Are staff costs or investments?

Do you agree or disagree with this tweet? ("They" refers to an organisation's staff.)


(Hat tip: Henry Blodget)

If you work for an organisation that sees employees as a cost, you're probably part of an organisation that wants to be robust. But if you see them as investments, then your organisation is more likely to believe in being resilient.

Here's why. A robust organisation values:

  • consistent execution of processes
  • standardised customer experiences
  • optimising towards a "best practice"

whereas a resilient organisation values:

  • processes that adapt to context
  • tailored customer experiences
  • continuous improvement within an environment

There are sound reasons for either approach (and you can mix and match aspects of both, but for simplicity we're going to ignore these middle cases here).

Robust organisations succeed precisely because customers know what they are going to get when they walk in. For example, McDonalds, Coca-Cola, Amazon, UPS, and Disney all deliver reliable and repeatable customer experiences. On the other hand, these are market leaders and well-established brands that are unlikely to delight or surprise their customers. In other words, if your customers know their solution and are just looking for a partner in delivery, robustness is very valuable.

Resilient organisations, on the other hand, seek flexibility in being able to solve whatever new problems arise, both internally and for their customers. And humans are still the best at ad hoc problem solving. The hitch is that you can't enforce the creative act of problem solving, or the quality of problem solving that staff apply. Therefore, when you want resilience, hiring and retaining staff that exhibit high quality problem solving skills for your organisation is an essential investment.

Now here's the critical thing. In robust organisations, workers are literally being asked to contribute labor according to spec. In some cases, it's classic Taylorism at work. But it turns out that even where organisations need to be robust and have repeatable processes, there are two things you won't get unless you value and invest in your staff:

  • an enthusiastic adherence to agreed processes and an understanding of why the process matters (and in the worst cases, your staff will passively or actively try to subvert them)
  • an willingness to identify and communicate potential improvements to processes, contributing to the organisation's ongoing distributed problem solving capability

This is why a car manufacturer like Toyota benefits from Total Quality Management (TQM), despite being the stereotypical industry where staff have been seen as pure overhead. It's why there case studies where supposedly menial labor (such as cleaning work) can be greatly improved by valuing and empowering staff to take action.

It's true that doing things more efficiently may mean cost savings in the long run, ie you need less staff per quantity of output. But always remember that it's your staff that get you to that point, and that even supposedly "replaceable" staff can be valuable assets to your organisation if you choose to think of them that way.

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