“Our business is only as good as the people we have.” A phrase you will have heard or read as part of leadership strategy and communications. But how often do business leaders make human capital decisions on the premise that people are a contribution to the business, rather than a cost?
Human contribution has not traditionally been used by accountancy practices and business operations to evaluate workforce productivity. Here lies an age old conundrum. How do you know the true worth of your workforce if you’re only ever measuring one aspect of it?
This is an important problem, and has been for centuries. Most people know that their employees are contributing positively to the bottom line of the business, but accountancy practices still treat them as a cost on the balance sheet. This incapacitates business leaders from making strategic decisions that put the workforce first. What if this was not the case?
Society as a whole has been attempting to quantify the value-add humans have provided for centuries. From studies that tried to calculate the cost to the UK economy of death in war, to today’s sophisticated life insurance algorithms and predictive consumer marketing techniques. However, for organisations this has always been a negative equation. The cost of paying the workforce to drive productivity.
The main barrier is a lack of data and information that describes such behaviours. Today, this barrier is no longer in existence. Just as there is a wealth of data that forms our consumer profile and predicts our buying habits, there is also data that can be used to predict and influence our behaviour as employees. In the same way we leave consumer data trails, we also now leave workforce data trails that describe us as an employee on a level not previously ever understood or possible.
Sound scary? Let’s think about this further. As consumers, we accept the Terms and Conditions for applications on our phones often without even reading them. We are happy to sign up to store membership cards where every purchase we make under that brand is collected for their own research. We are comfortable putting credit card information and other personal details online in order to purchase goods and services. So when we think about our data being used by our employers, why does it feel like a bigger issue? There may be concerns regarding the security or misuse of our data. We may be concerned that this information could be used against us. Each of these are valid reasons to be sceptical of employee data being used by corporations; however they are the same issues that had to be overcome for market and consumer research and there is no reason why they won’t be overcome for employee data usage either.
Another more promising way to consider this is the opportunity we as the human workforce will have to truly know what value we bring to the organisation and how to continuously learn and improve this. Gone will be the days of management making subjective decisions. Our workforce data trail will enable a full transparent view of human workforce value contribution for both employees and the organisations that manage them. What if you received advanced notice of a training or development course that will improve your value contribution before your next role? What if you were notified of a high stress, potential burnout situation before it occurs? The scale at which we can now use workforce data across all stages of the employee lifecycles is genuinely exciting.
Workforce economics has a long way to go, most of which will be solved through culture and behaviour change. However, one thing is for sure; the future of data use in all industries will have to incorporate complete transparency. Consumers want to know why and how their data is being used and this principle should be automatically adapted to workforce analytics techniques. Not only is it the right thing to do, but regulation will demand employee transparency on personal data use. This means HR practitioners and business leaders will have to let go of the fear of releasing information to the masses.
Some organisations are already pioneering in this space. By using their workforce data to predict and ultimately influence employee behaviour. Be that through proactive career managements, smarter recruitment practices or building better teams; this is not something of the future. It is happening right now.
At Deloitte, we have spent the better part of the last year developing a robust methodology and approach to tackle some of these issues. A secure ethical method for aggregating, cleaning, structuring and calculating human value contribution to the bottom line. The first version of the solution is called the Employee Value Index, EVI. Through further iterations and testing with our clients, we are able to refine this solution even further. Allowing for our understanding of what humans contribute to organisations to continue to improve over time.
Perhaps the real reason we have never truly been able to measure the value humans contribute to organisations is because we have been going about it the wrong way all along. It is not so much what humans can provide to us as it is how we provide the optimal environment and experience for humans to thrive. Just as we are investing in building the right spaces and environments for our machines and robots, we also need to do this with the human contribution in mind. There is no better place to start than measuring what your current humans contribute in their current environment today.
To find out more about this topic, please contact Deanna Lloyd at Deloitte.