BBC BLOGS - Stephanomics
IN ASSOCIATION WITH
« Previous | Main | Next »

The Bottom Line

Stephanie Flanders | 06:32 UK time, Friday, 11 February 2011

Every chief executive likes to say the company's employees are its "most valuable asset". But is that ever more than empty slogan?

That was one of the subjects I discussed with my guests this week on the Radio 4 programme, The Bottom Line.

In the studio I had Tim Watkins, vice president of the western arm of Chinese telecommunications company Huawei, Richard Fenning, chief executive of global security consultancy Control Risks, and Vineet Nayar, chief executive of Indian IT services company HCL Technologies.

I was worried they would all agree: employees come first.

But they each had a very different take, and Vineet Nayar was the only one willing to state that his staff were more important than his customers. His philosophy of 'putting customers second' to employees has been causing a stir at the world's leading business schools.

At HCL, every employee can contribute, anonymously, to the chief executive's annual appraisal, which is then published on the internal website. The other guests didn't fancy that at all.

Staff are crucial to Control Risks (and they are not all ex-army or former-spies, as the folklore would suggest). But Richard Fenning wasn't willing to say that he'd put them ahead of the client. Maybe that's not so surprising either, given that Control Risks will often be sending staff into countries that others are trying to flee.

With events in Egypt in the headlines, we discussed how businesses ought to deal with political instability - and how to judge when a political crisis has turned into an opportunity. (Of course, every crisis is an opportunity if you're Control Risks.)

Since he's the expert, I got Mr Fenning to tell us his top global hotspots to watch out for in 2011. You'll have to listen (or watch, on the BBC News channel) to find out which very large country, not so very far from the UK, came first on his list.

Comments

  • Comment number 1.

    It should not really be a question of who comes first - customer or employee - as they are both (or should be) integrated. The fact that this 'issue' is even being raised is yet another demonstration of the paupacy of management.

    If you really want to make an effect upon the Bottom Line then take a far closer look at the executives and the operational management. Following that look at the slavish corporate adherence to the 'rights' of the shareholder.

  • Comment number 2.

    Probably this could be one of those stories that just slips under the carpet or on the other hand it could be a weapon of mass destruction for Ed Balls, The headline in the FT reads;

    "IMF admits wilting under Brown Treasury"

    It goes on to say;
    "In particular, the constant sparring over the public finances between the IMF and Gordon Brown’s Treasury, when Ed Balls, now shadow chancellor, was a key figure, contributed to fund officials being insufficiently robust with the Bank and the FSA."

    The report makes interesting reading....

    http://imf-ieo.org/eval/complete/pdf/01102011/Crisis_BP5_UK_Bilateral_Surveillance.pdf

  • Comment number 3.

    Laughed aloud at the term " employees are our most valuable asset". Several years ago worked
    as an R&D scientist for a US Fortune 200 company in the Eastern United States, and they had that '.. most valuable asset' etched' in glass in the main meeting hall of the corporate research center. In less than
    3 years our group and my lab had achieved some good works; 4 patents to help save a large division.
    Then as the project completed I received my 'pink slip', the US method of layoff. So
    I signed the assignment of my fifth and final patent to the company using that glass 'valuable asset' framed
    statement as my writing support. A few years later I found out that I was let go because
    I was one of a few that had maximised my matching-fund toward my pension
    and that it would have been locked in a few months after I was laid off. In the event I used those savings looking for my next employment. Even now British jobs rely on my "asset" contribution of those 5 patents, pension or not, In effect I felt employed more as a commodity than an asset....

  • Comment number 4.

    We now had plenty of this share-hoder value crap; if we now turned back to where, yes, staff is a valuable, may be the most valuable asset, but the customer is the king, we might have a chance...

  • Comment number 5.

    The next little gem in the FT is the head line;

    "All aboard for a new two-speed Europe"

    This I fear is all too close to the truth with Germany and France looking to set a two tier EU. However I feel that it misses one important point and that is instead of all 17 Euro-zone members being part of the high speed EU economy there will be other casualties along the way.

    Who is to say which of the 17 will fall by the way, the PIIGS are most at risk but are there any of the others that will be jettisoned to save the floundering currency? The big question is also how will the EU cope if this does happen, could we see a smaller EU as a result?

    Quiz of the day, select which countries will be in and which will be out.....
    My guess is;
    Belgium In
    Germany In control
    Greece Out
    Spain Out
    France In
    Ireland Out
    Italy Out
    Luxembourg In
    The Netherlands In
    Austria In
    Portugal Out
    Estonia Out
    Finland In
    Cyprus Out
    Malta Out
    Slovakia Out
    Slovenia Out

    So 17 could well be 7, there are a few marginal countries that would not effect the new currency one way or the other so they may decide to include to add numbers and thus think they have more credibility. But what of the EU, could it take such a change, the bureaucrat's in Brussels would have to manage out and out civil war which could end up with a much smaller EU and result in the formation of the Federal States of Europe and so it will all begin again....

  • Comment number 6.

    My personal experience of working in the private sector is that while companies may make claims of the worth of employees to a business, the reality is that employees are expendable and exploited wherever possible. The last company i worked for experienced "trying times" as a result of poor decisions by management, during this period hundreds of employees (some who had worked at the company for many years) were made redundant while the executives who made the bad calls in the first place saw their salary and bonus double to over £2 million! If you point any of these obscene double standards out you are highlighted as a troublemaker!

