Key Point: Some employers no longer chant the old mantra “people are our greatest asset.” Instead, they claim “people are our greatest liability.” That was a quote in a popular 2002 HBR article by Peter Drucker, the late, grand sage of organization management. Dr. Drucker noted the rise of the itinerant workforce 14 years ago. (Now often referred to as the “gig” economy). However, I think the more interesting movement Drucker observed was the outsourcing of “employee relations.” The article stated:
“A 1997 McKinsey study concluded that a global Fortune 500 firm—in other words, a very big company indeed—could cut its labor costs 25 percent to 33 percent by having its employee relations managed by an outside company.”
The potential saving for smaller businesses is even greater. So why not keep a very tight core of highly specialized workers, vital to differentiating the company with customers and then sub contract everything else out? In this scenario executive leadership minimizes all the “red tape” caused by the apparently inconvenient requirement of having to manage people, including but not limited to employment regulations, liabilities associated with providing benefits, etc. This also allows management to pay strategically differentiated people (software engineers, data gurus, etc.) much more than interchangeable “transaction” employees (IT help desk, customer service, etc.).
Listening to National Public Radio recently, the broadcaster noted that since 2009, the profits of US companies rose 143 percent while the compensation of the combined workforce in these same companies experienced a feeble 4 percent growth. Perhaps there is a connection to the subtle and not so subtle trend of stratifying roles into relatively easily replaceable ones, versus those that are strategically differentiating. If a company puts out a request for a certain job and receives 200 plus qualified applications, why worry if these “workers” come and go? Crassly speaking, the “rent a worker philosophy” makes certain people insignificant to the institution’s core differentiation.
As a Chief People Officer I OPPOSE this trend. I believe the more important strategy is to turn on EVERY person to the organization’s purpose. However, I also feel strongly that much of the bureaucracy related to “managing” people must be eliminated. The key to that is a ‘People First “philosophy based on attracting and retaining those who are fiercely self-accountable, respectful, and abundant. Examples of applying this thinking includes but is not limited to the following human resource practices:
- Work where and when you need to get the results expected in your role.
- Take the time off you need to refuel and stay healthy; Remember though “no results = no job.”
- Simplify total compensation by paying at the top of the market (including benefits and savings plans).
- Tie everyone’s variable pay to net profit and customer retention.
- Invest in the continuous growth of all team members.
- Coach each other more and manage each other less
- Everyone is on five-year mutually renewable contracts with both parties able to terminate during the final year.
- Dedicate experience gained at the company to last a lifetime; proud to be alumni.
Execute on the above and I believe a lot of “stupid” administrative costs disappear.
Character Moves:
- Commit yourself to being part of an organization that hires people rather than “workers.”
- Believe that all people are strategic rather than only certain roles being strategic. I think if we do that, and apply all or some of the eight principles above, we can save the cost of a lot of “management waste,” and benefit from a thriving, inventive FORCE aimed at accelerating the organization’s purpose.
People more than workers in The Triangle,
Lorne
One Millennial View: Every organization will likely differ, but I know that my friends with the most happy/successful jobs seem to operate as “people” at the office, not just workers. We want to work for “team captains” who will confidently throw us the ball because they trust we can help everyone win. If you can’t depend on your “people” enough to apply the eight principles above, you probably shouldn’t have hired them in the first place.
– Garrett
Edited and published by Garrett Rubis