The whole is greater than the sum of its parts.
—Aristotle
Some days, I feel exasperated when talking to Senior Business Leaders who all nod their heads when you explain about people being an asset that harnesses competitive advantage and adds value. I watch them nodding their heads, but know that really they’re agreeing politely while shaking their subconscious head, thinking, “Yes I know this is important but . . .” In the complex world of a dynamic and global economy, and the focus on fast capitalism with quarterly returns, there is little room for organizational leaders to focus on people things. They have to hit financial targets or face losing shareholder confidence. The bar is set high. Organizations need to demonstrate that they are growing fast, that costs are under control, and the business is lean and efficient. Leaders need to be decisive and have a plan that they are delivering against now, if not yesterday. There is no room for long-term thinking, investment in soft stuff, and going the extra mile to engage people, unless there is demonstrable return on investment (ROI) from the activity before the year end.
Try telling an organizational leader that their short-term thinking is going to result in long-term problems. That a short cut, which will lead to a celebrated profit made today, is creating a root that will eventually bring down the house of cards. Some of the smoke and mirrors that are used by organizations to make their balance sheet look healthy make the mind boggle. Whether it is divesting of buildings and renting them back or letting go of permanent staff to employ them as contractors, the fixed cost versus variable cost machinations would confuse even the most business savvy individual. Consider if you will the collapse of the subprime market in 2008. Finance houses and banks had been making significant profit returns right up to the credit crunch. Lehmann brother reported billion-dollar profits year-on-year from 2005 to 2007. In 2007, it communicated record net income and revenue results to its shareholders and yet on 15th September 2008, it filed for bankruptcy, the largest in history. Its collapse precipitated a global financial crisis and, ten years on, the effects of the credit crunch and the resulting sovereign debt crisis mean that austerity, wage stagnation, and unemployment are every day realities, and yet for organizations, they have carried on as before. Therefore, telling organizations that they need to approach their business from a different perspective is a bit like telling a smoker the dangers of smoking cigarettes. They know the dangers, they know that smoking will kill them, but they won’t change their behavior.
Lots of psychologists will tell you all about conditioning, beliefs, values, and attitudes, which drive this seemingly complex arrangement of agreeing completely with the rationale, but refusing to change course. A bit like the Titanic captain who knew the ship was approaching the ice field and had been warned icebergs had been sighted, but still insisted on full steam ahead. The paradigm in which organizations are run is deeply engrained into the psyche of the people who lead them and the managers who manage them. Nothing changes, because deep down, the people running the businesses believe that if they keep doing what they will doing, they will achieve the revenue and income returns of yesteryear, not realizing that the business success and results of the past were based on meretriciousness.
Focusing on the Wrong Priorities
To be fair to the Senior Business Leaders, they probably have a hundred other priorities that they also know are really important but, given their limited resources they can only deal with five or six of the priorities with their current budgetary constraints. The biggest issue of course that, given the pressure to return dividends to shareholders, organizations are prioritizing dividend payments rather than investing profits back in the business (Rawlinson, 2015). It is the reason why many salaries have remained static, despite organizations profitability increasing. Shareholders are demanding more for less, and the big loser is investment in organizations resulting in lack of staffing and aging infrastructure. In the long term, this will result in catastrophic events, which will lead to lost revenue due to issues with customer service quality and failures. The recent IT failure, which caused BA to have a worldwide computer outage, stranding 75,000 passengers was probably caused by the company running outdated IT infrastructure that has reached the end of its life. The compensation is expected to cost the airline £100 million, the cost to its brand reputation has yet to be calculated.
