Transforming Businesses Through Human Capital Analytics With Dr. Solange Charas

The human capital is often 50% or more of an organization’s operating expense. Being the biggest part of an organization’s expense, it is actually the part that is the most leverageable. As such, the smallest improvements in your human capital return will generate a big impact on bottom-line performance. Joining Dr. Diane Hamilton is Dr. Solange Charas, a recognized expert in the area of human capital analytics. Together, they dive into Dr. Charas’ analytics platform and the importance of collecting “big data” in making the right business decisions. They likewise explore innovation, perception, motivation, organizational justice, and the employee-centric business model.

TTL 783 | Human Capital Analytics

 

I’m so glad you joined us because we have Dr. Solange Charas here. Dr. Charas is the CEO and Founder at HCMoneyball. She was formerly in senior-level leadership at Arthur Andersen, Ernst and Young, The Hay Group, and Towers Watson. She has done amazing things and she does a lot with quantifying some of the things that are hard to quantify in the HR setting. I’m excited to talk to her.

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Transforming Businesses Through Human Capital Analytics With Dr. Solange Charas

I am here with Dr. Solange Charas who is the CEO and Founder of HCMoneyball whose primary SaaS product is an analytics platform that instantly transforms human capital data into actionable information. She’s also an associate faculty at Columbia, USC and NYU. She was the CHRO for three publicly traded organizations and held various senior-level positions at Arthur Andersen, Ernst and Young, The Hay Group, and Towers Watson. It’s so nice to have you here.

It’s a pleasure to speak with you. After that introduction, I’m already tired.

You’ve had quite a career. I was looking at this, you’ve written more than 175 articles eight for HBR, Forbes, and Fast Company. You’ve been cited in 40 academic works. You’re a busy lady.

I try.

I saw that you were speaking for Ira Wolfe’s program, and he’s done a lot of work with curiosity and that’s my focus. It’s building curiosity in businesses and getting people out of status quo thinking so I was interested in your analytics platform and what you’ve done. I want to get a backstory on you, for people who aren’t familiar with you, if I don’t know how they could be based on everything you’ve done. Could you give me a little backstory to what led to you getting into all these incredible jobs?

I’m from California. I’ve lived in New York since 1986 with a brief stint in Europe. That old saying holds true, “You can take the girl out of California but you can’t take California out of the girl.” I want to give a shout-out to my home state. It’s interesting that we intersect in a big way in terms of your curiosity code and your work in that area. My fundamental come from is around transformation and it’s getting people to think differently to transform the way they contextualize not only the things that they’re observing but the way that they process that information.

I’m delighted to talk to you about some of the work that we’re doing on the analytic side. Hopefully, you’ll be able to interpret and frame it through your lens in terms of the Curiosity Index and the work that you’re doing there. How did I get here? It was a long and winding road. For those of you old enough to understand the reference, I did not grow up wanting to be in human resources or a human capital expert. That was the furthest thing from my mind. I am the daughter of a long line of entrepreneurs so it’s baked into my DNA to be creative, innovative, and be a risk-taker.

I didn’t speak English until I was about 5 or 6 years old. I was born in California to immigrants so I’m a first-generation American. We did not speak English in our home. We spoke Spanish. The first time I had to learn how to speak English was when I went to the first grade. I had an interesting experience as a first-generation immigrant. My experience was that as an immigrant because I didn’t speak the language in the country that I was living in until I went to school.

Thanks to a loving and dedicated 1st and 2nd-grade teacher, Mrs. Hurtado. She taught me how to speak English. I didn’t realize this until later on in my life, I speak English with a Midwest accent. She was from Maryland and I learned how to speak English from her so I picked up her accent. I didn’t realize that I spoke English with a Maryland accent growing up in California until I was a little older when people kept saying, “Where are you from?” It’s like, “I’m from here.” I speak a few foreign languages and the other interesting thing is, I speak the other languages with a Spanish accent, not with an American accent.