    The Government's pledge that the private sector is going to rescue the economy is a misguided one based on the fact that these politicians will only know the top end of the company scale. I'm sure Cameron and Osborne know many top executives but I can't imagine they have any idea of the frustration of being an run-of-the-mill employee whose prospects of a fair wage rise are minute.

  • Comment number 7.

    Did I miss it? I listened but didn't hear which country was the hotspot.

  • Comment number 8.

    IMHO most people in executive positions don't know the difference between leadership and management, and they also fail to do either.

    Most are 'promoted' from a finance background with a great deal of understanding of 'cost' and very little understanding of 'value' ... i.e. 'they know the cost of everything and the value of nothing'.

    With their drive (and bonuses) to satisfy the desires of shareholders to boost short-term profits (given the city-driven churn in traded shares - shares of companies !) they maximise short-term profit at the expense of everyone/everything else ... customers, employees, economy, nation ...

    21st Century leadership and management is the complete opposite of traditional leadership and management we see in Britain (in Government, the Civil Service and Enterprise) ...

    i.e. in 21st century enterprises staff are truly valued and classed as their "most valuable asset", but in British enterprises most executives see them as their 'biggest cost' ... which is a key reason why our economy will continue to get worse (e.g. noting the still worsening trade deficits figures)!

    IMHO GDP is a flawed and meaningless measure ... e.g. it allows politicians to 'talk up' an economy when in reality more and more people are losing their jobs! ... IMHO there are far better ways to measure 'recovery', e.g. the 'BUTS' test, which looks at Borrowing, Untapped talent, Trade deficit and Stress ... and such measures show a continuing downward spiral with all indicators continuing to get worse!

    There is a solution ... but we have to fundamentally change our leadership and management ... and therein lies the problem ... current leadership and management are not keen to do this!

    For those interested in finding out more I would recommend the work of Dr. W. Edwards Deming who, nearly 20 years ago, wrote two books aptly entitled "Out of the Crisis" and a "New Economics", and there is more on untapped talent and the BUTS test at http://poweromics.blogspot.com/2010/10/increasing-untapped-talent-and-stress.html

  • Comment number 9.

    All this user's posts have been removed.Why?

  • Comment number 10.

    I believe that it's in Peter Kropotkin that I have read something that said that when there is some talk about the rights of the people, that means that these rights are usually trampled - you never talk about the right to eat, or the right to sleep, or the right to breathe. We could say the same about the empty slogans about employees.
    It's striking how much the "most valuable asset" slogan is almost exclusively used in big companies where people are indeed disposable commodities ("Human Resources" tells all). In a very small company, everyone knows how much each one contributes and there is a strong sense of everyone being in the same boat that develops a loyalty that doesn't exist in big companies. And obviously obscene salary gaps don't contribute to the loyalty of the rank-and-file.

  • Comment number 11.

    Let us be clear of one thing Management always come first in terms of feeding their own greed. Sadly, this is seldom based on competence or performance.

    So in this regard the employees are for the most part a companies most inmportant asset since they deliver the money wasted by the Directors on their own salaries and perks package and investments taken that are seldom in the Shareholders, the real owners of the company, interests.

  • Comment number 12.

    Still too many companies regard staff as "resources". Resources have a habit of running out. The term "Human Asset Management" is I believe the right approach particularly within an integrated framework of staff/customer relationships whilst all the time remembering that any company is only as good as its weakest link(s) will allow it to be.

  • Comment number 13.

    Customers or employees is a false dichotomy. Management get it wrong with staff not because they have to favour customers but because they cant deal with people and/or they are pressurised or benefit from squeezing the last drop of added value from their staff. And in local government there is a large scale opt out by senior management of even talking to their staff and yet the talk is all customer care!

  • Comment number 14.

    With apologies, but as a footnote to my earlier post, what many companies fail to understand is the fact that every departmental function also has INTERNAL CUSTOMERS. Do they ever enter into the equation of customer service? Without this "inclusivity" concept, the external customer can rarely be given the service he/she deserves.

  • Comment number 15.

    Control Risks, Ms Flanders? I will listen via the Internet. But as for employees being the most valuable asset, I agree it is almost always said as if carved in stone. Pity P45s are easier to produce and more MOBILE than cave carvings. And Neil Oliver's Ancient Britain programme on BBC2, two nights back suggested some cave paintings are NOT meant to be seen.

    I will honour that. Control Risks? Hmm

  • Comment number 16.

    For many UK companies, this IS just an empty slogan. They use it to help keep levels of dissent low enough to allow the company to function. Most use business models that do not permit the staff to be productive enough to justify the cost of generous rewards and good treatment. There ARE companies out there who treat staff well and are successful - I have worked for two of them. I would happily say who they are but suspect doing so would attract the attention of the moderators.

  • Comment number 17.

    Come on Stephanie, keep up.

    Looting comes first!

    http://forensicstatistician.files.wordpress.com/2010/11/icb-submission-nov-2010.pdf

    "The assumption is that owners / managers employ a deliberate strategy of going broke (intentional looting) rather than subsidised risk taking / speculation. The reason for this occurring is that various conditions conspire to make this strategy yield a positive pay-off to the potential looter. The three key symptoms of looting are:
    a) Excessive Pay
    b) Over-inflated valuation of the firm
    c) Invoking Government guarantees"

    Now, where have I seen those three symptoms happening at once??

