Navigating labor shortages: tactical capacity management as a solution

“The aging population is currently the main driver of tightness in the labor market," Kant explains. ”In many Western countries, more people are simply leaving the labor market than entering it. This is causing a structural labor shortage, especially in sectors such as healthcare, education, and logistics, where automation is not always a viable solution. According to a recent analysis by Statistics Netherlands, 70% of businesses in the Netherlands suffer from a lack of staff. In the logistics industry, one-third of businesses report being held back by a lack of manpower, while one-third of healthcare workers are dissatisfied to the point that they are considering quitting. It’s not just a theoretical problem: we're running into a dead end.”

Moreover, Kant warns, the issues caused by the tight labor market will not disappear over night: there is work to be done. “The world population will continue to age for the next 20 to 30 years, so companies need to prepare and invest in appropriate capacity management solutions to survive these challenging times.”

A recent ORTEC survey revealed that many people feel that work schedules still leave much to be desired: companies should be smarter about how they deploy their human resources and both employment practices and internal communication could do with a much-needed boost. So where is the main area for improvement?

“There’s a lot of low-hanging fruits in the field of tactical capacity management”, says Kant, “A discipline that revolves around medium-term scheduling, about three to five months ahead. Not only does it help companies anticipate peaks and troughs, but it also helps optimize staff deployment.” According to Kant, many organizations still mistakenly disregard tactical capacity management, while its effects can be considerable. Companies have already adopted long-term HR visions and look slightly farther ahead when it comes to operational scheduling and clearing backlogs, but there’s still much to be gained between the strategic and operational levels. “It’s essential that companies start taking a tactical approach to scheduling. For example, by spreading out demand, by preparing more thoroughly for summer, or by improving how sessions are scheduled in healthcare. You can use data to forecast what workloads you can expect, but it can also tell you what your employees want. These insights put you in a much better position to match supply and demand. Mathematics can be harnessed to create improved planning that factors in many more people and many more restrictions.”

Most companies, Kant points out, rely on less efficient scheduling methods. “They might use Excel, for example, or simply extrapolate historical data. This means that their forecasts of how much work is coming their way and how they can best deploy their staff are generally suboptimal. As a result, staffing requirements stay stable, even though demand is expected to fluctuate. There’s so much to gain.”

If you ask Kant, smarter staff deployment is the way forward. “And that doesn’t mean encouraging employees to work harder. It means having the right people with the right qualifications available at the right time. In other words, companies need to predict more accurately how much staff they will need at any given time, for instance by harnessing insights from data analytics and AI.” In this regard, Kant points to the importance of predictive models based on historical data, such as the number of surgeries in a hospital or fluctuations in logistical demand. “Ultimately, models like these improve results and boost employee satisfaction.”

While strategic, tactical, and operational scheduling matter, employee satisfaction is just as important, Kant points out. And satisfaction goes beyond good pay and career opportunities: “It’s about giving employees a voice. Older employees often prefer predictability and peace of mind, while their younger counterparts often want more flexibility. This calls for a single, comprehensive approach that can accommodate for the different needs of different generations. Especially the new generation cares less about salary than about personal development and a good work-life balance. Involving employees in decision-making, e.g. by offering self-scheduling and shift bidding, is a sure-fire way to improve satisfaction and engagement, enhancing their affinity with the organization. The idea of having employees create their own schedules within the framework defined by the organization has the potential to improve both workforce scheduling and forecasting capabilities.”

Kant argues that while there is clearly a lot to be gained with workforce management, the main issue now is to raise awareness of its promise. It’s crucial that companies look at how other industries go about solving the problems they face. “I recently wrote an article about what logistics can learn from healthcare and vice versa. The logistics industry is more hierarchical: when the boss gives an order, the employees do what they’re told. In healthcare, on the other hand, decisions are often made by committee. On the other hand, the healthcare industry is miles ahead when it comes to workforce scheduling and employee satisfaction. Logistics companies simply draw up, print, and post a schedule, without asking for employee input. In the healthcare industry, however, self-scheduling is already common practice. That’s partly because the healthcare industry requires more coordination, as it’s home to a relatively large amount of part-time workers and demand fluctuates quite considerably. That’s not to say that demand is entirely stable in the logistics industry: Mondays aren’t the same as Wednesdays. Logistics can learn a lot from healthcare, and the same goes the other way round.”

"The focus will gradually shift to scheduling quality, supported by advanced technologies such as AI."

Besides self-scheduling, Kant also believes that automating time-consuming tasks such as admin holds great promise. “The focus will gradually shift to scheduling quality, supported by advanced technologies such as AI. Workforce management needs to become a field of its own right that specializes in creating smart short and long-term schedules. Kant also points out that new technologies and innovations could potentially make employees’ lives considerably easier: “Many employees, from police officers to healthcare workers, still spend too much time on admin. Technologies such as voice recognition and automatic activity and report processing can help cut the time spent on administrative work drastically, leaving workers with more time to spend on their core duties.”

Now that companies are also coming under increasing pressure about Corporate Social Responsibility (CSR) and sustainable operations, Kant points out that “Good personnel management doesn’t just keep employees satisfied, but also boosts a company’s image. It is a key ingredient of the future of workforce management, which has to be sustainable, efficient, and human-centered. It’s a part of CSR for a reason, and Decent Work for All is even the eighth Sustainable Development Goal.”