We’re diving in with Transform evangelist Stela Lupushor on her new book which she co-authored with Dr. Solange Charas, “Humanizing Human Capital: Invest in Your People for Optimal Business Returns.” Together we explore their book, the inspiration for it, their shared interests, and the long-term impact they’re hoping to make.
First, a little background
How co-authors Stela Lupushor and Dr. Solange Charas are transforming the future of human capital
Humanizing Human Capital: Invest in Your People for Optimal Business Returns enables HR practitioners and business leaders to generate positive outcomes by utilizing step-by-step methods to apply analytical approaches to human capital. The book’s co-authors, Stela Lupushor and Dr. Solange Charas explore how human capital analytics is shifting from subjective to data-driven decision-making to help organizations adopt a best-evidence approach to decision-making.
Lupushor and Charas decided to write the book after finding themselves in “violent agreement” on shared philosophies, values, and perspectives. Lupushor lends a future-thinking and humanistic perspective on workforce strategy. Charas helps contextualize human capital trends to deliver a blueprint for identifying and measuring human capital outcomes correlated to financial indicators representative of an organization’s business model. Their philosophy about human capital management led to a productive first meeting where they started brainstorming how they could change how businesses organize and deploy talent. After a highly productive 3-hour whiteboard session, Lupushor and Charas brought together all the elements they needed to get their innovative approaches into a book – the agent, the collaborator, the publisher, and now, the reader.
What was your inspiration for Humanizing Human Capital: Invest in Your People for Optimal Business Returns?
Lupushor:
Having spent most of my career in HR, I have seen the incredibly positive impact HR can and does have on the worker experience. I have also seen how technology and analytics can potentially be misused in a way that leads to negative consequences, such as:
- the feeling of inadequacy – when technology is very cumbersome and has a steep learning curve
- job loss – when the numbers are used to minimize the labor cost or refresh the workforce with more youthful “digital natives”
- the inability to find employment – when algorithms sift out any resumes that have unusual pivots, career breaks, or lack an advanced degree
- shrinking budget for employees development/bonuses/salary – when leaders think about the workforce and HR as a cost to be reduced, not one of the most important drivers for value creation for the organization that needs to be nurtured and invested in
It became clear that I have an opportunity and a responsibility to help reframe how leaders think about workforce-related decisions and demonstrate that business results and adequate investment in the workforce are not mutually exclusive.
What are the key points you’re hoping have the most impact?
Lupushor:
The book’s key idea is to look at the workplace experience through the lens of the worker and capture data along that experience as the relationship between the worker and the organization evolves.
Such data can then be analyzed for patterns and signals to identify opportunities to improve the workers’ experience, increase the efficiency and effectiveness of HR programs, and maximize business outcomes.
We support these points by comparing the experience “before” and “after,” with examples of measurements that can be used for each stage of the experience. Lastly, we establish 20 guiding principles to structure the experience. Examples of such principles: Treat Everyone as a Prospect, Hire for a Career, Not a Job, Redefine the Social Contract: Amplifying Each Other’s Brands, Shift Focus from Performance to Impact, Be Inclusive by Design, etc.
It is time to bring a worker-centric view to both the measurements and to the interventions.
If a leader were to commit to those 20 guiding principles, what would their organization look like a year after implementation?
Lupushor:
Traditionally, the HR approach has been specialization and standardization. One person or team handles talent acquisition, another group oversees benefits, and others manage succession planning, training and development, performance management, and so on. What characterizes this approach is that no one person or team is responsible for the success of individual employees. In essence, workers are on their own to navigate the system unless they are lucky enough to have bosses, mentors, or sponsors who provide support and counsel in navigating a successful career within an organization. Process-driven approach to managing people is bound to fail—and maybe we’re seeing evidence of that failure today with the noise around the Great Resignation, quiet quitting, ghosting, and an increase in unionization activities in unexpected industry sectors such as air transportation, retail, and technology. When progressive HR organizations embrace the experience-driven approach to people management, they are creating dedicated teams focused on designing and managing workforce experiences in a way that benefits the individual, the organization, and, ultimately, society. HR organizations that follow such models will be in a prime position to quantify the impact of human capital management on overall business outcomes like market share, brand strength (NPS), and financial performance (profitability). We already see this approach in health care, where healthcare teams deliver better patient outcomes. This can be replicated in all industries that rely on teams to drive results.
There are so many helpful insights in this book. So what’s the first step a reader should like to operationalize their learnings?
Lupushor:
Get familiar with financial terms and disclosure requirements. There is increasing demand for enhanced transparency related to how well human capital programs are working to attract, retain, motivate and engage productive employees and meet required financial return requirements. For this reason, financial literacy will be the new required skill for HR professionals. Given that the cost of human capital is generally the most significant expense for most organizations, it makes sense that more rigorous scrutiny of the effectiveness and efficiency of human capital programs is required. Traditionally, human capital professionals were never held accountable for the “return performance” on budget allocations to HR programs. No one measured if the investments in programs generated achieved HR goals or, more importantly, achieved an “ROI.” For current and future human capital practitioners, budget optimization and financial rationalization is going to be the new “normal.” The SEC couldn’t have said it any clearer when they released their reporting requirement for public companies: human capital spend is no longer simply an expense but an investment in an intangible asset that needs to be reported.
What does ROI look like for human capital management, and what’s the long-term impact?
Lupushor:
It is a simple algorithm that generates a performance metric that quantifies if human capital investments contribute to the organization’s sustainable overall financial performance.
The quickest win an HR professional can achieve today is to quantify their overall human capital return on investment (HCROI) and communicate this to management.
It measures if every dollar invested in human capital programs and people is a losing proposition, breaking even, or generating a financial return. It is critical to establish a baseline measure and then work to improve this number to prove human capital’s contribution to financial outcomes. Our research shows that a 5% improvement in HCROI can have up to a 25% impact on profitability. Minor improvements in HCROI significantly impact bottom-line performance, especially for labor-intensive businesses, where more than 60% of expenses go to human capital programs. Another quick win is understanding and managing the cost of attrition. With the attrition rate rising for many organizations, understanding what this costs organizations—in real dollars and lost-productivity costs—is critical. Cost implications help enhance strategic decision-making.
Transform would like to thank Stela Lupushor and Dr. Solange Charas for their insights, expertise, and contribution to people-first innovation.
We look forward to seeing their book’s lasting impact as it enables HR professionals and leaders to balance human capital analytics with more human-focused elements of people management. In addition, during times of continued disruption, we anticipate the introduction of a new sense-and-response framework will help leaders understand how human capital affects financial and non-financial business outcomes and measure the ROI of HR efforts.
Editor’s note: This Q&A has been edited for clarity and length.
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