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I would like to talk to you about something necessary: the price of pho. A few years ago, at the Vietnamese noodle place around the corner from my office, a large bowl cost $12. Now it’s $17.
How did my bill for the very same meal go up by almost 50%? It’s no secret. Businesses of all stripes are grappling with unprecedented inflation. But that’s not their only challenge.
Even as the cost of doing business rises, geopolitical tensions are squeezing trade and roiling stock markets. Meanwhile, worker engagement is at all-time low and finding the right talent stays elusive. And then there’s AI, which is disrupting work in ways we’re only just starting to understand.
The result is a business survival crisis. It is no exaggeration to say that firms are now facing an existential threat on many fronts. No wonder almost half of the CEOs they consider that if their business continues to grow because it has done so far, in 10 years it can not be profitable.
Here’s why firms find themselves in such a difficult situation, and how they’ll improve their situation by higher understanding the one resource they have at their fingertips—their employees.
Unpacking the “Productivity Erosion Crisis”
Despite all our technology, people—the core of every company’s success—remain a black box in most firms. Today, we will gain real-time insight into customers and prospects using modern sales and CRM tools. But when it comes to the people working alongside us, we’re often operating in the dark.
Sure, we’ve had people analytics for generations, but it’s been confined to spreadsheets and accessible only to HR experts. And even when people intelligence is available, it’s typically siloed and inaccessible to the managers who need it most. At the same time, performance isn’t systematically monitored.
The result is a crisis of productivity erosion. Productivity, without a doubt, has fallen. In fact, it is now at 75-year minimum and according to them it is the biggest challenge management staff.
Meanwhile, half of the employees they are withdrawn, which increases the likelihood that they shall be unproductive or simply walk out the door, three out of 4 firms are having trouble hiring qualified talent. As a result, 1.9 million manufacturing jobs may remain vacant in the US until 2033.
And remember the elephant in the room: AI. Employers consider that almost half of the employees’ skills shall be disrupted in the next five years. For firms, uncertainty about who to hire leads to inefficiency and turnover. If people are expensive, it makes things worse.
Just ask one of the biggest players on the market Intelwhich is shedding 15,000 people — 15% of its workforce. With revenues 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 stagnated relative to operating costs, firms in all places are moving in the exact wrong way.
How businesses can succeed
To survive in these uncertain times, firms must leverage their most precious asset: now greater than ever, they need real-time analytics that connect employees to business performance.
What I’m talking about is categorically different from the people analytics of years gone by—dense tables reserved for HR analysts. What’s needed is on-demand insights, accessible across the enterprise, in real time. For people data to be useful, it needs to be intuitive enough that managers can use it to make on a regular basis decisions, big and small.
The excellent news is that while AI is a catalyst for disruption, it is also Giving businesses a head start in the workforce when it comes to solving the productivity crisis.
Think about the questions every company has about how people impact business outcomes. Who are our greatest employees? Who is most probably to leave? Where is productivity falling?
New platforms allow managers to ask these questions in plain language—and immediately provide a clear, actionable answer. The best ones leverage a massive database of tens of millions of anonymized worker records across industries to deliver tailored results and accurate benchmarks.
Pay is one other area where real-time data about people may be a game-changer. Although most firms have detailed compensation policies, managers making compensation decisions often operate haphazardly, allowing bias to cloud their judgment. Smart AI-powered compensation tools help managers make more informed decisions by taking into account not only industry standards but also individual worker performance, while also flagging pay gaps related to racial, gender, and other biases.
Indeed, recent platforms can function a one-stop shop for many of the recurring questions that employees typically ask HR, whether it’s about pay, vacation days, or advantages. Turning all of this information into a self-service function frees HR teams from manual work, allowing them to focus on what really matters: ensuring the company has the right people to drive it forward.
Of course, technology alone is not a panacea. Companies that want to leverage real-time people data must even be willing to change their culture. This starts with a willingness to share the insights about people and performance that HR used to gather. People are the largest budget item in most firms and the most significant factor in business success. A commitment to understanding how people work best and sharing that information in a consistent, comprehensible, and secure way is a prerequisite to getting the most out of AI-powered tools.
Addressing the workforce challenges that are driving the productivity erosion crisis is no easy feat. To fully leverage your people in an unpredictable world, you wish to understand them and how they impact business outcomes. In my experience, the best way to do this is by leveraging the real-time insights that AI can provide. Like my bowl of pho, running a business isn’t getting any cheaper, so it’s time to get ahead by working smarter.