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CHAPTER IV - Maximizing Human Capital

The workscape of the future will prioritize the optimization of return on human capital and the investment made in workers’ continuous learning. But, notes Karan Chopra, Executive Vice President and Co-Founder of Opportunity@Work, “Human capital does not show up on the balance sheet.” Organizations cannot optimize return on human capital if the only way they keep track of it is with a cost item on a profit and loss sheet (P&L). The current limited view, when coupled with a scalable efficiency mindset, leads to fear in the workplace, because it is obvious to workers from the CEO on down that reducing payroll will boost profits. Increasingly, technology gives companies the means to do just that. To find the true value of human capital, perhaps organizations first need to find out what those humans value.

Employee Autonomy and Empowerment
Mukti Khaire, an organizational sociologist from Cornell Tech, notes a peculiar example of the Hawthorne Effect—the tendency of humans that are the subject of an experiment to change their behavior in response to being observed. In one management study, workers on a factory floor complained that the lights were too dim. They were brightened accordingly, and productivity went up. Sometime later, workers complained that the bright lights created glare, so the factory managers lowered the lights—and productivity went up again. Being able to see, it seems, is not as important as knowing you are being heard.

Maureen Conway notes that companies with satisfied employees often cross-train them “so that people on the front lines interacting with customers have judgment. Being able to solve the problem of the person in front of you is a much happier job than saying, ‘Oh, I have to go find my manager and see if I’m allowed to do this.’” Going deeper, it is about how transparent a company can be with its employees. Conway says it is about creating a shared vision between organization and employee—“a shared vision and shared goal of where this company is going and how the company solves problems and using that as a way to motivate people to bring their whole selves to work.”

Empowering employees to make decisions without consulting management has been shown to increase workplace happiness. The reverse is also true; if an employee with higher-level experience is swamped by requests for lower-level decisions, removing his/her authority to participate in those routine tasks (by limiting access to a program or a request form, for example) can free his/her to do their best work.

Employee ownership, as touched on above, lets workers feel more in control of their lives and more invested in the company. Likewise, giving employees stable schedules makes them feel that they are an important, integral part of a company, while “just-in-time” scheduling creates the impression that workers are mere commodities, which again amplifies an employee’s fear.

Employees who are bereft of information about what is going on in an organization find it difficult to grow within it. Dorie Clark, an author and lecturer specializing in professional development, speaks of employees who have reached a certain plateau in their career of promotion, seniority and income, only to realize that they have 10 or 20 years left until retirement. They have networks—their colleagues, their contacts, the people they have worked with—but they do not have a reputation in the marketplace. In the past, companies had defined ladders of promotion. But now, they are desperate to have their employees take agency over their own career path and direction. Some, perhaps rightly, look at this as organizations shirking their responsibilities in employee development. But because truly valuable learning is increasingly centered on exceptions, companies want employees who can build their own ladders—or whatever other model maximizes their potential for the business.

“I think there’s two factors that particularly interest me here,” says Clark. “One is this idea about specifically what companies can do to cultivate an entrepreneurial mindset in their employees, to both give them permission and encourage them with the tools and knowledge to be able to take that agency. And the second is the big gap that I see between the highly self-motivated employees and the ones that are not.” This second class may be perfectly good employees, and they have a multitude of tools to teach them new skills, but they simply do not have the drive. Companies will have to create environments where these types of employees can be successful.

There will always be workers who work primarily to make ends meet. Currently, they do their jobs the way they have been trained to, and do not strive for more because reaching creates risk. Companies will have to communicate better with them to help them develop and give them space to recognize problems and propose solutions.

Most of this fear of commodification is often focused in the lower levels of organizations. There, workers can see technological changes coming and are not confident in the human value that they add. According to MetLife Executive Vice President and Chief Human Resources Officer Susan Podlogar, the company is focusing on helping build employee confidence to face a more technologically driven future. With a focus on education—both awareness-based and skill building—the company has set up the Workforce for the Future Development Fund. “We’re teaching every single employee, no matter what level they are, about the fundamental future of work, and the new digital skills that workers may need. There’s a robust human skills and technology curriculum so they have confidence that no matter where they are—and no matter what company they end up working for, with MetLife or another—they can contribute.”

As algorithms become more powerful, a significant portion of the workforce will be moving into augmented work. In some cases, this augmentation can be quite literal; we can upskill people by putting some new skills into a device they already know how to use. For a decade now, companies have been giving tablet computers to home healthcare workers. This helped automate their work, which makes those who quest for efficiency happy, but it also sends a message: “We still need you to go visit; we just want to take away the drudgery.”

As a group, corporations can do more to ensure the portability of skills. A certification in digital skills from one company may mean nothing to another. And to make things worse, many companies operate on proprietary systems, making skills portability all but impossible— and that is before any form of non-compete agreement is added.

“If we’re going to get to a skill based continuous arc throughout a person’s life, there’s got to be some agreement of what the skills are,” says Governor Hickenlooper. How can we measure competency in a way that can be recognized industry-wide? The answer is to share intellectual property around training and competencies, to enable more— not less—employee mobility.

Retraining, Reskilling and Rehiring
“Today I would say many companies think it’s easier to hire new people with new technology skills than retrain,” says Lara Warner, Chief Compliance and Regulatory Affairs Officer of Credit Suisse Group. There needs to be an economic model that makes retraining more valuable than shedding the old and bringing in the new.

