Discovering the Value of People

It takes a strong manager to overrule the balance sheet and invest in employees

Published: Tuesday, October 20, 2015 - 17:25

Big news in the business world: Walmart is famous for keeping costs down, including employee-related costs. In Joplin, Missouri, the company is testing a new approach: investing in workers through higher wages and training, on the theory that this will pay off all around—for customers, the company, and employees.

Yes, at just one of their 4,500 stores, Walmart has discovered skills training. If it works, the company plans to roll out this innovative program to the other stores.

That isn’t a story from 1975 or even 1995. It’s from this past month. Good for Walmart, though, even if it did take a few decades to realize the potential value of people—a concept that many other companies in many other industries have leveraged to create competitive advantage for a long time.

Pretty much every organization has a mission statement, often gathering dust on the wall in a corner of a conference room, that says “Our employees are our most valuable asset.” Really? How is that demonstrated?

I bet Whirlpool had a statement like that as it was laying off thousands of highly experienced people at its Fort Smith, Arkansas, plant to chase “cheap” labor at a new facility it filled with inexperienced people in Ramos Arizpe, Mexico. At the same time Whirlpool was hiring at its nearby Clyde, Ohio, plant, and then, only a couple years later, it started looking for people to refill a plant it had closed. You can't make that stuff up.

But that’s what happens when you run a company based on traditional accounting methods, where labor is purely a cost, and there is no offsetting profit-and-loss or balance-sheet line for the value of people. There’s a benefit to reducing cost, but there is no balancing benefit for preserving the value of brains.

It takes a strong manager to realize that those brains are creating value that more than offsets their cost, even if it isn’t directly shown on the financial statements, and to buck the questions of their bosses and financial folks. It takes an even stronger and more capable leader to invest in, develop, and mentor those brains to really tap into their potential value. Organizations that have leaders like that understand the problems with traditional accounting. 

Truly empowered, high-performing people can have an impact far beyond improvements in productivity and quality. Consider your perception of the Chipotle brand after reading this article about a fatal accident that happened in front of one of its restaurants.

“She [Chipotle shift leader] appeared to be in her early 20s—not much older then her direct reports or the victim of the accident. Yet, she acted with the compassion and appropriateness of a far older leader.

“The next day, I called the Chipotle restaurant to offer my appreciation to the store’s manager. I told the leader how supportive, flexible, and respectful the Chipotle crew was to all in attendance.

“As our phone conversation drew to a close, I said, ‘I know that our presence last night was not what you expected. We no doubt hurt your business.’

“Before I finished my thought, the store manager responded, ‘There are a lot more important things in life than making our numbers last night. I’m just glad we were able to be there.’”

Great people, led by great leaders, create great companies. As Richard Branson says, “Clients do not come first. Employees come first. If you take care of and develop your employees, they will take care of the clients.”

I was thinking about a sandwich for lunch, but I think I'll head down to Chipotle for a veggie burrito.

First published Sept. 12, 2015, on Kevin Meyer’s blog.

About The Author

Kevin Meyer

Kevin Meyer has more than 25 years of executive leadership experience, primarily in the medical device industry, and has been active in lean manufacturing for more than 20 years serving as director and manager in operations and advanced engineering, and as CEO of a medical device manufacturing company. He consults and speaks at lean events; operates the online knowledgebase, Lean CEO, and the lean training portal, Lean Presentations; and is a partner in GembaAcademy.com, which provides lean training to more than 5,000 companies. Meyer is co-author of Evolving Excellence–Thoughts on Lean Enterprise Leadership (iUniverse Inc., 2007) and writes weekly on a blog of the same name.