  • Comment number 18.

    Im sorry but there are very few businesses who value employees at all these days, in fact there are a farily large number who appear to be trying to do away with employees all together, relying on contractors and technology to do the work. No surprise then that customer service is poor to non existant

  • Comment number 19.

    Steph,

    you didn't think this one through. Your discuss the notion that "staff are our greatest asset" and interview four people whoe businesses use staff as an expendable resoource int he pursuit of profit.

    It would have been a much better discussion if you'd thought a bit and included the CEO of John Lewis Partnership, or sdomeone from one of the many successful worker co-ops.

    It is almost universal that when worker co-ops hit bad times they will look to meet the challenge through voluntary redundancy, reduced hours, reduced pay, increased productivity etc, all done through consultation. They are able to do this because the employees who take the strain can be compensated through profit-share now or later, and through better employment conditions when the good times roll again.

    None of the firms who have reduced reward packages to employees to ride out the recession will compensate them when (if) things return to normal: they will simply take the profit made possible by their employees earlier forbearance.

  • Comment number 20.


    Madam you wrote, tantalizingly :

    'Since he's the expert, I got Mr Fenning to tell us his top global hotspots to watch out for in 2011. You'll have to listen (or watch, on the BBC News channel) to FIND OUT which very LARGE country, not so very far from the UK, came first on his list.'

    Is Ireland a large country Ms F ? Not Italy, surely ....that's a superb state with, according to yesterday's Times leader, a top Prime Minister.

    Could it be Luxembourg as a marker for Euroland ?

    Oh the suspense...the suspense....

  • Comment number 21.

    1. At 08:01am on 11 Feb 2011, foredeckdave wrote:
    It should not really be a question of who comes first - customer or employee - as they are both (or should be) integrated. The fact that this 'issue' is even being raised is yet another demonstration of the paupacy of management.

    If you really want to make an effect upon the Bottom Line then take a far closer look at the executives and the operational management. Following that look at the slavish corporate adherence to the 'rights' of the shareholder.


    ...or just adopt the German Social Market Model which looks to treat the 'stakeholders' with respect and thereby fend off social unrest. I can't imagine German workers being treated like UK workers (mere commodities) without serious social grief.

    It has nothing to do with socialism btw, just treats capital as an element of the process rather its driver and owner.

  • Comment number 22.

    Oh the suspense...the suspense....



    Russia?

  • Comment number 23.

    "Employers are my most treasured asset" is no more than a platitude said by managers to make their staff believe the company cares about them. So, when times are hard the first action is to carry out one or more of: freeze wages - not those of senior managers of course, make people redundant - again not the senior managers, reduce working hours and hence wages - again not the senior managers. There is only one other group treated so unreasonably and its not the customers it is the company owners.

  • Comment number 24.

    Come off it, as someone who has worked in the private sector for 20+ year it is very clear that more and more companies view staff as 'human resources' to use, abuse and discard like trash.

    Senior management at most big companies do not give a toss about anything other than maximising their own short term remuneration. They would happily sell their staff as slaves or grind then into Soylent Green if they thought that would maximise their bonus.

    Loyalty only works one way at Western globalised companies (never worked for an Eastern one so can't comment), they expect it from staff but treat staff like a photocopier, keep them while useful and chuck in a dumpster when not.

    Anyone who thinks any different is not living in the real world.

  • Comment number 25.


    Ms Flanders

    You are an intellectual temptress. (Sue me if you wish.)

    I have just listened to The Bottom Line on the iPlayer. Unless I was momentarily distracted there was no answer to be heard to the question used as your advertising bait.

    I suppose now I'll never ever know....which country Mr Fenning had in mind. But the programme was entertaining nevertheless.

  • Comment number 26.

    16. At 09:50am on 11 Feb 2011, stairforce wrote:
    I have worked for two of them. I would happily say who they are but suspect doing so would attract the attention of the moderators.
    =========================================================================
    Oh go on give it a go well risk it if you will, I will then tell you who I have worked for who don't give a dam!!!!!!!!!!!!!!!!!!!!!!!!

  • Comment number 27.

    21. At 10:14am on 11 Feb 2011, TheComingStorm wrote:
    ...or just adopt the German Social Market Model which looks to treat the 'stakeholders' with respect and thereby fend off social unrest. I can't imagine German workers being treated like UK workers (mere commodities) without serious social grief.

    It has nothing to do with socialism btw, just treats capital as an element of the process rather its driver and owner.
    ============================================================

    And also, surely those companies that inventivise their employees as full stakeholders will outperform those that see employees as mere commodities.

  • Comment number 28.

    Businesses ultimately have to balance the needs of all those groups who have an interest in it.
    The groups are-
    Management
    Employees
    Shareholders
    Customers
    The Community

    At any point in time one group may be most important; but ignore the needs and interests of any group for long enough and the business will be in serious trouble.

    - John Harvey Jones, I think; but I could be wrong.

  • Comment number 29.

    The hard fact is that redundant employees can be easily shipped out of the business for a fixed cost, unlike plant, equipment, surplus stocks and buildings that require further expenditure to shift even for resale.

    Employees rarely matter, just a paper number with the rest of the Balance Sheet, usually on the liabilities side, if shown at all.

