Laurie Bassi is the CEO of McBassi & Company, a leader in using behavioral economics to improve organizational performance.Since she founded McBassi in 2001, she has been working with clients to help them unleash human capability within their organizations.
In the earlier years of her career, Laurie served as vice president for research at ASTD, the director of several U.S. government commissions, and a tenured professor of economics and public policy at Georgetown University.
She is also Chair of the Board at Bassi Investments, Inc. - an investment firm that invests in firms with superior human capital management capabilities.
Laurie is a prolific author, with over 90 published papers and books. Her current books are Good Company: Business Success in the Worthiness Era (Berrett-Koehler, 2011) and HR Analytics: A Summary of the State of Knowledge (Reed Business, 2010). She holds a Ph.D. in economics from Princeton University and a M.S. in Industrial Relations from Cornell University.
Ques: How did “Good Company” happen? Who or what inspired you to author the book?
Ans. The path toward both the writing of Good Company and our work at McBassi & Company started nearly a quarter of a century ago with a conversation I had in a steel mill that fundamentally changed the direction of my career (and even my life).
In those days, I was a young assistant professor of economics at Georgetown University. With my newly minted Ph.D. from Princeton in hand, I understood the rules of the game for someone in my position. First among them was publish or perish. Equally important was to do so in a way that was respected and valued by my profession – by doing research and publishing papers in prestigious journals based on complex mathematical modeling and sophisticated econometric analysis. I became totally immersed in my field and this perspective. I came to view the world and the people in it through a lens of simultaneous structural equations and elaborate statistical methodologies.
And then one day in 1988, I found myself in a steel mill in western Maryland. I was there interviewing workers about the “learning environment” at the mill. These interviews were a component of a well-funded research project I was fortunate to be working on – one that held the promise of enabling me to publish some very good research papers. My immediate task was to translate the findings of my interviews with workers into quantitative, coded data. It was definitely a “stretch assignment” for me, because truth be told, although I was trained as a labor economist, I had never been in a workplace anything like this before.
This steel mill was a pretty tough place. It was hot – probably at least in the low 90s – dirty, noisy, and dangerous. Workers were busy managing the flow of red-hot, molten metal as it moved between various pieces of massive processing machinery. And there I was in my neatly pressed pant suit, with a tasteful purse on my shoulder, and clip board and Cross pen in hand – interviewing workers in steel-toed boots, hard hats, work clothes covered in grime, with sweat running down their sooty faces. They were compliant and polite as I took them through one question after another about the extent and usefulness of the (virtually nonexistent) learning opportunities available to them through their work.
In the very last interview, I apparently asked one question too many. In a very respectful tone of voice, the fellow I was interviewing finally said to me, “Look lady, I can sum it up for you like this. I go home at the end of every day, whupped, tired and disgusted.”
That pretty much ended the interview – there was really nothing left to say. He thanked me for my interest, and I thanked him for his time.
As I drove home that night, his words played over and over again in my mind. I shared them with my husband, and I thought about them the next day and the day after. The raw honesty of what he said didn’t fit neatly into my data coding scheme, and I understood that no system of equations – no matter how sophisticated or elegant – could capture the grim reality this gentleman had shared with me. Over the course of the weeks and months that followed, I began to think very differently about my work. It was no longer an academic exercise that would help me publish papers and get tenure. It was much more important than that. It was about the quality of people’s lives, and how they are shaped for good or for ill by their places of work. I also came to understand the profound effects our work places have on our lives outside of work, and indeed, the very society in which we live.
That conversation set me on a journey that ultimately led to my work today, to the founding of McBassi & Company, and to our 2011 book Good Company.
Ques: Tell us about “Good Company: Business Success in the Worthiness Era”. What is it trying to capture and convey to its readers?
Ans. For my money, the best summary to-date of Good Company has been written by Dr. Alan Blinder. He says, “Close your eyes and wish that companies that were good to their employees, their customers, their communities, and the environment made more money than ‘the bad guys.” Now open your eyes and read this fascinating book. Amazingly, Bassi, Frauenheim and McMurrer marshal evidence that it’s true. Read it and smile.” (Gordon S. Rentschler Professor of Economics and Public Affairs, Princeton University, former Vice Chairman of the Federal Reserve System, and my favourite professor while I was an economics graduate student at Princeton!).
The message of the book is that despite dispiriting headlines, we are entering a more hopeful economic age. We call it the “Worthiness Era.” And in it, the good guys are poised to win because good corporate behavior is no longer optional but the key to success.
This new era results from a convergence of forces, ranging from the explosion of online information-sharing to the emergence of the ethical consumer and arrival of civic-minded Millennials. Across the globe, despite lingering effects of the Great Recession, people are choosing the companies in their lives in the same way they choose the guests they invite into their homes. They are demanding that companies be “good companies”—good to their customers, employees, and investors. Good Company is the culmination of my life’s work (at least to date). It is, I believe, an important book for HR professionals to read.
