Have you ever asked yourself, what is your true worth to the company you work for?
Remember, if you are working in a company whose sole purpose is generating profit, then your worth mainly depends on how the economy is performing. That is why the interest in the state of economy is no longer limited to financial experts, government officials, and academics. On the contrary, everyone around us is eager to know which direction the economy is heading at a given time.
It is no surprise that the moment a company’s income begins to decline, their executives immediately panic and start “cost cutting” exercises to reduce the impact of economic instability. However, the solution that is mainly picked in such scenarios is to do with manpower.
Apparently, we did not benefit from all the advancements in the field of management as we seem to stick with the eternal solution of reducing staff or as they call it; downsizing.
Basically, we are clearly living in an era of contradiction. On one hand, we call our workforce “human capital” and consider them an integral part of our organisation similar to the “financial capital” and “real estate asset”. But, on the other hand, and especially at times of financial downturns, individuals are treated as pure cost and a burden that need to be eliminated.
Isn’t this a standard business practice? After all, businesses need to manage costs even if it meant reducing staff. But one should ask; how effective were those practices in the short and long term?
Cost cutting approach seems to be successful and very effective in the short-term, allowing companies to survive with minimum losses or a bit of growth. But this is achieved at a high price of pushing many individuals out of the organisation.
However, in the medium to long term, we see economic instability recurring more frequently than ever before. Companies are barely enjoying a few years of stability before being hit again. And this makes us question the effectiveness of standard “cost cutting” initiatives achieved by staff reduction.
We believe it’s time to let go of our easy approach when confronted with economic fluctuations. The standard root of simply reducing manpower proved to have limitations and caused more volatility. It is time for executives to take a different route when faced with challenges impacting their financials.
An approach that could provide better long term stability that we desire as individuals, organisations, and nations.
The different approach could be through acknowledging the importance of the human element of companies. This means that when faced with challenges, we must consider our staff part of the solution rather than making them part of the problem. Executives, in turn, must start with the question of how can we get value out of our staff to wave through the challenges and achieve the required stability.
Our viewpoint on the human side of organisations will not necessarily keep jobs at times of crisis. After all, some individuals will not be required genuinely. However, we believe this should not be the first and, at times, the only practice initiated by senior executives. It is now time for employers to demonstrate their true belief when calling their staff; “human capital”.
- The writer is a senior executive with a semi-government entity in Dubai.