So where does that leave us? It leaves organizations with a problem. Not only are they leaking investment out of the business, causing long-term sustainability issues, they are also focusing what little of the investment pots they have left on the wrong things. Part of my problem is that I passionately believe that it is People who are the key to organizational performance. If I didn’t, I don’t think I could do the job that I do. I fundamentally believe that people are an organizational asset that appreciates in value when invested in (correctly) and, more importantly, can deliver more to an organization than any capital asset, given the opportunity. With people, the sums really do result in 2 + 2 = 5. Fundamentally, organizations only exist because of people. It is people who think up the product ideas, develop the design, and make the products. It is people who understand a need that can be met and design and deliver the service. It is people who come together to find a way to make something happen that may have been thought impossible once upon a time. We have air travel because people believed that it was possible to fly, and despite many failures, we can now board a plane that carries hundreds of people from one side of the world to the other. We can exchange information from one side of the world to the other in a blink of an eye because people worked out the hardware and software to make that possible. We can save lives because of medical advances, grow food in a desert, and cross oceans and ice sheets. We can have hot food in winter and cold drinks in summer all because of people. The computing power in our smart phones that we can hold in the palm of our hand is more powerful than the computers that sent a man to the moon at the end of the 1960s. When you think about the marvels of human endeavor, we truly are an extraordinary species. If organizations were able to harness just one small speck of human ingenuity in their day-to-day operations, imagine what could be possible. And yet, all this potential and possibility is lost to organizations. Organizational leaders fret and worry about the EBITDA, capital utilization, and marginal cost and overlook the one asset that can, and does consistently create every day miracles.
What is more, the people asset doesn’t stand still. Get the recruitment and talent management right in an organization, and someone recruited at entry level could one day end up running the company—think of that for a moment in regards to Return on Investment. You employ someone in a job worth a salary of $18 thousand a year, and 10 years later they are performing a job role worth $1 million a year. There are very few assets, which can accrue value in the same way, or indeed fundamentally change and add value in a different area and in a different way. Training investment isn’t the same as uploading the latest software into the computer, or developing new processes, which, once they have been delivered remains static until the next upgrade or update. Learning expands, morphs, and mutates as the learner collects new learning, responds to experiences, gains additional knowledge, or is placed within a different context. It is never wasted or lost; rather it is symbiotic and exponential.
The Contribution that People Assets Make
The result of our learning is individuals working together who have ideas that contribute millions of dollars to an organization’s bottom line because of new product or service ideas, process improvements, new business, or improvements. Every organization is a result of its people. Its successes are a sum of its parts, a result of people working together to deliver something truly amazing. Facilitating development workshops grants me privileged access of seeing the creativity process in motion, the moments when light bulbs light up, and innovation is sparked as one idea is built on with another and another until a truly magnificent moment is achieved and a creative outcome is delivered. These results aren’t a once in a lifetime occurrence; they happen every time a group of people comes together with purposeful endeavor. The end result is millions of dollars of added value in improved productivity and the opening up of new markets, product, and services.
At this point, it would be remiss of me to avoid the negative aspect of my assertion. I acknowledge that the opposite is true, sometimes 2 + 2 = −5 because someone screws up, and that’s the rub for organizations. People are a risky asset. Just as they may add real value, so too can they destroy a company. Whether it is a mistake or a malicious intent, people are also the cause of all the organization’s problems too. Yes, all of them. It is people who make the decisions that lose millions of dollars. It is people who ignore the processes, which result in health and safety violations. It is people that sell out, annoy customers, break things, and destroy good will. Just as they can add value, they can destroy it too. Also, one of the main reasons that I am brought into an organization to facilitate development workshops is because of dysfunctional teams. Senior leadership teams, who should really know better, failing to work together, refusing to let go of petty disagreements, colliding over which direction they believe the organization should travel in or in all out conflict, warring over politics, power, and personality clashes.
However, despite these things all being true, I honestly believe that most people, with very few exceptions, come to work to do a good job. They genuinely want to deliver something amazing. I am an advocate of McGregor’s Theory Y assuming that individuals will show initiative, should be involved in decision making, ideally at the lowest level in the organization that it is safe to do so, that people are self-motivated, and that they will be creative and imaginative in their problem solving. People want to do well in work, but very often the organizational environment is not conducive to that being possible. Whether it is processes or policy that prevent people from doing the right thing, managers lacking the capability to help release individual potential or organizational structure that prevents cooperative and collaborative working, I have found that the root cause of problems caused by people is usually systemic rather than something that boils down to a single individual choosing to perform poorly. If an organization invested in its people, and invested resource in helping people do their jobs rather than in processes and policies that prevent people from being effective, then positive outcomes are assured.
