Haig R. Nalbantian, pioneering human capital economist and workforce scientist, has plenty of advice for the reward leader trying to build effective systems, for today and the future.
Haig Nalbantian, the renowned and respected workforce scientist and leading thinker on human capital, has always had a pre-occupation with the plight of workers. It was his French utopian-inspired vision of the organisation as a community – and questioning why, in a market economy, capital generally hires labour, rather than the other way around – during his time at university that led him into the powerful work he still does today.
Over nearly four decades, Haig practically invented the discipline of ‘workforce scientist’, combining the insights and methods of Economics and Organisational Psychology, to better inform decisions about workforce strategy and management. He’s dedicated his working life to challenging orthodox theories and championing the use of naturally occurring data to help organisations to recognise their people as their most important asset. Workforce decisions as investment decisions.
He is perhaps best known for having conceived, co-founded and developed Mercer’s Workforce Strategy and Analytics Group, a role he still glows when he talks about. “It was just so extraordinary what Mercer did, investing substantially in such a venture well before analytics were in vogue,” he says, “And I don’t think today you would get the opportunity in a consulting firm to set up a Group that, for so long, was more focused on research and changing the status quo than turning a quick profit. We really created something unique.”
Part of the Group’s success was due to the feverish intensity of Haig, who admits that he may have given a little more than he intended to his career, neglecting his personal life in the three decades from university. “I absolutely loved my work. It overtook me. I suddenly looked up and I was in my 50s!” he explains. “I had pretty much just worked and worked – and it seemed I’d missed my chance to get married and have children.” Was Haig’s loss the profession’s gain?
Family life and work life
Wonderfully, everyone was a winner. “Fortune smiled on me” is how Haig puts it: he met his barrister wife, Thelma, in his fifies and started a family in his sixties. “I’m an older father, but I love it and am deeply grateful for what life has given me!” His work-life balance may now have shifted in the opposite direction, but his determination to highlight and evidence the critical value of the workforce remains undimmed.
Haig left Mercer at the end of 2022, after thirty-three years within the MMC family (the last twenty-five as a Senior Partner) and continues to work as a researcher and in various advisory roles. With his former Mercer colleague, Rick Guzzo, he co-leads the Workforce Sciences Institute (WSI) which they spun out of Mercer to run as an independent entity.
WSI’s objective is to continue to advance the development of this burgeoning field. A key area of focus for Haig is to help bring the value of workforce sciences to the investment community, to help investors assess companies in terms of how well they secure and manage their human capital. He also works extensively with companies to use advanced analytics to identify systemic impediments to the success of their Diversity, Equity and Inclusion (DEI) strategies and build solutions that achieve DEI objectives in a manner that aligns with business objectives. (Read more about this work in Haig’s article, recently published in MIT’s Sloan Management Review.
When it comes to rewards, Haig laments that, “too often, companies claim to know what they value in and from their workforce but, when you examine the data, they are often surprised by what they are actually valuing.” This disconnect works against businesses, fostering resentment and disengagement, potentially reducing retention and productivity.
Armenian, cosmopolitan childhood
Haig’s advocacy for the workforce may have taken root in his childhood in New York city; he describes it as a “lively” Armenian home which his immigrant parents filled with interesting, creative people – writers, artists, musicians and academics – and a robust Armenian, cosmopolitan culture. His mother was a professor of French and Comparative Literature with a passion for surrealism, his aunt was an editor at the New York Times Sunday Book Review while his father worked as an engineer/entrepreneur. The influence of strong-minded, artistic adults with a driven immigrant mindset surely helped foster Haig’s earliest enthusiasms: writing and politics.
Both were pursued at university (he studied English and Economics at New York University), before focusing on the latter for his graduate degrees at Colombia University. “I just loved economics. Once I started studying it, everything clicked into place in terms of what I wanted to do. I wanted to challenge the rigid, ‘partial equilibrium’ models of micro- and labour economics, challenge the prevailing conclusions derived from game theory that group incentives can’t work, and bring in other elements like constructs and data from organisational psychology and mathematical models from laser physics to develop and test new approaches to workplace economics.”
The determined young man anticipated a career in academia that focused on his ideas – “obstinate” is how he describes his younger self – but when Mercer responded favourably to his idea to establish an interdisciplinary, empirically driven group to help organisations deploy advanced analytics and practice evidence-based workforce management, his destiny was sealed. There was no looking back.
Lessons for Reward
It is little surprise that Haig has many valuable insights for the reward leader, first and foremost being an encouragement to seek and use data.
“Tap into the data trail to get a better understanding of how reward actually affects your workforce,” Haig urges. “Develop real, workforce intelligence, and then use experienced judgement to make decisions that are right for your organisation, which won’t necessarily be industry best practice.”
Secondly, Haig calls for a greater focus on career reward alongside the financial renumeration that can dominate the approach to pay and benefits. “Often, it’s the career value that actually counts for the most in the reward package for the employee,” Haig explains. “This refers to the trajectory of rewards over time, such as how likely it is to get a promotion, to experience lateral moves that foster learning, to access professional development or training opportunities, as well as the nature and quality of supervisors and fellow colleagues.”
Data can be helpful when it comes to gauging what staff value. While Haig is not averse to employee surveys, he feels reward and HR leaders rely too much on them. He cautions that what employees say they most value is not always what they act upon, just as what employers say they value is not always what they value in fact, “it’s always worth tracking behaviour in addition to asking what people prefer.”
His final piece of advice is for greater thought over how “you implement pay for performance”, an approach that Haig finds a little discomforting, with data showing it can be ineffectual and have high variability in impact.
“Whose performance are you paying for? Is it the group or the organisation? The individual? Perhaps the Central bank’s (for example, considering their action on interest rates)? You need to filter out the macro-economic and sectoral factors that influence performance so that you don’t conflate risk with performance. Human Capital isn’t generally as well positioned to bear pure risk as are investors in capital markets,” – which is one of the answers to his early-career question about why firms typically aren’t owned by their workers. Fortunately, good analytics can help differentiate employee contribution from raw performance. “They can help assess actual performance given the unique conditions at play in each organisation.”
An eye on the future
As one of TR2050’s academic Members, Haig has been able to bring his vast experience to enhance Member’s discussions around how reward needs to transform in line with the rapidly-evolving world.
“I think there will be radical changes ahead,” Haig concedes. “The basics of pay and benefits remain important, but most of the time they aren’t what talent most responds to, even now. While I am wary of making predictions about what is ahead in terms of reward systems, I do think we will need more focus on the nature and value of career rewards in organisations.”
Unlike many others, Haig isn’t convinced that gig workers will dominate, nor that work will be reduced to performing tasks for various different organisations, rather than having a more fixed role. “Organisations and jobs exist for a reason – in part because they reduce transaction costs and because there is clear value in long-term association (see Haig et al. in Oxford Academic). Companies will still need to make money in the future, and tapping the value of longevity and homegrown experience will remain a source of profitability,” he says. “Institutional knowledge still has a value and I don’t think that will change soon.”
He sticks to the principles that led him into this focus area in the first place: reward your people in the way that best suits the unique environment you’re all within. “You need to understand your organisation, your own specific human capital requirements and realities and identify the approach that is best for you.” He warns that it is too easy, even “safe” to follow what others do, particularly successful companies. “Resist doing that. Excellence comes from achieving strategic alignment and that usually involves practices unique to your business.”
Haig’s advice will remain unshakeable, perhaps gaining strength as the nature of work transforms, and his academic approach and wise counsel will continue to enhance TR2050 discussions.