Know Your Internal Labor Market

Haig Nalbantian: For leaders to get their hands around a more viable and practical vision of the internal labor market, I think they need to do a number of things.  There are some readings -- Play To Your Strengths, a book we wrote a long time ago back in 2004, lays out in considerable detail what this construct is and what the methodology is to model and manage it are.  So that’s one starting place.  

The second thing is to ask the right questions.  Leaders know that every market has two fundamental variables: quantities and prices.  There’s the demand side of the market, there’s the supply side of the market, they interact with each other as anyone who’s studied any economics knows, and you get some kind of equilibrium, we hope.  Every leader understands that.  They need to be thinking about those things relative to their internal labor market, to be asking the questions relating to demand. 

So if I’m thinking about demand, the demand for labor is always a derived demand.  It comes from the ultimate demand from the products or services that you deliver.  So as a business leader, you should always be asking the question, if this is what we’re trying to accomplish with our business, if we’re moving to sell or deliver these kinds of goods and services, what kind of workforce do we need to meet those goals?  What’s the quantity of people we need in our workforce?  What is the right mix of skills, know-how, educational background, types of experience, mix of job families, I could go on and on.  What are these characteristics that we need going forward?  And how do they differ from what we’ve traditionally had?  So are there any areas where there are major changes required in order for us to be successful?  That’s kind of the in the workforce, the capabilities of the workforce. 

And you also need to speak to the behaviors of the workforce.  So, do we need more teamwork or is it really about individual achievement and individual quality?  Do we need more risk-taking?  Do we need more employees who are more entrepreneurial or maybe in the banking industry this day you say, “No, the exact opposite.  We need more diligence, and control, and attention to detail.”  So maybe a different set of aptitudes or capabilities we need going forward. 

You as a business leader need to be thinking about that translation and insisting that those responsible for your workforce, whether it’s HR or other parts of the line operation that have a strong influence on acquisition and development of talent, I need to know that you’re thinking about this and you can tell me what the workforce requirements are.  That’s the demand side.  

Like a good market person, you’re going to look at the supply side too.  Do we know where we’re going to get that supply of labor?  Is our current pipeline adequate to meet those needs, or do we need to develop people faster or go to the outside market to get them?  If we have to go to the outside market to get them, do we know where such people are and how costly it is to acquire these kinds of people?  And do we know that our reward systems are motivating the right behavior?  So if I say I need more risk taking entrepreneurial behavior, can you tell me what in our rewards system is actually motivating that kind of behavior?  If you tell me we need to grow global talents or we need to move people around our businesses, can you tell me if our rewards system or the prices in our market are actually encouraging people to move?  If you’re an employee and you move out of your comfort zone, you go on an ex-pat assignment, you go into another business line, you’re taking more risk than if you just stayed put in your comfort zone, right?

Well risk and reward are always aligned.  You don’t get people to take more risk if, on balance, there isn’t a higher prospect of reward.  So a business leader understands that.  That’s what they’re all about.  They need to be asking those questions about their workforce and insisting that HR have answers to those questions that have a strong factual basis.  That would be my advice to business leaders.

Start thinking about this whole workforce domain in the same way you think about other areas of business, recognizing, and this is all important, that if you thought asset management on the financial side was complex, asset management on the human capital side is all that more complex because people are not things, obviously.  People have volition.  A machine doesn’t decide I’m getting up and going on vacation today, or I’m fed up with my boss I’m not going to work.  People do.

Also, people change as they work. You know, your machine doesn’t change very much.  Maybe it depreciates over time, but there isn’t development occurring as that machine operates by and large, right?  People change.  The human capital asset, unlike any other asset, is always in development.  It’s always dynamic.  So as I work, I learn.  As I learn, I have bigger appetite to learn.  As I interact with customers and people, I acquire new information.

It’s an incredibly complex and powerful asset so the tools we have for other kinds of asset management need to be all that more balanced, refined, and ambitious to manage an asset as complicated as this.  So in the age of human capital, I think business leaders ought to be thinking this way and really devoting the same kind of attention and applying the same kind of mindset that they’ve traditionally done in so many other areas. 

Directed / Produced by

Jonathan Fowler & Elizabeth Rodd


The hiring and managing of employees is the achilles heel of many an otherwise tightly-run organization. Why? Because human beings come with many more variables than do widgets – we’re trickier to assess, our motivations are complex, and we change over time.

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Political division is nothing new. Throughout American history there have been numerous flare ups in which the political arena was more than just tense but incideniary. In a letter addressed to William Hamilton in 1800, Thomas Jefferson once lamented about how an emotional fervor had swept over the populace in regards to a certain political issue at the time. It disturbed him greatly to see how these political issues seemed to seep into every area of life and even affect people's interpersonal relationships. At one point in the letter he states:

"I never considered a difference of opinion in politics, in religion, in philosophy, as cause for withdrawing from a friend."

Today, we Americans find ourselves in a similar situation, with our political environment even more splintered due to a number of factors. The advent of mass digital media, siloed identity-driven political groups, and a societal lack of understanding of basic discursive fundamentals all contribute to the problem.

Civil discourse has fallen to an all time low.

The question that the American populace needs to ask itself now is: how do we fix it?

Discursive fundamentals need to be taught to preserve free expression

In a 2017 Free Speech and Tolerance Survey by Cato, it was found that 71% of Americans believe that political correctness had silenced important discussions necessary to our society. Many have pointed to draconian university policies regarding political correctness as a contributing factor to this phenomenon.

It's a great irony that, colleges, once true bastions of free-speech, counterculture and progressiveness, have now devolved into reactionary tribal politics.

