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August 2011

The Human Value

Did you ever doubt it?

If you ever needed proof that people are your greatest asset you certainly got it last week. The resignation of Steve Jobs as CEO of Apple wiped $10bn off the company's value.

Amazing! A company at the forefront of technology and it loses nearly 5% of its value on the resignation of one man! Certainly one for the humanists!

It does, however, beg some questions. (Not least about the iconoclasm of the market and its role the arbiter of value. After all, the news was hardly a massive surprise. So the reaction does seem to have been rather a knee-jerk response, even if reports claim that the fall was less than expected! However, let's not go down that road.)

Success imagesCA11Y5M2 Instead let us look at some of the implications of all this and see if there are lessons that we need to learn.

Firstly; if one man can have such a massive impact on the company's value, should that value not be tangibly recognised? Clearly the man is a massive asset to the company. So is it right not to include that value on the balance sheet?

Secondly: how can one man make such an enormous difference to a company? After all, no matter how visionary Jobs might be, there is no way he could have made Apple the success it is on his own. The products, the design, the marketing were never the result of just his effort.

This is borne out by the fact that Apple has 27,184 employees on Linked-In alone. And I am sure, no matter how much they revere the man, they will all claim a part in the company's success. And they would be justified, because business is ultimately a team effort. And as BP so dramatically illustrated: some lower level employee not doing his job properly can be disastrous. Each and every person contributes to success and thus they also have a value which should be recognised.

Thirdly: No man is immortal. And every leader knows this. Consequently any leader worth his salt will ensure that he imparts his vision, his values and his principles to those around him. To the extent that those govern his behaviour and his success, they will inspire others. So they will endure after him. Furthermore someone like Jobs who has been suffering from ill-health for some time will take even greater care to ensure that there is someone to whom he can pass the baton. Consequently, even if that person cannot replicate his unique qualities, the marginal difference will not be as great as that indicated by the market.

However, for me the clincher is the fact that, by not looking at the value of people, you are missing the opportunity to find other Jobs. How many people are there in the workforce whose potential lies untapped because no-one has given them the chance to demonstrate their abilities. At least with a leader like Jobs those qualities are more likely to be developed and come to the fore. As a result I would venture to think that Apple is better placed than most companies.

Just think how you could flush out latent qualities and enhance employee engagement if you were to value your people. What a difference it could make to your company if you were to do so. Surely you should if they are the assets you say they are!


Employee Engagement: The People Factor

 Are we becoming obsessed?

Do we risk setting ourselves up for failure?

Employee Engagement has become a very popular topic amongst HR professionals. If it doesn't dominate attention, it certainly occupies a considerable proportion of the discussion and debate. Yet many of the business people I encounter look blank when they hear the term. It doesn't impress them and they don't know what it means, why it affects them and why they should be concerned about it. They seem to think it is just more HR fluff. Have you found the same thing?

If you have, perhaps it is something to be grateful for, because it stops to make you think. It reduces the risk of its becoming just a rallying cry as HR endeavours to make itself more relevant.

The danger is that employee engagement risks becoming jargon, and jargon can separate just as easily as it can unite. Especially when - as employee engagement is - it is such a wide-ranging term that can mean so many different things to so many people.

That is why I was so glad to see the constructive contribution that ACAS, the UK employment relations service (often used to mediate in disputes between management and unions or workers) has made to the field.  They have recently published a new guide entitled, "The People Factor." (You can download a copy here.) I love the title, because it is basic and simple. It reminds us that ultimately we are all on the same side and that it is all about optimising the human contribution.

I have adapted one of the diagrams from the report to emphasise this even more effectively. You see, for me it is all about a common purpose; the more that people in the organisation can see, share and commit to the organisational purpose, the more effective they will be as individuals and the more effective the organisation will be. It is a win-win, but one that you can only achieve by recognising the importance of people and the fact that they are human assets because each and every one has a contribution to make.

 The People Factor










It is common sense really! So why do we need to make it so complicated?  

Why Treating People as Assets Will Improve Employee Engagement

I have always known that my idea of treating people as assets would invoke debate. I always anticipated a possibly lively discussion about how you assign a value to a person. And, of course I have to admit that it crossed my mind that, as part and parcel of that, there could be people who argue that it implies a sense of ownership that is inappropriate and undesirable. Naturally I expected to have to make my case. 

But I never thought it would be controversial.

Yet, it would seem that it is. It appears that I might have been naïve in failing to foresee just how passionately those people would feel. So, you can imagine how surprised I was this week when, in response to some publicity for my guide booklet "The 7 Deadly Toxins of Employee Engagement", someone wrote a comment on LinkedIn to say that describing people as assets "was the 8th deadly toxin!" 

Of course at one level I can understand this. After all it was hearing for the gazillionth time someone say "our people are our greatest asset" that started me on my mission to have it taken more literally. So I understand the hypocrisy of that statement better than most. I see how galling it is for people who feel that they are never treated as assets. And thus, in a sense, I can understand how you could regard it as the 8th deadly toxin.

But my challenger was not objecting to the hypocrisy that goes with the statement. He was arguing that it is totally wrong to regard people as assets. For he actually wrote, "People are people, and can never be assets." 

Does that shock you? It does me! After all, semantically speaking, if you don't see people as an asset, you see them as a liability. And you have to be utterly cynical or disillusioned to consider people in that light.

From an accounting perspective there are only 4 elements: asset, liability, income or expense. And there you have the crux of the problem. Historically you account for people as a cost. This effectively shapes all organisational behaviour. It is so ingrained into your management thinking you are not even aware of it. Yet this demeans people and makes them disengaged. It sabotages all your efforts to build employee engagement without you ever being aware of it. So you have to remodel the way you regard people to reshape your behaviour. And accounting for people as assets will enable you to do that. 

