Business Strategy is Human Capital Strategy: A View From the Video Game Industry

Human capital management and I-O psychology do not usually appear in popular culture. So, when familiar issues do appear, I enjoy highlighting them (I may be the only person whose written about Parks and Rec, SNL, and Star Wars in terms of human capital and I-O psychology). This week, Hassan Minhaj talked about the plight of video game workers on his Netflix show, Patriot Act. Minhaj focused on issues affecting workers in the video game industry such as ‘crunch,’ a term broadly defined as the ‘mandatory overtime, usually couched as part of a final push to finish a game’

While the more obvious HR related topic from this episode is that of workplace stress and overwork, I would like to focus on a separate issue that struck me: the business strategy behind ‘crunch’ and the video game industry’s labor practices. In some organizations, human capital and business strategy are seen as separate items. However, Minhaj illustrates that, in the video game industry, issues like ‘crunch’ can be an active part of an organization’s strategy. In other words, business strategy can translate into human capital strategy, for better or worse. 

Human capital consultants and HR departments must understand the business strategies that affect human capital strategies. For example, Minhaj highlights several strategic approaches that the video game industry takes towards its human capital (specifically video game developers). 

  1. Talent pool: Video game design is an in-demand field that many hope to enter. ‘Crunch’ exists because game companies know they can recruit new employees regardless of the amount of turnover. These companies know they can layoff a certain percentage of workers once deadlines are met. Industry senior leaders understand this unfortunate ebb and flow and choose to take advantage of it. 
  2. Performance appraisal: Minhaj describes how performance appraisals in the video game industry are weaponized when employees take time off or refuse to meet deadlines. With performance appraisals already fraught in many organizations, this is yet another strategic decision to use appraisals to punish and remove employees. 
  3. Gender discrimination and harassment: As my co-authors and I wrote in this piece, organizations often do not punish those who commit harassment. Minhaj’s video game industry example mirrors this unfortunate fact in that an executive only received minimal punishment from the organization, despite their inappropriate behavior. Although this move may not be overtly strategic, it is a clear communication of cultural values. Those values inform an organizations’ strategy. 

As human capital consultants trained in Industrial Organizational Psychology, we know the ultimate outcome of these activities are short-term gains, at best. Financial success of the video game industry aside, challenges like the development of unions and potential backlash from customers are just around the corner. If you’re an HR practitioner or a human capital consultant, reflect on what your organization or your client’s strategy says about them and their relationship to their employees. Research clearly indicates that better human capital practices lead to more sustainable success. 

Author Notes

Jacquelyn Voss is a passionate graduate student who is pursuing a PhD in Industrial-Organizational Psychology at Keiser University. She completed her Bachelors in Psychology at Nova Southeastern University and her Master’s in Industrial-Organizational Psychology at Keiser University. She is currently working in the hospitality industry, where she has developed a strong interest in employee engagement and motivation in the organization. In addition to these roles, she is an intern with Talent Metrics, where she continues to develop her skills as an I-O psychologist.

Thomas DePattie is a first year PhD student in Applied Organizational Psychology at Hofstra University and Consulting Research Intern with Talent Metrics. He earned his Master of Science in Management from the University of Florida, where he worked as an Organizational Behavior Research Assistant, and his Bachelor of Science in Psychology from Florida State University. Thomas is the Vice-President of the PhDs in Applied Organizational Psychology Club at Hofstra and his research interests span job search, recruitment, and decision-making.