That makes sense. If you listen to it around your house to have that part. You still speak Spanish, right?

Sometimes, the path not anticipated is the one that leads you to a place that brings you joy, happiness, fulfillment, and passion. Click To Tweet

I do.

My mom was first-generation Italian and she can’t speak any Italian. They only spoke Italian in her house and I’m thinking, “How could you have grown up like that and not speaking any Italian?”

That’s interesting.

She said she understands it.

I recommend Duolingo.

I do too. I love that. I’ve been taking it.

My Duolingo language is Italian.

Mine is Spanish. That’s funny.

One of the reasons my language and Duolingo is Italian is because I lived in Italy. I lived in Italy in 1990 or 1991. It was a long time ago. I had a great experience living in Milan in Centro Città. I decided that it’s time that I resurrect that language because that’s the one that I use the least. Thank you, Duolingo for getting my Italian back in shape. A long and winding road, I didn’t grow up wanting to be a human resources person. I grew up wanting to be a business person. I studied International Economics at UC Berkeley and I got my MBA from Cornell in Accounting and Finance with a minor in Taxation. It’s a good qualification for an HR person. I ended up in HR by accident. Sometimes, the path not anticipated is the one that leads you to a place that brings you joy, happiness, fulfillment, and passion. My message to the younger people that are reading, don’t get too caught up in charting a path for yourself because it’s the accidents that make life interesting.

That is an important point. I took one day Kelly girl with Kelly Service. I almost didn’t answer the phone because I didn’t want to do it and I ended up twenty years in that company so you’ll never know.

TTL 783 | Human Capital Analytics
Human Capital Analytics: HR has its own language, culture, and value system that is sometimes not consistent with the rest of the organization.

 

My focus in business management particularly finance and accounting gave me a different lens to look through when I was a practicing Human Resources Consultant and a practicing Chief Human Resources Officer. That set me apart from what was traditionally thought of as a human resources practitioner and that made a difference for me in terms of the impact that I could have, both in consulting to clients and as a Chief Human Resources Officer.

It’s the theme that we have been talking about both inside and outside of the human capital profession, which is having human capital be a business partner to the business. I know that a lot of people are working in this area and are striving or aspiring to be a full business partner. My observation is that human resources has its own language, culture, and value system that is sometimes not consistent with the rest of the organization. Not that I want to denigrate HR at all. Why would I? I’m in that field myself as a professional. It’s that old expression, “Here’s a nice tie.” “When in Rome do as the Romans do.”

If you want to be part of the business process in the organization, you have to speak the language of business. The language of business is financial. It’s expressed by Chief Financial Officers, Chief Executive Officers, Chief Operating officers, Chief Marketing Officers, and even the marketing function has gone financial, in terms of the way they measure and the way that they express their impact on the organization.

What we’re trying to do at HCMoneyball is to help human capital professionals speak a financial language. We help by taking a lot of rich data that resides in the Human Resources function that are already being created or collected and transforming that information into metrics and indicators of human capital performance both at the program level. Do we do training and development? How impactful is that training and development on the employees that are participating and on the supervisors that they report to? How diverse is our employee population? That’s easy.

You count the noses in the organization and what race, gender, or ethnicity those noses are but there’s a lot of data in the organization that we can mind to understand how well we’re doing against human resources, policies, and goals. More importantly, what we’re interested in or what I’m interested in is, how does that human capital performance impact the organization at the enterprise level, financial level, and in the aggregate. I might be spending a lot of money in my training and development and I might be fulfilling my goals. My goal might be that 75% of all employees receive some level of training every year. That’s great.

What is the ROI? Are we getting value? Is that the right training to give people at the right time at the right level? Are we moving the needle in terms of organizational performance or enterprise-level performance? We can measure the ROI of our investment in training and development and understand whether or not our employees are more productive or stickier. Are they staying with us longer? Are we generating more skills, competencies, and knowledge in the organization that we can more effectively deploy? Are we promoting from within and hiring at the lowest levels that we possibly can? We have lots of ways of measuring that but we also want to understand whether or not our investment in training and development is generating higher levels of profitability for the company.

