Andrew Mayo challenges that well-known mantra by asking, ‘are people really our greatest asset’?
Most HR people would assent to this much-used cliché without thinking. Indeed their chief executives probably would do so as well. There is an instinctive logic that without people we can do nothing – and therefore our heading must be true. But is the last symbol a question or an exclamation mark?
How frustrating it is to employees to often find the reality does not seem like the rhetoric. I often ask audiences first about belief in the cliché – which is almost universally present. But then I ask how many work in organisations where the belief is clearly translated into employee experiences. I am lucky if I get more than 10% who can say yes. How so?
Well one reason is that a financial culture dominates most organisations, whether private or public – so much so that people are seen as top of the costs league and the first port of call when times are hard.
But the deeper problem is simply that not all people are assets. It depends on our definition, but one that most people would assent to is that ‘assets are value creating entities’. Can everyone be described as this?
The nature of the job
There are two reasons why they may not be so. The first is the nature of their role. Not everybody has a role that is value creating, especially in larger organisations. The larger and more complex, the more people we have in what we might call ‘maintenance’ roles – their job being to keep things neat and tidy. They may prevent value being subtracted but they do not create it. (For example HR administration, accounting, IT helpdesks, etc).
Secondly, there are others who, by virtue of their lack of capability, actually subtract value – the customer facing employee who alienates customers, the support function enthusiast who consumes time and money but produces nothing, managers who make consistently bad decisions, bureaucrats who create time consuming processes. To borrow from accounting phraseology, these are actually liabilities.
This raises some challenges for HR. Are we in sufficient tune with what our organisation wants to achieve, to be able to identify and define the strategic capabilities (a term which, for me, embraces knowledge, skills, attitudes, experiences and network/contacts) needed in our organisation?
Do we know who possesses them? And to what level of depth? And who is in the category of liability – not actually adding any value, even though they may be very busy? Do we have the diagnostic and assessment tools for these judgements to be made (typical appraisal ratings being a very crude and mainly useless indicator)?
All kinds of talent
We might say this was the essence of talent(s) management. I add the (s) because so many organisations seem to have such a narrow value of talent – confining it to the ‘high potentials’ who are deemed to be able to make it to the ‘top’. On the other hand, whilst every individual has some talent, not all are strategically important to the organisation and its goals.
On the evening of 22 May, about 100 attendees attached either to the HR Society – a specialist network dedicated to the business edge of HR – or the Institute of Chartered Accountants of England and Wales (ICAEW) met together. They received presentations and had debate on the very subject of this posting.
Tony Powell, deputy chairman of the ICAEW, gave examples of how in different business situations the relative importance of intangible asset categories varied. It was not always the human capital that was the most critical, even though in the long term this would be so.
Duncan Brown, recently of CIPD and now at PWC, surveyed research in the field, including that which demonstrated – in his view the obvious – that the more care you take in hiring, retaining and developing your people, the better the job they will do for you.
I also contributed with some of the thoughts outlined above, and some practical ways of measuring our human asset value and linking it to performance. A lively debate ensued – one FD describing how in board meetings, ‘HR’ issues were low down on the agenda and therefore were often squeezed out due to time. The numbers were always discussed first.
If I was the board member responsible for people, I would have to find a way to stop this happening. Management must be educated to understand that appropriate and useful people related measures must be part of the numbers – simply because they influence performance so much.
But HR must not mouth platitudes and rhetoric. It must be anchored in business benefit. Not all people, by any means, are assets. But strategic capabilities are much greater builders of value for the future than last quarter’s profits, after all. Those who have them, combined with commitment to our mission, are indeed our most important and valuable assets.
Andrew Mayo is president of the HR Society. He is also a director of Mayo Learning International, a specialist in people related measures.
Previous columns:
“I wanna be strategic…”
“How competency frameworks have lost the plot”
“Prove we are valued….please”
“The truth about diversity”
4 Responses
Hard numbers
Performance measurements are difficult to make.
It is certainly true that many award winning organizations are operating at 30% and quite rightly believe they are much better than their competitors!
But that is the problem.
Management consultants like us are in the company of snakeoil salesmen. What we have to offer is little short of magical.
I’m speaking with the experience of supplying to China from the UK. We were able to do this because my people put their heart and soul into their work. We were cheaper.
Did I see that solution promoted in any government inspired junket?
I Agree With Peter
Not all people are valuable assets, but the vast majority could be if they were only managed properly. The problem is very, very few managers know how to do that.
Most companies with HR departments do a very poor job of managing their employees, a poor job of unleashing their full potential. A considerable store of creativity, innovation and productivity exists in every person and the management challenge is to unleash that store and apply it to the goals of the organization.
So what model of management should be used to maximize the use of that potential? Is it the top-down command and control model so pervasive in business or is it some other model. I spent about 12 years using the top-down model and was frustrated that about half of my people were not performing as well as I wished. My best people, the self-directed self-starters, were performing far above the average and I wondered why the others could not close the gap.
Then I read a book on organizational management which informed me of how important the workforce was, actually more important to achieving goals than I. I had to admit that I was so busy giving orders and figuring out what my next order would be that I had not ever really listened to my people. So I started listening and found that they had many complaints, suggestions and questions all of which I attempted to resolve to their satisfaction. In some cases, what they wanted was not what they needed and I took time to explain why, but most of the time they were at least partially on target.
Then an amazing thing happened. As I went about resolving their concerns, their performance improved almost in lock step. In fact, after some months I realized that as a group my people were about twice as capable as I had thought possible.
A few years later, I learned that I could convert the vast majority to being self-directed self-starters just like my best people. Once again, I was amazed to find out that my people were about twice as capable as I had thought possible or four times as capable as I had originally thought possible when using the top-down approach.
Management’s problem is the top-down approach because by its very nature it demeans and disrespects its employees and thereby causes them to demean and disrespect their work, their customers, each other and their bosses. In using the top-down model, managers and executives are their own worst enemies.
Best regards, Ben
Author “Leading People to be Highly Motivated and Committed”
http://www.bensimonton.com
People are all capable of being our most important assets!
Very few people are not capable of being assets but everybody is capable of being a liability.
If they are treated badly then they will behave badly.
If someone punches me in the face then I would describe that person as behaving badly towards me and therefore a liability to my organisation.
What we seem to be missing is that the vast majority of people do not go around punching each other in the face.
When it happens it can normally be ascribed to some very specific behaviour on my part that caused him to want to punch me.
The behaviour of people at work that is described by managers as having a bad attitude, lazy, workshy, invariably does not include a description of the very specific managment behaviour that caused that reaction.
When we hear time after time about the destructive behaviour of the workforce without hearing anything about the destructive behaviour of management it skews our perception until we delude ourselves that mangement are perfect and that the fault always lies with the workforce.
Until we become aware of the behaviours of management that cause this failure to perform in the workforce, our business’s will continue to fail.
Peter A Hunter
That’s a good question…
I would always challenge that assertion,and come at it from a slightly different angle.
The key metric here is engagement. In other words are your employees aligned with and committed to your objectives?
Consider employees as a dynamic asset. The value of their contribution can go down as well as up. And that will depend on:
– how they are managed;
– their line-of-sight between their job, their team goals, and organisational objectives;
– how they perceive reward and whether they can influence it;
– how they are learning and developing;
– and of course, how they are involved in decisions which might affect them.
Employee satisfaction is not a determinant of performance: it works the other way. Employees who are aligned with, and committed to your objectives perform. They are much more likely to be engaged; channel discretionary effort to your benefit; and given the conditions outlined above, enjoy job satisfaction.
Then they may be your most important asset.