Zealise Blog

People Assets - So What?

It started so well. There I was, explaining the thinking behind Human Assets and the Chief Executive I was talking to was not only agreeing with me, but informed me that everything I was telling him was “all motherhood and apple-pie.” Boy, I was excited! Here was someone who understood – who really understood and so would not need much convincing.

Unfortunately, I was wrong; even for the converted the proposition seems to be hard to follow and the benefits unclear. So let me take a few minutes here to explain the benefits and why it is vital for management to embrace the concept.

Before a business buys any equipment, whether a machine to improve production or a computer to improve service, it assesses its requirements. It identifies what is available in the marketplace and evaluates the best option according to the relationship between cost and benefits in each instance. The ongoing nature of the contribution that such equipment will make to the business and hence the long-term implications of the decision ensure that care is taken to make the best decision possible. Furthermore, the importance of this relationship is underlined, once the decision is made, by recording the equipment as an asset in the books. 

But it does not end there: a business investing in a new multi-million pound computer, for example, does not just install the computer in the computer centre and leave it there. It continually enhances the computer’s capabilities, by:
•    Developing or acquiring new applications software, or upgrading existing programs.
•    Acquiring new components to increase its performance capability.
Management is able to do this because it effectively continues to validate the original cost-benefit analysis, and hence the investment decision, by measuring the ‘return’ that the asset delivers i.e. the contribution it makes.

There is however, no equivalent for measuring people performance.

It is all very well to say that talking about people as assets is motherhood, but the fact is from time immemorial they have generally been easily replaceable and thus treated as consumables rather than as assets. For this reason, they have never been accounted for as assets. Consequently the statement that people are assets has profound implications for the management of a business and the way in which people need to be accounted for.

The duration of the relationship between a company and its employee is just as long as the relationship between the company and its fixed assets, and potentially even longer. Yet nothing like the same care is given to the ‘buying decision’ and even less to the ongoing investment to maintain or enhance the relationship. Yet, if people are the assets that they are increasingly recognised as being, this has to change.

Even more important, management needs to be able to assess its own performance in overseeing this vital asset. If, as increasingly recognised, it is people that give a company its competitive advantage, management can no longer afford to operate in a vacuum with regard to the way it manages them and it is absolutely imperative to find a way to measure their contribution in the same way as for any other asset.

This is the solution that Zealise offers! It provides an empirical, structured and consistent platform for valuing people assets, and the tool for management to measure people performance and – equally important – their own effectiveness in overseeing them.

Beyond Motivation

Question: “What is the difference between motivation and commitment?”
Answer: “A hen and a pig both contributed to your grill but while the hen was motivated, only the pig was committed.” 

I know! It's not new and it is really hardly even funny. But yet it keeps cropping up in motivational talks and seminars. On one level this certainly seems to be a rather facile illustration, rather endorsing my sense of the whole approach to motivation. I mean how would one assess the hen’s motivation, while there can be little doubt it wasn’t the pig’s commitment that saw him end up on your plate! Nevertheless the analogy has staying power because it serves to make a telling point. Motivation is certainly far more transitory and less substantial than commitment.

Given the choice, which would you rather have: motivated people or committed people?

Motivation has shallow roots and is easily dissipated; rapidly eroded by changing conditions and circumstances that somehow derive discouragement. Commitment on the other hand is less corruptible. It is tenacious and bold; the never-say-die attitude that looks upon obstacles as opportunities; challenges that make the cause more worthwhile. Commitment cannot conceive of defeat or, if it does, damns it as a bully and stands defiant. That is why, to truly succeed in anything, we need far more than motivation – we need commitment.

The difference between motivation and commitment is in fact the theme of virtually any romance. The happy-ever-after ending only comes when the commitment is sealed; prior to that it is all about motivation. And the same is true of life. Success derives from commitment.

It thus seems insane that such a disproportionate amount of management time is spent on employee motivation. If employee engagement is a problem, should we not be looking to improve employee commitment rather than employee motivation? And there is no better way to do this than to adopt the Zealise proposition and actually treat people as the human assets they are. Let's stop talking about human capital and human capital management in the abstract and make it a practical reality.  It might not guarantee we live happily ever after, but it sure improves the odds of being happier at work and thus in our lives.

Spotlight on Success

Have you ever stopped to think about success? What it is? Whether you have it? How you get it? How important is it? How much of it is there? What is the price you have to pay for it? 