We look at two different categories of human capital metrics that come out of human capital analytics. The higher-order is what we call Macroeconomic Indicators of Human Capital Performance. There are things like HCROI, Human Capital Return on Investment, Human Capital Value Add, HCVA, Human Economic Value Add, HEVA, and HCMV Human Capital and Market Value. We can establish a market value for our human capital.

All of those things relate back to EBITDA Performance and Profitability Performance, or if you’re a company that’s not tracking your financial performance, but you’re tracking market share, you can equate that back to a market share indicator. As long as you can reduce performance to some measurable indicator, you can track it over time, correlated to other financial performance indicators like EBITDA, Return on Sales, Return on Assets, Return on Equity, or look at the impact that human capital has surprisingly enough on Net Debt or Weighted Average Cost of Capital. All of these indicators that the financial people, the CFO, CEO, and investors look at to understand the health and sustainability of the enterprise.

When you think that human capital often is 50% or more of an organization’s operating expense, we’ve got to look at this. If you’re a Chief Financial Officer, you’re looking at every expense category in your organization. When you come to HR, you go, “Sub-cost. Check the box. We can’t do anything about that.” If that’s the biggest part of your expense, it’s the part that’s the most leverageable which means that the smallest improvements in your human capital return will generate a big impact on bottom-line performance.

We’re seeing a lot of this happen now. Years ago, CFOs were asked to start thinking beyond the numbers and being responsible for accounting and finance, and taking a stand on improving enterprise-level efficiencies. How do we make this organization more efficient? Human Capital is a great place to take a look at that. People don’t? Why? Because human beings are messy and unpredictable. Chief Financial Officers, Chief Executive Officers, and Chief Operating Officers don’t understand the language of human capital.

Don't get too caught up in charting a path for yourself because it's the accidents that make life interesting. Click To Tweet

They don’t see it as quantifiable a lot of times either. That’s what I was trying to do with the curiosity information was quantify it. I’ve had Francesca Gino on the show and the work that she published in HBR about the case for curiosity was great because it’s some quantifiable information. How could you do what you do for looking at the impact of training like curiosity and how they’re overcoming some of these factors that are holding them back? I’m trying to visualize how you can quantify that to see if its impact on EBITDA or whatever measures.

The alphabet soup that I spouted earlier, HCROI, HCVA, HEVA, and HCMV are not my constructs. These indicators have been distinguished in academic literature and used for many years and now they’re coming into the mainstream which is interesting. What I didn’t finish telling you about my background is that I got my MBA and I was out-of-school for about twenty years and I went back to get my PhD. I got my PhD from Case Western Reserve University. It’s a great school and a great program. To get into the program, you need to have a significant number of years of experience in senior management.

They don’t want people straight out-of-school, they want people who have had life and work experience. Their point of view is their DBA program is focused on creating scholarly practitioners, bridging the gap between academic research and the practitioners’ world. The lag time between what we learn in the academic world and how it gets applied to the practitioners’ world is too long. By the time it gets adopted by the practitioners’ world, we’ve missed the boat.

Their focus is to generate these great people whose focus is being a practitioner-scholar or a scholarly practitioner, either way, it gets to the same place, which is having one foot in the academic world and one foot in the practitioners’ world. The Weatherhead Program is the oldest Doctor of Business Administration program in the United States. There are lots of alums out there. You should be looking for them and hiring them because we’re all great.

For the Weatherhead School, it’s to be that bridge or marry the rigor of academic research to the practical world so we can move faster in the practical world and gain a competitive advantage. The research that’s done on the materiality of human capital on corporate financial performance has been studied for many years in the academic world. It’s what the International Standards Organization in Switzerland bases their new governance standard which number is 30-414 which is the Human Capital Governance Standard that was released in January of 2019.