Many years ago, one could count on the fact that universities would be the first places where you could espouse and debate any controversial idea without consequence. The decline of staple subjects that deal with the wisdom of the ancients, historical reference points, and civic discourse could be to blame for this exaggerated partisanship boiling on campuses.

Young people seeking an education are given a disservice when fed biased ideology, even if such ideology is presented with the best of intentions. Politics are but one small sliver for society and the human condition at large. Universities would do well to instead teach the principles of healthy discourse and engagement across the ideological spectrum.

The fundamentals of logic, debate and the rich artistic heritage of western civilization need to be the central focus of an education. They help to create a well-rounded citizen that can deal with controversial political issues.

It has been found that in the abstract, college students generally support and endorse the first amendment, but there's a catch when it comes to actually practicing it. This was explored in a Gallup survey titled: Free Expression on Campus: What college students think about First amendment issues.

In their findings the authors state:

"The vast majority say free speech is important to democracy and favor an open learning environment that promotes the airing of a wide variety of ideas. However, the actions of some students in recent years — from milder actions such as claiming to be threatened by messages written in chalk promoting Trump's candidacy to the most extreme acts of engaging in violence to stop attempted speeches — raise issues of just how committed college students are to
upholding First Amendment ideals.

Most college students do not condone more aggressive actions to squelch speech, like violence and shouting down speakers, although there are some who do. However, students do support many policies or actions that place limits on speech, including free speech zones, speech codes and campus prohibitions on hate speech, suggesting that their commitment to free speech has limits. As one example, barely a majority think handing out literature on controversial issues is "always acceptable."

With this in mind, the problems seen on college campuses are also being seen on a whole through other pockets of society and regular everyday civic discourse. Look no further than the dreaded and cliche prospect of political discussion at Thanksgiving dinner.

Talking politics at Thanksgiving dinner

As a result of this increased tribalization of views, it's becoming increasingly more difficult to engage in polite conversation with people possessing opposing viewpoints. The authors of a recent Hidden Tribes study broke down the political "tribes" in which many find themselves in:

  • Progressive Activists: younger, highly engaged, secular, cosmopolitan, angry.
  • Traditional Liberals: older, retired, open to compromise, rational, cautious.
  • Passive Liberals: unhappy, insecure, distrustful, disillusioned.
  • Politically Disengaged: young, low income, distrustful, detached, patriotic, conspiratorial
  • Moderates: engaged, civic-minded, middle-of-the-road, pessimistic, Protestant.
  • Traditional Conservatives: religious, middle class, patriotic, moralistic.
  • Devoted Conservatives: white, retired, highly engaged, uncompromising,

Understanding these different viewpoints and the hidden tribes we may belong to will be essential in having conversations with those we disagree with. This might just come to a head when it's Thanksgiving and you have a mix of many different personalities, ages, and viewpoints.

It's interesting to note the authors found that:

"Tribe membership shows strong reliability in predicting views across different political topics."

You'll find that depending on what group you identify with, that nearly 100 percent of the time you'll believe in the same way the rest of your group constituents do.

Here are some statistics on differing viewpoints according to political party:

  • 51% of staunch liberals say it's "morally acceptable" to punch Nazis.
  • 53% of Republicans favor stripping U.S. citizenship from people who burn the American flag.
  • 51% of Democrats support a law that requires Americans use transgender people's preferred gender pronouns.
  • 65% of Republicans say NFL players should be fired if they refuse to stand for the anthem.
  • 58% of Democrats say employers should punish employees for offensive Facebook posts.
  • 47% of Republicans favor bans on building new mosques.

Understanding the fact that tribal membership indicates what you believe, can help you return to the fundamentals for proper political engagement

Here are some guidelines for civic discourse that might come in handy:

  • Avoid logical fallacies. Essentially at the core, a logical fallacy is anything that detracts from the debate and seeks to attack the person rather than the idea and stray from the topic at hand.
  • Practice inclusion and listen to who you're speaking to.
  • Have the idea that there is nothing out of bounds for inquiry or conversation once you get down to an even stronger or new perspective of whatever you were discussing.
  • Keep in mind the maxim of : Do not listen with the intent to reply. But with the intent to understand.
  • We're not trying to proselytize nor shout others down with our rhetoric, but come to understand one another again.
  • If we're tied too closely to some in-group we no longer become an individual but a clone of someone else's ideology.

Civic discourse in the divisive age

Debate and civic discourse is inherently messy. Add into the mix an ignorance of history, rabid politicization and debased political discourse, you can see that it will be very difficult in mending this discursive staple of a functional civilization.

There is still hope that this great divide can be mended, because it has to be. The Hidden Tribes authors at one point state:

"In the era of social media and partisan news outlets, America's differences have become
dangerously tribal, fueled by a culture of outrage and taking offense. For the combatants,
the other side can no longer be tolerated, and no price is too high to defeat them.
These tensions are poisoning personal relationships, consuming our politics and
putting our democracy in peril.

Once a country has become tribalized, debates about contested issues from
immigration and trade to economic management, climate change and national security,
become shaped by larger tribal identities. Policy debate gives way to tribal conflicts.
Polarization and tribalism are self-reinforcing and will likely continue to accelerate.
The work of rebuilding our fragmented society needs to start now. It extends from
re-connecting people across the lines of division in local communities all the way to
building a renewed sense of national identity: a bigger story of us."

We need to start teaching people how to approach subjects from less of an emotional or baseless educational bias or identity, especially in the event that the subject matter could be construed to be controversial or uncomfortable.

This will be the beginning of a new era of understanding, inclusion and the defeat of regressive philosophies that threaten the core of our nation and civilization.