    Next time you meet with these fellows Stephanie ask them;- would they prefer a fully automated business producing a return on capital of a 5% p/a or a business employing a mere 100 unionised people producing a return on capital of 7% p/a?

  • Comment number 30.

    2 Chris London
    "It goes on to say;
    "In particular, the constant sparring over the public finances between the IMF and Gordon Brown’s Treasury, when Ed Balls, now shadow chancellor, was a key figure, contributed to fund officials being insufficiently robust with the Bank and the FSA." "


    Chris,
    The spat with the Treasury and the BoE was to do with the IMF's mindless insistance on "fiscal rules" similar to those agreed in Europe. The "need" for these rules was based on the flawed mainstream econometric models used by the IMF and others at the time.

    This debate over fiscal rules was irrelevant, erroneous and distracted from the more important problem of systemic risks caused by the banking system and asset bubbles in the UK. The IMF focused on the wrong priority, and this was not the fault of the Treasury, government or BoE.

    The wider evaluation report says this:
    "… finds that the IMF provided few clear warnings about the risks and vulnerabilities associated with the impending crisis before its outbreak. The banner message was one of continued optimism … The belief that financial markets were fundamentally sound and that large financial institutions could weather any likely problem lessened the sense of urgency to address risks or to worry about possible severe adverse outcomes. Surveillance also paid insufficient attention to risks of contagion or spillovers from a crisis in advanced economies."

    A good analysis can be found here:
    http://bilbo.economicoutlook.net/blog/?p=13471

  • Comment number 31.

    Surely, Stephanie, the "most valuable asset" a company has, is its "knowledgebase"?

    Without it, clients, customers, staff or bosses are equally worthless!

    The Indian business leader is correct - provided the knowledgebase is built up in the staff and passed on as staff come and go.

    Evidence? Look at how many UK companies went under in the great management purges in the early 1990's. Even BT suffered enormously (and perhaps still does to this day).

  • Comment number 32.

    In a world where most processes are at least semi-automated, human agents cannot be considered primary.

    There are only two things really at the root of any business: what defines it, and how well it can adapt to circumstances to retain that core definition.

  • Comment number 33.

    leanomist

    Deming was a genius and a beacon of light in 20th century development.

    From Toyota's recent recalls to the collapse of deregulated debt-based consumerism, we all need a return to a focus on Quality. From quality of product and quality of service, to quality of life. Yes, and GDP is a measure worthy of nothing.

  • Comment number 34.

    Is this an economics post or self-promotion?

    Meanwhile UK Producer Price inflation has surged again according to figures released this morning posing a question for the Bank of England's decision to keep interest-rates unchanged yesterday. But I guess inflation so rarely gets a mention on here.

  • Comment number 35.

    This is about 'organisational behaviours' and the 'overall benefits' customers are buying. People often expect service benefits they won't pay for. And some people assume that being a boss means treating staff as if they were servile workers.

    There's also a confusion here about just who the customers are? It's common to mistake what are 'end users' for the customers of an organisation. Their customers are actually the businesses that hire them. End users don't pay the bills directly: their relationship is quite different.

    Call centres and many other industries supply highly variable benefits to their BUSINESS customers from a cost-base that is mostly the employment of workers. Since the principle assets in services are usually people, it makes sense to give high priority to their needs. End-users of their services or products are not THEIR customers.

    Bosses who look after their staff - such as in hospitals and call centres - may be doing so because that ensures their staff will reach the standards their BUSINESS customers have contracted for. Which may not be exactly what their end-users want.
    End users who don't like the service they get should make their complaints to those who're paying for them directly.

  • Comment number 36.

    #27 The ComingStorm,

    "or just adopt the German Social Market Model which looks to treat the 'stakeholders' with respect and thereby fend off social unrest. I can't imagine German workers being treated like UK workers (mere commodities) without serious social grief."

    You are not listening. There is no point in adopting the German model unless or until you address the thw whole philiosophy of the firm and the role of the executive?senior operational managers.

    The other major problem with the SMM is that it is essentially a German cultural model. In exactly the same way that Japanese corporates had to ammend their work practices to fit the culture outside of Japan so the SMM would have to be adapted to suit the UK.

    "It has nothing to do with socialism btw," I do understand that - after all I kept being reminded by Richard Dingle often enough - you are not Richard Dingle are you?

  • Comment number 37.

    The HCL idea that the employees should appraise the chief executive is one that other companies should copy. It solves the problem of who should appraise the chief appraiser.

    Employees are in a much better position to do this than directors, let alone shareholders. Collectively they have an unrivaled knowledge of the functioning of
    the company and are very committed stake holders. Shareholders can sell their shares if they see things going wrong. It is not so easy for employees to change their jobs.

    More generally, most companies could improve their performance by listening more carefully to the opinions of their employees about the company's objectives and how the company is run. However the traditional authoritarian attitude of many UK senior executives makes this impossible in many cases. The requirement for large companies to have works councils in Germany, could be part of the reason why, in general, German industry performs better than British.

  • Comment number 38.

    Ok, it is complete myth that all surveys and opinion questionaires etc are completely anonymous. The way most are designed, through simple deduction you can filter just where the praise / dissent is originating. Indeed I just had a similar survey where I was wrongly emailed from a company responsible for survey, they singled me out as one who had still not completed it, so the simple logic if they know who has not done it they can also exactly identify who said what & when! Hence the reason I did not do a recent one from the CEO of my company, I choose to let actions speak louder than words! Basically she get's 100 times my salary, so every little bit I can do to limit her bonus is more rewarding to me than rubbishing her in a survey!

