Posted by: hagengreen | February 21, 2010

People are our biggest assets, not to mention biggest liabilities

Look at any flourishing business and consider what makes it successful. Is it their product or service? The timing to market? Marketing or advertising materials? Perhaps. I argue their biggest competitive advantage and driver of success is their people. You and me. However it is very same factor contributing to business success that can lead to a breakdown and eventually a downfall of any thriving business venture.

People are not only the foundation of business, but also of life. A relevant example is why I’m writing this blog post: to write down my thoughts and share them with other people. (And likewise you’re reading this because you’re clearly a dedicated reader of my blog – thank you! ;-).) Reflect for a moment on a job you’re holding or held in the past. What are the first things that comes to mind? Perhaps the product comes to mind: the wing you designed on the airplane, the children’s book you published, or the software application you shipped. Or maybe you recall coming up with a system to better manage bookkeeping of expenses, came up with a marketing plan, or a more effective advertising medium. Alternatively, you might think about your former boss, your coworkers, or that really smart person down the hall. Remember the 3 P’s approach to quality: Process, Product, and People. But the first two are dependent on the last. Without people, we have nothing.

Whether we like it or not, our lives are filled with people, some we love and others we don’t like all that much. Even if you are a self-proclaimed loner, you still depend on others for basics in life such as food, clothing, shelter, and the income to buy the food, clothing, and shelter. Another example we can all relate to is government and politics. It’s very clear that without people, whether we like them or not, the world would cease to exist as we know it. Our lives would be quite dull and uninteresting. Human nature is built upon the foundation of being in the company of other people and social interaction. There are well-known negative consequences of withdrawal from society: mental diseases such as depression arise. There’s a reason why the happiest people I’ve seen embrace loved ones and laughter – these are things you cannot do individually.

Humans are complex creatures. As such, a whole slew of variables play a part in how or why people do what they do. What makes them tick? What makes them love what they do? How do ingenious ideas come from seemingly nowhere? I strongly believe motivation, determination, and creativity stem from a strong base of happiness. Making and keeping people happy generate great results. It’s a de-facto standard in today’s modern society to accept the local currency in exchange for mental and/or physical labor. In other words,  you get paid for what you do at work. While just having a job these days is already a reason to be happy, it’s easy to get compulsive and believe your worth is greater than the salary you receive. While it’s a free-market economy and you’re simply a pawn in the game, you want to feel valued and rewarded appropriately. There are many ways to help keep employees happy, such as offering benefits and bonuses. But financial rewards aren’t the only consideration. Keeping people challenged, finding stretch role opportunities, and seeing the results and consequences of their former actions and decisions are also rewarding. It’s unfortunate that some people can’t see experience as important, or even more so, than salary. It’s a bit ironic in the sense that experience, in large part, drives salary!

While people generally do things for the greater good, they’re a clear liability in negative behavior. When motivation and happiness go down, so do results. But it’s a social domino effect such that one person can poison others and the negativity or resentment can trickle across a team and even influence an entire organization. With social media like TV, radio, and arguably more importantly Facebook and Twitter, it’s easier for the few to talk to the masses. Negativity can spread much more quickly than ever before. And it need not be a pessimistic individual causing the stir. Even one or more employees leaving their team or the company can kick off a wave of speculation, rumors, and overall negativity that brings down the morale of the group as a whole. As you can see, it’s critical that management not get too separated from what’s happening on the ground. The ability for managers and executives to rally the troops and focus on a common mission with clear challenges and expectations is a very powerful and required tool for successful organizations. Just look at any organization with weak leadership – it won’t have the best people, it won’t be successful, or it will simply cease to exist in the future. The risks with people are as great as they are assets. It’s cliché yet a truism: little do we know what we have until it’s gone. In business, that could mean the difference between a thriving and healthy organization and an team that’s falling apart at its seams.

There are many other contributing factors to a business – people are clearly only once piece of the picture. Environmental conditions such as the economy, time of year, competition, demand, state of technology, and even weather can adversely affect the short and long term health of a business. (Nearly all of those factors are caused by many people, we even influence the last one!) Yet in the end, it’s all about people. Fundamentals of economics are founded on the behavior of humans in a free market society. Take the people out and you have nothing. Given that people are the foundation of business, they are our biggest asset and deserved to be treated with utmost respect. So it’s no surprise that layoffs generate a bigger buzz compared to cutting an entire product line (assuming those people are reorganized in a different product).

People make the world go ‘round. It’s a never ending feedback loop: people influence other people (for good or bad) and so on. I hold a general belief that humans instinctively strive to be good for the sake of other people*. Yes, the Golden Rule. With that in mind, people make up the foundation of a successful business. It’s management’s accountability to keep people engaged by dialing up motivation through challenges and ensuring employees are valued through appropriate rewards. Managers need to keep their eyes and ears on the ground to stay in touch with organizational health and mitigate negative rifts that arise before they become viral. A typical business’ charter includes staying accountable to shareholders and offering a healthy return on investment. I argue a business’ charter should be to do greater good for the world which means keeping people in the world happy, especially those in that very organization. Shareholder return will happen automatically if the company plays a positive role in the world. (In fact, one could argue the premise that maximizing shareholder return may leave a negative overall impact – think subpar wages and environmental pollution as a few examples. This subject is a blog topic for another time.) Focus on doing the right things for people, and everything else will fall in place.

End the end, it is really all about people like you and me. The key is keeping them on the ‘asset’-side of the equation. At some point, everyone will be a liability for an organization. People move on and the organization is left to fill in the ensuing gap. A healthy organization may not even notice a bump in the road if the leadership team isn’t a liability themselves.

 

*  I’ve inevitably opened a can to the “good vs evil” discussion. Yes, people can be evil by exhibiting selfishness, violent religious extremism, or any other of many vices that plague our modern-day society. But I’m asserting the general belief that people default to goodness starting from their first breath.

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