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The
new people economy
By
Dinesh Weerakkody
Management
guru Peter Drucker once said knowledge is the only meaningful resource
today. Access to other resources is no longer limited. Capital flows
freely across borders, unerringly seeking out companies that need it.
Technology
is available to countries that cannot grow it - for the right price.
Information is available to anyone who wants to flag it down on the
digital highways. Crucially, the people who can bring knowledge into
business and government are limited and the key to build competitive
advantage and improve our productivity levels.
Productivity
Productivity
is a measure of the quantity and quality of work performance with
optimum utilisation of resources. Also, productivity is a broad
performance factor that applies a criterion of work achievement to
individuals, groups and organisations.
People
in the organisation are in a position to influence directly the
productivity of individuals and groups under their supervision. They
are also in a position to help integrate these performance
contributions into the organisation as a whole. Only when such
integration occurs, is high organisational productivity possible. We
also know that an organisation can rise only up to the level the
people in it can take it to.
Some
time ago I visited Japan on a study tour organised by Matushita
Institute. I visited a few industrial giants. In every company I ended
my visit by interviewing one or more of the managing directors of the
company. I would always inquire from them, "Please tell me of the
directors who is the most influential?"
The
response would always be a variation of one theme. "We manage as
a group, we are equals." But, I would probe. "Is one of you
somewhat more equal, more powerful than the others?" In every
case the final answer surprised me - "Well, ordinarily the most
senior and most respected managing director is in charge of
personnel."
As
we all know too well, Human Resources (HR) rarely is a powerful
function in Sri Lankan companies and is often the weakest. Moreover,
the difference does not have to do simply with a commitment to the
importance of 'people management.' In Japan, it is deeper than that.
In order to ascertain the views of a few top executives on the subject
of 'competitive advantage through people' I decided to interview key
CEOs of a few companies.
Other
than one CEO, the rest thought that the key executive who is in charge
of the human resources need not occupy a position of importance and
priority either on the board of directors or in the management
structure of the firm. If this is the view of our top executives, it
shows that we cannot relate to people, if we do not believe in people
as an end in itself.
If
we do not realise that productivity depends largely on people, and
that they need to be motivated, then undoubtedly the profit figure in
the balance sheet is likely to suffer. It is time, therefore, we
realise the importance of people in the new paradigm of business.
Good
to work for
In
Sri Lanka, many companies pay lip service to the objective of being a
good employer, but do firms take their obligations towards their
employees seriously?
Does
it pay to be a nice guy in the world of business? South Western
Airlines is a case in point. By investing in people, this company
became a profit maker from a loss maker. John Towler, a HR consultant
in the US says the key issues that can make a company "good to
work for" are first and foremost, there must be a high degree of
trust and respect between employees and management.
This
is earned over time and cannot be legislated into existence. Next,
open honest communication with employees. In practice, successful
companies offer more than just competitive wages.
They
also offer compensation and benefit plans with perks such as career
development and training for all employees. Such firms have a policy
of promotion within coupled with an ongoing program and the
understanding that the line managers are responsible for the
development of successors. This approach creates a stable management
structure a dynamic management team and a supportive system.
The
pay off to the company would be customer satisfaction, employee
satisfaction and a healthy cash flow. We all know that companies need
not be large multinationals nor have unlimited financial resources to
find ways of creating a positive working environment and in fact it
may be probably easier for a small firm to achieve an excellent
working environment.
People
are undoubtedly the most important asset of any business, and if they
are not properly motivated they will respond in kind. Research
suggests that the test of a firm's commitment to its workforce is the
size of its training and development budget.
Companies
which expect employees to carry on year after year without any further
development should not be surprised that their employees are turning
out poor quality products at high costs.
Many
may argue that it is not easy to create an atmosphere and environment
in which people are happy and highly productive, this may be true to
an extent, however many of the Fortune top 500 companies in the world
are not only highly profitable but they are also good employers.
Rising
costs
In
the face of rising operating costs and increased global competition
the question is whether companies should treat their employees better
than their competitors. Research suggests that a competitive advantage
over a firms rival can be gained through human resources.
The
Japanese philosophy of management is based on a participative approach
to decision making centered on people. Most Sri Lankan firms generally
tend to demand loyalty, without providing the necessary employment
conditions, and overlook the fact that loyalty, like respect, can only
be earned, not demanded. As the Japanese have discovered, worry first
about the people and the profits will look after themselves.
In
the final analysis, organisations that go all out to develop their
people and to improve the quality of life of the employees and their
families will succeed in attracting newer talent while enabling it to
retain good and bright employees and above all deliver high returns to
their shareholders.
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