“Enough already!” I can just hear your reaction as you drown in the questions. But if you do stop to think about it I am sure you will agree success is a rather strange phenomenon. Easily defined, it is not so easily measured. This is because it is ultimately completely subjective: a roomful of people asked to quantify personal success would probably produce as many answers as there were people in the room.

Perhaps it would be easier if we took Maya Angelou’s definition: “Success is liking yourself, liking what you do and liking how you do it.” Simple yet profound, this highlights that – no matter how or how much other people may judge you – success is ultimately personal.  But what is really remarkable is how closely it resembles Mahatma Gandhi’s statement: “Happiness is when what you think, what you say and what you do are in harmony.” The essence of the two statements is so similar that it is only a small step to conclude that success and happiness are one and the same! And that is certainly enough to make one pause to think.

And there is even more to think about if we apply this logic to organisational success. It would mean that organisational success is the same as organisational happiness – a new concept for all but the most progressive organisations.

Yet this is perhaps not the leap of logic it may first seem. The natural corollary to the statement ‘you are only as strong as your weakest link’ is that the most successful team is the one with the most successful players. And since any organisation is ultimately a team, it is entirely logical that the more successful its people are individually, the more successful the organisation will be. Dale Carnegie said, “You never achieve real success unless you like what you are doing” and it thus makes perfect sense that a company should focus its efforts on ensuring people like what they are doing. Numerous studies indicate that companies with happy people outperform those where the people are not.

In fact the link between happiness and success is neither as surprising nor as tenuous as one might first think. It brings us back full circle to the Harvard Business Review comment quoted in my last blog, “Most companies have it all wrong. They don’t have to motivate their employees. They have to stop demotivating them.” To do this they simply have to create an environment in which fulfilled people can engage all their talents and so like themselves, what they do and how they do it. Yet we do seem to be very slow learners. Albert Schweitzer identified this secret more than a century ago when he said, “Success is not the key to happiness. Happiness is the key to success. If you love what you are doing you will be successful.” This applies equally to organisations. The most successful organisation will be the one with the highest proportion of successful (happy) people - those who are using all their talents. 

Motivation: The Rainbow's End?

“It is not the job of the manager to motivate employees. That is impossible. It’s a manager’s job to create a happy work environment in which employees are naturally motivated.” (Alexander Kjerulf: “Happy Hour is 9 to 5”)

This statement has stuck with me for 10 days since I first read it. Why? Perhaps because it is so simply expressed, and yet so profound. More likely though, it is because it seems so blindingly true!

Yet that cannot possibly be. A quick Google search on the word ‘motivation’ returned an incredible 5,640,000 hits. The top 5 sponsored links were:
•    Improve Staff Motivation (Leading rewards scheme provider)
•    Motivation (Reward and incentive schemes to improve employee motivation)
•    Employee Surveys (Try something new)
•    Employee Motivation (How are your employees doing?)
•    Improve Staff Motivation (For a wide range of incentive schemes….)

Interestingly the 7th sponsored link was “Book Motivational Speaker” and a follow-up Google search of motivational speakers returned 131,000 hits!

Clearly there are whole industries focussed on motivating people. With so many people earning livelihoods, and in many cases pretty lucrative livelihoods, from motivating others, it seems pretty far-fetched to say that it is impossible to motivate people. And it would be stretching the bounds of cynicism to suggest that all these people are charlatans! Yet, both positions cannot be true. 

As ever when two opposing positions both appear to be true, it is best to go back to definitions. Webster’s dictionary defines ‘motivate’ as ‘to provide with a motive.’ Motive, in turn is defined as ‘that within an individual, rather than without, that incites him to action.’ This is crucial, for it means motive is innate, driven by personal values. The whole purpose of motivating people, however, is to get them to do what you want them to do rather than what they want.  This can only happen when both parties want the same thing. Thus outside forces can do no more than inspire behaviour that coincides with the individual’s personal values.

Mahatma Gandhi said, “Happiness is when what you think, what you say and what you do are in harmony.” Thus, if motivation is not impossible, it is very nearly so, and certainly beyond most managers’ capabilities. It is unreasonable to expect managers to be able to align the various and variable values of all the different people for whom he is responsible. American entrepreneur Russell Simmons put it this way: “Your happiness ultimately comes from the way you work, not where you work.” 

So trying to motivate employees is rather like looking for the fabled pot at the end of the rainbow. We can all see the rainbow, and to that extent it exists, but it really has no end and certainly no pot of gold at the end. The Harvard Business Review article was spot on when it stated, “Most companies have it all wrong. They don’t have to motivate their employees. They have to stop demotivating them.”

