7 minute read 3 Dec 2021
Reframe your future woman green workspace

The COO Imperative: How do you ensure your workplace is still the right place for your people?

By Steve Krouskos

EY Global Managing Partner – Business Enablement

Enabling EY to create long-term value. University of Florida alumnus. Son, husband and father of four.

7 minute read 3 Dec 2021

To retain talent and drive transformation, Chief Operating Officers must build a mutually beneficial relationship with their evolving workforce.

In brief
  • Today’s workers are sending a message to COOs – don’t just give us a job, understand our motives, give us the skills and meet our aspirations.
  • COOs face intense pressure to reduce costs and increase productivity, while navigating disrupted markets.
  • By meeting the aspirations of your workers and adopting a talent ecosystem approach, you create a winning balance of job satisfaction, productivity and agility.

As global operations are being disrupted, so is the operational workforce. A new kind of worker is emerging – more mobile, with their own career aspirations. Simultaneously, new approaches to resourcing such as automation, upskilling, and managed services can enable the creation of a talent ecosystem that matches these new employee segments to new ways of working. This can prevent what The New York Times has termed, your own “great resignation,” while driving a seismic leap in employee productivity.

The human factor is widely recognized as a key part of transformation. In EY’s 2021 study, The CEO Imperative, 68% of CEOs identified employee issues such as talent needs, organizational change and culture as the number one driver of transformation in their company. Less visible but equally important is the transformation of the workforce itself as a driver of change.

This is the third article in the COO Imperative Series – insights designed to provide critical answers and actions to help COOs reframe the future. The first article, explored the COO’s journey in the recovery from COVID-19. The second article, addressed the specific challenges of ensuring resilient and sustainable operations. Here, we explore the emergence and management of the new workforce.

Prepare for a new kind of workforce

Every company has a unique work environment. But as a rule, the functions of the COO – production, supply chain, and the extensive admin and business support "back-office" – have required less specialized skills and have been open to a broader base of applicants. Many of these positions are location-based or industry-specific, reducing job mobility.

These dynamics have placed the traditional COO in a strong position to set the terms of employment. Because of the need to hire at scale, management of these employees is often a highly structured regime of job descriptions, fixed compensation, and a command-and-control culture.

As a COO, you must rethink this relationship – because fundamental trends are reshaping the working world.

  1. The traditional workforce is aging and leaving the market. The age demographic of operations-heavy industries is disproportionately high. For example, 97% of US manufacturing firm executives are concerned about the imminent loss of institutional and technical knowledge. The departure of these employees is creating the conditions for a new workplace.
  2. The next generation are seeking new career objectives. Incoming employees have different aspirations. According to EY’s 2019 study, The Millennial Economy, 58% of the new wave of workers believe they are more entrepreneurial than previous generations and less than a third intend to stay with one company. This is a workforce that needs to be understood, not commanded.
  3. Increasing volatility is posing challenges for workforce management. Today’s supply chain volatility shows the dangers of high fixed costs. Forward-looking COOs are seeking to reduce the rigidity of these fixed costs, while maintaining productivity and employee quality of life.
  4. The world is becoming more reliant on digitally skilled workers. The Internet of Things is rewiring factories, robots are staffing warehouses and AI algorithms permeate the back office. In a recent EY survey, Reinventing the supply chain for an autonomous future, only 44% of respondents said their employees were prepared for digital innovation. COOs must compete with big tech, hot start-ups, and their own CIOs for scarce digital talent. But as a COO, you also have a special challenge. You don’t just need data scientists – you need data scientists that understand automotive systems, insurance actuarials or retail operations. These specialties are not taught in computer science classrooms – they need to be home grown on the job. 
  5. There is a growing need to manage at scale. The COO is often the largest “employer” in the company – sometimes fielding a workforce in the tens of thousands. This requires the building of a talent structure that meets new talent needs.

These factors mean you need to rethink your organization’s relationship with its employees and to begin a restructuring of the systems they use to support a working environment.

  • Case study: A mining company upskills its workforce

    Sustainability is a central concern of COOs, and a global mining company decided it would set the industry standard. It established an “Environmental Excellence Training Center” that all workers – in the office or in the mine sites – were required to attend. The center not only taught compliance skills, it also created commitment and purpose standards of sustainability within the workforce.

Just as a transforming world has created challenges for the COO, it’s also provided new solutions to manage them. 

