The Human Capital is Now a Liability…

Human Capital Now a Liability

It use to be said that “people make a company” however it’s clear that human capital has turned from being an asset to that of a human liability as companies no longer want people.  In effect we have now become obsolete by our own actions and world.  What got me thinking of this was while having my hair cut at local mid-scale chain on a Sunday afternoon, the hair dresser had to stop multiple times to answer the customers at the front counter, sell (hair) products to walk-ins as well as to sweep up.

As in the day harking back many years ago, hair salons would have trainees who would start in the business by shampooing hair, waiting on the front desk, and sweeping up.  This allows the seasoned hair stylists to be able to devote more of their time to productive “core” tasks, all the while still learning the trade.  In addition to this, there is also the perspective of quality to consider in this model, because as this young lady’s attention was constantly being divided from her core task (cutting my hair), it had a clear impact upon the quality of the job she performed.

What strikes me is the acceptance by corporations of the loss of productivity, in leu of adding employees.  In addition, they are limiting the continuity of their workforce too, as in the past when attrition would happen there was a readymade pool of staff to pull from back filling the open position quickly and efficiently.  However, they are now forced to go to the open market again thus adding cost by loosing productivity as any new staff must be trained in the business practices as well as lost opportunity in servicing its customer base due to the time it takes to accomplish this.

Part of the reason for this is we’ve created liabilities of ourselves through our expectation of high entry salaries coupled with who wants to do perceived lame jobs* such as wash peoples hair and sweep up after others?  To combat this we have now diluted the “better tasks” with portions of the lesser [desirable] tasks.  So if each hair stylist has to take a turn sweeping, then the job no one wanted to do is then done by many instead of one.  However readers of this blog will remember that I’m an ardent believer in the zero sum game, so what does this mean?

In short something has to give as if Pat the hair stylist is sweeping up the floor, they are no longer spending time cutting hair which is the revenue generating activity.  Whereas one could say the sweeping of cut hair is simply an embedded cost of the entire undertaking and it would be a correct statement.  However this remains at the goal of cutting staff, as the company is moving a low value task to a high cost worker thus not only increasing the “cost of goods sold” however they are also impacting the revenue side of equation too by reducing the number of customers which can be serviced.  Since this later metric [customer not serviced] is non-empirical, it goes unconsidered in a short sighted management view.

While this story is a simple analogy of a larger issue, many out there may be asking “why do I care”, the simple answer is this is most likely you, your children and grandchildren.  The fact of a jobless recovery should be concerning people as false economies will catch up with us as economies only work if people work, as people are the economy and the economy are people…

*Note: there is no such thing as a lame job as jobs are important to the task; it’s simply a matter of properly aligning tasks with the workforce.

About Joseph Campbell

As a strong believer in the fact that "people work for people", it has been a life driver to better to understand the complexities of the various aspects which drive efficiency within this axiom, especially the concepts of leadership. Supporting this, I have been fortunate enough to having experienced this as leader on a global basis over the last decade and half. During this time it has been clear there are three core drivers being Life, Leadership and Economics.
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