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“Workers Are on Their Own to Navigate the System”

By Shana Childs

Dr. Solange Charas, a lecturer in Columbia’s M.S. in Human Capital Management (HCM) program, teaches courses such as Transforming Total Rewards and Finance for Effective HCM. She has spent the past three decades working for the likes of EY, Willis Towers Watson, Havas Worldwide, Benfield Group, and Praetorian Financial Services Group. So it comes as no surprise that Charas, a human capital analytics expert, has coauthored a recently published book on the world of HCM.

In Humanizing Human Capital (Matt Holt/BenBella Books), Dr. Charas and coauthor Stela Lupushor provide strategies and case studies for using evidence to inform HCM decisions. Charas and Lupushor recently shared tips on how HR practitioners and leaders alike can move away from a cross-your-fingers-and-hope-for-the-best people-management approach to one that’s rigorous, data-driven, and evidenced-based. We asked her to provide highlights; edited excerpts from the interview follow.

What’s an HR strategy that’s surprisingly outdated? 

Lupushor: Traditionally, the HR approach has been specialization and standardization. One person or team handles talent acquisition. Another group oversees benefits. Others manage succession planning or training and development or performance management, and so on. What characterizes this approach is that no one person or team is responsible for the success of individual employees. In essence, workers are on their own to navigate the system, unless they are lucky enough to have bosses, mentors, or sponsors who provide support and counsel in navigating a successful career within an organization. Most organizations don’t have formal mentor/sponsor programs, and many exit surveys indicate that “lack of career progression” is one of the top reasons for leaving. We think a process-driven vs. experience-driven approach to managing people is bound to fail—and maybe we’re seeing evidence of that failure today with the noise around the Great Resignation, quiet quitting, ghosting, and an increase in unionization activities in unexpected industry sectors such as air transportation, retail, and technology.

How can organizations stay ahead of phenomena like the Great Resignation?

Charas: In the book, we predict that organizations must adopt employee-centric business models to survive and thrive. That makes sense, as according to the World Bank, 80% of the U.S. GDP is generated by the services sector, and services must be delivered by people! Critical to the employee-centric business model is the concept of employees’ “experience,” which is contingent on both the programs offered to support employees and the quality of the human capital practitioners (and manager/leaders) delivering those programs and shaping employee experiences.       

Instead of HR being siloed by subprocesses such as talent acquisition, rewards, benefits, talent management, mobility, and advancement, it needs to become a horizontally integrated function spanning the employee’s end-to-end experience. Progressive HR organizations are creating dedicated teams focused on designing and managing workforce experiences in a way that benefits the individual, the organization, and, ultimately, society. HR organizations that follow such models will be in a prime position to quantify the impact of human capital management on overall business outcomes like market share, brand strength (NPS), and financial performance (profitability). We already see this approach in health care, where healthcare teams are delivering better patient outcomes. This can be replicated in all industries that rely on teams to drive results.

What’s a quick win that an HR professional can implement now?

Charas: The quickest win an HR professional can achieve today is to quantify their overall human capital return on investment (HCROI) and communicate this to management. It is a simple algorithm that generates a performance metric, like other financial metrics (return on sales, return on assets, return on equity, etc.), that quantifies if human capital investments are contributing to the sustainable overall financial performance of the organization. It measures if every dollar invested in human capital programs and people is a losing proposition, “breaking even,” or generating a financial return. It is critical to establish a baseline measure and then work to get this number up as a way to prove human capital’s contribution to financial outcomes. Our research shows that a 5% improvement in HCROI can have up to a 25% impact on profitability! Small improvements in HCROI generate large impacts on bottom-line performance, especially for labor-intensive businesses, where more than 60% of expenses go to human capital programs. Another quick win is understanding and managing the cost of attrition. With the attrition rate rising for many organizations, understanding what this costs organizations—in real dollars and lost-productivity costs—is critical. Cost implications help enhance strategic decision-making.

Columbia University’s M.S. in Human Capital Management prepares graduates to be world-class HCM strategists able to address changing needs in building and motivating talented, engaged workforces in the private, public, academic, and not-for-profit sectors. The program is available part-time, full-time, on-campus, and online. Applications are open for fall 2023 enrollment.