Thought you might be interested in this article I recently wrote:
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Employees are NOT Assets, They are Investors
By Kevin Wheeler
Wednesday, March 31, 1999
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I think I have heard the expression "people are our most
important asset" a thousand times. And, every time I wince
twice. I wince the first time because I know that most
executives really believe that labor is a cost, just like
steel or semiconductors, and want to get it as cheaply as
they can. I wince a second time because an asset is by
definition a possession or something we can own and control
and we can do neither (legally) to people. So what are our
employees?
Our employees are really investors in the firm. They just
choose to invest their talents, skills, time, and energy in
the organization instead of dollars, and they expect a
return on that investment just as the dollar investors do.
In recruiting terms, this mindset is important for several
reasons.
First, when you recruit an investor you probably take a
different perspective than when you "purchase" an asset.
Most companies spend time and executive level attention
courting investors, speaking to investor clubs, writing
letters and articles in publications aimed at prospective
investors and so on. Do they expend the same energy for
recruiting top-notch employees? I doubt it. Yet, what
would the benefits be if they did?
Second, investors can choose to make their investment
elsewhere at will, as we all know so well. People who do
not feel that they are fairly rewarded for their investment
will find somewhere else to invest. They will put their
skills and energy to work for whoever understands this need
to separate assets from investments.
Third, investors need to have a sense of expected return.
They want to know what kind of earnings they will get for a
given input of funds. An employee instinctively seeks out
whatever it is that equates to value to them. That may be
job security, salary, flexible benefits, or time off. It
may simply be a culture that they find comfortable and lets
them express their individuality. Organizations that
understand this need for a clearly defined return on
investment have low turnover and find it easy to recruit
people.
Fourth, many people are choosing to become contractors
because they then have a contract that spells out the reward
they will get for delivery of a service within a certain
time frame and at a certain level of quality. We should
learn from them that all of us have a need to understand
what we will get for our investment. Unfortunately, we
often do not make the expectations or rewards clear for
regular employees.
There is a company in the Midwest that has become well known
over the years for its lack of "normal" benefits for
workers. This company, Lincoln Electric, has been in
business for more than 50 years and yet has no real human
resource benefit packages. Employees are paid by the piece,
for the work they do; earn as much or as little as they want
and are capable of; realize that by gaining more skills they
can earn more money; get paid no sick time or vacation time,
and vote on the distribution of profits each year. They can
vote to improve the physical plant with amenities such as
air conditioning or take the profits as cash. They usually
vote to take the cash, even though working conditions can
be pretty brutal in the middle of the summer. Turnover
rate? Virtually zero. Absenteeism? Almost none.
Recruiting issues? Standing room only.
How does a company with almost no benefits and few amenities
get such dedicated employees? Simple. The employees get a
clearly understood and fair return on their personal
investment of time and energy. Their raises don't come from
who likes them, but from their performance. It is a simple
system, but one that works very well.
Let's assume that the top executive team of your firm,
whether it is a single individual or ten, invested a few
hours each week in activities aimed at marketing the firm to
prospective employees. Let's say that they laid out clearly
the return on investment an employee could expect and what
their input expectations were of the employee. I believe
that the recruiting quality would improve exponentially and
that you would have found a way to differentiate your company
from the pack.
However, you also need to assess candidates as investors as
well. Do they have the skills and talents and energy that
your firm needs to compete? Do they have the capital to
invest that you need? The selection of potential
employee-investors is much more complicated than that of
cash investors because the employee-investor gives us his
or her innate abilities, accumulated skills and personal
energy rather than an external object like money.
Assessing candidates as investors is different, I think,
than assessing them as assets. I will devote a column
to this topic later.
For now, focus on getting management to think of people as
investors. Spring is a great time to revitalize, re-educate
and re-evaluate. Take a look at your recruiting strategies
and messages and try to ensure that you are taking an
investor approach and not an asset approach to your
employees and candidates.
____________________________________________________________
Kevin B. Wheeler
President
Global Learning Resources
46330 Sentinel Drive
Fremont, CA 94539 USA
510-659-0179 (voice)
510-659-0189 (fax)
Enter the 21st Century with the Best Possible People
Corporate Education - Staffing - Retention
http://www.glresources.com
----- Original Message -----
From: Bevis England <
bevis@VOYAGER.CO.NZ>
To: <
MG-ED-DV@MAELSTROM.STJOHNS.EDU>
Sent: Wednesday, March 17, 1999 11:15 AM
Subject: Re: People versus Capital
>As a specialist consultant in telework (including home offices), I have
>observed a number of ways of interpreting the 'value of people'.
>
>Many organisations persist in quoting, in their mission statements for
>example, the time worn clich� "People are a greatest asset" and yet
continue
>to require them to travel every day through rush hour traffic and make
their
>lives totally subservient to the whims of the workplace. Such
>contradictions are probably a good illustration of the split between
>leadership (defining missions and directions) and management (implementing
>the requirements) -- they pull in opposite directions.
>
>However, some organisations have recognised that if a person's salary is
$x,
>their true value to the enterprise is probably $x times 2.5 (in round
>figures) once the cost of replacing them if they left, training
>replacements, lost potential productivity, and so on. Such organisations
>also often realise that providing telework secures the productivity and
>decreases potential turnover. In other words, it is possible to quantify
>the capital value of staff, and to implement 'human', 'flexible',
>non-financial strategies to maximise this value. People and Capital for
>such enterprises are not opposites but supplements: with telework you can
>have your cake and eat it.
>
>Some companies have got to the point where the 'capital' and other
>conventional corporate descriptors (premises, labels, job titles, etc.)
have
>become irrelevant: the company exists simply as a group of committed
people
>doing things for their mutual benefit. Such enterprises are often the most
>successful (in social and human terms, which are the most important in the
>long term).
>
>Regards,
>Bevis England
>Telework New Zealand
>