"Soft skills." Those are the interpersonal, "human" skills—like communication, conflict resolution, and other traits—that companies are prioritizing, experts believe to be more automation-proof, and some recruiters are saying new graduates lack.
But so far, that conversation has focused on a soft-skills gap at the individual level, as something for job seekers to brush up on and emphasize in order to stay competitive. And while it speaks to a growing need for these skill sets among employers, we rarely talk about the organizational costs of that need going unfulfilled—not to mention the risks to businesses that can't measure or predict how people will act within their own walls.
The fact is that many companies simply don't have the tools, resources, or expertise for understanding human behavior. That leaves them blindsided by consequences at the "people" level of decisions made at the "money" level. I direct a program at the University of Texas called the "Human Dimensions of Organizations" (HDO). These dimensions haven't gotten much serious attention until recently. But the core assumption, which more people are now coming around to, is that the humanities and the social and behavioral sciences are loaded with knowledge about people—at the individual, group, and cultural levels—that companies ignore at their own risk.
These are three principles from the HDO program I direct that correspond to the major blind spots some companies are now striving to correct.
Most organizations base their decisions on financial information. Costs are managed. Revenue streams are developed. Stock prices are monitored to maximize shareholder value. Money is easy to measure and track, so it becomes the most important source of information about key decisions. That's sometimes a mistake.
At times, these financial decisions have unforeseen and unintended consequences. A company may decrease labor costs by offering early retirement to high-priced, mid-level managers, who can then be replaced with younger and less expensive talent. But the people who take early retirement are often the most successful executives who can then find another job (or hang out a shingle as a consultant), while the less talented folks stay on. Ultimately, these early-retirement programs may save money in the short term, but lead to an exodus of talent and institutional memory in the mid to long term.
Problems like this may often be unforeseen, but they aren't unforeseeable. To recognize the impact of certain decisions on people, though, you first need good methods for measuring what people are doing. That requires expertise in qualitative methods, like structured interviews, participant observations, and document analysis. It requires people who understand how to give good surveys, observe behavior, and set up experiments.
The only way to take the behavior of people into account when making decisions is to submit it to the same rigor you use to track and understand the flow of money. Companies then need to use that information to assess what people are likely to do in the future. Most organizations simply don't know what their own employees are doing and thinking, and so they can't factor that into key decisions.
Diversity is a part of every organization. In our global economy, companies deal with partners, clients, and even employees from around the world. More and more, people within any given organization differ by age, race, ethnicity, gender, sexual orientation, and core personality characteristics.
Fortunately, this is widely (though perhaps not universally) recognized as a good thing. Differences in perspective can lead to innovative solutions to problems, and even to better products. Personality differences influence which unique strengths individuals bring to bear on their work.
But even the most progressive companies are finding it difficult to harness the full potential of a more diverse workforce. This is partly a consequence of basic human psychology: Most people’s first impulse is to frame problems in the way that makes the most sense to them, and managers tend to motivate employees using techniques they've responded well to in the past.
Experts, though, understand the variety of sources that lead to differences between people. They assess the people around them to understand the ways they differ, and then tailor their management approaches based on their understanding of those dimensions of difference—not familiarity.
Disciplines from psychology and sociology to anthropology and ethnic studies are repositories of information about ways that people differ—all robust, well-established fields that businesses and management experts are only beginning to tap. These disciplines provide a basis for recognizing the characteristics and cultural influences that shape organizations from within, person by person.
One of the most important lessons about working with other people is that the context of interactions influences others' responses tremendously. The same request is greeted enthusiastically or skeptically depending on who says it, when the request is made, and the outcome of previous interactions. A proposal in a negotiation is treated differently, depending on a company’s recent string of successes and failures as well as their best alternatives to that proposal.
Many of us assume other people will share the same context we do, so we interpret statements, requests, and offers in the spirit in which we think they were intended. But that can mean plenty of guesswork. It's difficult to recognize when other people’s context differs from your own.
Anyone who's intensively studied literature and history has learned how important—and often hard to reconstruct—a role context can play in understanding statements, ideas, and events. In the workplace, this same skill is crucial for people to communicate effectively. That doesn't just mean using the "right words" to convey your meaning. It's also about understanding the context in which those words will be interpreted.
In general—and while that's finally beginning to change—people are hired on the basis of their technical, business, or financial expertise. That's left organizations with gaps in their knowledge of the ways individuals, groups, and cultures behave and interact. Understanding the consequences—employees, clients, and customers—can help companies continue to close the soft-skills gap, not just by hiring "people" people, but also by rethinking the ways they make some of their biggest decisions from within.
The human dimension has always been a part of business. Now it's time to pay it the attention it deserves.