More on Human Capital
Eric Garton, a consultant to businesses, has just published an article with the provocative title: “What if Companies Managed People as Carefully as They Manage Money?” His company’s research has shown that there is an abundance of financial capital, but
“In contrast, today’s scarcest resource is your human capital, as measured by the time, talent and energy of your workforce. Time, whether measured by hours in a day or days in a career, is finite. Difference-making talent is also scarce. The average company considers only about 15% of its employees to be difference makers. Finding, developing, and retaining this talent is hard…Energy, too, is difficult to come by. Though intangible, it can be measured by the number of inspired employees in your workforce. Based on our research, inspired employees are three times more productive than dissatisfied employees, but they are rare. For most organizations, only one out of eight employees is inspired.”
Unfortunately, having stated the problem, he is unable to provide a clear direction of attack other than to argue we need to use or create metrics to measure and assess human capital in the same way we do financial capital. Of course, it is also clear that many of the issues involved in assessing human capital are intangible, therefore not easily reduced to a series of numerical indicators. It is this, I suspect, that makes human capital management difficult for most organizations. We know engagement, or energy as Garton calls it, is important for getting work done, but recognizing and rewarding the engaged employee requires and engaged and knowledgeable boss—one who gets out on the floor and sees what is really going on. It is easier to sit in the office and look at computer-generated data reports.
What makes some people more effective at finding, developing and retaining talent? I suspect first and foremost, is an appreciation that all human organizations are just that—human. If you start with the assumption that it is always about people, it is easier. Second, these people appreciate that human motivation is more than economic. Yes, money matters, but for most people, it is only one of the factors. Since they are aware that other things matter too, effective leaders are able to deploy a wider range of motivators, thereby reaching more people.
One of the paradoxes I have encountered is that those who are trying to manage physicians start and finish with the notion it is all about the money—that physicians are examples of “economic man” who make rational decisions designed to maximize their incomes. Yet looking at the postings on a popular website like KevinMD will show that money is seldom mentioned as one of the rewards or stressors. Instead, the feeling that physician work is directed toward improving the lot of their patients has a high value, and things that detract from that feeling, which seem to be increasing in number, are negative.
Of course, I have known physicians who were cursed—it did not matter how much money they made, it was never enough. In fact, those who can never have “enough,” be it money, power, prestige, fame or whatever, are generally miserable and do not make good leaders. The need to feed their craving makes it impossible for them to relate to the needs of their underlings. Fortunately, they are not in the majority, but there are enough of them who have sold their birthright for a mess of porridge that the entire structure of medical practice has become unstable.
Healthcare organizations are by nature very people intensive operations, so staff costs are always the single largest part of the budget. On the other hand, it is clear that the supply of talent is insufficient to the need, starting with physicians and working down to entry level patient-care technicians. Yet turnover in medical organizations is high. One of the “new” trends that has become more common is turnover in physician staff. Where once a physician came and set down roots in the community, now they are paladins, available for hire provided the price is right.
So managing well the limited supply of human capital and energy is what determines which organizations thrive and prosper and which ones languish and fail. While we may prefer to look at our numbers and statistics, this fact will be with us today and tomorrow. I recently told a group of dialysis unit medical and senior operations directors that I was thinking a lot about a scene that was common in the Westerns of my youth. Remember the stagecoach being attacked by the bad guys? The shotgun is the first casualty, but then the driver is shot, grabs his chest and drops the reins. The horses are galloping full tilt down the road and the turn is up ahead. At the last minute the hero rides up alongside the lead horse of the team, jumps on and saves the passengers. I fear many of our healthcare organizations are like the stagecoach, but the passengers are busy arguing with each other about whose job it is to climb up on top and try to grab the reins. Will the Lone Ranger arrive in time?
29 May 2017
 Garton, E. What if Companies Managed People as Carefully as They Manage Money? HBR 24 May 2017. https://hbr.org/2017/05/what-if-companies-managed-poeple-as-carefully-as-they-manage-money.htm.
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