Philosophizing

Photo: NIOSH, Public Domain,
 https://commons.wikimedia.org/w/index.php?curid=39802192

This week more than most, I have had time to talk to companies about their philosophy toward employees and the role of HR. So I thought I would take a minute to share the basics of my own.

• Our employees are potentially the single greatest competitive advantage we have. If that isn't true in your workplace, it's on the company's leadership.
• Most employees want to do a good job; many want to do a great job. Only the very rare individual stays up nights thinking of ways to make your life miserable.
• Respect, civility, and fun make any workplace better.
• Employees model their leadership, so choose your models wisely.
• Maximum transparency is best. What employees don't know about the employer's motivations and actions, they make up. What they imagine is never good for the employer.
• Honesty truly is the best policy. But if you make a habit of shooting the messenger, you won't get it.
• HR's job is to help the organization take advantage of the enormous talent of the workforce in order to achieve the organization's goals. Not to be the compliance Nazi or party central. Compliance and fun are important, in small doses. They should comprise a very small slice of HR's time.

Cutting Off Our Nose to Spite Our Face

I'm sure you're all familiar with the phrase, "Cutting off your nose to spite your face." Nowhere is that more evident than companies that do not invest in and grow their talent pool.

Managers carefully consider investments in facilities, equipment and technology and spend millions to purchase what they feel they need to make their businesses more efficient, their services more effective, or their product/service more appealing in the marketplace. But mention spending money on people, and the wall goes up.

I can understand some of that: it is hard to quantify exactly what people bring to the table in terms of profitability. With few exceptions, companies make no attempt to figure that out--it doesn't show up on the balance sheet. People are reflected as a cost only.

The excuse I hear most often however is, if I invest in an employee and they leave, I have lost that investment. And they are absolutely right. Which leads to the questions: Why do they leave and how can I prevent it?

We don't have space/time to tackle all of that today, but let's start the discussion with taking a purely anecdotal approach--we can flesh out some hard data in future posts. Have you left a company because of poor customer service? Do you stay with one company over another because you trust the people you interact with? Do you have some employees who work circles around others in your company? Are there key people that would leave a gaping hole in your capabilities if they left?

My guess is you answered 'Yes" to one or more of these questions. Probably all of them. Which points out the importance of people in your organization. The people you have, their capabilities and their interactions with your customers directly impact your bottom line.

When we buy new equipment or facilities, we carefully evaluate our options. We make sure we have the right environment and supplies to ensure we get the best performance from our investment. And we provide ongoing maintenance and occasional refurbishment.

We treat our people differently. We often have a poor methodology to determine the type of people we need (I am not talking just technical skills here--I am focusing on the entire package of competencies.) We don't invest the time or effort into the hiring process we should. We don't have a process to get employees up to speed as quickly as possible and we don't invest to keep their skills sharp. We use them up, throw them out (or they leave) and we repeat the cycle. So because we don't want to take a chance we will spend some money and the employee leave, we purposely leave ourselves open to poor customer service, poor quality, and low productivity. This is classic cut-off-your-nose-to-spite-your-face mentality. You're planning for mediocrity, and you'll absolutely get mediocrity.

But as a consumer, I'm not looking for mediocrity, especially for products and services that are important to me. I need vendors I can rely on. Are you one?

The Faulty Thinking Behind "Human Capital"

I take a generally negative view of the term "human capital." The expression came into vogue as a way to emphasize and to attempt to capture the value of people. It seems that if something doesn't have a monetary value attached to it, then we cannot conceptualize its importance in business. I fully understand the value of people; after all, that is what this blog is all about, but I do have concerns about the term and its implications in how we think about people in our organizations.

The term "capital," according to Investorwords.com is defined as:

• Cash or goods used to generate income either by investing in a business or a different income property
• The net worth of a business; that is, the amount by which its assets exceed its liabilities
• The money, property and other valuables which collectively represent the wealth of the individual or business

Following this definition, human capital would be one of the "other valuables."

There is not complete agreement on the definition of the term 'human capital." Sometimes the term "human capital" is used almost interchangeably with the word "people." It may also refer to the productive output of the person or to the set of skills a person has that increases the economic value of that person.

But the important point is that the "capital" if you choose to call it that is inseparable from the person. Therefore, you can invest to increase the value of the person, but since slavery is no longer legal, you can't own the person that controls that value. Even if you rent, borrow, lease or purchase the capital for a period of time, you have only so much control over the value of of the output you receive. The person can control the amount and quality of what they produce for the organization. They control how long you have access to their knowledge, skills and abilities. When the employee leaves, so does your investment.

For us as business people, the key is to find a way to get the employee to choose to put forth their full effort to invest their capital in our organization. That is the bottom line for business and what we'll discuss going forward.