Posted by Brian McCullough
When a company is doing well, it will rhapsodize often about how its “most valuable asset” is its “people.” But when a company is doing badly, those “assets” quickly become their most expensive (and thus expendable) expenses.
I thought this post from Valleywag summed it up so nicely, I have to quote the whole thing:
Nortel, the second-rung maker of telecom equipment, is losing money. In an attempt to stop doing that, the company is firing 3,100 workers. Of course, that’s not how Nortel PR is spinning it. The AP reports: “The company said it plans to cut about 2,100 jobs globally and will shift approximately 1,000 additional jobs to lower-cost areas.” Even with our mere powers of journalist math, we can calculate that the company is really firing 3,100 employees and hiring 1,000 more for lower pay — a likely euphemism for “shifting jobs overseas.”
When I was fresh out of college, like everyone else my age, I was influenced by the Naomi Klein book “No Logo.” In that book, Klein suggests that the greatest dream of the modern corporation is to one day be able to produce a product without needing any actual employees to produce it. People are expensive.
(Actually, the book goes further… the dirtiest wet dream in the corporate mind is to be able to sell just it’s essence… no need for people or materials or factories or even products… If they could just sell their essence… their logo… their brand “experience”… that’s the ultimate. Simply selling with no other costs involved. Klein suggests that Nike, amongst others, has come closest to this… all they are really selling is that Swoosh logo.)
But maybe we’re coming out of that era. As we enter the “virtual economy” good ideas and good people to think them are the most important thing a company can possess. Look at the most successful company of our era: Google. You could argue that the only thing they’ve done since becoming successful is hire. And hire. And hire. They’ve literally tried to sign up all the smart people in Silicon Valley.
They’ve done this because they understand their only worth is the next good idea… the next Gmail or Google Maps. And they need good people to get those good ideas out the door.
And look at Yahoo, about to be swallowed by the Microsoft maw. They couldn’t compete with Google… couldn’t compete with Google’s good ideas… couldn’t compete with Google’s good people. Sure, they tried to buy their way to good ideas, (Flickr, et al) but in the end, they couldn’t produce as many good ideas in house as Google could. Partly, this was because Google had stolen all their good people.
Maybe we’re entering a new era where having the best people is the more important metric than having the least people. Labor overhead can be a good thing if it’s laboring to produce the next good idea… the next good product. The successful companies of the future might understand the phrase “human resources” in the way the dictionary actually defines it.
There endeth the commentary…