Making Human Capital Decisions - 5 essential actions

For insights on how the digital age impacts employee and employer expectations, check out part 1 of this series on Making Human Capital Decisions: Oh, those digital age expectations.   The first article sets the scene for taking a new approach to making human capital decisions; this article explains the key actions to enable more effective people decisions in the digital age. 

So, how should organizations make people decisions in the future?

Pointing a laser at employee decisions highlights how the new employer and employee expectations create new challenges for making people decisions during the digital age.    The following table summarizes some people decisions and emerging challenges for strategic people areas.

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Achieving goals for these strategic people requires the right processes, roles and enabling technology across critical employee ‘moments of truth’.  A review of the key decisions across the employee lifecycle exposes some emerging digital age challenges.

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Five essential human capital decision-making actions

The shifting external landscape and new employee expectation create new challenges for decision makers.  While many of current solutions focus on tools to gather more data and improve analytics,  data and technology are only part of the overall solution.  Decisions on employees can’t just be clinical.  An individual’s decision to join an organization, or strive to work harder for that organization, or commit to continue to work there is a personal, emotive, and a point in time action.    Leaders need to go beyond the numbers and remember inspiration, influence, respect and dignity all have an impact on decisions that people make.  While the goal is not perfect decision making about people, there are tremendous opportunities to improve decision making confidence.  

Here are five actions organizations can focus on to improve human capital decisions in the digital age.

1.       Design for the Moments of Truth

First, as an overall design concept, think about the decisions needed during the key ‘moments of truth’ with employees.   People goals are achieved through two primary means: (a) developing the right people programs (e.g. recruiting, career development, rewards, etc), and (b) effectively delivering these programs through people leaders.  The delivery of human capital programs, often through 1-1 interactions with people leaders, are the critical interactions that lead employees to join, become engaged or decide to remain.    Decisions on human capital programs need to start with the events that matter most to employees – and enable leaders and managers to effectively execute in those moments.   What is the point of spending millions of dollars designing human capital programs, implementing world class talent management systems and building the next generation of leaders if you don’t support these leaders during the key ‘moments' with employees.  It is a classic last mile issue.  

2.       Leverage the Information Value Chain

Second, build a solid foundation of trusted data that is available to make people decisions.   This goes beyond having a core HR Information System that stores data. Data exists in a value chain with the 6 components (see chart) that have interconnected processes, roles and technology. This value chain starts with clear definitions of data and follows a clear process to collect data (e.g. which data sources, how frequently) to store in systems (e.g. cloud) that enable ready access (e.g. multi-channel) to filter through analytical models and tools to provide more insights and predictions on potential people related decisions.   Organizations need to have an end-to-end view of human capital data to improve decision making.   For example, the advent of on-demand engagement pulse surveys and performance feedback tools aren’t going to live up to the hype if the process, roles and technology don’t exist further along the value chain to analyze the information and improve predictive and prescriptive decision making.

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3.       Build Critical Thinkers

Third, build critical thinkers who can think ‘deeply’ as well as ‘backwards’.  Domain experts with the ability to think deeply about a specific goal (e.g. engagement, retention) and can pose the right questions, formulate the interesting hypotheses and interpret a data set based on what they know about the individuals impacted by the decision.  Critical thinkers can also ‘think backwards’, or use deductive approaches, by defining the goal they want to achieve then define the data needed and  analysis to run.  Regardless of the approach taken, the analysis and insights need critical domain thinkers who understand the business problems that human capital programs enable – and can develop, test and recommend improvements in human capital programs based on robust analytics.     

4.       Align Decision Making Governance and Roles

Fourth, clarify the governance and roles for decision making.  Readily available data and predictive insights provide additional opportunities for decision making confusion if the accountabilities are not clearly defined.  For example, HR will have more knowledge of potential issues and risks and needs to know what issues to bring to the management team and which to resolve themselves.   It is important to structure the decisions on a set of mutually agreed (between business and HR) outcomes that serve as the basis for determining what data to collect, store, access and analyse.

5.       Understand How the Tools Enable Your Goals

Finally, apply the right analytical and decision making tools.  The market will only become more flooded with technology that profess to improve decision making through artificial intelligence, natural language queries and predictive analytics.   Remember, that like technology tools in the past, these are enablers to achieve a goal, improve a process or enhance a role.   The simple question to start with when thinking about technology investments is always:  What business goal do you want to achieve with this technology?

For further discussions on Making Human Capital Decisions, please reach out to me at:  jeremy @third-idea.com