They base their ISO standard on what was in the academic world. Their fundamental foundation for this governance standard is their observation that organizations are more transparent perform better than organizations that don’t disclose, don’t share, don’t track, don’t monitor, and don’t measure especially in human capital. This is an old Michael Porter thing, you can’t improve what you can’t measure.

The more you measure and the more you share that information with both internal and external constituents, the better off your organization is going to be. The better off your organization performs, the more the investor community likes it. We all want to invest our money in organizations that are healthy, sustainable, and can support economic value creation. ISO’s fundamental concept starts with measurement, continues with communication and disclosure, and tracking those measurements over time.

Your comment is, “How do we measure stuff?” I started by saying there are a lot of data in the HR function that is systematically collected in our HR systems. Getting the data is not a problem. Getting human resources people to adopt an analytics approach is a little bit of a problem and that’s where we overlap which is you need the information to make better decisions. You need to find a way of quantifying what’s observed in the organization.

A lot of leaders will ask me, “What data do you have to support the value of curiosity in getting engagement?” I know we’re losing $500 billion a year or whatever the Gallup has but to get it to compare the improving curiosity improves engagement or improving curiosity improves innovation. Those are the studies I’d like to see and they’re not out there. Do you do that type of research with your analytics at all? Where do you get that content?

We curate existing work information. We don’t ask organizations to create any data for us. We curate data from HR systems or payroll systems. The important piece is we curate financial information from mostly the pre-closing trial balance sheets where every expense code is laid out and populated in terms of how much money the organization spent. Anything that’s coded by HR could be contractors, gig workers, training, and development expenses, hiring consultants from the outside to consult around HR, or it could be the cost of recruitment if you’re paying headhunters or paying a fee. It could be the annual Christmas party that’s employee-oriented.

TTL 783 | Human Capital Analytics
Human Capital Analytics: If you want to be part of the business process in the organization, you have to speak the language of business, which is financial.

 

Anything that you’re coding to an HR expense is what we’re going to take into the platform and we also ask organizations to provide information like revenue on a monthly basis and total expense. We’re getting their headcount number. We’re getting that out of our payroll system. We are asking for certain other financial indicators like your weighted average cost of capital. With twenty semi data points, this is not a heavy lift. We’re not asking organizations to create information, we’re asking organizations to curate information from existing sources.

You load that data into the platform and you can automatically understand the relationship between human capital performance and corporate financial performance. We look at things like training and development. What are you spending on training and development every month? What is your expense there? How many people, on average, are going and participating in training every month? We can look at the corollary to that which could be 1 or 2 months. Does productivity go up? Does retention go up? Does attrition go down? We’re helping organizations find those relationships and correlations so companies can make better decisions about where they’re going to invest their limited resources.

You can’t find causation. You’re finding correlations, right?

We’re finding that the platform will allow you to find correlations. If you want to do a multivariate analytics project, we’ve got 6 or 7 people on our staff who are PhDs in technology. We download your data, we do an analytics exercise, and we can help you not only understand closer causation because we’re never had 100% no causation. That’s impossible but we can get closer. We can show you the statistical significance and the correlation coefficient. What strongly correlated to EBITDA or market share in your human capital performance?

The platform gives you an idea and directionality. You can engage us to do more sophisticated analytics exercise like predictive analytics. The interesting thing is organizations that hire data scientists, that’s what the data scientists are doing. They’re taking their data, building predictive analytics models, and picking whatever methodology that they’re going to use whether or not it’s going to be a regression or some other approach. That’s what the data scientists are hired to do. They figure out how to get data, how to build a predictive model, and how to inform decision-making. In different parts of the country have different price tags but in the northeast, you want a good data scientist. You’re going to spend about $300,000 in salary to get a good data scientist to work for you. These are not cheap people. That’s why it’s a hot job.

