Peter Hall is former director of the Management Development Unit at
Cranfield, and is now Chairman of The Wadenhoe Group, a Consultancy
and Research organization based at Wadenhoe House ouseHounear
'People are your greatest asset' is
hardly a new thought. But unlike most old adages, this one seems to
grow sharper and more relevant every day.
When Jack Welch handed over the reins
of GE, the business press filled to bursting point with analyses of
his success. Most commentators agreed that his strategy of
remorselessly pursuing excellence (and rooting out underperformance)
among his people lay at the heart of his success.
At about the same time, a new book by
Jim Collins sifted through the 1,435 companies that had been in the
Fortune 500 from 1965 to 1995 in search of ones that had made a
transition from 'good' (keeping pace with the market) to 'great'
(outperforming the market threefold). Collins found that only eleven
companies fitted this bill. Looking at what they had in common, the
answer was not systems or technology, but the people in charge. All
eleven had a particular kind of leader - modest, determined,
passionate about the business, and themselves great believers in the
value of excellent, committed people.
I could go on, but I feel the case is
proven. People really are the ultimate competitive edge, the ultimate
differentiator - a business' greatest asset.
So, are you looking after this asset
as well as you need to be? Here are five questions to get you
Can you list the five
brightest people in your organization?
This isn't about academic qualifications, it's about their unique
capabilities that are really delivering value to your
organization. Can you say why you believe them to be the
brightest? Are you sure your stars are delivering as much value as
they should be? A regular 'Talent Audit' can be an essential tool
for ensuring that they are. While we're on the subject, how do you
see these individuals' future? How do you feel about them lining
up behind you, ready (and possibly a bit overeager) to step into
your shoes? The best leaders plan their departures objectively and
Do they know they are your
Some people are shocked when I ask them this. 'Of course
not! We don't want them getting too big for their boots.'
Naturally, this is no way to get the best out of bright people -
or any of your people.
Do you know their
Loss of key staff can be devastating to an organization. I
have seen calculations of the cost of replacing staff that vary
from £4,500 to 'a year and a half's salary'. The first is
ludicrously low: I think it was talking about very junior people.
Replacement cost mounts exponentially as you move up the
organization. The second estimate is nearer the truth, at the top,
anyway. Southampton recently sued Spurs for £900,000 for poaching
Glenn Hoddle, exactly one and a half times his salary. And in
fact, replacement costs of this most valuable asset - able people
at the top of your organization - can be even higher, especially
if you recruit from outside and the new person fails to fit in.
Such failure is much more common than headhunters let on.
What are you doing to
maintain and update this asset?
You wouldn't fail to spend money maintaining plant,
machinery or vehicles. They receive routine servicing, protection
and are upgraded when necessary. So what about your people? All of
them, not just the 'high flyers'? Their skills need continual
development. And they need looking after, too - witness the
effectiveness of Marjorie Scardino's email to Pearson employees
after September 11.
Is the person in charge of
this asset on your board?
If you really believe that 'people are your greatest
asset', then why is the HR Director not on your board? For some of
you, he or she may be. Great. But for others... Sadly, the story
is often that the head of HR is not up to the job. They may have
the title 'Director', but actually they are not sufficiently au
fait with the broad spectrum of issues that a real director has to
be master of. HR tends to be its own world: HR people learn their
skills there and don't spend time in other departments. Some may
ask, why should they? The answer is, of course, because a real HR
director must be as good a strategist as any other director. They
must have spent time outside their specialism, so that they can
walk into a board meeting and add real value to every discussion.
'Every' because every discussion has a people aspect.
GE or Jim Collins' eleven 'good to
great' companies would have given clear, positive answers to these
questions. How about you?