As the saying goes, the customer is always right. This is even truer in today’s global economic environment as customers have expectations for faster, better and cheaper goods and services now, not later.
And, according to Mark Huselid, a Distinguished Professor of Workforce Analytics at Northeastern University’s D’Amore McKim School of Business, the creation of global markets and distribution systems combined with customers’ expectations is driving HR professionals to leverage integrated business analytics to not only improve talent, but also core business services.
“The bottom line is that companies spend a lot of money on talent, but the problem is that they don’t know what they are really spending it on – or what they are getting from these investments,” said Huselid, who is also the Director of D’Amore McKim’s Center for Workforce Analytics. “A job that is strategic and critical to one company’s mission might not be the same at another. Today’s executives must understand this, realizing that they have to have top talent in the roles that really matter. Companies need to get away from the old school model of investing in talent in terms of hierarchy.”
The rapid development of these trends has created what Huselid calls a global “arbitrage” of talent, where employees are much more likely than ever to work for multiple employers and live in cities or countries different than their employers.
“The upside of these trends is that leaders now have unfettered access to a global market for talent,” said Huselid. “The downside is that their competitors have these same opportunities. In a highly competitive market, one of the last sources of competitive advantages is talent, and by extension the way in which talent is managed.”
According to his research, Huselid explains that even though many companies routinely spend between 50% and 70% of their revenues on direct and indirect workforce costs, these investments are often not well measured or managed. Addressing these issues means that leaders — both HR and line managers — should be prepared to develop a comprehensive understanding of how the workforce contributes to their strategic success.
This means that companies need to manage their workforce strategically, including:
- Identifying the strategic work that is truly necessary to execute firm strategy;
- Investing in differentiated management systems that support that work; and,
- Designing and implementing targeted measurement systems that hold line managers accountable for the company’s most expensive resource, the workforce.
“Everyone in the workforce can’t be perfect and some work within a company is only worth doing so well,” said Huselid. “However, it’s imperative that companies use data to discover what it is customers really value and more importantly, find out if the company is truly delivering on that value.”
In order to introduce this thinking into an organization and get buy-in, HR executives and learning development officers need to develop programming that challenges the C-suite and asks: What’s your business? What’s your strategy? How do you compete? What talent do you need to win the game?
Once a company has clarity into those questions, Huselid mentioned, it comes down to developing the strategic capabilities –the bundle of technology and data, along with the right employees that help you win. Understanding what it will take to close the strategy gap is key.
“Business analytics will help training officers discover where the value lies within the enterprise and determine how the company should invest in that talent so that everyone gains, including the customer,” Huselid said. “The only real job security any of us has is customer security.”