  • Comment number 39.

    The first person that I met who really meant that he put the employees first was the founding MD of First Direct. He meant it and it has delivered the best customer satisfaction in the industry. In banking that would be like being the liveliest corpse in the cemetry except that First Direct really do delight their customers and are miles ahead of their nearest rival.

  • Comment number 40.

    HCL are slightly disingenuous on this. They say they put the staff first because they believe that motivates the staff to provide ever better service to the client.

    But HCL are as sales driven as the rest in their market space and I wonder if they will back their staff against clients or potential clients when revenues are at risk?

  • Comment number 41.

    I work for a CEO who makes this claim, but also openly says that he belives in rewarding only the people most critical to his business - basically the sales guys. He's happy to confirm that most of us are expendable, so in saying that his people are his greatest asset he's displaying almost as high a level of hypocrisy as a Tory politician - a bit less than a Lib-Dem though.

  • Comment number 42.

    I heard Stephanie's episode of The Bottom Line, and it was okay - I think it is one of Evan Davies' genuinely best endeavours, but if he gets bored of it, as he will (you can tell he's the sort), Stephanie should hopefully manage to carry it on.

    The mere fact that Stephanie raised the question in the Bottom Line alerted me to the certainty of the change in the wind.

    Investors in People?

    Businesses normally depend on taking over promising investments produced by MomandDad Co and making further profits from them.

    Last Year, even Terry Leahy mentioned that Britain's youth were not adequate for hiring into Tesco.

    Businesses can't invest in just any type of people, and now there isn't a national government credit card for subsidies in low-standard applicants.

    Your employees are your most valuable assets? Yes, if you've been picky about them. Otherwise they are a burden and you've still got to go through them to sort the wheat from the chaff.

    Stephanie has frequently commented that in this recession, employers held on to their staff because of the assumption that re-hiring them would cost too much. Three years into the recession, how many companies can continue to afford to hang onto staff on the hope that economic conditions shall revert to historical states? None.

  • Comment number 43.

    Happy Friday Stephanie.
    ~~~~~~~~~~~~~~~~~~~~~~~
    I am curious. Which accounting rule counts salaried-staff as an asset?
    As I recall, salaries are an "overhead" or "expense". that would put them the wrong side of the balance sheet. Worse, salaries are a "variable overhead". Low-hanging fruit for the short-run pursuit of profit.

    "Intellectual capital" may be an asset, but, as noted above, once that has been encapsulated in a patent, by law it is not the property of the employee, and the employee reverts to being an "expense".

    Equipment can be bought, and goes on the books as an asset.

    Even loans to other business entities can be classed as an "asset" (which is somewhat daft).

    But, the only way people could be classed as an "asset" would be if they were bought or sold, either fixed term or outright. As the old office poster says: "They can't fire us...slaves have to be sold".

  • Comment number 44.

    Most valuable asset... more "most valuable resource".

    And resources are things that a company uses. More and more we see workers having pointless rights (to maternity/paternity pay, sickness pay etc) which only make employers less likely to want to employ them in the first place and few rights where it really counts - being expected to work 11/12 hour "professional days" etc, having their pensions eroded by their employers who are also allowed to be the trustees of their pension fund.

    And don't get me started on takeovers and what happens to the workforce when they happen... Cadbury's should be causing a sea change in the takeover rules but we are seeing nothing be done and even nothing being planned.

  • Comment number 45.

    @34 LadyEcon wrote :"Is this an economics post or self-promotion?

    Meanwhile UK Producer Price inflation has surged again according to figures released this morning posing a question for the Bank of England's decision to keep interest-rates unchanged yesterday. But I guess inflation so rarely gets a mention on here."

    Quite.

  • Comment number 46.

    Of course workers are a companies most valuable asset - IT'S WHERE ALL THE PROFIT COMES FROM.

    ...whether they are treated like that is another matter.

    Crikey, doesn't anyone read Marx these days? ...oh no wait...I forgot most people believe you can 'add value' to a product by witholding the supply of it and charging what you like.....or that there is value in exchange.

    Well I suggest all workers down tools and lets see these 'exchangers' and 'wealth creators' run this country. That would be most interesting to watch.

  • Comment number 47.

    34. At 11:50am on 11 Feb 2011, LadyEcon wrote:
    Is this an economics post or self-promotion?

    Meanwhile UK Producer Price inflation has surged again according to figures released this morning posing a question for the Bank of England's decision to keep interest-rates unchanged yesterday. But I guess inflation so rarely gets a mention on here.

    I can only agree with this statement......

  • Comment number 48.

    36. At 12:32pm on 11 Feb 2011, foredeckdave wrote:

    The other major problem with the SMM is that it is essentially a German cultural model.


    It was created in the early 1950's as a way of giving a fair crack of the whip to all the stakeholders and it has been very successful.

    Cultural model ? Is treating people with decency a 'cultural model' ? Possibly. In Germany's case it was a necessity given the volatility of the Germans in embracing extreme left (almost went communist in 1920's) and the right (1933) when they are not happy with their lot (better than being 'sheep like' imho).

