Companies are under pressure to measure and quantify what is so-called “Human capital” – The capacities that the workforce is -or might be able- to give
Yet statics show that most of companies struggle to define their Human capital and have no specific metrics to measure their workforce’s strength or the success of their employment strategies
We sought to focus here on a very important aspect of measuring the workforce which is documenting the quality of the jobs that companies create. In other words, We ask to separate and define a dead-end job from a meaningful career
While we believe that effective professional development of employees will result in better financial performance, we are focusing on internal mobility because having clear prosperous jobs will have a societal impact.
There’s a huge income gap, and the Covid-19 pandemic has made it even larger, with frontline workers bearing great risk of infection but missing out on the rewards of the booming stock market. Employers are having difficulty filling entry-level roles because of the labor market being tightened, it’s becoming quite necessary that managers think of these workers as investments in their operational success.
And thus we presented a series of questions that should guide companies into creating formidable metrics to their workforces capacities
- What percent of workers earn the local living wage?
- How many workers have health care?
- How many new jobs are created each year where pay is above the local living wage?
- What percentage of workers that started below the living wage moved to jobs that paid above living wage each year?
- What percentage of the lowest paid workers left the company before their one-year anniversary? How many left before the two-year mark?
- What is the demographic composition in the company’s high-wage occupations? How does it compare to that of the local pool of potential labor?
- What is the difference in mobility rates in each of the company’s wage quintiles for different demographic groups?
These metrics documents are not only showing us how one can grow in a company, but also who’s growing and who’s not. These metrics can help managers create a catalog for creating meaningful jobs
For example, we’ve worked with a food services company to examine how training and job opportunities are created within the company. Although they have more than 15,000 jobs opening, they sill focused on their recruitment and retention. One of the most important strategies they have is that they train middle-wages employees to make their own career paths within the company.
When we looked at the data you can see that the training expenditures were the highest among low-waged workers, yet when those low-wage workers changed jobs within the company, more than one third soon left, and nearly half saw no pay increase. With more research, we found that only 17% of low-wage workers saw a worthwhile pay increase.
This analysis helps explain the disconnect between training and retention at this company. It also suggests that offering training without offering the time to take advantage of that training may be counterproductive. These takeaways can also provide management with a roadmap for how to improve training to mitigate turnover and offer workers a clearer path to promotion.
Concerns regarding the internal mobility are not new to companies with large numbers of the working class. Bank of America has reported an increase in turnover in 2021, approaching 11% after falling to its lowest level of 7% in 2020. Aware of the costs of turnover, the company created an internal tool to map potential careers for all employees. For example, wealth investment can be a potential path to an entry-level sale hire. Simply put, the company wants to provide all employees with the tools they need to identify and obtain their dream jobs within the company.
These examples show the challenges and benefits of thoughtful human capital strategies that create opportunities for both employees and employers. Our metrics are designed to help managers make taking internal decisions easier, these outcome-based measures can also be of interest to investors who focus on ESG issues. Still, our main goal is to develop metrics on worker’s well-being that reflect society’s challenges and workers’ dreams and aspiration.
The next step, Now that we have measures for the well-being of workers, is to do experiments, as we’ve mentioned in our examples above. Different companies may have different interventions at different scales. Regardless of the level of flexibility, managers will quickly discover that improvements to their workers’ wellbeing will fall into two types: those that prove material to the firm and those that don’t.