Managing Metrics
Boards and management view workers slightly differently than they might have years ago. One key consideration now is “how can we get a return on invested talent as opposed to how we can get a return on invested capital,” says Steve Klemash, Americas leader, EY Center for Board Matters.
Qualified HR experts who know their industry can help boards identify effective ways to address assessing their workforces. There is no silver bullet regarding how to measure employee investment and the return on that investment. Measuring efficiency at a technology company is much different than measuring efficiency at a food service company, so metrics must be customized by company and industry. “Your [board] should be trying to determine what metrics matter to your industry and your specific company,” says Taylor. “There is not going to be some broad metric that applies across the board.”
Sage-Gavin adds that human capital measurement can help unlock additional value for companies that ask the right questions and measure the right metrics. “What is my critical talent pool and what’s my strength of engagement and connection with them? How can I make sure that they have the tools, resources and training that they need to help unlock their value?” she asks. “It’s important that you’re getting everything out of your critical workforce that can be unleashed.”
An Evolving Talent Pool
Worker shortages in high-tech jobs, the need to accommodate a multigenerational workforce and employment-related trends like the gig economy and working remotely further complicate the conversation. Companies increasingly find themselves with baby boomers, Gen X, millennials and now Gen Z workers—each with different skill sets and expectations of employers—all coexisting in the same workspace. This workforce may encompass virtual and contingent (or contract) employees and may be in the process of adapting to an influx of automation or robotic technologies. Companies operating in industries grappling with digital transformation must also accommodate a dual workforce: experienced workers capable of delivering on current customer needs and digitally savvy next-generation employees who will help it transform for the future. “Academic institutions are producing graduates as fast as they can, but some of these technologies are so leading edge that you’ve got to invest in your workforce,” says Sage-Gavin, who sits on the Silicon Valley Advisory Board. “You can’t expect external worker pools to provide the tech workers you’ll need.”
Boards should consider the costs, risks and rewards of reconfiguring their workforces through training on new systems and technologies, as well as “reskilling” internally and in collaboration with technical schools, colleges and universities. “Instead of going out into the market to find 25 individuals with these skills, look at 25 individuals in an area of the business model where you anticipate divesting resources,” says Klemash. “Take some of your top talent there and re-skill them in places you need and in areas you are investing in from a data perspective to drive growth.”
As competition for talent continues to intensify, it’s critical that boards give human capital strategy challenges like these the same level of scrutiny that they devote to financial capital, says Bakewell, who notes that a company’s ability to deliver on its corporate strategy hinges on its ability to attract, accommodate and engage the workforce capable of executing on it. “You can have the best strategy in the world, but if you don’t have the people you need, it’s not going to be implemented.”
Taking a more vigilant approach to monitoring and managing workforce strategy begins with an honest assessment of the board’s human capital strategy capabilities and review practices. These questions will get you started.
• Does the board’s skill set include talent management? Who on the board has the necessary expertise to drive workforce strategy oversight?
• How is the board kept informed of workforce strategy concerns? How often are talent issues discussed?
• What are the company’s talent needs now? How will they change in the future?
• How does management plan to meet those needs?
• How does the compensation program support the company’s workforce strategy?
• What efforts are being made to position the company as an employer of choice?
• What metrics are employed to evaluate effective workforce management (employee engagement, training and development, turnover, diversity)?
• How does the company benchmark itself against its peers on talent management?
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