Sadly, accounting practices still classify labor, as an “expense” while classifying the purchase of equipment the “expense” is expected to operate as in “asset” or “investment,” which is commonly defined as the "commitment of resources to achieve later benefits." Little is known about the value of the so-called expense nor the return on worker investment, accumulating value throughout the lifespan of the worker. Historically there have been few ways to account for it. Consequently, a general manager has very little data to present to the board when told to cut expenses - the easiest being headcount.

Every employee who is hired encounters the same scenario. Once hired and through whatever screening available to make sure that the known pre-hire skills are sufficient to learn the unique tasks that make up the job, the blank-slate employee is most likely matched-up with somebody who has already demonstrated they can perform the tasks to the employer's satisfaction. No structure, no training tools, no documentation, just an informal experience that differs from informal trainer to informal trainer, shift to shift, for every employee that goes through the ritual. Read More

In a recent article in HR Dive by Carolyn Crist entitled, "Fewer Job Posts Require Degrees, Though Hiring Hasn’t Caught Up," the author explained what appears to be a growing shift in hiring practices by employers. Or maybe not.

Hiring based on skills is more difficult than hiring by degree, by far. Hiring by skill requires an accurate understanding of the required prerequisite skills for the job and an accurate way to measure a candidate's skill base relative to that job classification. It requires "content valid" or "job relevant" hiring criteria that represents today's version of the job classification, not yesterday's or yesteryear's job criteria - something most employers lack. Many employer's job descriptions alone are grossly behind today's technological state of operation, and what they have is guaranteed to continually degrade with each passing year. For some, it might even be so extreme that it may produce an Equal Employment Opportunity Commission violation waiting to be discovered.

For one, as mentioned, sufficient job or content valid hiring criteria is typically lacking. Second, most employer's worker development strategies haven't kept up with the times. Unlike 20-30 years ago when an employer could get by with a "Bob, this is Jim...why not show him around" approach to on-the-job training, today's jobs are more complex and too broad to not deliberately train workers to master the tasks of the job classification for which the employer should expect them to be responsible. And when hiring continues, as if more bodies is the answer, while there aren't enough "subject matter experts" nor a system of worker development in place, productivity is sure to decline and desperate decisions to seek cheaper labor(with the same challenges or more) elsewhere may be forced upon the CEO by anxious shareholders. Read More

The world has been through a lot in the last few decades. Employers finding themselves making decisions and changing their mind for the most unexpected reasons. Proactive Technologies, Inc.^® wants to accommodate and support those workforce development decisions in the best way it knows how. This introduction for new and returning clients of its turnkey worker development package is one example.

Value comes in many forms. Sometimes value stares us in the face but we may not realize it…or fully realize it. Like a software we purchase but only use 10% of its functions, a car that we seldom drive, or the treadmill that sits in its original packaging. Underutilized value not only represents a minimal return on an investment, it is a lost opportunity to maximize its potential and an inefficient use of capital.

Undeveloped or under-developed worker capacity is a lost opportunity to increase return on worker investment and reduce labor costs. Multiply this experience by the number of employees you have and the loss can be substantial! This is a fact that should be obvious and continually frustrates many a CEO or Operations Manager. It doesn’t have to be that way.

Every employer conducts a massive amount of informal, unstructured and undocumented on-the-job, task-based training every year. The significant cost(especially if you have a lot of retiring experts, revolving new-hires and marginally trained residents), as well as the effectiveness, usually goes unmeasured. If you doubt this point, ask yourself one question; Do I know which tasks each of my employees have mastered, and which they have not? If you draw a blank, you are not alone. Read More

Total Cost of Ownership formulas, such as the one used by the Reshoring Iniative, try to capture the hidden and overlooked costs of off-shoring operations, with labor challenges being one factor considered. But even so, the factor’s significance is understated. Read More

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