In the wise words of Benjamin Franklin, "By failing to prepare, you are preparing to fail." This quote often resonates with me when I talk with business leaders. I am surprised by how many organisations are prepared to make significant business decisions based on a gut feeling, because something like that worked once before or even trying something new to see if that works without any evidence base. While it's great to learn from our mistakes in our private lives – that is part of learning, right? - mistakes cost businesses billions of pounds a year.
Here are five of the mistakes I spotted in 2022 that I think are best left behind as we move forward into 2023.
Not treating your workforce as an asset
There is renewed sentiment in the HR world that talks about people as individuals, and the terms 'human capital' and 'workforce as an asset' have become dirty. I believe it is vital to consider your workforce as an asset, as when you recognise it as such, you treat and manage it in a completely different way. While I'm not suggesting you don't treat people as individuals within the workplace, when it comes to talent you need to think about the overall collective workforce as an asset. You need to consider access to people and skills the same way your business would think about access to finance. If you don't do this, you’ll find yourself hiring reactively, which we all know is inefficient and expensive.
This leads me nicely to the fact that organisations are still doing this. The market has been talking about talent and strategic workforce planning for years, and the benefits of doing so are well documented, particularly in a market which is competing for labour. However, business leaders continue to think about hiring at the point of need rather than considering their human capital as an asset that is needed to deliver their business strategy. I’ve witnessed a lack of proactivity around planning how access to that asset, could be and should be, obtained. Reactive hiring results in longer hiring cycles and increased salaries.
Stop plucking diversity targets out of thin air
A worrying number of senior leaders I talk to are unable to quantify the basis of their diversity targets when questioned. They are often aspirational or have been benchmarked against their sector rather than being based on the needs of their business or the availability of diverse talent in their market. There is little benefit derived from chasing a diversity target just to say a certain percentage of your workforce is from this background or has these characteristics and then find that you can't meet it. To establish a successful diversity strategy, you need data on the talent supply and demand. Data that will allow you to map skills globally and enable you to think beyond the target and to find and understand more diverse sources of talent. Accessing external data on the diversity of the skills needed to run a successful business will help you to understand where and how to change the make-up of your organisation.
Stop planning growth or consolidation on cost alone
Companies need to stop making decisions about where to grow or where to consolidate based on cost alone. With hybrid working becoming commonplace, we continue to see companies assessing the viability of their offices. Suppose they only think about cost when making these decisions rather than access to skills. In that case, they run the risk of closing their most expensive office only to discover that they can't get access to the right people in the least expensive office or that salaries are higher. For example, you might build a team in Asia but find that your attrition rate is considerably higher than in Europe, and as much as half of the workforce could be lost annually. The cost associated with replacing those people is higher than any savings that can be achieved. If your company is going to make decisions about consolidation or expansion, then make sure you're joining the dots between the labour market, business risk, and location.
Stop ignoring the fact you don't understand your labour market
Sounds harsh, but true! Companies do research on their markets, their clients, and their competitors all the time, but they very rarely do such robust research on the most significant asset that they have, their workforce - the people they need to deliver their business strategy. If you suspect you don't understand the labour market in which you operate, stop, and do something about it. Often organisations will access data sources such as Stratigens to meet a specific need around a role or setting of DEI targets but to truly understand what is happening in the market in which you operate, the data needs to be a constant flow. This allows you to have an ongoing picture of your labour market because it has never been so unpredictable as it is now.
Of course, we are in a period of economic unrest, and everyone is predicting what will happen to the economy; however, none of the labour market data points are doing what they usually do in an economic downturn. We've still got low unemployment, skills shortages, and high attrition. Essentially, companies are competing for the same talent, and where business leaders were making decisions based on previous experience, this is not a robust strategy for making intelligent business decisions in 2023. Organisations must put human capital data at the heart of their decision-making going forward.
In my parallel world of equestrian eventing, if you make a mistake, you get straight back on the horse. But we all know that horses are unpredictable beasts, so mistakes happen. In business, it doesn't have to be so unpredictable.
In the words of the academic, historian and politician James Bryce, 'three-fourths of the mistakes a man makes are made because he does not really know the things he thinks he knows."
To mitigate any mistakes in 2023, why not talk to us about how you can use Stratigens to help you make smarter decisions around talent acquisition, workforce design and real estate? Book a demo