If It's All About the People....

We've heard it so many times we sometimes want to puke: it's all about the people. People are our biggest asset. Without a laser-sharp focus on human capital, we are worthless as a company. Yadda yadda. Part of our cynicism comes not from the fact that it's not true—it most certainly is—but the fact that words rarely lead to action in this area.

This feeling is backed up by a new study from Mercer Human Resource Consulting, which confirms the sad truth that much of corporate-speak about its people is more hot air than anything. A two-year study of the annual reports of the 100 largest publicly-traded companies shows that only about 20% even mention human capital and how it contributes to the company's results in its annual reports. About 25% of the companies "offer platitudes," according to its authors, Mercer consultants Rick Guzzo and Haig Nalbantian, while even those that do talk about the importance of human capital rarely try to quantify exactly how its approach to its people helps improve its numbers.

This is hardly surprising, but somehow, I find it depressing. If people are so important, shouldn't they get as much ink in a company's discussion of its last year as a new bond offering or an inventory overhaul? Why do you think this subject continues to remain so poorly developed?

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6 Comments

  • J Srikanth

    I recently read in the Annual report of a software major here in India that Attrition was an issue, inspite of the best environment, opportunities for growth aand compensation!
    That puts the ball back really to why do people work anywhere? In my view if companies value their employees they must be willing go that extra mile or stretch as they exepect their employees to do....

  • Robert Cenek

    Fortune magazine's annual 100 Best Employer issue has a legitimate aim - the chronicling of the those employers who seemingly do think that people, and not spreadsheets, primarily drive the business.

    How interesting it might be for those firms to agree to have a statistically significant sample of their workforce participate in an engagement survey that unequivocally establishes whether folks are truly committed to the enterprise.

    My sense is that many in the list are excelling at providing a steady shower of good perks and pay, but are they really creating work environments with meaning and purpose? It's really a question for me.

    Robert Cenek
    Cenek Company
    www.thecenekreport.squarespace...
    www.cenekcompany.com

  • Vernon Martin

    I have yet to read a pamphlet that describes a companies view on it's "people," as pawns, tools, or expendable. It is not fashionable and it just plainly turns many people off. There are some companies that openly demonstrate a purposeful attempt to put their people at least second if not first, but the prevailing view lags behind the human care sound bites. Maybe, we just don't believe the hype. In a world of clashing ideals against economic realities, it is quite easy to praise the human contribution while downsizing a workforce to increase the bottom line. As we push the limits of creativity and talk about the optimal work environment, companies continue to seek ways to get more out of less, and this causes the focus to be product over person. Even investors raise their eyebrows when they see excess expenditures towards human frills. All is not bleak! There is a slow movement towards turning the talk into action as more companies experience the payoff of employees that feel as though they are the biggest asset and then prove it. We live in an ever shrinking world and if we continue to take our people for granted, someone else will take our people. A lesson at least one company taught us for the price of a cup of coffee (Tall, Grande, or Vente).

  • Jeremy Roberts

    For the past decade, many large companies have been measuring the current status of their Human Capital on an annual basis using employee engagement surveys. These surveys effectively quantify how well the company is motivating its people to achieve the mission. Why don't corporations publish these statistics in their annual reports? Good question.

    I would suggest that:
    1. A falling engagement score (something common in the current corporate environment) could cause the stock price to drop, especially for firms in service industries like consulting.
    2. A low engagement score could deter an outside company from acquiring the firm. Who wants to add unhappy employees?

    With executive compensation being enormously influenced by stock price (and not at all by employee engagement) and with the sweet packages given to executives in an acquisition, there is substantial financial incentive to keep low and falling engagement scores out of the public eye and, therefore, not in the Annual Report.

  • Roger Fulton

    My experience: companies that crow about how good they treat people - don't.
    Organizations that say they have an "open Door" policy - beware, they should'nt.
    Bosses that say to you, "I always let you know where I stand, I'm honest," really means - wear armor when you come in for a review.
    Supervisors who tell you up front, we NEVER shoot the messenger - will ALWAYS shoot the messenger.
    In short, I've found its about trust--or the lack of it. I am not aware that there is much of it in the modern work place. Todays water cooler is an armed camp. What you whisper in private is carried everywhere. Politics and the progress of promotion is a cultural art form, and no one I know can part the seas and form "relationships" in the work place that are either lasting or meaningful. I know of no one with the magic want, certainly it is not me. ###

  • Marianne Powers

    Let's suppose they don't do it for a good reason. People usually do things, or don't do things, for a good reason. They might think that quantifying exactly how their approach to their people helps improve their numbers means quantifying their approach to their people. They might think that would be a bad way to treat people. I agree that it would be.

    Human capital is one of those substances that cannot be measured because the very act of measuring it changes it. In other words, measuring people usually has a deleterious effect on the people.

    But there is another way, maybe what you're thinking. Even though you can't measure the thing itself, you can measure the effect of a change in or a difference in the environment.

    They can compare the company's performance on any measure before and after they changed their approach to their people. Or they can compare the company's performance to another company's performance that has a different philosophy.

    The only prerequisite is that they are very clear about what their philosophy is. Which is a very cool thing. Because once a company states clearly and in detail what they believe about how people should be treated, the people themselves will hold them to it.

    There might be an unspoken axiom here, which is that one hundred percent of a company's performance is dependent on how they treat people. But you wouldn't disagree with that, would you?