Is there a degree in that? I don’t even know what degree would be to be a data scientist.

You need a PhD in either statistics, mathematics, or information science. I know somebody who didn’t have a PhD and was offered a job at a major organization. The base salary was between $450,000 and $500,000. We’re talking about a high level of sophistication to help organizations better understand the relationship between human capital and corporate financial performance with a price tag that’s a fraction of what you would spend to hire a data scientist to your organization. It’s a shortcut and it provides a lot of information. The information uses standard algorithms so there’s no black box. What we’re trying to do is create a database.

Let’s say you’re a midsize company and you profile your performance. You do your macroeconomic and your microprogram level analytics to understand whether or not your programs are efficient and the impact of human capital on the whole organization. That’s great because you get a lot of insights but the question is, how am I doing against everybody else? The platform allows you to benchmark so you can say, “Compared to this set of organizations that I can filter based on size, location, or performance, I’m doing better than or worse than from a financial perspective. All those financial indicators like ROE or ROS and the like, but also from a human capital perspective. Is my human capital ROI above or below my filter set of competitors?”

That gives you that context for understanding. You might calculate that your HCROI is 4.8. From every dollar you invest in human capital, you’re getting a $4.80 return on it. You may be happy with that until you find out that your competitor is getting a $10 to $12 return on every dollar that they invest in people. Now, you’re not so happy. It’s not about understanding your performance, it’s contextualizing it to understand how that is helping you either have a competitive advantage or lose a competitive advantage in the marketplace.

I’m working with companies like Verizon and Novartis. I was thinking of a conversation I had with Novartis and the research they’d done looking at the engagement of how they compared to the industry average and how increasing curiosity had moved them from three points below the average to two points above. I like to see data that ties into engagement, innovation, and a lot of the things that they’re asking me to talk about. What are the top types of terms like engagement, motivation, or whatever, what words are they using with you that they want to see? Do they want to see innovation, creativity, or certain things change? Are they asking you to look at analytics that you haven’t looked at?

If you have engaged employees, you have low levels of attrition. Click To Tweet

I wish people were asking for that.

I’m asking for it.

You’re way ahead of the game. I started liking that you’ve got to learn how to crawl before you can learn how to walk and run. We’re trying to get people to think differently around the importance of quantifying the human capital experience at the macroeconomic level and microprogram level. What we’re promising people is that they don’t have to collect or create new information. Everything that they’ve already got in their system can give them a landscape view of how they’re performing.

A lot of the things that you’re asking about like innovation, curiosity, and engagement are variables, attributes, or indicators where you have to collect primary data. You have to go to the employee and say, “How do you feel? How are you experiencing this?” For a lot of organizations, that’s a deal-breaker. They don’t want to go to their employees. They don’t want to ask employees whether or not they’re engaged. Some of the reason is they don’t want to disturb the workflow or they don’t want to know the answer.

I’d rather be strange and not deal with the issue and not know about it than have to know about it and deal with it. We asked people to give us existing data which is secondary data. We don’t necessarily need the lived experience of the employee at that moment. We’re not creating a burden on the organization. We also believe that the experience of engagement, innovation, and curiosity can oftentimes be expressed through other things so a direct or latent variable.

If you have engaged employees, you have low levels of attrition. We have to make some assumptions about the relationship between high levels of engagement and how that manifests in behavior. If you’ve got loyal employees, you have a long tenure. If you have engaged employees, you have higher levels of productivity because they’re not screwing around at their desk, they’re working. If you have curious employees or innovative employees, you can see that in terms of product development, commercialization of products, and sales. What we try to do is we try to find the proxy for the direct measurement because we don’t require that organizations get first-hand data. We say, “We can give you an idea of engagement, innovation, even curiosity but we’d have to think what the measurable resulting indicator or manifestation of curiosity is and collect that and we can make some assumptions.”

