The case aginst people being an organisation’s greatest asset is getting
stronger. And, in any case, the time to adopt a less fanciful slogan is long
past, writes Stephen Overell.
According to Adslogans, which runs a database of advertising taglines, the
first company in the UK to use the phrase ‘people are our greatest asset’ was
Interactive Services, an Oxfordshire-based training consultancy. That was in
1991. The honour is qualified, however, by the suggestion that the inspiration
may be derived from the Army, which has long held that ‘the Army’s greatest
asset is the morale of its soldiers’. Since then, of course, the phrase has
blossomed. Marconi, West Midlands Police, UBS Warburg, Ernst and Young,
Andersens, Nato, the CIPD – the list of believers is long and diverse, the
sentiment wholly uniform.
What are we to make of this? An impressive show of unity? A testament to the
sparkling originality of the corporate intellect? Final proof that ideas follow
the patterns of diseases, becoming more virulent as they spread? Or is it that
social conventions have made mouthing such platitudes a necessary obligation
for the go-ahead business leader?
Like many roadworthy slogans, the axiom sums up a generation of academic
argument – in this case about the nature and meaning of HRM (human resource
management). As scholars wrestled with such matters as the softness of HRM, the
hardness of HRM – its wickedness, its contradictoriness, whether it was really
different from good old personnel management – practitioners simply got on with
it. HRM grew, and as it grew, it needed a positive slogan to reinforce the view
that employees were now investments rather than variable costs. Step forward
‘people are our greatest asset’.
There is no denying that as rhetoric, the phrase has been phenomenally
successful. Its truthfulness, though, has always been in doubt. Michael Hammer,
who co-wrote Re-engineering the Corporation, has called it "the biggest
lie in contemporary business". Peter Drucker prefers "a cliché that
borders on a lie".(1)
A new theory is gaining ground. According to the sudden surge of books about
managing professionals, the phrase is not so much a lie, as only realistically
applicable to a tiny minority of organisations which operate under a very
particular set of pressures – namely, professional service firms (PSFs).
For the majority of organisations, it is simply inaccurate. "In most
businesses, a company’s competitive advantage does not rely directly on the
retention, motivation and behaviour of particular individuals," write Jay
Lorsch and Tom Tierney, the authors of a new book on managing PSFs.(2)
"Instead, it turns on shelf space, brand strength, cost position,
distribution systems, price, technology, product design, location, or any
number of other variables that can exist apart from the individuals who created
them… Most companies’ profit performance does not correlate with their ‘people
assets’." Or put another way: people are expendable.
In PSFs, however, which, after all, are nothing more than gangs of
individuals with specialist skills – lawyers, accountants, PR firms, management
consultants, advertisers and so on – the dependence on high-performance people
is absolute. Indeed, Lorsch and Tierney describe it as "the distinguishing
characteristic" of the PSF – so much so that the interests of the employee
come before those of customers. "The people you pay are more important
over time than the people who pay you," they explain.
Managing teams of professionals is often alleged to be like ‘herding cats’.
Patrick McKenna and David Maister, authors of another new book about PSFs,
First Among Equals, (3) paint a picture of star professionals as being
congenitally averse to accountability, claiming it will thwart their
creativity. They hate the uniformity of meetings. Their well-honed professional
scepticism trains them to pick holes in constructive new ideas. They have what
McKenna and Maister describe as an "alarming tendency" to do
precisely what they want, irrespective of the firm’s wishes. They are
temperamentally restless and ambitious, nursing a compulsion to compete against
their colleagues; and they can take lucrative clients with them in the event of
a fall-out.
Trimming their elevated salary costs is not an option: cutting wage bills
never translates into competitive advantage in a PSF. The firms have little
choice but to put up with such irritations because, unlike all other business
models, in PSFs the balance of power really is tilted towards the individual.
Accordingly, PSFs tend to be flat-structured and participatory. Yet this
culture of involvement, even democracy, works against responsibility. "If
everyone is in charge, no one is in charge," explain McKenna and Maister.
And, as a sector, professional services has boomed. In 1990, the global
revenue of PSFs was $390bn, a decade later, it was $911bn and between 1980 and
2000, PSFs globally grew by 11 per cent a year.(4)
If the professional services sector really is uniquely dependent on good
people – and the case is, I think, a fairly strong one – HR’s generic cliché of
choice during the last 20 years is looking shabbier than ever.
People are our greatest asset’ is often used as a reason why all
organisations should promote best practice across a host of different agendas –
equal opportunities, reward, selection, appraisal, employee relations,
development.
The logic carries an implied threat: if companies don’t treat people as
their most important asset – helping to retain good people by offering
competitive maternity rights, for example – those assets will leave and the
company will suffer. This threat carries some weight when the only assets an
organisation has are its brand and its people – the PSF model.
But does the logic really work in a typical enterprise? Does the threat of
workers hot-footing elsewhere really have the potential to devastate the
average commercial or public sector operation? The honest answer is probably
‘no’. Most organisations can use, abuse and lose their hum- an assets with
relative impunity because they have others that are more important. Generally,
people are a means to an end.
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‘People are our greatest asset’ is, then, a slogan that is for the most part
fanciful and inaccurate, even a downright fib. Nothing new there then. The
point is that ‘people are our greatest asset’ may have done more harm than
good. It has made the HR profession look over-ambitious, deceitful and smarmy.
Ideas for a new tagline, anyone?
References
1 Taken from Delivering on the Promise, Andersen Consulting Human Capital
Practice, www.andersen.com/resource
2 Aligning the Stars: How to succeed when professionals drive results, by Jay W
Lorsch and Thomas J Tierney, Harvard Business School Press, 2002
3 First Among Equals: How to manage a group of professionals, by Patrick
McKenna and David Maister, The Free Press, 2002
4 Lorsch and Tierney, as above
