Executive Briefings

Your Employees Aren't Things, But the '80-20 Rule' Still Applies

You know the principles of inventory optimization when it comes to raw materials, finished and unfinished goods, etc. You and your leaders understand the "80-20" rule - that 80 percent of the impact of inventory optimization occurs in the most pivotal 20 percent of inventory items. You don't ignore the other 80 percent, but the vital 20 percent receive more attention and careful management. You identify the vital 20 percent using frameworks that look at the probability, costs and benefits of things like holding inventory, being out of stock, ordering and liquidation.

What about your human capital inventory? Your people are not simply items in a warehouse or components of a product, so it's easy to assume that "we shouldn't analyze people like inventory." Yet, the principle still holds: your organizational success probably depends disproportionately on a vital subset of your human capital. So, the principles of inventory management can "retool" traditional HR numbers like turnover rates, hiring costs and yield ratios to reveal opportunities to optimize for both your organization and your people.

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You know the principles of inventory optimization when it comes to raw materials, finished and unfinished goods, etc. You and your leaders understand the "80-20" rule - that 80 percent of the impact of inventory optimization occurs in the most pivotal 20 percent of inventory items. You don't ignore the other 80 percent, but the vital 20 percent receive more attention and careful management. You identify the vital 20 percent using frameworks that look at the probability, costs and benefits of things like holding inventory, being out of stock, ordering and liquidation.

What about your human capital inventory? Your people are not simply items in a warehouse or components of a product, so it's easy to assume that "we shouldn't analyze people like inventory." Yet, the principle still holds: your organizational success probably depends disproportionately on a vital subset of your human capital. So, the principles of inventory management can "retool" traditional HR numbers like turnover rates, hiring costs and yield ratios to reveal opportunities to optimize for both your organization and your people.

Read Full Article