Mistakes: A disaster or an opportunity?

“We all make mistakes. Anyone willing and determined to strive for something better will probably make more mistakes than someone who provides only status quo service. But mistakes are a small price to pay for the successes that follow failed attempts. A true test of exceptional service can be found in the actions a company or an individual takes to turn mistakes into a positive experience.”

This is certainly a topical issue in the light of the fiasco that was the launch of Heathrow’s Terminal 5 last week. As mistakes go that one is way up there in the order of magnitude.

One might argue, however, that it was a rather unfortunate consequence for British Airways when their original goal was to move way beyond “status quo service.” Unfortunately there can be no doubt, when it comes to the second part of that statement, that they completely missed the boat (or should that be the plane?) There certainly does not appear to have been any effort to turn the negative into a positive, and statements apologising “for the inconvenience” would have been more likely to raise hackles than soothe the feelings of those traveller’s whose annual holidays or important business trips were totally disrupted.

Apart from the television coverage of the mountains of luggage piling up, the lasting impression for me was the one of the senior executive turning his back on a camera crew and refusing to answer the reporter’s questions. That conveyed the sense of personal embarrassment with no feeling whatsoever for the customers’ feelings and absolutely no clue of the need to do everything possible to retrieve the situation. Subsequent acceptance of ‘total responsibility’ by the CEO simply confirmed the sense that, even at that late stage, he was only expressing what he thought he had to, with no feeling for the customer.

Undoubtedly the scale of the predicament was unprecedented and there was no text book for them to refer to, but the management handling of the situation turned what was a company disaster into a complete catastrophe. There was absolutely no concept of the fact that “It is better to spend money refunding clients when they aren’t satisfied than to forfeit money in lost accounts for the same reason.” Unfortunately this is a service business where compensation is as important as refunds, and efforts to minimise customer claims for hotel accommodation actually suggested the completely opposite philosophy.

No doubt there will be a massive enquiry to find out how BA ever got itself into this mess, and rightly questions will be asked as to:
1.    Why was such a massive conversion attempted in the first place, rather than having a more traditional ‘phased’ implementation?
2.    What kind of risk assessment was done?
3.    Why was there not a contingency plan in place for if things did go wrong?
And that doesn’t include the probing to find out what actually did go wrong and why. But how many will ask 'Where did customer service come into the equation?' and 'What could have been done to minimise the loss of goodwill?'   

Forget for a moment that it happened to BA and ask yourself, ‘What would my company have done if it had happened to us?’ And then consider the wisdom of Hal Rosenbluth’s words, and the lessons they contain. However, there is little point in asking what he would have done in such a situation, for, with his philosophy, such disasters would never happen in the first place.   

“The growth of a company is really the aggregate of the growth of its individuals.”

This 'no-brainer' statement is actually a serious indictment on the management of most organisations, who just don't 'get it.' Don’t believe me? Then just ask yourself what the correlation is between the investment in people in your organisation and the growth on its profits and/or performance. In most companies this isn’t even measured!   

Early in my career one of the biggest inhibitors of productivity was the tendency for many managers to assess their importance by the number of people they had working for them.  Fortunately we have moved on from there: unfortunately that is due more to the emphasis on downsizing than enlightened management.

If we really value people and the contribution they make to a business, why is it that when times get tough, almost invariably the first two things to get cut are:
1.    Headcount; and
2.    Training and development?
That very prevalent tendency proves that, as a general rule, management has no idea of the economic correlation between business growth and personal growth.   

The wonderful thing here, however, is that we are not actually talking theoretically. The growth of  Rosenbluth International from a $20 million company into a $6 billion global leader provides irrefutable evidence of the practical wisdom of Hal Rosenbluth's words. Yet, despite his example, and his detailed explanation of how he did it in his seminal book, “The Customer Comes Second,” very few organisations have picked up on his approach and followed his example. I cannot for the life of me understand why not.

Nor is that opening quote a single one-off statement. He backs it up when he says, “It’s important to look at training as a long-term investment. Companies that look for immediate returns on the time and money spent on training will be disappointed. The investment in training should be viewed no differently from any capital project. Its success should be gauged by the benefits over the entire life of the project, not just by looking at years one and two.”(P 85)

The only thing I would quibble with there, are the words’ “the entire life of the project.” To me a person’s training is part of the cost of growing that individual, something that has benefits way beyond the life of a single project.  This is why, in the Zealise approach, I would capitalise these costs, but as part of the increase in human asset value of the individual. This is what provides the added value, for it is this that re-establishes and reinforces the partnership between the individual and the organisation. It is thus not only the means to engender employee engagement and ensure that people are truly happy at work, but it is the glue that will cement the organisation and provide the basis for developing meaningful, empirical KPI that will improve business performance measurement AND prove the relationship between the growth individual growth and bottom line business growth.