    My own take on the UK is that it has not shrugged off the cultural model of feudalism. This country is the only major country in Europe (along with Russia) that never had an '1848'; when the old order was swept away and 'ordinary Joes' asserted themselves.

    This might explain the Master / Servant cultural model that pervades the Board Room and also property ownership (almost as a class apart to those who rent).

  • Comment number 49.

    All this user's posts have been removed.Why?

  • Comment number 50.

    Post 39 Forelornehope said ...

    "The first person that I met who really meant that he put the employees first was the founding MD of First Direct. He meant it and it has delivered the best customer satisfaction in the industry. In banking that would be like being the liveliest corpse in the cemetry except that First Direct really do delight their customers and are miles ahead of their nearest rival."

    ---------

    A good point well made ... and it's worth noting First Direct are one of the companies in this country actively applying a little 21st Century practice (based on Deming's Principles - see post 8, 33 earlier)!


  • Comment number 51.

    Is this really an either or question? The banks put their employees first with the bonus system and we all know what that produced. If the customer is viewed as a short term profit center the staff will act accordingly. Internal organizational structure is the best reflection of how staff are viewed. Where are the resources allocated. What are the opportunities. Technology allows for contract employees with little or no loyalty to an organization and this can be a plus when asked to perform questionable actions. Governments and government protected organizations usually require some relationship, in some countries that means bribes, in others, political influence. Companies see employees as costs centers and production centers. One constant has been that those with a sense of creativity usually leave a company to start their own as companies tend to not encourage new ideas from the bottom up. Costumers on the small scale are only important to pubs and restaurants. The banks felt no obligation to make whole their customers after gambling away their retirement accounts and savings as they continue to pay bonuses to their staffs.

  • Comment number 52.

    I did as promised and listened to The Bottom Line. Very instructive.
    Yes, BH, sfter today, "I want to go and work for you!" Or the gentleman who uttered said words at the end. But I had better stay retired.
    BH on Line. Robert P yesterday, here today and working stuff Out sort of. Helpful tips how to combat insomnia which I found useful too on the PM Blog site. I will think on, Ms Flanders.

  • Comment number 53.


    An earlier blogger made reference to:

    The just published IOE Report on the Surveillance by the IMF of the UK 2004-07.

    In addition, there is a Background Paper (dated Dec 2010) by David Peretz. Many of the BBC's financial journalists and most contributors on here will doubtlessly remember him when he was Under Secretary at the Treasury during the Asia Crisis.


    An overarching and important question is , surely, does the Treasury put its own employees' welfare over and above the welfare of the country ?
    They all seem to be able to find plush jobs ex Civil Service.

    PS use a search engine to find the material which is terribly 'interesting' on the Financial Crisis.

  • Comment number 54.

    Hi Stephanie,

    You got it wrong this time ...

    Today, Stephanie, I give you an exercise.

    *** 1. Just go through the latest Annual Reports of the 3000 Indian companies listed on the National Stock Exchange of India. and you will get surprised that most reports do not even mention how many employees work there for them !!

    Now,
    There is a mandatory statement that they have to put regarding Employee-Employer relations by law. and that is the reason why you will see exact one paragraph and most annual reports have exact cautious wording
    and across the board of companies, this para is so curiously similar ...

    Rest all references to employees are w.r.t. the expenses that employees caused to company. Like (a) costs and funds transferred to so called "Employee welfare trusts, (b) "Top employee" compensation details Mostly director level compensations mandated by Government to be included in Annual Report and so on and so forth .. etc.

    Your second exercise would be: SEE FOR YOURSELF HCL Technologies Annual report ... Take lenses and read.
    Just don't talk to wrong people. Read and be enlightened ...

    I am not sure your choice of the people who you called in your studio was right or not.
    ================================================
    Now,
    Ownership leads to probable independence and a possible freedom;
    No matter how small business (or the fraction of business) you own.

    Choosing to be an Employee is choosing to compromise one's independence and leads to eventual slavery and degradation; No matter how big position you hold in the company.

    In India, and in U.S., I do not know about Europe (I have not worked in that continent) following is what I personally observed in almost ALL 10 companies I worked for ( I have added "almost" just to give a benefit of doubt in case I have made some observation error in some rare case) :

    *** An employee is just a peripheral unwanted (but unavoidable) expenditure to the business. What is doled out to employee as compared to what an employee contributes towards productivity and profits of the company is always unfavorably tilted against employee BY DESIGN. ***

    *** EMPLOYEE IS JUST A "EXPENDITURE" item on the balance sheets of the company that companies relentlessly endeavor to reduce, no matter what.
    (and that part is IN DEPTH explained as a schedule to the balance sheet of ALL Indian companies. Don't believe ? If you go through the exercise I prescribed earlier, you will agree)

    Stephanie, I like and appreciated your articles, ALWAYS, but you got it wrong this time because the choice of people you called went wrong !!

    But the subject matter you chose is BRILLIANT !!
    It's just the approach ... Stupid !!

  • Comment number 55.

    51. At 2:32pm on 11 Feb 2011, ghostofsichuan wrote:
    "Is this really an either or question? The banks put their employees first with the bonus system and we all know what that produced..."

    The banks put a SMALL number of their employees first. The majority do not receive these bonuses and many have seen their jobs go abroad in the relentless drive to drive up senior executive remuneration.

    The bonuses of some have been ridiculous but partly raised this high to justify huge remuneration of those at the top 'the people I manage get million pound bonuses so I deserve them too!'

