Why Manage Better?

Thursday, June 21, 2007

Management Phrase Abusage – People Are Our Number One Asset

Management Phrase Abusage (MPA) may be the most common symptom of ineffective management. Only we don't know about it. Or we choose to ignore it.

One abused phrase, "People are our number one asset," is undoubtedly a powerful one—the meaning dense and implication immense. What I wonder is, What do people seek to convey when they use this phrase? Moreover, do people really believe in it? And, if they do believe, do they ever act on it?

These and other questions have disturbed me during the course of my consulting practice. If people are our number one asset, then how do we take care of that asset? If we purchase a piece of land, or an apartment, or a high-end car, we take very good care of it. Do we think of people in the same way? Assets are construed to be inanimate. Is it then right to use “asset” in this context?

Some allowance can be made on grounds of the “transferred epithet.” If you survey the policy statements (or other such exalted rhetoric) of companies around you, I am sure you will see the double standards I am hinting at. Companies where employees are recruited without a selection process and are removed without sufficient opportunity, or are treated as slaves, have the same stated human resource policies as the companies that don't. My conclusion is: It is fashionable to say people are our number one asset.

Also, it is difficult to come up with better substitutes. So why redo it? If people are my number one asset, why do I sell off through voluntary (in most cases compulsory) retirement schemes? Why do I have appraisal systems and then look to give a higher reward to some and none to others? Why do we keep hoping and scheming how to get rid of that one person? Why do we secretly hope that our company would be so much better off without this person?

I found some answers to these concerns in the book Good To Great. Jim Collins, a meticulous and insightful researcher of corporate success, writes that “People are not the number one asset, the RIGHT people are the number one asset.” Bull’s-eye. His research shows that companies that did well over a sustained period of time stuck to a talented and committed set of people. These people were not necessarily popular. They were effective and in most cases low profile.

These companies knew who these people were and made sure they were taken care of. They did not repeat the mistake of companies that reward glamour and presentation skills but not simple, quiet, and effective performance.

How do you convert the not-so-right people to being right? In my belief this is the biggest challenge every manager faces. And my personal take is you can't really make this conversion. No one can change the attitude of a colleague, peer, team member.

You must make the hiring decision based on attitude. Hire the right people because you can't change them later. Hire for attitude, train for skills, and educate for knowledge.

It is difficult to convince people of your values. You have to find people who already believe in your values or have a similar value set.

People will believe that they are right for the company when you have the courage to differentiate, reward, recognize, and most important punish. I believe very strongly in differentiation. It’s human nature to be upset when others get what we think they don't deserve irrespective of what we got!

One of the biggest corporate icons of the twentieth century was a master at differentiation. Very early in his tenure as Chairman at General Electric (GE), he revolutionized human resource practices. Some innovations included:

· Unflinching adherence to the code of conduct and the GE way
· Open sessions to discuss personalities and performance
· Turning out the bottom 10 employees each year
· Conducting Work-Outs to empower employees

The most important practice of Jack Welch was to apply all of these rules to himself also. When asked, "How would you know Work-Out is successful?" he replied, "One of the ways we will know Work-Out is successful is that my style of leadership will no longer be tolerated in this company."

Now if you have that kind of guts, you can say that people are your number one asset. I would prefer—”The right people are our number one asset.”

Anshuman Tiwari

This article first appeared in Industry 2.0 in March 2005 as part of a column titled “On Quality.” The views expressed are solely those of the author.


Anonymous said...

Good for people to know.

cambiasso0330 said...


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