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I want to talk to you about something important: the price of pho. A few years ago, a large bowl at the Vietnamese noodle restaurant around the corner from my office cost $12. Now it costs $17.
How could my bill for the exact same meal go up by almost 50%? It's no secret. Businesses of all kinds are battling unprecedented inflation. But that's not their only challenge.
As the cost of doing business continues to rise, geopolitical tensions are hampering trade and rocking stock markets. At the same time, employee engagement is at rock bottom and finding the right talent remains difficult. And then there's artificial intelligence, which is changing work in ways we're only just beginning to understand.
The result is a crisis that threatens the survival of the company. It is no exaggeration to say that companies today face an existential threat on several fronts. No wonder that almost half of CEOs believe that their company will no longer be viable in 10 years if things continue as they are.
Here's why companies find themselves in such a difficult position and how they can turn things around by better understanding the one resource they have at their disposal: their people.
Related topics: AI will radically change the workplace – How HR teams can prepare
Exposing the “performance erosion crisis”
Despite all our technology, people – the fundamental engine of business success – remain a black box in most companies. Today, we can gain real-time insights into customers and prospects through modern sales and CRM tools. But when it comes to the people who work with us, we are often flying blind.
Of course, HR analytics have been around for generations, but they're limited to spreadsheets and reserved for HR professionals. And even when information about employees is available, it's usually siloed and inaccessible to the managers who need it most. At the same time, performance isn't systematically tracked.
The result is a performance erosion crisis. Productivity has clearly reached zero. In fact, it is now at a 75-year low and is the biggest challenge, according to executives.
At the same time, half of employees are unmotivated, making them more likely to be unproductive or simply quit, and three-quarters of companies have trouble hiring skilled workers. As a result, 1.9 million manufacturing jobs could go unfilled in the United States by 2033.
And don't forget the big issue: AI. Employers expect nearly half of employees to lose their skills in the next five years. For companies, uncertainty about who to hire leads to inefficiency and turnover. When employees are expensive, that makes matters worse.
Just ask blue-chip company Intel, which is laying off 15,000 employees – 15% of its workforce. Faced with falling revenues, the tech giant admits it has not benefited from AI.
In short, growth expectations are as ambitious as ever, but with productivity stagnating relative to operating costs, companies everywhere are moving in exactly the opposite direction.
How companies can emerge as winners
To survive this uncertain time, companies must make the most of their most valuable resource: more than ever, they rely on real-time information that connects the dots between their employees and business results.
What I'm talking about is fundamentally different from the HR analytics of yesterday – dense spreadsheets reserved for HR analysts. What we need are on-demand insights accessible in real time across the enterprise. For HR data to be useful, it needs to be intuitive enough for managers to use it to make their daily decisions, big and small.
The good news is that AI is not only a catalyst for disruption, but also gives companies a head start on their workforce when it comes to addressing the crisis of attrition.
Think about the questions every company asks about the impact of employees on business results. Who are our top performers? Who is most at risk of quitting? Where is productivity dropping?
Related: AI is changing the way we view job skills—here's how to prepare.
New platforms allow managers to ask these questions in plain language—and get a clear, actionable answer immediately. The best of these platforms draw on a massive database of millions of anonymized employee records from every industry to deliver tailored results and accurate benchmarks.
Salaries are another area where real-time employee data can have a critical impact. Although most companies have detailed compensation policies, the managers who decide salaries often make decisions on the fly and are clouded by bias. Intelligent compensation tools based on AI help managers make more informed decisions. They take into account not only industry standards but also individual employee performance and point out pay gaps that are due to racial, gender and other biases.
In fact, new platforms can serve as a one-stop shop for many of the repetitive questions employees typically ask HR, whether it's about salaries, vacation days, or benefits. Turning all of this information into a self-service feature frees HR departments from manual work and frees them up to focus on what matters most: making sure the business has the right people to move it forward.
Of course, technology alone is not a panacea. Companies that want to leverage real-time workforce data must also be willing to make a culture change. This starts with a willingness to share insights about employees and performance that were once hoarded by HR. Employees represent the largest budget item for most companies and the single most important factor in business success. A willingness to understand how they work best and share that information in a consistent, understandable and secure way is a prerequisite for getting the most out of AI-powered tools.
Tackling the people issues underlying the performance slump isn't rocket science. To get the best out of people in an unpredictable world, you need to understand them and how they impact business results. In my experience, the best way to do this is to leverage the real-time insights AI can provide. Like my bowl of pho, running a business isn't going to get any cheaper, so it's time to start gaining the edge by working smarter.
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