Fancy Equipment, Cheap Help? Doesn't Add Up!
So, I'm reading McKinsey & Company that businesses are shelling out three times more money on people than they are on all their fancy machines and buildings. Three times! You'd think they'd treat those people like gold, wouldn't you? Like they were the ones actually making the sausages, not just the cogs in the sausage-making machine.
But no, what do they do? They see labour as a 'cost to cut'. A leaky tap they need to tighten to save a few drops. It's like buying a prize-winning racehorse and then complaining about the price of the oats. The horse is the reason you're in the race in the first place!
It just doesn't make any sense. You can have the shiniest new computers and the most automated factories, but it's the people who come up with the ideas, who fix the problems, who actually make the thing work. Those machines don't think for themselves, do they? Not yet anyway, and if those AI advertisements are anything to go by, maybe that's more trouble than it's worth anyway.
It reminds me of when you buy something cheap. You think you're saving money at the time, but then it breaks down after a week, and you end up spending more in the long run replacing it. Treating your employees like a disposable expense seems like the same sort of short-sighted thinking. You might save a bit on wages in the short term, but what about the cost of constantly hiring and training new people? What about the knowledge that walks out the door when someone who feels undervalued leaves?
This idea of 'maximizing returns on talent' sounds like common sense to me. If you're spending that much money on people, wouldn't you want to get the most out of them? That means more than just expecting them to show up and do the bare minimum. It means investing in their skills, listening to their ideas, and making them feel like they're actually part of something.
Remember that fella at Lincoln Electric*? They paid their workers well, and what happened? They got incredible productivity. It wasn't about fancy slogans or motivational posters; it was about recognising the value of the people doing the work.
Maybe these businesses need to take a leaf out of that book. Stop looking at their employees as just numbers on a spreadsheet to be squeezed and trimmed. Start seeing them as the real asset they are. Because at the end of the day, a business without good people is like a restaurant with a fancy menu but no cook – it might look good on paper, but it's not going to deliver anything worthwhile. And all that fancy capital equipment isn't going to run itself, now is it?
*Lincoln Electric is a well-established and prominent company in the manufacturing sector. Here's a breakdown of what they do and how they operate:
What Lincoln Electric Does:
Manufacturing:
Lincoln Electric is a global manufacturer of welding products, arc welding equipment, welding accessories, plasma and oxy-fuel cutting equipment, and robotic welding systems.
Essentially, they provide the tools and technology used for joining metals.
Global Presence:
They have a wide network of distributors and sales offices, serving customers in over 160 countries.
They operate manufacturing locations across North America, Europe, the Middle East, Asia, and Latin America.
Business Performance:
Established Company:
Founded in 1895, Lincoln Electric has a long and successful history.
Publicly Traded:
They are a publicly traded company on the Nasdaq (LECO) and are a component of the S&P 400.
Financial Success:
Lincoln Electric is a financially strong company, with billions of dollars in revenue.
How Lincoln Electric Treats Its Workers:
Performance-Based Culture:
Lincoln Electric is known for its unique performance-based culture. They have a system that rewards employees for their productivity.
This system has historically been a key factor in their success.
Emphasis on Productivity:
They have a strong focus on employee productivity, and their compensation structure reflects this.
Long-Term Employment:
Historically, they have had a very strong record of long term employment for their workers.
The Lincoln Electric System:
The "Lincoln Electric System" is a well known management system that heavily relies on incentive based pay, and a strong company culture.
In summary, Lincoln Electric is a major player in the welding industry, with a long history of success. Their approach to employee relations, particularly their performance-based system, has been a distinctive feature of their business.