Human capital driven business leadership
Wednesday, 10 November 2010
Md Arif Iqbal Khan
MANY companies in Bangladesh face a common problem related to retaining talented human resources, not only because of shortage of skills but also due to some interesting facts.
Most recently a young man from a reputed university was posted to my department. I had my doubts when he reported for duty. So, I called him and asked him to draft a letter. He could not do it. Then I asked him to do a simple spreadsheet calculation. He could not do it. I asked him to come back a month later after completing basic computers course. He did not return and joined another department.
This is the familiar face of the young workforce that is coming out of our distinguished universities. Graduates feel that they have completed their academic studies and as such they now deserve a respectable job that will not only give a fat pay cheque but will also come with periodical promotions followed by other facilities. Most new workers want to look at their jobs as a launching pad so that they can learn what they need to learn and then negotiate a better package with another company and "move up in the career ladder". Asked why they do like this, they say: "Companies don't care about me and my career so I have to look out for myself or else I will be left behind in the race. Besides, I am already behind my batch-mates". Employers can blame those "migrant" employees as disloyal or greedy but that will not solve the problem because their replacement could possibly end up in similar situations.
It is the responsibility of a company's leadership to check on the core principles of human capital formation and its reward structure, in addition to other factors assumed to be working perfectly, like work environment, technology etc. Financial capital is formed normally by the offer of a company's ownership in exchange for cash or stock dividends and share price appreciation. Human capital is structured not differently, which implies that cash and other benefits are directly proportional to business performance.
For the human capital, there are people who compete based on their skills and abilities while others are "comfortable" in their roles. Both types of people contribute to the company in their own ways. But are they equal in value to the company is the tricky question that a mediocre company will struggle to answer. There may be "family" models and other socially appealing models, but the hard fact is that all employees are not equal, some are more equal than others.
Rewards, recognition and incentives are tools for management to motivate people to compete, and to win. Now, if both high- and low-level performers end up with equal rewards at year-end it could provide motivation to "stay put" for the mediocre workers and de-motivation for the fast movers from doing what they do best. This situation creates instability calling for normalisation by a market correction. A high performer is like the hottest stock in the share market, everybody wants that stock, and they are ready to pay a premium for it.
To deal with the high achiever is probably easier than to deal with the "dead wood", especially in a society where skilled workers are hard to find. It makes little sense to feel good by under-valuing a performer because the principle here would be "high skill-low pay" whereas keeping mediocre at equilibrium will follow "low skill-high pay" principle. This stage is obviously a danger point for any business organisation because these two principles can never co-exist unless the company itself decides to take a backseat in a competitive market.
Employers' investments in training and skill building of its employees are not without expectations; and employers are right to demand superior commitment to performance from their trained and skilled employees. However, rewards and recognition become more meaningful when there is an honest principle to separate the achievers from the rest.
(The writer works for a commercial bank. He can be reached at e-mail: arifatdhaka@yahoo.com)
MANY companies in Bangladesh face a common problem related to retaining talented human resources, not only because of shortage of skills but also due to some interesting facts.
Most recently a young man from a reputed university was posted to my department. I had my doubts when he reported for duty. So, I called him and asked him to draft a letter. He could not do it. Then I asked him to do a simple spreadsheet calculation. He could not do it. I asked him to come back a month later after completing basic computers course. He did not return and joined another department.
This is the familiar face of the young workforce that is coming out of our distinguished universities. Graduates feel that they have completed their academic studies and as such they now deserve a respectable job that will not only give a fat pay cheque but will also come with periodical promotions followed by other facilities. Most new workers want to look at their jobs as a launching pad so that they can learn what they need to learn and then negotiate a better package with another company and "move up in the career ladder". Asked why they do like this, they say: "Companies don't care about me and my career so I have to look out for myself or else I will be left behind in the race. Besides, I am already behind my batch-mates". Employers can blame those "migrant" employees as disloyal or greedy but that will not solve the problem because their replacement could possibly end up in similar situations.
It is the responsibility of a company's leadership to check on the core principles of human capital formation and its reward structure, in addition to other factors assumed to be working perfectly, like work environment, technology etc. Financial capital is formed normally by the offer of a company's ownership in exchange for cash or stock dividends and share price appreciation. Human capital is structured not differently, which implies that cash and other benefits are directly proportional to business performance.
For the human capital, there are people who compete based on their skills and abilities while others are "comfortable" in their roles. Both types of people contribute to the company in their own ways. But are they equal in value to the company is the tricky question that a mediocre company will struggle to answer. There may be "family" models and other socially appealing models, but the hard fact is that all employees are not equal, some are more equal than others.
Rewards, recognition and incentives are tools for management to motivate people to compete, and to win. Now, if both high- and low-level performers end up with equal rewards at year-end it could provide motivation to "stay put" for the mediocre workers and de-motivation for the fast movers from doing what they do best. This situation creates instability calling for normalisation by a market correction. A high performer is like the hottest stock in the share market, everybody wants that stock, and they are ready to pay a premium for it.
To deal with the high achiever is probably easier than to deal with the "dead wood", especially in a society where skilled workers are hard to find. It makes little sense to feel good by under-valuing a performer because the principle here would be "high skill-low pay" whereas keeping mediocre at equilibrium will follow "low skill-high pay" principle. This stage is obviously a danger point for any business organisation because these two principles can never co-exist unless the company itself decides to take a backseat in a competitive market.
Employers' investments in training and skill building of its employees are not without expectations; and employers are right to demand superior commitment to performance from their trained and skilled employees. However, rewards and recognition become more meaningful when there is an honest principle to separate the achievers from the rest.
(The writer works for a commercial bank. He can be reached at e-mail: arifatdhaka@yahoo.com)