Preface

There are too many myths and too much conjecture about the management of people.

Considering the sophistication of tools and metrics common in major companies—inventory tracking, logistics, customer experience management, and financial measures—most tactics and measurements for workforce management seem almost primitive. Thus few, if any, companies know the return on investment (ROI) on their various investments in people practices.

Ten years ago, we set out to bridge that measurement gap, starting as a research and development group and gradually evolving into a consulting practice. Since that time we have worked with over a hundred global and national firms—some the best in the world, some average, some struggling. More to the point, we have had complete access to company data—covering more than 2 million employees—that enabled us to measure and define their actual people management practices, how those practices affect the workforce, and what their impact is on business performance.

Along the way we have learned a lot about the process of discovering organizational realities and turning that knowledge into strategies for business success.

In place of platitudes or meaningless generalities, this book explains the new science for making fact-based, firm-specific decisions. Unlike most business books, it does not urge you to adopt practices used successfully at other companies or in other industries. There’s no reason to believe that those practices will work for you. Instead, this book gives you a framework for thinking strategically about the people side of your business and introduces you to new tools for measuring and managing your most valuable asset.

The cornerstone construct—discussed at length in the book—is the concept of each company’s unique internal labor market and the methods to measure and manage it. Specifically, we will show how companies can establish the direct, quantifiable links between discrete workforce tactics—ranging from the right mix of talent to managerial spans of control—and business results.

Whether you’re a CEO approving a multi-hundred million-dollar workforce initiative, a CFO trying to judge the return on investments in people, or a human resources chief who needs to make a compelling case for change, this book will show you new ways to resolve those issues—and to make smarter decisions. For the first time, you will see how to really understand and measure the contributions of human capital to business success. Not only will you see things differently (and better), you will think and talk about your business differently.

Dozens of clients and colleagues have made this work possible. Clients that supported this work—particularly early on when its power was only emerging—include Karl Fischer, Kurt Fischer, LuAnn Jarnagin, Sarah Meyerrose, Steve Michel, Pat Nazemetz, Shelley Seifert, and Anne Szostak. We wish to acknowledge scholars who variously stimulated and encouraged our thinking, including organizational psychologist Cheri Ostroff (Columbia) and economists Bengt Holmstrom (MIT), Ed Lazear (Stanford), and Lalith Munasinghe (Barnard). Consultant and former ITT executive Bob Braverman spent months with us, challenging our assumptions and the practical applications of the work.

Internally, the work was kept alive solely by the vision and support of CEO Peter Coster. More recently, EVP Mac Regan has begun to advance these capabilities globally. Scores of colleagues at Mercer have invested their time and reputations in introducing this work to their clients and have contributed insights and expertise to enhance what we deliver. We thank them all.

And, of course, we also thank our team—especially those with us in the early years who helped us build the foundation: Douglas Dwyer, Luis Fernando Parra, Mike Spratt, Bruce Wang, and Wei Zheng. Our crackerjack analysts in those early years were Steve Blader, Gigi Foster, Sonya Kim, Katie Noonan, Michael Wolosin, and later Sara Hertog. Since then, Stefan Gaertner, Wendy Hirsch, Brian Levine and Matt Sato have developed new extensions of our work. Mark Chandler, David Lee, and Matt Stevenson have designed software for managing the huge databases we use. They have been joined by other talented professionals who offer fresh perspectives and enhance our core capabilities. These include: Ilse de Veer, Damien DeLuca, Pete Foley, Helen Friedman, Gail Greenfield, Rosemary Hyson, Julie Kim, Lingzi Liang, Susan Merino, Kanishka Ray, Bill Sipe, and Roy Wellman. Thanks too to our desktop publisher Deneen Jones and our assistants Tammy Miller and Melissa Wilkison.

We value the counsel of Graham Leigh and Pat Pollino in moving this book project forward, and we particularly appreciate Debra Joseph for her tireless work in planning and executing the launch of this book. We thank Richard Luecke of Salem, Massachusetts for helping us with the book. We appreciate his willingness to accommodate the schedules and idiosyncrasies of four strong-willed authors with different writing styles. Finally, Ryan Risk put in exceptional efforts under great time pressures to bring all the edits and figures together and move the book into production. And, needless to say, we acknowledge our editor at McGraw-Hill, Mary Glenn, who has steered this project to completion.