We are in a ‘Performance Erosion’ problem. Here’s How To Free Your Business.
The views expressed by the business participants are their own.
I want to talk to you about something important: the price. A few years ago at the Vietnamese noodle joint around the corner from my office, a large bowl cost $12. Now it’s $17.
How did my bill for the exact same food jump almost 50%? It’s not a mystery. Businesses of all kinds are battling unprecedented inflation. But that is not their only challenge.
Even as the cost of doing business continues to rise, political tensions are disrupting trade and stock markets. Meanwhile, employee engagement is in the dumps, and finding the right talent remains difficult. Then there’s AI, which is disrupting work in ways we’re just beginning to grasp.
The result is a business survival emergency. It is no exaggeration to say that companies today are facing threats in many fields. It’s no wonder that almost half of CEOs believe that if their business stays on its current path, it won’t work in 10 years.
Here’s why companies find themselves in such a difficult position and how they can turn things around by better understanding the one resource they have in front of them – their people.
Related: AI Will Dramatically Transform the Workplace – Here’s How HR Teams Can Prepare For It
Unraveling the “performance erosion problem”
Despite all our technology, people – the fundamental driver of any business’ success – remain a black box for most companies. Today, we can get real-time information from customers and prospects through modern sales and CRM tools. But when it comes to the people who work with us, we often don’t see it.
We’ve had demographics for generations, of course, but they were confined to spreadsheets and limited to HR wonks. And even when information about people is available, it is often siled and inaccessible to the managers who need it most. At the same time, performance is not systematically tracked.
The result is a problem of operational erosion. Productivity, in no uncertain terms, is down. In fact, it is now at a 75-year low and is the first challenge, according to management.
Meanwhile, half of the workforce has been laid off, leaving them unable to do their jobs or out the door, and three out of four businesses are struggling to hire skilled people. As a result, 1.9 million manufacturing jobs may remain unfilled in the US by 2033.
And don’t forget the elephant in the room: AI. Employers think that almost half of the workforce’s skills will be disrupted in the next five years. For companies, uncertainty about who to hire leads to inefficiency and volatility. When people call, that makes things worse.
Just ask blue-chip stalwart Intel, which is laying off 15,000 people – 15% of its workforce. With declining revenue, the tech giant admits it has failed to capitalize on AI.
In short, growth prospects are as rosy as ever. But as productivity stagnates relative to operating costs, businesses everywhere are looking in the opposite direction.
How companies can come out on top
To thrive in these uncertain times, businesses must leverage their most valuable resource: now, more than ever, they need real-time information that connects the dots between their people and business results.
What I’m talking about is very different from the classic demographics – the dense tables reserved for HR analysts. What is needed is on-demand information accessible across the company, in real time. For people data to be useful, it must be accurate enough for managers to use to drive everyday decisions, big and small.
The good news is that while AI is a disruptor, it is also giving businesses a workforce boost when it comes to tackling operational attrition.
Think about the questions every company has about how people affect business results. Who are our top players? Who is most at risk of quitting? Where is the production sink?
Related: AI Is Changing the Way We Look at Career Skills – Here’s What You Need to Do to Prepare
New platforms allow managers to ask those questions in plain language — and deliver a clear, actionable answer quickly. The best of these draw on a large database of millions of anonymous employee records across industries to deliver personalized results and accurate benchmarks.
Payments is another area where real-time demographic data can be a game changer. Although most companies have a detailed compensation policy, executives who make pay decisions often shoot from the hip, letting bias cloud their judgment. Intelligent compensation tools powered by AI help managers make informed decisions, focusing not only on industry standards but individual employee performance while flagging pay gaps related to race, gender and more.
Indeed, the new platforms can serve as a one-stop shop for many of the recurring questions employees often ask HR, whether it’s about salaries, vacation days or benefits. Turning all that knowledge into a living job frees HR teams from the drudgery, freeing them to focus on what’s really important: making sure the business has the right people to drive it forward.
Of course, technology alone is not a panacea. Companies that want to monetize real-time human data must also be willing to change the culture. This starts with a willingness to share information about people and operations once collected by HR. People represent the bottom line of most companies’ budgets and the single most important driver of business success. Committing to understanding how they work best and sharing that knowledge in consistent, understandable and secure ways is a prerequisite to getting the most out of powerful AI tools.
Addressing the workforce challenge at the core of the attrition problem is not rocket science. To get the most out of people in an unpredictable world, you need to understand them and how they affect business results. In my experience, the best way to do that is by tapping into the real-time insights that AI can deliver. Like my bowl of pho, running a business won’t be cheap, so it’s time to get the edge by working smarter.
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