27 ISMOR Personnel Cost Modelling Technique 2 nd September 2010
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Transcript of 27 ISMOR Personnel Cost Modelling Technique 2 nd September 2010
1www.corda.co.uk © BAE SYSTEMS 2010. All rights reserved.
27 ISMOR
Personnel Cost Modelling Technique2nd September 2010
Steve Pretty, CORDA
2www.corda.co.uk © BAE SYSTEMS 2010. All rights reserved.
Contents
• Background
• RAF Requirement
• The RAF Personnel Costs Model
• Analysis
• Benefits
• Outcome
3www.corda.co.uk © BAE SYSTEMS 2010. All rights reserved.
Need for personnel analysis: organisation personnel profile
Organisations require the right personnel profile to function effectively, over time
How can we sustain this personnel
profile, in the most cost-effective way?
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Need for personnel analysis: change in terms & conditions
Terms & Conditions of employment
Reduce staff wages
Save money(lower pay
costs)
Harder to recruit new
staffSpend more
money(recruiting)
De-motivated staff
Decreased retention
Need more recruitment and training
Spend more money
(recruiting & training)
Reduce Personnel
Effectiveness
Terms & Conditions of employment
Reduce staff wages
Save money(lower pay
costs)
De-motivated staff
Reduce Personnel
Effectiveness
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History
Manning StudyEstablished the need for Personnel Modelling
Personnel Cost Modelling ApproachIn-house Personnel Model demonstrator
Support to Air CommandRAF Personnel Costs Model
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Air Command Requirement
RAF required a modelTo help them assess the cost implications of changing how they
treat their staffRAF Strategy for PeopleRAF input to SDSR
Needed to support three top level questions…
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Air Command Requirement
Three top-level questions:
What are the implications to the RAF on the total costs attributable to personnel of changing the way they employ, motivate, recompense and reward people?
Which policies have the biggest impact on managing cost growth while supporting desired force levels?
What are the relative differences in costs between employment models that prioritise retention, and employing people over shorter careers?
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Requirements Capture
Held a workshop with RAF Personnel Policy staff. Captured:
Broad model requirementsKey inputs and outputsPersonnel data availability
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Requirements Capture
Refined the requirements through smaller meetings over the next couple of weeks
EstablishedThe data requirementAcceptance tests
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Data collection
Data requirements document drawn up and circulated around Air Command at an early stage
Baseline dataset compiled from a range of MOD sourcesDASA22 GroupAir Command sources
Simplifying assumptionsJob type: assume 7 trade and branch “groupings”3 career stages for officers; 4 for airmenConstant “rank proportions” for each career stage
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The RAF Personnel Costs Model
Manpower flow model
CareerStage 1
CareerStage 2
CareerStage 3
Costs model
RAF strength
Outflow
Replacementrate
Postings
Replacementrate
Outflow
Outflow
Outflow
Manpower inputs Cost inputs
Ph3 Trg cost
Accomm.costs
Staff Pay
Pensioncost
Resettlementcost
Replacementcost
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The RAF Personnel Costs Model
The model…
• Is a flexible, “analyst’s tool”
• Represents “pools” of people (System Dynamics approach)
• Can compare the long-term cost impact of different personnel policies, over time
The model…
• Does not simulate the career progression of individuals
• Is not a manpower planning tool
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Sample analysis – what-if questions
Home ownership
What would be the overall cost impact of allowing individuals access to the pension lump sum early, to encourage home ownership?
What would be the overall cost impact of increasing Long Service Advance of Pay (LSAP) to encourage home ownership?
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Sample analysis – what-if questions
Length of service
What is the impact of a change in length of service on overall cost?
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Sample analysis – Pensions what-if question
Initial pensions “investment”
But estate costs fall
Increase in allowances
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Sample analysis – comparison with alternate strategy
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Outcome
RAF Strategy for PeoplePaper endorsed by Air Force BoardModel results in annex and summary in main body
RAF Career Management ReviewCurrently ongoing
Chairman’s Award for Personnel Cost Modelling approach
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Benefits
The application of dynamic modelling to personnel provides:
The ability to compare multiple and diverse personnel strategies
• On both a cost and personnel supply basis
• Over a period of time (rather than at a fixed point)
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Questions?
Steve PrettySenior AnalystCORDA,BAE Systems Tel: +44 (0) 1252 383520Fax: +44 (0) 1252 383544