As the world continues to shift and settle into a new state of normalcy, one thing remains increasingly clear: an organization’s greatest cost — its people — continues to have the largest impact on the bottom line.

While this may not be new information, it is important to keep this challenge in mind — especially since companies have struggled to measure the return on investment (ROI) of these assets consistently.

When it comes to the impact of different working styles, the development of talent, or the effect of space on employee productivity, many companies have been operating in the dark. With the increase in remote work and the shortage of skilled labor, organizations must learn how to assess work more accurately and care for the people who do it.

This article will highlight how the latest learnings in people analytics could be used toward creating a human capital balance sheet (Exhibit 1) or similar dashboard that succinctly captures the inputs and outputs of the workforce. This holistic view helps leaders manage the costs associated with a company’s people, places, and processes more effectively.

The Questions

As we begin 2022, businesses are still looking for answers to such questions as:

• How do we know that we won’t lose ourselves (culture)?
• How do we know that we won’t lose each other (collaboration)?
• How do we know that people aren’t slacking off (productivity)?

The answers to these questions must first be explored by considering people data foundationally, strategically, and tactically.

Foundationally

Crowd Sourcing

Historically, work could be measured using tools such as Lean and Six Sigma to eliminate waste. However, today’s workers perform tasks in ways that leave organizations looking for how to measure and improve their processes. Crowd sourcing information is one of the ways to gather these insights from and for the modern workforce.

Leaders need to gather information from those who they lead first, and then bring it to other leaders in the company to make judgments on the best path forward. By getting more perspectives, leaders can better identify outliers in the data and focus on what matters most for the entire organization. A holistic view also tends to address the weaknesses of individual perceptions over time and the influence of more vocal stakeholders.

However, this doesn’t mean sending out more “happiness” surveys. Too often, organizations use current engagement and workplace survey methodologies to no avail; this isn’t the way to measure the knowledge worker of the future. Leaders must better understand needs vs. traditional “wants” and should account for how employees are getting the work done as well as what provides the most value for meeting goals and expectations.

Lastly, crowd sourcing helps address change management proactively. Many organizations make large changes to their businesses and then communicate the decisions to employees hoping that adoption is fast and effective, but this is often not the case. CEOs frequently cite fears that the workforce won’t be able to adapt to change quickly enough, and the pain associated with this reality has been seen many times before.

It is important to understand that the workforce is more than ready to adapt to changing landscapes. Resistance to change includes poor communication (discussed later) and, even worse, a lack of inclusion.

Involving employees in the decisions that affect them is a large and often missed piece in the current change management practice puzzle. Employees will stick with a poor solution that they helped develop longer than they will tolerate a good one in which they were not involved.

When & How Not to Crowd Source?

Consultants often conduct focus groups with a select, purposefully chosen group of employees where information will be gathered and used to create solutions for the entire workforce. In this case, crowd sourcing isn’t the best approach.

These groups are not representative of the larger populations in which they serve. Chances are they are higher-level, better-paid employees who see things quite differently from the majority. There are several factors that lead to unintentional biases in these focus groups, as it is human nature to give answers that represent an individual’s own experiences and perceptions. Using a small, nonrepresentative sample often amplifies biases in the data and thus degrades the quality of decisions.

Additionally, those supplying the data must have enough trust in the integrity and intention of the process to provide the correct data. If employees do not believe they can provide honest input and feedback for leadership teams, then the data will not provide the base for optimal decisions. Any crowd sourcing exercise must provide sufficient psychological safety for the effort to succeed.

Psychological Safety

In 2012, Google began to study their workforce to determine what factors led to the highest-performing teams;¹ out of the hundreds of variables (team size, location, experience, etc.), the most important one was psychological safety.

Psychological safety is “an individual’s perception of the consequences of taking an interpersonal risk, or a belief that a team is safe for risk taking in the face of being seen as ignorant, incompetent, negative, or disruptive.”²

Organizations often measure employees in psychologically unsafe ways to the detriment of the integrity of the information and, ultimately, the decisions made with it. As an example, when employees are asked, “How good is your leader,” the answer is often based on the relation to their leader or, more frequently, to the fear of retribution for providing an honest answer. If the leader is standing nearby, then the employee will likely not give honest feedback, ultimately leaving the organization blind to issues and opportunities. Psychologically unsafe practices will negatively skew your data.

Other examples include the use of observed, structured data within organizations. Recently, an organization conducted a study to determine ideal working environments for a future campus renovation. When making decisions on office types, they put seat sensors in the offices of the higher-level employees to measure utilization. When the vice presidents left their offices to go to a meeting, lunch, or even the bathroom, they would take large stacks of books and put them in their chairs to trick the sensors into thinking they were still there so that the company didn’t take away their private offices.

Such measurement efforts are expensive, costly, and largely biased by what psychologists refer to as experimenter reactivity or the “big brother is watching” syndrome. When psychological safety isn’t properly accounted for, information becomes far less accurate and representative of the truth.

Foundationally, involving people (crowd sourcing) in a (psychologically) safe way will help leaders get better information so that they can make better decisions.