Here is another thoughtful article on what should be the top management theme of this decade. It is also a good follow on to my post on Labor Day. Hopefully it gets resolved in this decade. Louise Altman, Partner, Intentional Communication offers us - Humanizing Workplace Relationships – People Aren’t Tasks. The tag line is the most significant concept. I recently re-watched an excellent video produced by the BBC in 1997, Intellectual capital: The New Wealth of Nations. It made the same point. The film portrayed the industrial revolution as a plague on people where workers were treated as mere extensions of machines.
Now the percentage of tangible assets in the corporations in the S&P 500 has shifted from 66% in 1982 to 16% in 1999 and likely continues to fall (see Juergen Daum, Intangible Assets and Value Creation). In its place is the rise of intangible assets as the creators of wealth. These are mostly the ideas in people’s minds. Yet, as Louise points out many organizations are still managing people as though the wealth was created by tangible assets, machines, and people are just servants of these machines. The wealth now comes from treating people as human assets and releasing their creativity to enable innovation and new wealth in organizations. McKinsey found in 2010 that the lower the decision level was in the organization, the higher operating margin. Top down authority is the enemy of profits.
Top down authority is also the enemy of employee engagement and so many studies show high levels of workplace disengagement. What would you want to disengage your most powerful creator of profits? In the old days, no manger who think about turning off the production line machines and yet they often do this to today’s creators of wealth.
Many organizations still persist in old ways. Louise quotes, Tim Leberecht, “There appears to be a fundamental chasm between individual human behavior – which is expansive and multidimensional, ranging from the rational to the wildly irrational, sentimental and unpredictable – and the design of organizations, rational, practical, results oriented and engineered to perform consistently.”
I hope this issue does get resolved in this decade for the sake of the emotional, physical, and financial health of the world.