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Thursday, April 03, 2008

Capital Punishment of Human Capital

"Employees and ideas are really our core assets." Paul Jacobs, CEO, Qualcomm Inc.
"Technology is important, but we're in the service business, and if we don't respect and understand our people – our most valuable asset – then we can't be successful." Gary D. Forsee, former Chairman & CEO, Sprint Nextel Corp.

Every CEO spouts off about what a valuable asset employees are and how the firm is based on knowledge workers and intellectual capital. But

1) Employees never show up on the asset side of the Balance Sheet
2) Firm-wide Intellectual capital does not show up on the Balance sheet (apart from patents that have been filed and approved)

Whenever mismanagement results in poor earnings performance, the corrective action is to execute mass layoffs- essentially writing down significant knowledge capital.
More critically, the failure of managers, ably illustrated through the Dilbert cartoons, to recognize, develop and nurture talent results in many potential innovations never seeing the light of day. A recent experience of a good friend of mine illustrates that many managers still threaten and abuse the key knowledge assets that are supposed to create 'value.' These 'managerial jerks' still run rampant in the workplace- private and public sector alike.

In a May 2007 McKinsey Quarterly article titled "Building the civilized workplace" Robert Sutton describes workplace jerks and quotes a 2003 study2 of 461 nurses which found that in the month before it was conducted, 91 percent had experienced verbal abuse, defined as mistreatment that left them feeling attacked, devalued, or humiliated. Physicians were the most frequent abusers.
The article " When the Bully Sits in the Next Cubicle" describes workplace abuse and the serious health toll bullying can have. According to the article "Some victims become physically ill from the stress, with depression, anxiety and even symptoms of post-traumatic stress disorder. Surveys also suggest that victims of office bullies call in sick more often — although it’s not clear whether they really are sick or just avoiding the abusive environment at work. A large share of the problem involves women victimizing women. The Zogby survey showed that 40 percent of workplace bullies are women." Women managers abusing women is quite commonplace and tragic-putting their sisters down instead of helping them move up when everyone is fighting the glass ceiling.

A sad commentary on human inability to maximize collective human ability.

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