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Should You Treat Employees As Resources?

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Editor’s Note: Ganesh Rajagopalan is a seasoned management consultant and former investment banker.  He is also a leading author on Flevy, having published numerous business frameworks on topics such as Strategy Development, Investment Analysis, and Value Chain Analysis.  You can view all his materials here.

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hiring-1977803_960_720A Google search on the meaning of ‘resource’ threw up the following meaning:

A stock or supply of money, materials, staff, and other assets that can be drawn on by a person or organization in order to function effectively.

Then I searched for meaning ‘natural resources’ and came up with this definition:

“Materials or substances occurring in nature which can be exploited for economic gain.

Another definition of ‘resource’ I came across is:

An economic or productive factor required to accomplish an activity, or as means to undertake an enterprise and achieve desired outcome.

When I tried to check what ‘HR management’ is – came across this explanation:

  • Human: refers to the skilled workforce in the organization.
  • Resource: refers to limited availability or scarceness.
  • Management: refers how to optimize and make best use of such limited and a scarce resource so as to meet the ordination goals and objectives.

Altogether, human resource management is the process of proper and maximize utilization of available limited skilled workforce. The core purpose of the human resource management is to make efficient use of existing human resource in the organization.

The underlying philosophy or psychology it appears is that humans are assets/resources, which requires to be managed/used/exploited effectively to reach the desired outcome – generally economic gain. So the treatment is similar to any other asset/resource – land, building, machinery, computers, vehicles and so on. We therefore have productivity measures, ROI measures, value added measures etc. applied all such resources including human resources.

Investopedia further reinforces this underlying psychology when it says:

A human resources department is an essential, if not critical, component of any business regardless of the organization’s size. It is primarily focused on maximizing employee productivity and protecting the company from any issues that may arise from the workforce. HR responsibilities include compensation and benefits, recruitment, firing and keeping up to date with any laws that may affect the company and its employees.

So what is the point being made?

This underlying philosophy of not looking at people as ‘people’ but as resources is to my mind the greatest flaw in the design of so called HR strategies and their subsequent implementation. While some organizations have reoriented their approach, by and large, this philosophy prevails.

The trick to my mind is to remodel:

  • First is to treat/approach people as ‘people’
  • Secondly, have an ‘engagement’ strategy rather than ‘management’ strategy

‘Engagement’ here is in the sense of commitment, pledge, promise and obligation to them.

The end result of such engagement strategy should be to have ‘happy’ employees. The objective of the strategy is focus on the emotional well being of the employees.

Happy employees, I trust, will automatically be self-motivated, driven, productive, have high ownership quotient and will therefore will be high on any ‘resource effectiveness metric’ that are used currently – at the level of all stakeholders.

The thinking to me should be that while resources are means to an end in the case of employees their ‘happiness’ itself should be treated as a key/primary objective. This in turn will deliver other key objectives.

I trust there is reasonable research to support this argument. In a recent article in Mint on ‘Economics of Happiness’ the following observations back the point being made:

In a 2010 study, the Nobel Prize-winning economist Angus Deaton and the psychologist Daniel Kahneman took the Gallup poll data for about 500,000 residents in the US to show that happiness increases with income although there is an upper bound beyond which the income effect dissipates. Deaton and Kahneman also put a number to it: $75,000. Anything that goes beyond $75,000 doesn’t add anything to emotional well-being although the levels of “life-evaluation” or life satisfaction increased with levels of income even beyond this point, according to the authors.

 It further quotes:

A recently published report by the London School of Economics is the latest in this tradition, and it suggests that mental health has greater impact on reported life satisfaction than income. To put it in numbers, income gaps explain only 1% of the variation in happiness in the community whereas differences in emotional well-being explain over 4%, the report found.

For a start this change in mindset can initiated by calling ‘Human Resources Strategy’ as ‘People Engagement Strategy’ and ‘People Engagement Department.’

What are your thoughts on this?

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World Class HRM Best Practice PPT Strategic human resource management (strategic HRM) provides a framework linking people management and development practices to long-term business goals and outcomes. It focuses on longer-term resourcing issues within the context of an organization's [read more]

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The purpose of Human Resources (HR) is to ensure our organization achieves success through our people. Without the right people in place—at all levels of the organization—we will never be able to execute our Strategy effectively.

This begs the question: Does your organization view HR as a support function or a strategic one? Research shows leading organizations leverage HR as a strategic function, one that both supports and drives the organization's Strategy. In fact, having strong HRM capabilities is a source of Competitive Advantage.

This has never been more true than right now in the Digital Age, as organizations must compete for specialized talent to drive forward their Digital Transformation Strategies. Beyond just hiring and selection, HR also plays the critical role in retaining talent—by keeping people engaged, motivated, and happy.

Learn about our Human Resource Management (HRM) Best Practice Frameworks here.

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About Ganesh Rajagopalan

Ganesh Rajagopalan is an advisor and trainer with expertise in the areas of Strategic Planning, Business Planning, Business Modeling, Financial Planning, Tactical Planning, Industry Analysis, Investment Analysis, Credit Analysis, Financial Systems Planning, Team Building, and Organizational Structuring. Prior to consulting, Ganesh worked with Standard Chartered Bank, Oracle Finance and a niche investment banking firm. He has several business frameworks available on Flevy here.


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