  • Robotics, process automation and artificial intelligence are creating opportunities for automation in large segments of the workforce. In addition to lower costs, automation can speed operations and generate valuable data analytics.
  • Hybrid working technologies are enabling a more flexible workforce – either regular employees working from home or supporting contract and gig workers. This may be a necessity – EY research, 2021 Work Reimagined Employee Survey, shows that over half (54%) of employees would consider quitting if not allowed a flexible working environment.
  • Today’s chronic shortage of talent has increased investment in upskilling and reskilling – according to World Economic Forum research (pdf), approximately 40% of workers will require reskilling over the coming years – critical for COOs that need to elevate workers with proprietary experience and skills.
  • Digital platforms have enabled a new generation of outsourcing, allowing third-party advisors to provide highly customized managed services such as flexible manufacturing, data analytics or supply chain management.
  • An innovative new way of harnessing talent is the business ecosystem, in which different enterprises join to pool talent, assets and expertise.

Instead of a rigid, one-size-fits-all structure, these options allow you to build a portfolio of work environments matched to employee skills and aspirations.

  • Case study: Extending digital training to the manufacturing workforce

    An international manufacturing company had digital training for office workers, but none for the factory floor. Under the COO’s direction, learning modules in statistical analysis, digital monitoring and Internet of Things assets were provided to the operations workforce, using its own people to accelerate the company’s digital transition.

The new mindset a rebalancing of the COO-employee relationship

We are now in the middle of “the great resignation.” Younger employees don’t see the opportunities they want, parents cannot work because they are unable to access day care and socially motivated workers are lacking a sense of purpose. At the same time, COOs are facing intense pressure to cut costs and increase productivity, all within more volatile markets.

Old approaches to the employee-employer relationship are not working anymore. You need to develop a new, mutually beneficial balance with your workforce to facilitate employee satisfaction whilst maximizing productivity and building an agile talent model.

There are five actionable steps you can take to transition toward a new model of workforce management that encourages talent retention and drives operational transformation.

1. Adopt a new mindset – ensure the people experience has a customer focus

Segment your workforce into target populations based on skill levels, mobility, and career goals. Sell on the whole employee experience, not just price. Restructure your messaging, employment terms, compensation and motivations based on the unique needs of each customer group.

2. Match new kinds of workers with new ways of working – create a talent ecosystem

Don’t just offer job positions – leverage new technologies to create a portfolio of working environments that align to the needs of the employee. For highly repetitive and low-value tasks, automation may be the solution. Aggressive upskilling can fill scarce, high-value positions. Instead of one-size fits all, you will manage a mosaic of employment types that bring out the best in each worker.

3. If you can’t be the pay leader, become the career aspiration leader

You can’t win the talent wars by outspending the opposition. The best employees are attracted by the respect of their colleagues, a working environment that empowers them to do their best and a sense of social purpose in their work and their company. Win the talent you need by winning their aspirations.

4. Build a more resilient and agile workforce to navigate more volatile times

The pandemic has shown the capacity and the desire of workers to work remotely. You can make gig-working, contracting and hybrid work environments a talent competitive advantage. These structures also variabilize employee costs – an important flexibility in uncertain times.

5. Reach outside the firm for the talent you need

The migration to hybrid work environments, combined with new technology platforms, creates opportunities for you to harness third-party talent. Specialized functions – flexible manufacturing, data analytics and regulatory compliance – can be economically contracted out to managed service providers.

  • Case study: Mobilizing scarce talent outside of the firm

    A global media and advertising agency generated terabytes of customer data that was critical to keep secure. Instead of attempting to hire extremely scarce cyber-talent, the COO selectively outsourced data protection to a third-party – saving money, increasing security, and allowing workers to get back to the core business of the enterprise.

Your workforce could be an operational game changer

The emergence of a new workforce goes far beyond recruiting, retention or even a great resignation. Your endgame should be a massive leap in productivity and the market power of the enterprise.

The new employee can manage a fleet of robotics that can customize orders in minutes at a fraction of the price. A team of AI experts forecasts demand with unprecedented accuracy. Automated warehouse technicians manage inventory to truly optimize cost and risk. These aren’t operational improvements – these are game changers in your domain.

The immediate need is to adopt new ways of working to stop your own “great resignation,” while meeting the demands of the market. But the greater reward is a new level of human capital at the heart of the enterprise. When that happens, you elevate your organization to unprecedented levels of productivity and success.

Summary

COOs are facing a revolution and a “great resignation” in their workforce. You need to strike a new balance that takes full account of your employees’ talents and aspirations, to create an environment that maximizes productivity at scale. To accomplish this, you need to migrate from “jobs” to a talent ecosystem that matches new ways of working to individual needs and skills of workers. This will drive a seismic leap in productivity, competitive advantage and ultimately your business transformation journey.

About this article

By Steve Krouskos

EY Global Managing Partner – Business Enablement

Enabling EY to create long-term value. University of Florida alumnus. Son, husband and father of four.