    What has happened with the banks has been one of the biggest scandals in the last hundred years and continues to this day but it is only a few at the top who are screwing the rest of us.

    The majority of people working for banks are crapped on by arrogant, selfish, incompetent managers just as they are in other industries.

  • Comment number 56.

    48. At 2:06pm on 11 Feb 2011, TheComingStorm wrote:
    My own take on the UK is that it has not shrugged off the cultural model of feudalism. This country is the only major country in Europe (along with Russia) that never had an '1848'; when the old order was swept away and 'ordinary Joes' asserted themselves.

    --------------------------------------------------------------------

    1649?

  • Comment number 57.

    56. At 3:23pm on 11 Feb 2011, Reticent_Trader wrote:
    48. At 2:06pm on 11 Feb 2011, TheComingStorm wrote:
    My own take on the UK is that it has not shrugged off the cultural model of feudalism. This country is the only major country in Europe (along with Russia) that never had an '1848'; when the old order was swept away and 'ordinary Joes' asserted themselves.

    --------------------------------------------------------------------

    1649?
    ------------------------------------------------------------

    Sadly Cromwell wasn't up to creating a viable long term society which let the b******s back in again.

  • Comment number 58.

    Our banks certainly think their employees are its "most valuable asset".
    They reward them for losing money - You could not make it up.


    They downgrade their other assets such as our savings.

  • Comment number 59.

    #55 Allan

    Of course you are correct in that it was the highest who benefited from the greatest theft in history. The policies following the collapse was to save the wealth of the wealth stockholders of the banks. But on the more local level it was the local bank that was qualifying the unqualified for loans with very little questioning. It goes back to the old WWII question: Where does personal responsibility start? The local banker had no idea that the loans were backed by an empty box created by the banks and endorsed by the elected.
    The government still fails to understand that demand creates jobs and giving money to banks only profits profits for the investors and owners of the banks and upper level staff. Had the government required that some percentage of the public money given to be placed in the diminished accounts the people would have money to spend and jobs would have been sustained, but they chose to give large sums to the wealthy to secure their wealth. It all remains a feudal system.

  • Comment number 60.

    56. At 3:23pm on 11 Feb 2011, Reticent_Trader wrote:

    48. At 2:06pm on 11 Feb 2011, TheComingStorm wrote:
    My own take on the UK is that it has not shrugged off the cultural model of feudalism. This country is the only major country in Europe (along with Russia) that never had an '1848'; when the old order was swept away and 'ordinary Joes' asserted themselves.

    --------------------------------------------------------------------

    1649?
    ~~~~~~~~~~~~~~~~~~
    Chuckle of the week. Thanks.

  • Comment number 61.

    59. At 4:20pm on 11 Feb 2011, ghostofsichuan wrote:
    "..."

    Agreed wholeheartedly

  • Comment number 62.

    57. At 3:45pm on 11 Feb 2011, allan365 wrote:

    ------------------------------------------------------------

    Sadly Cromwell wasn't up to creating a viable long term society which let the b******s back in again.

    ~~~~~~~~~~~~~~~~~~
    Not just Cromwell...have a think about more modern utilitarian societies (emulating the puritans) in which "democratisation" has been the key ideal.
    In the English revolution, the people wanted to bring medicine, law, politics, wealth and religion down to the lowest common denominator.

    Ditto the French revolution "liberte, egalite and all that", and look at the "elitism" in French politics nowadays.

    Ditto the Russian revolution. Look at the oligarchs with their hands on the levers in the 21st C.

    China is going the same way.

    Animal Farm was quite an accurate description of the process, don't you think?

  • Comment number 63.

    14. At 09:44am on 11 Feb 2011, Peripatetic_Scribe wrote:

    With apologies, but as a footnote to my earlier post, what many companies fail to understand is the fact that every departmental function also has INTERNAL CUSTOMERS. Do they ever enter into the equation of customer service? Without this "inclusivity" concept, the external customer can rarely be given the service he/she deserves.
    ~~~~~~~~~~~~~~~
    As one well respected quality manager once remarked to me,
    "the difference between internal customers and external customers is that external customers give you money, whereas internal customers only give you grief."

  • Comment number 64.

    The HR Director in Dilbert gave the best ever summation of 'Our Employees are our most valuable asset'. It was along the lines of:
    Like all assets they depreciate in value over time, except for valuable works of art and noner of them are Rembrants.

  • Comment number 65.

    62. At 4:51pm on 11 Feb 2011, stillpuzzled wrote:
    57. At 3:45pm on 11 Feb 2011, allan365 wrote:

    ------------------------------------------------------------

    Animal Farm was quite an accurate description of the process, don't you think?


    Very true. Probably why it was written. Stating the obvious. Deep down most humans are uncomfortable with democracy. Those with the clout will push it and bend it as far as they can.

    Though some are more pig like than others.

    Why we need a 2013.



  • Comment number 66.

    43. At 12:58pm on 11 Feb 2011, stillpuzzled wrote:
    Happy Friday Stephanie.
    ~~~~~~~~~~~~~~~~~~~~~~~
    I am curious. Which accounting rule counts salaried-staff as an asset?

    Goodwill i.e. what someone is willing to pay for a business above and beyond its net assets. This would include a bit for half-decent staff.

  • Comment number 67.