With the half-life of new skills so brief, employees entering the market right now may have four or five major careers. This can mean either five careers with five companies, or five careers within the same company, but there is no reason to be that binary. If a company can create the right on- and off-ramps, says Warner, employees “may be with you in Chapter 1, they may not be with you in Chapter 2 and 3, and then you might want them to come back in Chapter 4.”

Of course, all this may not be at the employer’s discretion. For a variety of reasons, professional and personal, employees may wish to take some time off—and they should not be penalized for it when they return. William Huffaker, Vice President of Inclusion & Diversity, and Talent of SC Johnson says, “I think to enable great talent mobility, we need something radical where we don’t have employees anymore; we stop pretending that we own people.” He points out that our reward schemes are portable with benefits and pay, as are retirement savings through programs like the 401(k). He suggests that it is time for hiring managers to stop stigmatizing people for moving around between companies, especially when those types of lateral moves bring more knowledge to the hiring company, and often offer salary bumps to the employee.

In the transitions between those jobs, employees should be able to develop more skills, though most human resources professionals are a bit cynical about the concept, especially for the lower half of the work force. “Reskilling is basically taking workers who are doing routine tasks and giving them a new set of skills to do another set of routine tasks,” says John Hagel. “That’s not, in my view, redefining work.” Besides, very few employees have the kind of support they need to take time off to learn even valuable new skills. And while corporations seem to find the money to educate and inspire their executives, they often leave retraining of lower-level employees to inadequate government programs—and that, unfortunately, is usually after the employee is let go.

It is often suggested that society needs more safety nets, but Jeff Schwartz of Deloitte Consulting suggests the term “transition nets” instead. “If we can’t support transitions, both in the corporate world and as individuals, we’re basically saying we understand what the world looks like, but we have neither the career or occupation or educational programs to go forward.” In public policy terms, that might mean guarantees of continuous and stable health care between jobs and government- funded educational benefits. Safety nets help people who are falling; we need a system that will keep them from falling in the first place.

Rethinking Recruiting
Organizations are hiring now for a new future. That will mean less and less hiring for skills and more and more hiring for the ability to learn. William Huffaker suggests that employees can be agnostic to the companies they work for if they are true to their personal identities and value sets. When companies recruit, it’s largely a game of salesmanship for both parties, with the goal being trying to mold an employee to fit an empty slot. What we need instead is an exchange that starts with “Here’s who I am,” and continues to “Do we have a good match, and can we go forward?” Added onto the duties of human resource managers should be honoring the identity of the potential employee.

That means honoring skills outside of a specific, expected set. Right now, job descriptions read like pedigree proxies, with requirements echoing the credentials of the people previously employed. Often these proxies echo cultural biases and are therefore pernicious at excluding people of color. This robs companies twice: first by excluding promising candidates from the search pool, and later by robbing the organization of the valuable insights that come from a diversity of viewpoints, knowledge and problem-solving strategies.

Karan Chopra at Opportunity@Work says, “A four year degree requirement on a job description is exclusion. A keyword filter looking for years of experience for an entry level job is exclusion. And the reason I think this is so important is because this is the demand signal into the entire labor market.” If an applicant has the relative skills but does not meet the machine-filtered minimum requirements, there is no reason to even apply, and that is wasting talent and the potential of individuals. Algorithmic screening process—which are fed data that reflects the status quo and reflect the biases borne of non-inclusive data sets—are filtering out promising candidates before humans ever have a chance to make a hiring decision.

Even before the application process, workers from marginalized communities find themselves excluded through social circumstances. Chopra notes that people of great promise may never have the opportunity to discover where their skills lie, because they do not have access to the knowledge required to gain those skills. “If I want a job today,” says Chopra, “I have five people that I can call who will give me some guidance. That doesn’t exist for a lot of people today.”

Companies in a new work environment should recognize skills outside of the context of a degree. Governor Hickenlooper notes, “Someone told me the other night, we have 90 percent dropout rate in our community colleges. That’s not dropout. They’re going there to get one specific skill.” Steven Spear of MIT concurs. “It’s very possible you didn’t get your college degree not because you’re just dumb as a rock, but more likely than not it’s because some problem arose in your life which you had to solve. And college wasn’t the vehicle or the vector to solve that problem. But we don’t scan on that. We scan on whether you completed the milestone rather than how you solved the problem.”

The exclusionary process begins even before the job search, of course. Individuals need ways to enable discovery, feedback and guidance as they gather skills. How does a worker learn what he/she is good at? How does he/she know what the opportunities are? How can he/she develop the skills she needs, and fill in the gaps where they need extra training? “One of the biggest barriers that I have seen for learning are actually things like trauma, things like imposter syndrome—I do not belong, or that everything I’ve done in my life has led to failure, and so how do I know that this is not another door that’s going to be shut in my face down the road?” says Chopra. He notes that there are many people who do not even know what job roles exist or what skills are needed for them, because workers do not have a mentorship structure that goes beyond their limited experiences. “There are 200 plus classifications in BLS (U.S. Bureau of Labor Statistics) on high level job categories, and you ask some people, ‘What jobs do you think you can do?’ they can name five, and those would be what has been true in their community—nursing or home care, but not, ‘Oh, maybe I can be a DevOps engineer.’”

Peter Fasolo of Johnson & Johnson is frank about where the change will need to emerge. “The quality of candidates is not the issue we are addressing here, it’s how we articulate the skills we need so that we’re searching and selecting in the right way. These conversations need to occur at the very top of the organization, so that human resources and campus recruiters can create the right opportunities.”

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