I’ve had this talk with a lot of people like Francesca Gino and different people on the show and I’ve asked them, “What comes first? Curiosity or motivation, curiosity or creativity, curiosity or innovation.” In any of these things, they all say curiosity. I look at it as baking a cake. If your end product is cake and you have ingredients like flour, oil, eggs, and things, you’re mixing it together, put it in a pan, put it in the oven, you want cake but nobody turns on the oven so you don’t get cake. In the business setting, your cake is productivity and money. Everybody is mixing together motivation, drive, and innovation engagement but you look at the spark as a curiosity so it’s hard to look at what to measure.

Based on your analogy, they forgot to turn on the oven. The oven is culture.

That’s interesting because my next book is on perception. Perception, I saw, is a combination of IQ, EQ, and CQ for curiosity and CQ for culture and they all combine to this perception process that we go through. It’s so hard. It’s chicken or the egg sometimes on some of this.

Let me throw in another ingredient into your cake which is akin to this concept of perception. There’s a stream of research around organizational justice which I like to teach my students about. The way that I teach it is organizational justice. I’ll tell you what comprises organizational justice. Organizational justice is the context that companies have to design themselves in a way so employees perceive organizational justice. That’s the context and the flip side of it is motivation.

TTL 783 | Human Capital Analytics
Human Capital Analytics: The human capital is often 50% or more of an organization’s operating expense.

 

Both need to be motivated so you can look at it through, “Are employees motivated?” They can be as motivated as you want them to be. If the organization isn’t perceived in a way by the employee to treat them fairly, the oven doesn’t get turned on. That employees, even though they’re highly motivated, if they don’t work in an organization where they perceive that they are being treated fairly, will go someplace else.

The four things that I found that inhibit curiosity are fear, assumptions, the voice in your head, technology, and environment, and you’re talking about the environment.

I’m talking about the environment. Organizational justice is studied. It’s been studied for a long time and it continues to be studied. In fact, I have a Google Scholar alert setup for organizational justice. I get noticed of new articles once a week in the academic community. Organizational justice is the worker. I don’t want to say employee because when we say employee, we assume that an employee is either a full-time or a part-time W-2 wage earner and that’s not our world anymore.

An employee should be called a worker. A worker is anyone that provides input into the business model from a labor or work perspective. It could be your digital workforce, boss, gig workers, contracted workers, or the outsource like a PEO organization. Whatever that labor input into the business model is what we should be thinking about in terms of the worker. Bots are not going to have perceived organizational justice because they’re bots, but your gig worker and your seasonal worker will. What organizational justice is, is made up of four components, distributive justice, procedural justice, informational justice, and interactional justice.

Procedural Justice is the employee answering the question, “Is the organization set up to treat me fairly? Are the programs and policies designed in a way that I will be treated fairly?” We see a lot of that now with the social justice movement, LGBTQ, #MeTooMovement, and pay equity. The employee needs to perceive that the organization is designed and set up in a way to treat them fairly. Distributed justice is the employee saying, “Am I getting treated fairly and personally? Is it set up to treat me fairly? It’s the outcome?

Am I being treated fairly? Am I getting paid fairly compared to other people? Do I have the same opportunities for training, development, mobility, and advancement than other people? Is what I’m getting at the end of the day something that I perceive as being fair? Are the systems set up fairly? Are they generating a fair outcome for me?” That’s procedural and distributive. The third one is interpersonal justice which is, “Do I feel that my boss is treating me fairly?”

That’s a huge one if people are leaving bosses and not organizations.

What the research has found is that interpersonal justice, and I hate to use this word, trumps procedural justice. The organization may be set up to treat me fairly but my boss isn’t treating me fairly so I’m out of here. Even with the things in place, I’m still not the recipient of being treated fairly. The last component of justice is what I think of as an indicator of inclusion which is, “Are my peers treating me fairly? Can I bring my true and authentic self to the workplace and not feel that I’m being judged or marginalized?” You get that experience from the people that you work with. When you score on all four aspects of justice, when the organization is truly living organizational justice, you find that organizations’ enterprises are high performing. They outperform their competitors.

