Most, if not all institutions will tell you that their employees or human resources, constitute the most valuable element in their asset portfolio. Yet, it is not difficult to show that this most valuable asset, more often than not, is the most mismanaged and ill-utilized in both public and private sector organizations. "Why is that so, you ask?" The answer is simple, but not without far-reaching implications. This kind of asset has a brain, has feelings, and its yield-to-cost performance ratio is highly unpredictable - unlike that of buildings, equipment, and money. Nonetheless, this asset is needed in any real organization. The planning, acquisition and management of human assets, therefore, present a formidable challenge, and there are no magic formulas or recipes, only guidelines which if not followed, will guarantee major losses for any organization.I raise this issue of human asset management because we are facing an era of resource scarcity, sluggish economic growth, increasing inflation, over-capacity in both the public and private sectors, high unemployment rates, and declining job creation rates. There are signs everywhere that the unemployment rate will continue to rise for a while before we see any signs of a decline. We have seen some bouts of layoffs, particularly in the tourism sector. There have been rumblings about the public service being next (remember George Odlum’s statement about the state of public sector productivity?). The rumblings have been further exacerbated by at least one recent government appointment. Some say, there is a "hatchet man" in the new crew. Some say that Dr. Lewis as an academic and an economist might be amenable to the types of prescriptions of bodies like the IMF - namely the requirement of a very lean public sector. Some speculate that the statement "government does not create jobs" is in-keeping with a potential move to trim the civil service.
My intention is not to raise fear here, but rather to explore why human asset management in most countries, not just St. Lucia, is often typified by a roller-coaster trajectory of hirings and layoffs. Why is the human asset acquisition and management plan rarely a stable one for most organizations? Since organizational re-engineering and restructuring have become (unintentionally) synonymous with downsizing, one is forced to ask, how do organizations become riddled with redundancies? How does excess human capacity develop? Let us face it, many companies have the potential to reorganize themselves to achieve their stated purpose with fewer employees. Either employers are not aware of this situation, or they are caring enough to absorb the redundancies until its no longer affordable. Then, the hatchet falls.
There are several reasons why redundancies (or non-yielding human assets - for want of a finance phraseology) accumulate in most organizations: 1) rapid organizational growth, 2) inability to forecast the future, 3) inability to identify and exploit the effective capacity of human resources, 4) a functional approach to human resource planning, acquisition, and utilization, 5) greed, 6) a lack of a clearly defined strategic focus 7) inefficient approaches to hiring and promotion, 8) a lack of congruence between strategic purpose and core competencies, 9) inability to identify and/or articulate requisite competencies consistent with strategic purpose, 10) inability to quantify human resource capacity, 11) existence of an ill-founded meritocracy, 12) inability to attract quality staff, 13) an ineffectual organizational culture causing employees to maximize their incompetence, and 14) badly defined job functions. There are more.
Many organizations start small, and as opportunities present themselves, they expand accordingly using a simple "chase" strategy. In most cases, there is little analysis of whether the perceived opportunities are sustainable. This would require thorough analysis of uncertainty - a skill most executives never nurtured because they hated mathematics. Forecasting the future also requires similar analytical skills. Most hirings are myopic. People are hired to do specific functions based on current need. As the strategic direction of the organization changes, these employees (human assets) yield less and less. In other cases, employees hired for a specific function never have their full capabilities assessed and/or explored. Further, there is a general inability to quantify the asset-yield capacity of human resources. Consequently, the organization cannot effectively determine when it has reach its affordable human asset capacity level. Some organizations are simply greedy and develop an optimistic expansionist philosophy, particularly in the "boom" times. But surely as night follows day, "bust" follows "boom".
Organizations without a clearly defined strategic purpose will have great difficulty optimizing the allocation and use of its human assets. It will be ineffective at hiring the "right" people. This inevitably leads to redundancy. Further, if the organization does not have an effective hiring strategy, many of the "wrong" people will be hired. In hirings and promotions, particularly the latter, many people will argue that a meritocratic approach is not used. On the contrary, people always get rewarded on the basis of some merit system. However, the merit system may be ill-defined. There is political merit, academic merit, social class merit, ideological merit, and so on. The question is what meritocracy governs the appointments? Finally, badly defined job functions will increase incompetence and over-capacity.
What can organizations do to avert frequent human asset acquisition and disposition cycles (hirings and layoffs)? 1) Plan sustainable growth rates, 2) understand their environment, 3) acquire and develop flexible human resources, 4) adopt a strong culture of an outward and forward focus, 5) match strategic purpose with the acquisition of human resources, 6) improve hiring approaches with clearly defined criteria, 7) measure and review human resource capacity constantly in the context of the organization’s strategic purpose, 8) establish a meritocracy consistent with the organization’s strategic purpose, 9) develop an organizational culture that allows the optimum yield-to-cost ratio of the organization’s human asset portfolio.
With the public sector, while there is much opportunity to reduce redundancy, I would only hope that any such move would be guided by people who understand the critical dimensions of human asset management, and who also understand the critical success factors for national productivity and the economic well-being of the disenfranchised.
