By Paula Brown, ActiveOps
If you’ve picked up a newspaper lately, you might have noticed a worrying trend coming out of Silicon Valley. After a breathless pandemic-era hiring spree, thousands of tech workers have been given the chop. More than 100,000 of them have lost their jobs this year alone as tech firms, not anticipating the drop in demand in the wake of the pandemic, misjudged the level of capacity needed and took on too many workers. Banks, too, are preparing for the biggest round of lay-offs since the financial crisis, with Wall Street giants such as Goldman Sachs and Morgan Stanley announcing hefty job cuts in recent weeks, in part because they over-hired, financial services headhunting firm Silvermine Partners told the FT in January.
This problem with over-staffing is resulting in capacity being squandered across financial services firms—a broader trend that is impacting bank back-office teams. If that sounds like a familiar struggle, you’re not alone. Our latest research shows that operations teams in the UK and Ireland, North America, Australia and New Zealand are failing to get the most out of their employees. With banks’ operations teams under pressure to cut costs amid shakier economic conditions, the traditional response is to take an axe to headcount. But that strategy is not going to work this time round.
Tackling this capacity challenge, therefore, will require a different way of thinking. In this blog we will explore how using data can help your operations team become more agile—and how that increased agility can help reduce latent capacity without having to downsize your workforce.
Why is capacity being squandered?
OpsIndex measures how well operations are being run based on five key metrics—agility, control, efficiency, effectiveness and focus—and enables operations teams to benchmark their performance against peers. Our latest OpsTracker report, which aggregates OpsIndex data from thousands of operations departments globally, shows that operational performance has been slipping around the world. In part, that’s because operations teams are not working in as controlled a fashion as they were during the pandemic—an indication that organisations are not planning effectively and are failing to meet their targets. Often inadequate planning results in operations teams being staffed for peaks in workload, resulting in capacity being wasted.
Another key reason capacity is being squandered, is because operations teams are not agile enough. Agility levels have fallen from their pandemic-era peaks in all regions tracked by OpsIndex data. This indicates that teams are not sharing resources effectively, either due to poor control levels or because employees don’t have the necessary skills to handle different types of work.
Therefore, to get better at managing capacity, operations teams need to look at ways to become more agile so they can flex resources to balance the ebbs and flows in workload. We’ve written another blog on capacity and strategies to unlock it here.
Lessons from the wider business
Banks have dealt with agility issues before. Changing operating conditions and shifting customer preferences mean some banks have already started to become more agile by addressing squandered capacity in their branch networks. With the growth of online banking reducing the need for people to visit their local branch—a trend that accelerated during the pandemic—retail banks are having to think differently about their approach to physical banking. While that has meant closing some branches (the chopping headcount method), there is a limit to how many branches incumbent banks can shutter given some customer demographics still need to use a physical bank while others may need to visit their bank manager in person to resolve more complex questions (discussing a mortgage, for example).
In the same way that making operations teams more agile can help back-office staff do more with less, some retail banks have been seeking to transform their branch networks by using data analytics and insights that enable managers to be more agile, allocating resources across the branch as demand dictates. That also involves upskilling staff so they can handle a wider scope of work.
How to build operational agility
There are two key ways you can improve your agility levels: get better at planning resource allocation and invest in training and development to broaden staff skillsets so that resources can be spread among teams as needed.
The most agile teams are the ones that can seamlessly move resources between teams to meet changes in workload, reducing the need to pay overtime or hire temporary workers during peak times. This means breaking down traditional work silos and fostering a more collaborative culture where different teams work together to ensure the entire operations outfit is performing efficiently.
The more variation in work staff can handle, the easier it is to move resources between teams. That means taking time to cross-skill and upskill employees, so they are capable of juggling a greater array of tasks. However, that training should be laser focused, to ensure workers are developing skills in areas that are relevant (there is little point training staff to take on additional activities where incoming work volumes would rise and fall in tandem with their existing role).
How data can help you avoid wasted capacity
Using data can help your operations team become more agile by enabling you to allocate resources more effectively across teams, helping you reduce squandered capacity without having to cut headcount. OpsIndex data allows you to track your agility levels over time and helps you better understand what levers you need to pull to become more agile. Because all five metrics are interconnected, pulling on one lever could impact another. To boost agility levels, you may need to take steps to improve control levels or rebalance focus away from core work to training and skills development. By optimising these levels, you can improve your productivity and ensure capacity never gets wasted.