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I want to talk to you about something important: the price of pho. A few years ago, near my office, a large bowl was $12, at the Vietnamese noodle joint. It's now $17.
How did my bill for the same meal go up by almost 50%? It's not a mystery. Businesses of all kinds are struggling with the unprecedented inflation. But this is not their only challenge.
Even as the cost of doing business continues to rise, geopolitical tensions are hampering trade and roiling stock markets. Meanwhile, employee engagement is in the dumps, and finding the right talent remains elusive. Then there's AI, which is disrupting work in ways we're only just beginning to understand.
The result is a business survival emergency. It is no exaggeration to say that companies today are facing an existential threat on multiple fronts. It's no wonder almost half of CEOs believe that if their business stays on the current path, it will not be viable in 10 years.
Here's why companies find themselves in such a tough spot, and how they can turn things around by better understanding the only resource they face – their people.
Unraveling the “Performance Erosion Crisis”
Despite all our technology, people are the basic driver of everything business success — remain a black box in most companies. Today, we can get real-time insights into customers and prospects through modern sales and CRM tools. But when it comes to the people who work alongside us, we are often blind.
We've had people analytics for generations, sure, but they've been limited to spreadsheets and limited to HR questions. And even when information about people is available, it is usually siled and inaccessible to the managers who need it most. At the same time, performance is not systematically tracked.
The result is a crisis of performance erosion. Productivityin no uncertain terms, it has fallen. In fact, it is now in one Low in 75 years and it is the number one challenge, according to the leaders.
Meanwhile, half of the employees are disconnected, making them more likely to be unproductive or simply walk out the door, and three out of four businesses have difficulty hiring skilled talent. As a result, 1.9 million manufacturing jobs may remain unmet in the US until 2033.
And don't forget the elephant in the room: HE. Employers think that almost half the skills of the workers will be phased out in the next five years. For companies, uncertainty about who to hire leads to inefficiency and frustration. If people are expensive, it makes things worse.
Just ask the blue-chip stalwart Intelwhich is laying off 15,000 people – 15% of its workforce. With revenue falling, the tech giant admits it has failed to capitalize on AI.
In short, growth expectations are as ambitious as ever. But as productivity has lagged behind operating costs, businesses everywhere have headed in just the opposite direction.
How companies can come out on top
To survive in these uncertain times, businesses must take advantage of their most valuable resource: now, more than ever, they need real-time insights that connect the dots between their people and business results .
What I'm talking about is categorically different from the people analytics of yesteryear – dense spreadsheets reserved for HR analysts. What is needed is on-demand insights accessible across the company, in real time. For people data to be useful, it must be intuitive enough for managers to use to make everyday decisions, big and small.
The good news is that while AI is a catalyst for disruption, it is also giving businesses a workforce advantage when it comes to dealing with the performance erosion crisis.
Think about the questions every company has about how people affect business results. Who are our top performers? Who is most at risk of quitting smoking? Where is productivity falling?
New platforms allow managers to ask those questions in plain language—and immediately provide a clear, actionable answer. The best of these draw on a large database of millions of anonymized employee records across industries to deliver tailored results and accurate benchmarks.
Pay is another area where real-time people data can be a game-changer. Although most companies have a detailed compensation policy, managers making pay decisions often shoot from the hip, letting biases cloud their judgment. Intelligent AI-powered compensation tools help managers make more informed choices, taking into account not only industry standards, but individual employee performance, while flagging pay gaps linked to racial, gender and other biases.
In fact, the new platforms can serve as a one-stop shop for many of the recurring questions that employees typically field in HR, whether it's about pay, vacation days, or benefits. Turning all that information into a self-service function frees HR teams from manual work, freeing them to focus on what really matters: ensuring the business has the right people to drive it forward.
Of course, technology alone is not a panacea. Companies that want to take advantage of real-time people data must also be willing to make a cultural shift. This starts with a willingness to share insights on people and performance once accumulated by HR. People represent most companies' largest budget item and the single most important driver of business success. A commitment to understanding how they work best and sharing that information in consistent, understandable and secure ways is a prerequisite to getting the most out of AI-powered tools.
Addressing the workforce challenge at the root of the performance erosion crisis is not rocket science. To get the most out of people in an unpredictable world, you need to understand them and how they affect business outcomes. In my experience, the best way to do this is by tapping into the real-time insights that AI can provide. Like my bowl of pho, running a business isn't going to get any cheaper, so it's time to gain an edge by working smarter.