Home » Management Tips with Babatunde Fajimi » Transforming Employees from Liability to Asset

Transforming Employees from Liability to Asset

It is theoretically acceptable for employers to declare that people (i.e. employees) are their greatest asset. Are Chief Executive Officers really convinced as Human Resource Managers work round the clock to match this viewpoint with reality?  

Peter F. Drucker (2002) in his Harvard Business Review (HBR) article titled They’re Not Employees, They’re People said that “Employers no longer chant the old mantra ‘People are greatest asset.’ Instead, they claim ‘People are our greatest liability’.”  Recent cases of multiple downsizing in multinationals like British Airways and national SMEs where employees are laid off as the one of the first corrective measures in corporate restructuring is an indicator that companies view their employees as liability instead of asset as popularly perceived.  

Robert Kiyosaki (1998) in his bestseller, Rich Dad, Poor Dad revolutionized perception about asset and liability when he challenged contemporary thoughts and placed mortgage, credit cards among others as liabilities. 

These days Human Resource Managers end up acquiring and patching their employees as liability because the objectives set out when hiring and deploying these employees have not been actualized.  Although evaluation scores keep pointing upward year in year out, the company continues to grapple with problem employees instead of a productive workforce. The cumulative consequence is that performance is intangible, the financials unhealthy and the future bleak. 

Employees turn out to become liabilities when a company fails to articulate and embrace a Human Resource strategy. Becker, Huselid and Ulrich (2001) in The HR Scorecard expressed concern that most companies are yet to synchronize their corporate strategy with Human Resource strategy.  They were worried that most CEOs are always in the woods about the significant interplay of Human Resource Manager in executive management and business strategy.  The Managers are usually relegated to the traditional role of administering human resources in the company without any input into either business strategy or executive management. 

Every company needs a complimentary human resource strategy to drive its corporate strategy. A company requires a Human Resource strategy to transform its people to a source of competitive advantage. 

What every Chief Executive Officer or Human Resource Manager should realize is that people are not an asset by default. Employees are not an asset because the phrase is inserted in the company’s annual report and accounts. Employees are potentially an investment that if wisely utilized can yield dividends/profits for the company. Conversely, employees could turn out to be failed investment as a result of bad investment decisions –  in the form of management input in the conversion process of the investment/wealth creation circle. Management input is essential to convert people into asset through productive engagement, measurement and management. 

Derek Torrington and Laura Hall (1998) in Human Resource Management said “Human Resource strategy involved a central philosophy of the way that people in the organization are managed and the translation of this into personnel policies and practices”.  

Companies have well-crafted Staff Handbook and Employees Manual which spell out expectations, deliverables, accountabilities and conditions of service.  These handbook and manual do not presupposes that people are automatically an asset unless the policies and practices of the company are integrated into what Derek Torrington and Laura Hill described as a ‘coherent whole’ which in turn should be incorporated into the business or organizational strategy.  

In order to achieve this integration, the corporate strategy process at its evolution should involve human resource strategy and vice versa.  Companies with existing corporate strategy but with a traditional approach to human resource that does not include a strategic intent can engage HR strategist or consultant to draw up a human resource plan that will ride on the platform of its subsisting corporate strategy to maximize value from its people as an asset.  Companies need a human resource plan just as they have business or marketing plan that chart their strategic thrust in the marketplace.

It is the responsibility of the Human Resource Managers to ensure that from manpower planning to interviews, compensation management to employee involvement and welfare to exit management, their workforce have the criteria and behaviourial aptitude in a broad perspective that are in harmony with the vision, mission, objectives, core values, shared beliefs and the constantly emerging direction of their companies.  The process of identifying and sustaining this fit is the primary role of Human Resource Manager throughout the life cycle of each employee in any company that is merit driven.  

The Human Resource Manager cannot reinvent the wheel to evolve a new set of strategy for his company but he must ensure that the people possess the key personal traits including self discipline, perseverance, maturity, leadership, loyalty and ability to work in a team in order to fit into the behaviour typology required to drive the company’s corporate strategy.  This is because while corporate strategy is more often than not system-based, human resource strategy is behaviour-based.  

When Human Resource Managers pay attention to the behaviour-based fitness of their employees and how their potentials are organically harmonized for profitability, they will have nil worry about measurement and productivity problems.  In a keen competition where failure is not an option, companies can pride their employees as asset and a veritable source of competitive advantage once this behaviour-based fitness has been ascertained and maintained.  

Closely tied to the problem of unavailability of a human resource strategy is the lack of organizational capacity to manage the human side of employees in the workplace. Human Resource Managers must understand their people, uniqueness, psychological and social needs, career aspirations and forces that motivate them.  The human side of employees is usually neglected because employers motivate their employees with the wrong tool – salary underpayment below industry average or overpayment that is unsustainable.  Employees are human beings who value intrinsic motivation beyond extrinsic ones. Experiences have shown that employees achieve work satisfaction when they are intrinsically motivated.  Timothy Butler and James Waldroop (1999) who authored the HBR article titled Job Sculpting: The Art of Retaining Your Best People recognized this reality when they attributed turnover of turnover of professionals in organizations to the fact that “senior managers don’t understand the psychology of work satisfaction.”   

By a way of summary, it takes executive decision and passion to commit the company to pursuing a deliberate programme of transforming employees from a position of liability to asset.  Kaplan and Kunreuther (1996) in The A-to-Z Book of Managing People said “employees are a real priority” comparable to “the meeting you have to attend tomorrow morning, the report you must complete by week’s end, and the dental appointment next week.” Human Resource Managers should begin to give priority attention to their Human Resource strategy and deploy it to enhancing its strongest asset to lead its market and keep competition at bay.

Author: Babatunde Ayoola Fajimi

The article was first published on http://www.nigeriavillagesquare.com in February 4, 2007

Posted from WordPress for Android

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2 Comments

  1. Great write-up on the need for the CEO and HR Manager to go for a refresher courrse in Strategic Human Resource Management .

    I foresee the need when I wrote an article titled:Do your HR Manager needs a refresher course in Strategic Human Resource Management (SHRM) – Read here: http://tinyurl.com/mjh8kv5

    Like

  2. Great write-up on the need for the CEO and HR Manager to go for a refresher course in Strategic Human Resource Management .

    I foresee the need when I wrote an article titled:Do your HR Manager needs a refresher course in Strategic Human Resource Management (SHRM) – Read here: http://tinyurl.com/mjh8kv5

    Akeem Gbadamosi
    COO,HR Consulting Nigeria
    http://www.hrconsultingnigeria.wordpress.com

    Like

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