Your Next Expert in Performance Management? Hire an Economist!

From the world of unicorn employers (Google, Amazon, Facebook, etc.), our next great HR experiment has almost gone undetected. What is it!?

The use of Economists to run employee performance management!

A recent article talked about a new trend of tech companies (Amazon, Google, etc.) hiring hundreds of PhD Economists for all kinds of roles:

For example, Amazon runs a program called Connections, which sends out small questionnaires to employees: Does your work provide you with opportunities to learn new things? Does your team always put the customer first? How often does bureaucracy get in the way of your ability to deliver results?

To improve that feedback, Amazon tries out interventions like training managers to interact better with their subordinates. Originally, the company brought on a team of psychologists, other scientists and product managers, but before long, it became apparent that they weren’t well suited to achieving what Amazon was ultimately after: Better performance. Economists, by contrast, were able to analyze which interventions led to higher worker productivity.

“The psychologists had a really hard time at Amazon, because they weren’t trained in what economists are trained in, which is how this relates to profitability,” said one former Amazon economist who spoke on the condition of anonymity. “Amazon is a very data-driven place, and if you can’t prove that your program is beneficial to customers, you’re at risk of having your program defunded.”

At the root of figuring out whether an HR pilot program worked, and many other things economists do at Amazon, is something called “causal inference”: Determining what caused what, and therefore what to do more of and what to cut off.

Are you ready for data-driven, Economist HR?

You might believe you are already in data-driven HR, but this takes it to a completely different level. Economists aren’t about to buy into an “employee-friendly” workplace if the data doesn’t actually show that productivity, and thus profitability, increase with these types of policies.

More likely, we will start to see Economists find functions, sections, and locations where certain policies work well and drive profit/productivity, and certain ones don’t. This trend could lead to very different performance management practices and policies within the same building based on the roles and positions.

Let’s face it, Amazon isn’t known for having the best employment practices. They have a history of being quite hard on employees. The cool part about this approach is they might find that great leadership actually turns a higher profit than crappy leadership–and then who knows what might happen (it could happen, stop laughing!).

They also might find that beating your employees drives the most profit and well, then, let the beatings commence…(just kidding, no beatings! Maybe just some light berating!).

What do you think? Are you ready for an Economist to tell you how HR should be run?

Tim Sackett

If you Google “Tim Sackett” you’ll find our Tim, and a truck driver chaplain. Our Tim is NOT the truck driver chaplain, although how awesome would that be if he was!? He is a prolific writer in the HR and TA space who just happens to also run an Engineering and IT contract staffing agency (HRU Technical Resources) out of Michigan. He also writes every day at his own blog, the Tim Sackett Project. Weirdly, he’s known as an expert in workplace hugging, which was kind of cool years ago, but now seems painfully creepy, but we still love him and he’s fairly harmless. Tim is also on the board of the Association of Talent Acquisition Professionals (ATAP), lifetime Michigan State Spartan fan, husband to a Hall of Fame wife, 3 sons, and his best friend Scout. He also wrote a book with SHRM called The Talent Fix, you can find it on Amazon.