“Companies earn the bad attitudes of their people.”

That is certainly a statement that doesn’t pull any punches! And, if it is true, then the Towers Perrin 2007 Global Workforce Survey revealing that 79% of employees are disengaged, is clear evidence that most organisations have a serious problem.   

So the $64,000 question is, “Is it true?” As it is largely a statement of opinion that probably isn’t possible to answer categorically, without a lot of research which I don’t have, but its validity can be established by looking at the source: Hal Rosenbluth, who made the statement in his book, “The Customer Comes Second.” 

As someone who definitely “walked the talk” he is unquestionably someone whose opinion has to be respected. In fact I would even go so far as to say, after the remarkable success he achieved putting his people first, he is certainly someone who should be listened to, and more effort made to follow his example. As I wrote last week, his book is a panacea for the ills of employee disengagement highlighted by the Towers Perrin and justifies the Zealise approach totally.

Let’s just have a look at some of the other things he says.

“Cries from corporate America lament a lack of motivation in the workplace, absenteeism, turnover, apathy, lethargy, and a host of other evils that drag production in our country down and make us a less fierce global competitor. The origin of these maladies is a lack of happiness in the workplace. Without it, the best-planned processes, the finest tools, and most marketable products go to waste. Without it, eventually all else breaks down.” (Page 35) And as the survey shows, its not just in the US.

“If more corporations paid as much attention to their people as they do to politics, public image and increased profits, everything else would fall into place. Profits are the natural extension of happiness in the workplace.” (P 36) Don’t you think treating people as human assets will provide a mechanism to ensure this?

“Most of us choose our spouse with care and rear our children with nurturing and compassionate attention. Yet we tend to select the people that will join our company on the basis of an interview or two, and once they have joined, they often find that they must fend for themselves.”

“Service begins in the heart. Too often a person’s job history carries more weight than his or her human values.” (P 51) As I wrote last week, how can you possibly expect to deliver customer delight if a person’s job description carries more weight than the person doing the job?

That’s just the first quarter of the book, and there’s enough wisdom there to start a revolution. The tragedy is that it is so fundamental it should not need a revolution, but as the Towers Perrin survey shows; one is clearly needed! 

The Customer Is NOT Always Right

I have always thought the statement “The customer is always right” was a rather sweeping presumption that was at best questionable and at worst downright wrong. 

From a purchasing perspective alone it doesn’t always make sense. As a customer myself, there have been times when my purchasing decisions have been poor: when ‘buyer’s remorse’ has not been the result of hard selling on the part of the salesperson, but rather of my own prejudice, inflexibility, and unwillingness to be guided. In fact many of the purchases where I have been most satisfied have been those where I have been given advice and guidance. The adage that the customer is always right thus can be a Machiavellian principle that would make it legitimate to sell concrete lifebelts if that is what the customer requested.

But the issue runs deeper than just purchasing; it seems to me to be a statement that gives the customer superior rights and powers in what should rightfully be a mutually-beneficial relationship between equals.  Thus, when I read Hal Rosenbluth’s “The Customer Comes Second” recently, I was delighted to find that my instincts were sound. In fact, ever, since reading it, I have wanted to draw others’ attention to this very important and all-too-often overlooked fact. However, the words for a blog have simply eluded me. So I am delighted to have been saved that labour, for here is one that says everything that I wanted to, and more! I cannot recommend it highly enough, and invite you to read it and share your comments, and, if you are of the same mind, to spread the word!

After all, how can you ever expect to create customer delight, if your people management makes your people feel unimportant and inferior.

Who drives customer experience?

Business is ultimately about meeting the customer’s needs, which is why for so long ‘Customer Satisfaction' has been the primary CRM measure. Yet surveys indicate that 60-80% of customer’s who defect reported that they were ‘satisfied.’   

So the bar has been raised, and now it’s all about the ‘customer experience’ and creating ‘customer delight.’ Yet even while raising the bar, the judgement remains subjective and it is still all about perception. However, if that isn’t difficult enough, the challenge is compounded by the question, “Who is responsible for the customer experience?”