Creating an Environment for Sustainable Performance
As an organization development practitioner, I meet many senior business leaders who have a genuine desire to create an environment for sustainable performance, but, at the same time, are reluctant to spend any money investing in their people asset. There is little chance, without investment and support, that people will be able to make a positive contribution. If they are not trusted to take pride in their work, and are micromanaged, then there is little scope for people to deliver any value to the organization. When it comes to investing in people resource, I find myself coming back to the advice on strengths. An organization should invest 80 percent of its resource in its strengths. An organization needs to invest in its infrastructure, but limiting the investment in its people, or not investing in people at all is a failure to follow the strengths investment principle. Taking a market view, the only asset that an organization has that cannot be replicated by its competitors is its people. It is the asset that gives the organization its competitive advantage. Every other asset innovation can be replicated, copied, or plagiarized. In a previous role, I worked for a soft drink manufacturer, who was a market leader, and as such invested heavily in research and development. Competitors would copy every flavor, product range, and even bottle design that the manufacturer developed within six months of its launch. The brand reputation was an important component, but on the supermarket shelf, the products were homogenous and the product line was commoditized. Keeping ahead of the competition was down to the constant innovation from both the product team and the marketing department. Fortunately, the organization did invest heavily in their people, and I would argue this is the reason it always kept one step ahead of the competition.
An organization knows that if it doesn’t invest in its plant, then the likelihood of it running at optimum efficiency over the long term is low, and yet this is exactly what happens with the people asset. Also, as explored in the introduction, when training is given, so often the focus is on an individual’s weak areas. Since a business would not invest all its marketing money on a product that was its weakest product, it seems illogical that it would pursue this course of action with its people resource. It seems that senior business leaders treat people in the exact opposite way of the most sensible and rational approaches that they use to build a business. It is by focusing on investing in the strengths of individuals and freeing up individuals to play those strengths at every opportunity that the organization will be able to deliver 2 + 2 = 5.
The ROI from learning and development is not something that is impossible to measure. Many development practitioners will fret over the ROI of their development programs. Coming from a commercial background, I feel confident aligning what it is that the learning and development program needs to deliver with the outcomes that the organization is seeking. Investing in personal development is an opportunity to align individuals with an organization’s purpose and develop mutually beneficial outcomes. Fundamentally seeking to answer the “So what?” for both the organization and the individual leads to the development of a solution, which will deliver something of worth to the organization. If the development program is worth more to the organization to run the program than not, then you have begun to build the business case for running a development program.
Investing in people is not a zero sum game that loses touch with the commercial business needs of the organization. At the same time as designing a great learning program, it is possible to start building in measures taking account the difference it will make to the organization if people develop in a particular area, what does that impact, and what will be different. Quite simply, if the learning and development deliver a change, which is visible, then you can see something, and if you can see something, you can measure it, if you can measure it, you can put a value against it. Therefore, not only can a business case can be built that demonstrates that 2 + 2 = 5, and the organization committed to investing in people as the most important business asset should be developed, then it will deliver a measurable ROI, the value added will remain embedded in the business culture, and the organization will achieve more than it would do, if it continued to hope that that doing nothing will deliver fantastic results.
Manage Your Career Tool #3 – Personal Development Planning
Personal development planning (PDP) has got a fairly bad reputation, mainly because it is given scant regard during the performance development review session or because they get put in a drawer for a year and none of the development objectives succeed to leaving the PDP and making it into real life. Well as with all plans, the PDP is only as good as the investment put into, and the actions taken to implement it. Worthy of note is also to highlight that a PDP must be owned by the individual, as I once had to point out to a Finance Director, it’s a personal development plan, which means that it is particular to the individual, who will get much more out of it if they take responsibility for it.
It is important that clear SMART objectives are set, and that the development goes beyond training courses and focuses on developing in all four key areas:
- Behaviors – How you act
- Experience – What you know
- Skills – What you can do
- Thinking Range – Your talent. Who you are.
Your task is to revisit the strengths statements that you wrote for Career Tool #2 and develop a PDP to increase the added value that can you achieve for the organization. Set yourself a maximum of three robust stretch development goals that you can focus on. This PDP should be an iterative exercise, which is constantly updated; as you finish one development action, you should set yourself another. Your goal should be continuous development and a growth mindset. A growth mindset is a belief that you can learn and become smarter and be better at what you do; it is a self-belief that you can be all that you are meant to be with hard work and perseverance. (Dweck, 2006)
Task 1 – Personal Development Planning
