Thinking like an Economist
Human Capital Trends 2013
Today, many HR leaders are dealing with more complex, challenging questions than the ones their predecessors faced. Instead of focusing on traditional “personnel” issues, these new questions address core business issues: Where should we build a plant? Which M&A target will add the skills we need? Where should we locate a new R&D center? Why is our turnover rate in China so high?
Answering questions like these require new data and new thinking. Today’s HR leader has to think like an economist – someone who studies and directs the allocation of finite resources. In the global economy, talent is one of those scarce resources.
Embracing that mindset is half the challenge. The other half is harnessing the applicable information. Companies are accustomed to following their own internal “leading indicators,” but the economist-minded HR leader has to look outward as well. Macroeconomic indicators like GDP (gross domestic product), employment shifts, or public infrastructure spending are critical in pointing the way to sound business decisions. By calibrating the finite talent investments their organizations are able to make, these leaders aim to make their workforces more responsive to the current and future needs of their organizations.
Ultimately, HR decisions are like many other business decisions: They involve both cause and effect – and supply and demand. As HR leaders focus on solving more complex business issues, they increase their alignment with the other business leaders in their organization.
What’s driving this trend?
Because of globalization, connectivity and other trends, business is more complex, moves faster and is more competitive than before. Senior leaders don’t only have tougher decisions to make – they also have new kinds of decisions to make. And they need new kinds of facts to base them on. The data, skills and methodology of the classical economist can help an HR leader answer that call.
- Globalization. Increased mobility and social media have erased boundaries, creating a global talent pool. Today, HR is recruiting and managing people around the world.
- Competition. Thinking like an economist about human capital questions doesn’t just influence the competition for talent; it influences competition at virtually every level. Talent is a bigger driver of enterprise performance and profitability than ever before.
- The connected workforce. Many businesses operate on a global basis, which expands and accelerates competition at every level. In this digital age, companies and their competitors can view their workforces – and the entire global talent pool – in real time.
- More complex business issues. Large organizations often face major strategic turning points, such as entering new markets, siting new facilities, locating sales offices, or making M&A moves. Now, the talent and workforce implications of these decisions have come to the forefront. For example, the value of talent may represent a significant part of an acquisition price; some M&A transactions actually center on the need to acquire talent. Choosing where to locate a facility may depend upon workforce demographics and visa availability. Across the board, business is asking HR to help solve top-level strategic problems.
Meet our people
Robin Lissak, Principal, Deloitte Consulting LLP
Jonathan Ohm, Managing Director, Deloitte Corporate Finance LLC
Patricia Buckley, Director, Deloitte Services, LP
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