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People remain the most important asset in any company
9th February 2009 > IOL-Jobs
Every organisation in the world depends on three pillars for its success: process, technology and people.
It is pretty much common cause that most organisations have their processes and technology taped. The work done by "Big Five" and other consultancies over the last two decades has seen to that.
In particular, consultancies have applied the precepts and principles of business process management and enterprise architecture to make sense of their processes and technology, respectively.
Which brings us to the third pillar of organisations, people. Two axioms suggest themselves: people are the lifeblood of any business; and people are the greatest cost centre of any organisation.
It was the father of capitalism, Adam Smith, who first coined the term "human capital".
- He identified four types of capital that comprised a company's fixed assets: Useful machines and instruments of the trade;
- Buildings as the means of procuring revenue;
- Improvements of land; and
- Human capital
Ironically, most companies implementing an enterprise performance management (EPM) suite will focus on the first three, while ignoring the final one.
EPM in this case is defined as a set of management and analytic processes, supported by technology, that enable businesses to define strategic goals.
Yet human capital has much that needs to be managed and measured and, which if not made part of the EPM suite, will undermine the overall value delivery.
People provide the business with some of its leading, rather than lagging indicators. As happy customers are a consequence, in part, of happy employees, employees are a critical leading indicator to the performance of any company.
Any company should answer questions such as these:
- Is there a detailed, rigorous process and structure for human capital?
Such a structure should include an organisational chart, job descriptions, selection process, regular performance appraisals and comprehensive evaluation, training schedules and reward and recognition.
- How many employees do you have (by position), are they ideally deployed and are there critical positions vacant?
- Are employees productive in their specific positions? If not, why not, and what can you do to amend the situation?
- Are employees focused on critical metrics such as quality and delivery on time?
- Are your employees happy, and can you judge what constitutes happiness? To quantify this, it's ideal to conduct regular employee satisfaction surveys, at least twice a year.
- Are your customers happy with your employees?
- Your employees expect feedback... In all likelihood it was promised to them. Are you delivering in line with this expectation?
- Are your employees being properly trained? Is their training in line with SAQA requirements? Are you claiming back your input costs?
Here's a tip: you are almost certainly losing many thousands, if not millions a year, through not claiming against your training levy.
- Does every employee have a growth path?
Has this been identified, or are there square pegs in round holes?
- Is your selection, identification and recruitment process scientific?
Is it traceable, answerable and auditable?
- What progress are you making toward BEE targets, across the multiple pillars of the Codes of Good Practice?
What is BEE returning to your business, if anything?
- Given that people are your greatest cost input, do you know your staff attrition rates?
Do you know why they left, is there a pattern and, given the cost of people, can you identify a commonality in why people left and could you have persuaded them to stay?
- Are your people easily able, and with some degree of automation, to report via the balanced scorecard?
- Can you measure productivity, such as sales and profit per employee, gross margin per employee and margin per hour worked?
Each of these provides a good metric for your organisation's productivity.
Chances are your company is like most others and you will not be able to answer these questions in the affirmative.
If this is the case, you would be well advised to consider implementing the human capital-centric components of an EPM suite.
It will close the loop that links your process, technology and people and ensure that human capital benefits from the integrated, single-version-of-the-truth management process that is EPM.