Ques: McBassi & Company specializes in measuring return on people. Pl share your insight on how employee management in an organization can be streamlined to achieve its business returns.
Ans. At one level, the answer is very simple. To achieve its business results, an organization’s management of people must be simultaneously caring, exacting, and inspiring. Simple enough to say, but difficult to achieve in reality (Chapter 7 of Good Company is devoted entirely to this topic.) That is why we focus so much of our attention at McBassi & Company on HR analytics. It helps organizations to understand the tradeoffs that inevitably exist between competing priorities, and to make well-informed decisions for optimizing the management of people. It combines science and art to help organizations achieve what we think of as the “sweet spot” – the intersection of enlightened and profitable management of people.
Ques: If you had to define Human Capital in a single line, what would it be? Do you see organizations increasingly taking a genuine interest in building this capital and how?
Ans. You would think that by now, there would be an easy answer to this. But it turns out that is not the case. Early on in my work as the chair of SHRM’s Investor Metrics Workgroup, I spent some time trying to come up with an answer to this question. The single best definition that I could find is that at the level of the individual, human capital is “the time, experience, knowledge and abilities of [people], which can be used in the production process.” (Martin Husz, "Human Capital, Endogenous Growth, and Government Policy", Peter Lang Publishing)
Having said that, I think for HR professionals the more important concept is the value of human capital at the organizational (as opposed to individual) level , which is determined by its ability to effectively recruit, develop, leverage, and retain people (employees and contractors) with the skills, talents and experience necessary for the organization to achieve its business objectives.
As for what organizations are doing in this regard, it’s all over the map. Yes, some are taking a genuine interest. Others are not. The evidence that we, along with other analysts, are accruing indicates that organizations that fail to take human capital issues seriously are putting their mid- to long-run results – even their very existence – at peril.
As for the “how” part of the question......Once again, we believe that analytics is the key. Without getting serious about analytics, organizations are just doing the same-old-same-old by running the “people side of the business” largely by gut and intuition. Given the convergence of forces – economic, social and political – that we describe in Good Company, the stakes are simply too high to continue with business as usual in this regard.
Ques: What would you describe as being more beneficial for a company, the cost effective employee retention, or introducing creativity and enthusiasm by recruiting the young talent every year in to the company?
Ans. In my view it is, in general, a mistake to ask either/or questions – and an even bigger mistake to attempt to answer them. The only two potentially correct ways to answer this question are:
(1) It’s more beneficial to do both, or (2) It depends. At the risk of sounding like a broken record, that’s why we need HR analytics! It helps us answer questions such as this based on (organization-specific) evidence, rather than guessing.
Ques: Odd hours of work, conflicting shifts and enormous work load have always been an employee’s woe. It is important for a company to treat their employees well, for happy employees are a valuable asset. How should an HR professional manage to make the workers feel at ease without compromising the productivity and quality of the word to be done?
Ans. At the risk of sounding like a heretic, the first step is to reject the “HR myths” that employee engagement: (1) should be maximized, and (2) is virtually synonymous with business results (which is most definitely not the case). Rather, employee engagement should be optimized. The difference between the two, and the shift in thinking that is required to get from one to the other, is incredibly important for HR professionals. And by now, you should be able to guess that the process for making that shift requires HR analytics. We have an article on this very topic in the March 2010 issue of Talent Management, entitled “Does Engagement Really Drive Results?” I’d be happy to share a copy with readers (just send a request to email@example.com.)
Ques: Roger Enrico, Vice Chairman of PepsiCo had said in an interview that “The soft stuff is always harder that the hard stuff” referring to areas like Human Resource Management as opposed to the quantitative factors. That was in 1995. How hard is the “soft stuff” now with the mammoth amount of technology helping the HR?
Ans. The soft stuff is definitely getting a lot “harder,” and that is very good news for the profession – or at least for those HR professionals who are willing and able to seize the opportunity that this represents. As your question suggests, technological advances have greatly reduced the cost of doing analytics, which is how you make the soft stuff hard. And because human capital management is emerging as one of the few sustainable sources of competitive advantage, there is also the necessity to make progress on this front. So times, they are a changing.
Ques: Now-a-days, when the global economy crashes down with the blink of an eye, and the recession takes a toll on people’s life, what affects does it have on human resource management?
Ans. The Great Recession has fundamentally, and perhaps permanently, altered employees’ preferences. Employees now place a much higher premium on economic security. Plus high levels of insecurity undermine employees’ performance.
So even though it is a “buyers’ market,” smart employers are finding ways to reduce unnecessary job and wage insecurity among their employees (see Chapter 2 of Good Company for further discussion of this point.) In short, now more than ever, human resource management is an essential organizational core competence.
Ques: Life never stops teaching and the world never stops changing. What is the recent lesson that life taught you about the changing world and its people?
Ans. There is plenty that I learned while writing Good Company. But here is the single most important lesson I learned – technology-fueled people power is changing the world, and changing it for good.
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