Organizations cannot compete effectively - at least for long - without aligning their people with results. And yet the decision-making processes for optimizing the people side of the business remain rudimentary in most organizations, often amounting to little more than guesswork and gut feel.
At a minimum, this state of affairs results in lost opportunities: a failure to attract, motivate, and retain a talented and diverse workforce; unnecessary escalation in health care costs; lackluster sales; or disappointing results from mergers and acquisitions.
Other times, this state of decision-making can even prove fatal to an organization. The decline of Circuit City from a widely-admired company to oblivion was a quick one. One of only eleven companies identified as “great” eight years ago in Jim Collins's book Good to Great, Circuit City filed for bankruptcy in 2008. Collins and others have pointed to a major decision on the people side of the business - Circuit City's 2007 decision to lay off 3,400 of its most experienced sales people and replace them with lower-wage workers - as a key contributing factor in the organization's demise.
What happened? At some level, the answer has to be that Circuit City executives failed - or were unable - to do the analysis that would have enabled them to understand the consequences of their cost-cutting decision. They made the decision based on gut, rather than analytics. Had the organization developed the discipline of human capital analytics, the outcome may well have been different.
An extreme example? Perhaps. But it points to an important underlying truth. When executives make critical decisions about the people side of their business (which typically represents both their biggest asset and their largest cost) without the benefit of analytics, they do a disservice to their organization and its shareholders.
by Laurie Bassi, McBassi & Company
McBassi is a survey firm that helps organizations improve their performance through more effective management and development of people. You can contact them at info@mcbassi.com.
