Most of my blogging is about sustainability and I’m a firm advocate of investing in people. Hence, there are some who find it contradictory that I would write a blog like this. First of all, it’s easier to manage robots does NOT mean it’s better, it just means easier. (-:
People say businesses are cold because they only care about profits. The part that they fail to see when making such statements is that profits are what enable businesses to exist. Operating at break-even (where revenues only cover costs) does not yield enough surplus for growth or investment. Once there are profits, decisions need to be made on what to invest in first. This is done through cost-benefit analysis (what are we getting for what we spend) and opportunity cost examinations (what is the highest and best use of our revenue at this time).
Although it sounds denigratory, the mechanism businesses use to determine value is price; when it comes to humans, price is measured in salaries. In the book, The Strategy and Tactics of Pricing, value is defined as “the total savings, monetary gains, [and/] or satisfaction that the customer receives from using a product/service.” Price is what the customer is willing and able to pay. In this case, the customer is the business owner.
Rather than get into a technical assessment, let me share a “day in the life” example that illustrates the issues:
9:00am Tired and Cranky Exec is gets a frantic call from Vociferous HR Manager. Tired and Cranky Exec has only had 3 hours of sleep because 1 week ago Nefarious Competitor just unleashed an unexpected new product that could immediately wipe out 80% of Running OK company’s market share and client base. A response strategy is needed before the market turns and there is no room for error. Running OK company employs 50,000 employees globally. Vociferous HR Manager wants Tired and Cranky Exec’s immediate attention.
3:00pm [Yesterday] Vociferous HR Manager got a call from Irate Employee. “I have just sent you an email with a copy of Arrogant and Irresponsible Employee’s Facebook post as of 2hrs ago. Arrogant and Irresponsible Employee called off sick at 6:00am. At 1:00pm Arrogant and Irresponsible Employee posts a Facebook picture with friends on a beach and talking about what a great time they are having.” Irate Employee wants to know why Arrogant and Irresponsible gets away with this when Irate has not taken a sick day in 2 years and has come to work feeling ill in order to ensure the team has necessary coverage). Irate Employee is demanding a 10% raise by the end of the week or Irate Employee will resign citing intolerable work environment. Vociferous HR Manager called Arrogant and Irresponsible Employee and fired Arrogant and Irresponsible effective immediately and forwarded Irate Employee’s email as evidence.
8:00am Arrogant and Irresponsible Employee’s attorney served Vociferous HR Manager with a $3million wrongful termination law suit and citing intolerable working conditions as a documented problem attributable to Vociferous HR Manager’s style (Arrogant and Irresponsible Employee was being paid $85,000 between salary and benefits). Vociferous HR Manager calls Stern Corporate Attorney for help. Stern Corporate Attorney gives Vociferous HR Manager the tongue lashing of the century! “You were hired to ensure we properly document and manage all our HR activities and procedures. What possessed you to do something this stupid?” Vociferous HR Manager tries to explain that every division in the company has tried to fire Arrogant and Irresponsible Employee but there’s always a technicality so Vociferous HR Manager decided to put a stop to this by taking initiative and is now expecting support, not condemnation, from Stern Corporate Attorney.
9:20am Tired and Cranky is on the phone listening to Vociferous HR Manager and trying to make sense of the situation which had not been brought to senior management’s attention until this phone call. In walks Founder, CEO and 60% Owner with a livid face and slams the door. “I just got a call from Stern Corporate Attorney. Can you explain what kind of bullsh** is going on here???? We pay employees to solve problems NOT create them. I won’t tolerate all this attitude! For $2,400 a month I can hire a robot receptionist and program the attitude I want! For $3million I could build a damned robot to replace all 3 of these jesters! Get this fixed by 4:00pm today!!!!”
Now, before you start analyzing management/communication styles etc, answer 1 basic question for this scenario:
How did the actions of the 3 employees create (a) savings, (b) monetary gains, or, (c) satisfaction for the business owner?
Strategic Management Advice for Humans 