This is 40 or some odd years, maybe even more in this space of research that there is a questionable link between the way the employee perceives their work environment, relationships, the organization itself, and what they get out of working there. It doesn’t necessarily have to be cash-based. It doesn’t need extrinsic based rewards. It could be intrinsic rewards, “Do I feel my job has a purpose? Do I feel I’m part of something bigger than my work has meaning?” That also is a level of reward that we can give to employees.

I’m curious, when you’re talking about how they perceive it, can we work on their perception that it’s something in the same position of two people who have completely different perceptions of getting the same stimulus in the same situation?

Human resources set the standard for customer service. Click To Tweet

That’s the responsibility of the organization. I can tie this back to the ISO saying that when organizations are transparent, they perform better. Organizations need to understand if there are misperceptions of their policies, programs, and rewards in the broadest sense. I’m talking about opportunity, training and development, and intrinsic rewards. When I was the CHRO, I made it my business to understand how people felt about the organization. I wasn’t going to hide behind the door of my office and say, “I’m here to do an administrative job, the hell with everybody else.”

I made it my business to understand how people felt about the organization and I used to tell my boss, who’s a brilliant guy. I followed him from one company to another and in the second company, we were in Times Square on the 42nd floor of a high-rise building. I used to say to him, “Our assets ride down this elevator every night. Every night, I go home, and I pray that they’ll all come back in the morning and my job is to make sure that they all come back in the morning, and they focus on their jobs, and they’re happy and productive.”

We are human resources, we set the standard for customer service. We were an insurance company so almost every job is market-facing. I used to tell my staff, “We set the standard for customer service. If we treat our employees well, they know what it feels like and they will turn around and deliver the same high-quality customer service to their clients.” It starts at home. We are the core of high touch customer service.

As you’ve said this, I’ve had so many people on the show talking about the board of directors, who’s represented to fix certain things, and to give advice on certain things. Since you have such a diverse background and strong HR background but are also now a CEO, especially now we’re trying to get more women on boards, should we get HR professionals on board of directors? Why don’t they do that? I’ve had so many people tell me that they think that’s the consulting angle. They could hire consultants for that but that shouldn’t be part of the board. I’d like to hear your position.

No surprise in what my position is going to be.

We had a couple more minutes for the show but I wanted to see, what you think we can do to change that?

I’m sure it’s not an accident that you asked me that because my PhD research focused on the board of directors and I’m part of The Conference Board. I’m a distinguished principal research fellow for The Conference Board and we finished the 1.5-year research project on human capital management as a governance issue as an ESG issue. It’s coming out in either December 2020 or January 2021. I’ll let you know when it comes out.

One of our big recommendations is, for board directors, you either need to train your board of directors on human capital matters on the deep technical issues related to the human capital function, recruit a board member who has deep experience in this area, or hire a consultant to consult to the board. We feel that it should be an indigenous set of experiences and competencies because the world is changing too.

The world is changing as we’ve gone from a production-centric business model, technology-centric business model, to a customer-centric business model. What we’re facing now in the future is an employee-centric business model. When that business model is focused on the employee and what the employee can do, you need to have board governance that is focused specifically on human capital and human capital performance. The best way to do that is to recruit human capital expertise onto the board.

They’ll say, “Who would you get rid of to add that or do you add another position?”

TTL 783 | Human Capital Analytics
Human Capital Analytics: When the organization is truly living organizational justice, you find that organization’s enterprises are high performing.

 

You don’t need to get rid of anybody. You can add. Here’s the scary part and also the opportunity part. Board directors’ average age is coming down because over the last couple of years, we’ve added younger and younger board directors. The average age of Corporate America boards is someplace in the mid-70’s. If that’s the average age, it ranges so you’ve got board members that are in their 80’s or more. I’m going to say men because they’re primarily men, are going to cycle off of your board so use that as an opportunity to replace that retiring board member with a new set of skill sets that’s critical to your company’s operating efficiency and governance.

