Reassess your assets

first_img Comments are closed. The case aginst people being an organisation’s greatest asset is gettingstronger. And, in any case, the time to adopt a less fanciful slogan is longpast, writes Stephen Overell.According to Adslogans, which runs a database of advertising taglines, thefirst company in the UK to use the phrase ‘people are our greatest asset’ wasInteractive Services, an Oxfordshire-based training consultancy. That was in1991. The honour is qualified, however, by the suggestion that the inspirationmay be derived from the Army, which has long held that ‘the Army’s greatestasset is the morale of its soldiers’. Since then, of course, the phrase hasblossomed. Marconi, West Midlands Police, UBS Warburg, Ernst and Young,Andersens, Nato, the CIPD – the list of believers is long and diverse, thesentiment wholly uniform. What are we to make of this? An impressive show of unity? A testament to thesparkling originality of the corporate intellect? Final proof that ideas followthe patterns of diseases, becoming more virulent as they spread? Or is it thatsocial conventions have made mouthing such platitudes a necessary obligationfor the go-ahead business leader? Like many roadworthy slogans, the axiom sums up a generation of academicargument – in this case about the nature and meaning of HRM (human resourcemanagement). As scholars wrestled with such matters as the softness of HRM, thehardness of HRM – its wickedness, its contradictoriness, whether it was reallydifferent from good old personnel management – practitioners simply got on withit. HRM grew, and as it grew, it needed a positive slogan to reinforce the viewthat employees were now investments rather than variable costs. Step forward‘people are our greatest asset’. There is no denying that as rhetoric, the phrase has been phenomenallysuccessful. Its truthfulness, though, has always been in doubt. Michael Hammer,who co-wrote Re-engineering the Corporation, has called it “the biggestlie in contemporary business”. Peter Drucker prefers “a cliché thatborders on a lie”.(1)A new theory is gaining ground. According to the sudden surge of books aboutmanaging professionals, the phrase is not so much a lie, as only realisticallyapplicable to a tiny minority of organisations which operate under a veryparticular set of pressures – namely, professional service firms (PSFs). For the majority of organisations, it is simply inaccurate. “In mostbusinesses, a company’s competitive advantage does not rely directly on theretention, motivation and behaviour of particular individuals,” write JayLorsch and Tom Tierney, the authors of a new book on managing PSFs.(2)”Instead, it turns on shelf space, brand strength, cost position,distribution systems, price, technology, product design, location, or anynumber of other variables that can exist apart from the individuals who createdthem… Most companies’ profit performance does not correlate with their ‘peopleassets’.” Or put another way: people are expendable. In PSFs, however, which, after all, are nothing more than gangs ofindividuals with specialist skills – lawyers, accountants, PR firms, managementconsultants, advertisers and so on – the dependence on high-performance peopleis absolute. Indeed, Lorsch and Tierney describe it as “the distinguishingcharacteristic” of the PSF – so much so that the interests of the employeecome before those of customers. “The people you pay are more importantover time than the people who pay you,” they explain. Managing teams of professionals is often alleged to be like ‘herding cats’.Patrick McKenna and David Maister, authors of another new book about PSFs,First Among Equals, (3) paint a picture of star professionals as beingcongenitally averse to accountability, claiming it will thwart theircreativity. They hate the uniformity of meetings. Their well-honed professionalscepticism trains them to pick holes in constructive new ideas. They have whatMcKenna and Maister describe as an “alarming tendency” to doprecisely what they want, irrespective of the firm’s wishes. They aretemperamentally restless and ambitious, nursing a compulsion to compete againsttheir colleagues; and they can take lucrative clients with them in the event ofa fall-out. Trimming their elevated salary costs is not an option: cutting wage billsnever translates into competitive advantage in a PSF. The firms have littlechoice but to put up with such irritations because, unlike all other businessmodels, in PSFs the balance of power really is tilted towards the individual.Accordingly, PSFs tend to be flat-structured and participatory. Yet thisculture of involvement, even democracy, works against responsibility. “Ifeveryone is in charge, no one is in charge,” explain McKenna and Maister. And, as a sector, professional services has boomed. In 1990, the globalrevenue of PSFs was $390bn, a decade later, it was $911bn and between 1980 and2000, PSFs globally grew by 11 per cent a year.(4) If the professional services sector really is uniquely dependent on goodpeople – and the case is, I think, a fairly strong one – HR’s generic cliché ofchoice during the last 20 years is looking shabbier than ever. People are our greatest asset’ is often used as a reason why allorganisations should promote best practice across a host of different agendas –equal opportunities, reward, selection, appraisal, employee relations,development. The logic carries an implied threat: if companies don’t treat people astheir most important asset – helping to retain good people by offeringcompetitive maternity rights, for example – those assets will leave and thecompany will suffer. This threat carries some weight when the only assets anorganisation has are its brand and its people – the PSF model. But does the logic really work in a typical enterprise? Does the threat ofworkers hot-footing elsewhere really have the potential to devastate theaverage commercial or public sector operation? The honest answer is probably‘no’. Most organisations can use, abuse and lose their hum- an assets withrelative impunity because they have others that are more important. Generally,people are a means to an end. ‘People are our greatest asset’ is, then, a slogan that is for the most partfanciful and inaccurate, even a downright fib. Nothing new there then. Thepoint is that ‘people are our greatest asset’ may have done more harm thangood. It has made the HR profession look over-ambitious, deceitful and smarmy.Ideas for a new tagline, anyone? References1 Taken from Delivering on the Promise, Andersen Consulting Human CapitalPractice, www.andersen.com/resource 2 Aligning the Stars: How to succeed when professionals drive results, by Jay WLorsch and Thomas J Tierney, Harvard Business School Press, 2002 3 First Among Equals: How to manage a group of professionals, by PatrickMcKenna and David Maister, The Free Press, 2002 4 Lorsch and Tierney, as above Related posts:No related photos. Previous Article Next Article Reassess your assetsOn 28 May 2002 in Personnel Todaylast_img

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