With the second quarter 2009 results just out from the Labor Department, it was reported that productivity rose at an annual rate of 6.6% in the quarter. This was one of the largest advances in productivity since 2003. With productivity defined as output per hour of work, the cited and obvious factor for the increase was output (production) at a somewhat constant level and a significant reduction of hours worked. The reduction of hours worked is the result of corporations shedding staff through a variety of means.
While this report has its bright spots, many have been impacted by the labor related cost cuts. Likely you or someone you know has been impacted. For those whose positions were spared, remaining workers are left to "produce" at current or higher levels. This may be fine in the short run, but there are limits to human capacity as well as the degree people can be cross trained to perform certain skill or knowledge tasks in the organization. REMEDI knows about staff limitations because we speak often with IT folks responsible for the integration and eCommerce function within their organization. These managers were asked to make contractor cuts, others asked to make staff cuts, and others asked to make cuts concerning both parties.
They say it's likely this will be a slow recovery with unemployment (the consumer) presently at 9.4% nationally. The consumer, spending more cautiously, will be responsible for the slow recovery and the consumer drives about 70% of economic activity. So if this is to be a consumer led recovery they need to be employed and feel as though their finances are on solid ground.
So what's my angle on this post you might ask?
While it was prudent to review labor capacity and make moves to reduce costs, some cut too deeply. Some did this by choice and others unknowingly. But in either event, REMEDI has had quite a number of EDI/EAI engagements in the past year that supplement staff to handle backlog, fill a skill set gap, or utilize our managed services to perform their entire EDI/EAI function, all initiated by deep staff cuts. By the way, many of these organizations did not use consultants as a matter of practice before the recession.
I mentioned this will be a slow recovery, yet the work must get done. It may be tough to get resources back in a full-time capacity until we are on the path to a firm recovery. In the meantime you have IT service providers that can assist with solutions to capacity and skill gaps. The good news for your finance folks, contract capacity does not count toward FTE headcount in most organizations. This is an approach that enables you to easily ramp your labor needs up and down without a lot of HR headaches.