    Posts 55/59 - great posts - I fully agree too and well put.

  • Comment number 68.

    48. At 2:06pm on 11 Feb 2011, TheComingStorm wrote:
    My own take on the UK is that it has not shrugged off the cultural model of feudalism. This country is the only major country in Europe (along with Russia) that never had an '1848'; when the old order was swept away and 'ordinary Joes' asserted themselves.
    ------------------------------------------------------------------------
    We tend to do things on a smaller, gentler scale, which may be good.

    Mrs T, in opposition, promised a revolution but failed to deliver after election.

    We had a small revolution post WWI, but unfortunately a mad little German and his pals messed it up for us. The Great Crash and Depression didn't help.

    The Victorian revolution, with a century's distance, now looks rather attractive.

    We need a new revolution - a velvet one. Unfortunately there are people at work in Britain and elsewhere who would like to see we get something rather different. I would love to know the geographical spread of the non-indigenous demonstrators at the university fees protests.

  • Comment number 69.

    I've only ever worked for small manufacturing companies, who made finished products ( i.e sold high value parts).

    There were two kinds: one where the owner was the chief architect of the products, and had used his own money to get the business running. Typically the owners still worked in the business, and knew everybody. They also pulled up their sleeves when needed.
    Although not co-operatives, everybody felt part of something, and awkward employees, were initially supported by all, but also ignored if they upset the applecart.

    Essentially it all worked like a small community.

    The other type of company was owned by salesmen( read money lovers) who ran everything for a quick buck, often with borrowed money. The hype was great, but the reality when things hit the fan was somewhat bleaker.

    So perhaps it's all to do with the attitude of the owners: Think money, get short term greed above all else, think product, get holistic bussiness.

  • Comment number 70.

    Employees are an intangible asset. Their value is knowing the job, knowing the organisation, knowing the customers, having the network. This is not recorded on the balance sheet. Organisations that have a high staff attrition rate suffer in subtle ways: they may not succeed in getting contracts or sales, they may find it difficult to improve efficiency, they may take longer to solve problems than would otherwise be the case, or they may hit problems that they would not have hit otherwise.
    The often incredible mistakes that we read about in local Councils, the NHS, or Central Government: these generally happen because someone who knew what they are doing has left the organisation (or been kicked out). I work in the NHS and I am now seeing the effects of the big reorganisation on the workforce. Basically, the good people are leaving, and they cannot be replaced. You can be sure that there will be clinical repurcussions from this.

  • Comment number 71.

    Business based on smoke & mirrors from day 1. The employer employs staff who on paper 'profess to be the best thing they've never employed'. The company usually retorts they're the best employer offering a 'career' which in reality becomes little more than a buzz word for 'delegated tasks'.

    Once the honeymoon period evaporates, unless you're a staunch yes person who nods in the right places, drops the right amount of 'of the moment' management speak / jargon, and has a honours degree in smarm and self efficacy, the majority of employees are probably already on the 'farm to outsource' junk pile.

    Nodding donkeys go on to become management not based on competencies or deliverables, but by being prepared to put aside ethics and morals and playing the system like a fiddle. A system that fails to recognise or care that this is in fact the biggest issue probably in business today. How is this so overlooked? It's because it's how it's always been. It's normalised business behaviour.

    People who care about people, and put staff on an even footing with the business or customers are often deemed as much a threat to any organisation as competitors or any major business risk exposure. Why would a business want any David's (ref: Goliath) within the inner sanctum of the management club offering up awkward ethical viewpoints in response to difficult employee based decisions? That doesn't oil the wheels of progressive Western business.

    It takes an exceptional company to realise that actually if you empower your people, let them do what they do best, give them autonomy, manage them by objectives rather than fear and misery, you may just end up with what everyone wants and needs (better business / happy customers / engaged employees). Doesn't sound radical, but name ten companies off the top of your head that you know can do this well!

    As there seems to be a trend for business leaders to come from the accouting functions, and their view of successful business is mostly led by cost control and risk management (not innovation and great vision). Whilst this cycle manifests (and they will tend to chose their own to replace themselves), businesses will ultimately become hollow shells run by outsource agents who have little passion or understanding of the aspired brand ethics of the businesses they front. It's about transactions happening, not greatness, and hence employees probably won't ever been seen as part of delivering something 'special', just performing a task (tick in box). Hence they are no longer an asset, but part of 'the machine of delivery'.

  • Comment number 72.

    Point is that there is too much hypocrisy in the firms from managers or even human resource side. They are expressing, yes, how valuable employees are, but in real-life this kind of story is only for those who believe in E.T. I understand that CEO's or other managers are first class hypocrates (it's in their new nature or better say role in firm) but when it comes to human resource stuff, I would expect that at least they defend colours of employees and not allowing that managers are acting like they do, in general. Those who wants to be first class managers or even leaders in terms that they actually respect employees, use styles for leading that are trully adoptable to every situation. But fact is that they can not exist in firms, where top management does not support »open-minded-leadership«.

    So when I hear this phrase that employees are the most valuable assests, we should asked ourselves how long we must read this kind of b.s. Management itself must first believe in this phrase. I also doubt that they want this, because who, from these »tayloristic-new model-capitalistic managers« want to share happines, resources etc among subordinates and give them trully respectful honest appraise?

  • Comment number 73.

    Customers!

 

BBC iD

Sign in

BBC navigation

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.