People will never be engaged so long as you demean their contribution by trying to reduce the part they play. It is not calling people assets that is the 8th deadly toxin, but accounting for them as costs. 

In fact there other good reasons to account for people as assets. You can get a good idea of these from the diagram, which shows just how much of a contribution people make to your business.

People Contribution - no logo










It shows how you depend on your people and how valuing your people improves your day-to-day operations. You optimise performance because:-

  • You determine a person's value by their contribution to the business; and 
  • Their value determines their individual reward.

The relationship between the two ensures this - especially when cemented by my employee ownership model. It creates a common purpose that aligns individual self-interest with that of the organisation. This creates a natural employee engagement that creates a win-win for both. It also means that people will manage themselves to optimise their own performance, and in the process reduce your burden and improve the quality of your life.

So, if you felt that people could never be assets, I hope you are now convinced. This offers you a solution that nothing else does, and to more than just your employee engagement challenge.


Employee Engagement: Is it a fluffy cliche?

"I am beset by doubts that our quest for employee engagement is subject to the law of diminishing returns."

"(Employee) Engagement has become something of a buzzword. It is used as shorthand for a lot of things."

"Many organisations only pay lip service to employee engagement."

"The engagement industry has taken on a life of its own; we are in danger of breeding a workforce of high-maintenance namby-pambies."

Those are some of the statements quoted in a HR Magazine report "Beyond Fluffy: Has employee engagement become nothing more than a cliché?" Interesting, aren't they? Because, no matter whether you agree with them or not, they highlight the massive challenge that those of us face who are trying to inspire greater workplace performance. 

Of course you can ignore the first question. If you look upon employee engagement as a project you will inevitably find it is subject to the law of diminishing returns. That is a simple law of life. No, I am sure you will agree that it is the other statements that are more thought-provoking, especially the second one: that it is used as shorthand for a lot of things.

You can hardly dispute that. There are too many definitions of the term to argue otherwise. And that is the reason why you find the kind of schizophrenia in the HR industry implied by the last two statements. You have a concept that is widely endorsed, but yet only superficially supported. How else do you explain the finding that there is no executive sponsorship of employee engagement initiatives in 47.7% of cases? You cannot expect commitment to anything that is so ambiguous that people 'do not get it.'

So, how do you turn the situation around? That is the $64,000 question.

Handshake The UK government created The Employee Engagement Task Force to try to find out the answer. It states that "employee engagement is about how you can harness the full capability and potential of your people." But it adds, "That must be willingly offered." This is still pretty generic. It won't go far to resolve the ambiguity that we are talking about.

But it does not have to be "Mission Impossible." Employee ownership - giving your people an equitable ownership stake in the organisation and its results - will go a considerable way towards addressing the rider. People working for themselves has to be the best way to creating a willing worker. Do that, and you have the platform to harness their full capability and potential. It may not be a panacea, but at least you will have a starting point where you are both striving for the same thing. That has to be better than anything you currently have.

Yet it goes even further. It makes managing your people a whole different ballgame. Now employee engagement is no longer a cause! You can concentrate instead on creating a partnership where the common focus is the good of the business. That has to be a win-win. It is no longer fluffy or a cliché.


Creating a Better Future

Change is easier if you stop taking personal responsibility for it.

Are you feeling battered, bewildered and buried by the barrage of demands being made on you? Is the conflict between cost-cutting and maintaining services a cruel conundrum that has you at your wits end? Is the only light you see an express train heading in your direction?

Of course you can hardly be criticised if you feel that way. Unfortunately, as you well know, the problem isn't going to go away. In fact things are likely to get worse unless you find a way to get on top of them right now. 

Now you don't need me to tell you that. You are all too well aware of the demands that are being placed on you. However, to master change you need to be aware of the nature of what is happening, and why.

Traditional business culture is one of command-and-control. Rules, regulations, and red tape have governed the time, place and method of the way you do things. Such an environment does not encourage innovation, individuality or enterprise. You could even say it is undemocratic, for it is a system that is at odds with the principles of individual rights and freedoms that underline democracy. Thus it is perhaps inevitable that it would come under strain. It is no wonder then that people claim command-and-control is 'dead'. The only problem is that we haven't yet found its replacement.

But, have you thought that perhaps the solution is staring you in the face? Maybe it is simply to create a more democratic workplace. After all, innovation, individuality and enterprise are personal qualities. So, if they are what you need to give you your competitive edge, you need to look to your people to provide it. 

When you think about it, it is pretty obvious. You are already aware that your people and their knowledge comprise the bulk of organisational value. After all, ultimately value is determined by, delivered by and optimised by people. So why not do more to align your organisational interests with their self-interest? What better way is there to create greater employee engagement?

We have already seen this in the cracks in capitalism caused by too great an emphasis on profits and the failure to look at the bigger economic picture. Well, the same mindset means that you still tend to regard your people as a cost. Yet this is no longer appropriate. If your people constitute the bulk of your organisational value you have to focus on them more. So the way to optimise organisational value is to value your people more. 

Sustainability When you value your people you create a massive multiplier effect. They feel appreciated and a greater sense of belonging. This in turn facilitates the creation of shared values and enables you embed enterprise, energy and enthusiasm and that is what employee engagement really is. Create that and you don't have to worry about employee engagement - it becomes an effect rather than a cause to be chased.

Not only that! With them taking greater ownership you will no longer find change as onerous as you do at present. You will give yorself a better present and create a better future.