Haig Nalbantian: My colleagues and I at Mercer have been doing this work in the area we call “workforce sciences” for about 20 years now. When we started, data wasn’t so available, and the broad acceptance that human capital was that critical to business success, that it was as important as finance and technology and marketing to business success, wasn’t fully appreciated. It wasn’t quite there. That’s all changed. I think everyone now speaks and understands that human capital is indeed an asset, not just in name, not just as a throwaway line you put in an annual report, but in fact it’s a critical asset to the organization.
I think organizations also are much more savvy about data. We’re living in this era of big data. Everywhere you look you see organizations tapping big data to make more informed decisions. You see it in baseball, where cyber metrics was a little small cadre of people doing it 20 years ago. Now it’s the norm. The decisions about who you acquire and what players you bring together are no longer based just on the gut feel of some coach or the scouts. Yeah, their judgment still matters, but they are strongly reinforced by hard data that is predictive in nature, that says, “Well, people with these characteristics and who have these metrics are likely to be successful and help you be successful.”
We have the same opportunity now in spades for the workforces of organizations. All of those transactions, every hire you make, every rating you give, every new assignment you give, every pay increase you give, every decision a person makes every day to stay or leave their organization, it’s all captured in electronic systems. And with the right lens of economics, organizational psychology, you’re able to look at those data and really understand what’s happening so you can tailor your practices and policies to get the right workforce, to achieve the right ends, and to ensure that the employees you hire are the right ones, that they’re getting out of this deal what they need to be engaged, successful, and productive.
What’s happened in the last five years, the surge of interest in workforce analytics, the surge in technologies that are products around workforce analytics, dashboards, human capital score cards, and the like, are all reflecting this increased awareness that you can’t lead this major investment decision to gut feel, intuition, what the other people are doing, whether they are competitors or “best practice companies.” You can’t leave it even to the philosophy of your CEO.
The one final point I’d make on this, which speaks directly to leadership, the leaders of companies are all about markets. That’s what they do. They understand, anticipate, and respond to developments in the various markets with which they interact. They know customer markets, they know capital markets. They know their vendor markets. It’s very ironic that there’s one market that they seem to have a blind spot for, by and large, not everyone but too many still. And that’s this thing we call the internal labor market. And this is the market that really creates or produces the workforce that you have, the workforce you have today, the workforce you’re going to have three years out, five years out. All those dynamics of talent coming in, moving through, exiting, are creating the workforce of your future.
The irony is, this is the one market that you as an organization actually have a chance to shape and manage to your needs. Unless you’re a major monopoly, government entity, or a major player in the oil market who can really control the supply of oil, for example, there are very few markets that companies strongly control. They influence in some way, but they can’t really strongly control them.
Here is one market that you can actually shape to your needs. You can make the outcomes what you need them to be to deliver to your business design. If you bring that construct together with all the data that are available now and the wonderful statistical modeling tools we have, there is no reason all business leaders should not understand thoroughly how their internal labor markets work, and whether they’re working in the right way, or whether they need to be changed.
Directed / Produced by
Jonathan Fowler & Elizabeth Rodd