Last week, Venture Capital firm Sequoia described the current combination of volatile financial markets, inflation, and geopolitical conflict as a “crucible moment” of change. In the book Imaginable: How to see the Future coming and Feel Ready for Anything, Jane McGonigal states that in the years 2020 and 2021 alone, there were over 2.5 million English – language news stories with the word “Unimaginable” in them.
Due to the pandemic, we have lived in times of uncertainty in the last two years. Governments across the world engaged in pandemic stimulus programs. The combination of weak supply chains, inflation, and expected geopolitical uncertainty has led to some difficult questions in the minds of Global Leaders. Do we continue building and hiring the next generation’s skills, or do we slow down? This dilemma is the central dilemma
In 1950, Merrill Flood and Melvin Dresher designed a method called Prisoner’s Dilemma technique. This model is taught in most Industrial Engineering schools.
It is built on the following premise. The following premise is adapted from the Stanford Encyclopedia of Philosophy
Tanya and Cinque (names are fictionally used for illustration purposes) are arrested for robbing a bank and placed in separate holding cells. The prosecutor individually presents the following proposition: “You may choose to confess or remain silent. If one of you confesses and the other remains silent, the confessor will walk away free of charges while the other faces 20 years in prison. If you both confess, both of you will face five years in prison. If neither of you confesses, you both will face one year in prison.” What is the best move for Tanya to make, regardless of Cinque’s decision? Given the consequences of all the scenarios, what will Cinque’s decision be?. Tanya and Cinque have found themselves in a prisoner’s dilemma.
The Prisoner’s dilemma provides a framework for understanding how to balance cooperation and competition and is a helpful tool for strategic decision-making. As a result, it finds application in diverse areas ranging from business, finance, economics, and political science to philosophy, psychology, biology, and sociology. Unlike other periods of uncertainty, the current times are unique. The rate at which companies can get disrupted is exponentially high if we do not focus on Skills building. So making the correct decisions is even more important than the previous periods of uncertainty.
Let us look at the application of this concept. Let us assume that you are comparing against your competition from a skills-building standpoint. The term Building skills is used to refer to talent from the external market and the continuous transformation of the existing workforce
An imaginary comparison between the bottom line dollars two competing companies (Company1 and Company2) can make by continuing hiring and building responsibly vs. slowing down/stopping**
**Please note, the numbers quoted here are imaginary and derived from papers on Prisoner’s dilemma and a wide variety of papers on Nash Equilibrium studies. In this case, the scenario modeled is as follows:
- If both companies choose to Continue Hiring and Build Responsibly, they stand to make 90MM each
- If Company 1 builds and company2 does not build, then Company1 stands to gain more (130 MM)
- If Company2 builds and company1 does not build, then Company2 stands to gain more (130 MM)
- If both do not build, both company1 and company2 stand to make a much lower number (65 MM) (please note this outcome is slightly different from than classical prisoner dilemma problem)
The key is, therefore, to build responsibly through Optimal Scenario Modeling for both Workforce Planning and Recruitment
“There are best-case scenarios, and there are worst-case scenarios. But neither of them ever happens in the real world. A sideways scenario happens in the real world” – Bruce Sterling- Science Fiction Writer.
To evaluate scenarios, we have to conduct Simulations. Simulations need not be mathematically intensive; it just has to be contextually rich.
In 2010, World Bank pioneered a unique approach called EVOKE. World Bank was interested in studying what the bank could face in a decade from 2010. Over 20,000 players (input providers) were chosen, and various questions were raised about the pandemic, weather changes, and several other crises. Some aspects of how citizens may behave during a pandemic were correctly modeled by EVOKE almost ten years back. This simulation is not algorithmic but a rich exercise driven by interviews and game theory
It will be beneficial for Workforce Planners and Recruiters to conduct similar simulation exercises with several leaders in the business. Specific aspects of discussions will be including the following questions (not exhaustive, a sample is given to get your thoughts organized)
- What projects do the leaders think will stand the test of time and become the company’s long-term revenue generators?
- What digital initiatives do they plan to continue and scale?
- What skills should be rapidly scaled?
- What is their viewpoint on expanding in different geographies (within a state, country across the country)
- What is their belief in remote work?
- What type of questions do investors ask them about talent in board rooms?
- What skill gaps do you see in new hires?
- Do they see any opportunities to target specific competitors
- Who are the mid-level leaders in peer companies they would like to target and onboard
We can come up with a complete list of questions for this simulation. We envision a survey-based simulation that can collect data from all the leaders in a digitally seamless manner
Depending upon the output from the simulation, you can consider several factors for scenario modeling. Such a modeler can be customized for various scenarios. (Attrition, Diversity, Remote First, and so on)
Here is a sample model output showcasing the FTE ratios. A simple FTE ratio can be developed for any skills family. (i.e., what sort of cost advantage do I get across key locations compared to my existing base pay/total pay trends.)
A long-range forecast for each job family is also critical (Occupation Level, Job Family Level, and Skill Level). Here is an example of such a longer-term forecast. Here the knowledge worker growth is compared against GDP growth. Such comparisons with macro will help HR leaders justify the velocity of the growth that is planned