Here’s the big headline, the SEC is now going to require that company’s filers disclose anything that is material of a human capital nature so you’ll need that expertise at the board level because the boards are responsible for disclosures. It’s like a perfect storm. Everything is happening all at once. I made a couple of funky little turns someplace early in my career and here I am right in the middle of this. I’m combining my governance, PhD, with my human capital practical experience, and my analytics background. My three passion areas are now converging like a Venn diagram. I’m in the middle and you can only imagine how excited I am to wake up every morning to this new world.

Everything you’re working on is so inspiring. I was so excited to have you on the show. This has been so great. A lot of people are wanting to know how they can follow you or find your work. I don’t know if you’re on social media. If you do any of that, but I wanted to see if you wanted to share any website.

The first thing you should do is follow HCMoneyball LinkedIn page. We post a lot of content there that’s relevant. That’s the intersection between governance, human capital analytics, and big data. That’s where you’re going to find new things that are coming out or thought leadership about that. If you want to learn more about the company, you can go to www.HCMoneyball.com.

We’ve got a magnificent board of advisors. It’ll knock your socks off who’s interested in this topic. My management team is unbelievable and they’ll also knock your socks off. We’re doing some amazing things now. We’re looking now at issues around diversity and equity as a driver of corporate financial performance. The platform will let you instantly understand equity performance around diversity, pay, training and development, mobility, advancement, attrition, and velocity. Are you moving all people in all ethnic, gender, and race categories through the organization at the same rate which is important?

This has been so fascinating. I enjoyed having you on the show. Thank you so much for everything. This was fun.

It was a lot of fun. Thank you very much.

You’re welcome.

I’d like to thank Solange for being my guest. What a great show. I learned so much. She is fascinating to me and I love all the stuff she’s working on. We’ve got so many great people on this show. If you’ve missed any past episodes, you can go to DrDianeHamilton.com to catch them. In addition to wherever podcasts air or AM/FM shows. I know we’ve interviewed more than 1,000 people on there so should keep you busy for a while. I hope you enjoyed the episode and I hope you join us for the next episode of Take the Lead Radio.

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About Dr. Solange Charas

TTL 783 | Human Capital AnalyticsHuman Capital expert with 25+ years experience as Consultant, Practice Leader, Top Corporate Executive, and Board Director across all industry sectors. Adept at the strategic C-Suite/Board level, as well as “roll-up-your-sleeves” tactical level. M&A Due Diligence expert with 70+ completed transactions.

PhD research proves a direct and statistically significant relationship between Boards (4% impact) and C-Suite teams (20% impact) and corporate profitability. Developed proprietary products to effectively create and manage high-performing work teams (PhD focus); and identify organizational effectiveness and ROI of human capital investment.

Creative and innovative HR leadership, program design and culture/climate change agent. Experience in leading large and diverse programs and staffs. Extensive international experience including competency in five languages. Certified Team Coach.

Areas of Expertise:
HR-driven Margin Optimization: Experienced in the analysis and re-engineering of HR process flows, benchmarking and organizational structure to improve operating margins affected by “people” costs as measured by Key Economic Performance Indicators (KEPI). Expert in facilitating collaboration and cooperation amongst various business stakeholders.

Project Management: Experienced in planning, organizing, securing, and managing resources to achieve specific goals related to time-bound strategic projects. Competencies in technical skills and management strategies to deliver project goals and objective, honoring scope, time, and budget constraints.

Mergers & Acquisitions, Divestitures and Post-transaction Integration: Subject matter expert in the HR M&A/Divestiture function with more than 50 transactions completed. Experienced in transaction post-close activities including identification of key business drivers, talent retention, organization redesign/combination and financial impact on margin optimization going forward.

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