The fact is that customer experience is not, nor ever can be, the responsibility of any single person, for it is the culmination of the way things pull together. For example, the best efforts of a salesman to ensure that a delivery is made on the date the customer requested can be futile if the despatch process is chaotic. Customer experience can, and most likely will, vary in every single instance. Customers might change the experience themselves: after all eating the same meal in the same restaurant will not be the same two nights running.  

Yet even that is not the end of it. So much of the customer experience is determined by others outside the organisation and over whom one has no control. For example, imagine flying with a group of friends to go snowboarding in the Alps and arriving to find that some of the party’s luggage, including snowboards, had not made the journey with you! This happened to a relative recently. Initial enquiries resulted in a promise that the missing luggage would be sent out on the next flight and would be with them by lunchtime the following day, but in fact it only finally arrived 3 days later. Certainly not much ‘customer delight’ in an experience where the sole purpose of a holiday is adversely affected for literally half its scheduled duration! The inconvenience and inability to use their own equipment was offset, but not compensated for, by insurance. In this instance, however, the problem was caused by the baggage handlers at the airport and not the airline. So who here really shaped the customer experience?

Such inter-dependence is mirrored in countless organisations every day and, with the prevalence (curse?) of outsourcing, is becoming ever more commonplace. How will any organisation that aims to have loyal customers ensure a delightful customer experience in such conditions? 

This inter-dependence is why an organisation has to be considered as a team, and why it is so very important that people be regarded as assets and treated as such. There can be no  organisational alignment when there is no organisational teamwork, or people are not fully engaged and prepared to collaborate effectively. This can only happen when people assets are treated as such and feel like assets. Only then will you have the role-ownership, combined with the sense of team with its concomitant sense of collective responsibility. Furthermore, it is only when all this happens that it will become possible to ensure that there is proper inter-company liaison, that, even if service itself isn’t seamless, the standards of service and commitment will be universal.

Only then will it be possible to drive the customer experience.

It’s all about the people!

Business is not complicated. In essence it is simply a case of people finding a way to deliver a product or service to other people requiring that product or service. Consequently, for all the glamour and mystery we give it, business strategy is ultimately only about the development of a master plan to connect producer and customer. And no matter how sophisticated we make the production process, it all ultimately revolves around people.  

Since our earliest days as hunters and gatherers, when we first reasoned that we could be more economically efficient if we diversified and optimised individual talents for mutual benefit, business has always been about trade. Increasing sophistication has undoubtedly swelled the scale, but ultimately the increase in scale boils down to nothing more than the volume of transactions required. Unfortunately with scale the focus mysteriously switches to the transaction rather than the relationship that underpins it – with significant consequences for all involved. The old sales adage that “people buy from people” somehow gets completely overlooked, and a take-it-or-leave-it attitude begins to prevail.   

This applies just as much to intra-business transactions as to inter-business transactions, and is epitomised by the term “Human Resources” – a designation that equates people with the other inanimate “factors of production.” So the burgeoning trend to talk about people as assets and the increasing use of the term “Human Capital” is good news. But, driven as it is by a need for new management measures, there is a danger that the change in terminology will not change underlying attitudes. Without this change the workplace conflict, declining levels of employee engagement and poor customer service so prevalent today will remain a problem.

Signs that this tendency to dehumanise may be continuing include:
•    The classification of people as intangible assets;
•    The subordination of “Human Capital” below “Knowledge Management” and “Intellectual Capital”; and, possibly,
•    The burgeoning topicality of “Talent Management” with its inherent risk of focusing on talents rather than the whole persona, a possibly dangerous tendency when we all know that it is not always the star-studded team that wins the tournament, and when allowing people to develop and discover new talents is potentially the single biggest contributor to happy, engaged employees. 

Of course this is paradoxical when the trend is being driven by the recognition of the importance of people and the widely accepted fact that people constitute as much as 80% of the worth of a business, something which clearly corroborates my initial point. It also points to the fact that the most successful businesses will be those that manage their people best. So any organisation wanting to survive and thrive in today’s competitive world, simply must recognise the importance of people and find a way to effectively manage them.

Equally paradoxically, despite appearing to turn people into numbers on a balance sheet, Return on Human Assets not only offers a mechanism to drive this, but a universal benchmark to compare different organisations regardless of the nature of their business. This is because it goes to the very essence of business and deals with the fundamentals – the people: identifying the individuals who make both the internal and external trades that are the heartbeat of the business.