Why People are Not Your Greatest Asset

Ask any CEO, in healthcare or elsewhere, about the secret to success, and not a few will fall back on the tired platitude that “our people are our greatest asset.”

That phrase sets Tom Davenport’s teeth on edge. “That is utterly wrong. People are not assets. People own a very important asset called human capital,” says Davenport, the author of Human Capital: What It Is and Why People Invest It, and the coauthor of Manager Redefined: the Competitive Advantage in the Middle of Your Organization. “The ‘asset’ is an intangible that resides in the heads of employees, not in the bank account or the building of the company,” he says.

This is not just semantics for Davenport, who is a senior consultant at Towers Watson. To him the people-are-assets mindset is indicative of an antiquated management style that views people like office furniture – something to be arranged, inventoried, and occasionally sat on.

“You don’t manage people. You manage assets,” Davenport says.

If you understand that your employees own their own assets, however, you can create the work environment and incentives to get those employees to invest their human capital in your hospital.

Davenport spoke with HealthLeaders Media this month at the 47^th Annual Convention & Exposition of the American Society for Healthcare Human Resources Administration (ASHHRA), in Phoenix, AZ, where he led a discussion on transforming the healthcare workforce.

“The question HR folks should be asking is ‘How can I get people to invest more of their human capital in their job here in this organization?” he says.

If employees like their job, if they like their bosses, if they are engaged in their work, if they are properly compensated, if their concerns are addressed, if they are treated respectfully, if there are opportunities for development, then they will invest more of their time, talents, and commitment – their capital – in your hospital. If not, they’ll leave, or dial back their efforts.

“An effective 21^st-century manager manages the environment for success more than the people,” Davenport says. “At the end of your project or your year or your career, you’re saying ‘I did a really good job. I am responsible for my success.’ And [the manager is] offstage saying ‘You bet you are because I created the environment that allowed you to be successful.’”

To create that productive work environment, Davenport says supervisors must give their workers the resources they need, understanding that different workers have different needs and expectations. Those supervisors also must be immediately available to address workers’ concerns.

“A good supervisor has to have some empathy, and the resources to do something about it. I have to connect you with other parts of the organization to help you do your job,” Davenport says.

For that to happen, senior management must allow immediate supervisors sufficient time and support to create the effective work environment. That means acknowledging that the supervisor’s productivity might suffer as he or she concentrates on improving the environment for the people they lead.

In other words, don’t pile it on!

“There is this emotional element of empathy and a rational element of navigation that have to come together. You can’t do that effectively if the first thing a supervisor has to do Monday morning is three days of code writing,” Davenport says.

“So, the investment is less production from managers. The ROI for the hospital is lower manager and employee turnover, higher productivity, and higher engagement.”

For too long organizations have relied on player-coach models, Davenport says. “They think, ‘I can combine that production and leadership.’ But even for the people who are talented enough to do it, you have constructed a job where they can’t do both well.”

Fortunately, organizational attitudes are evolving. Executives across the business spectrum are starting to understand the importance of those immediate supervisors in sustained workforce retention, development, and productivity.

“We are just coming out the era of executive leader worship – that ‘if we just had Jack Welch or Steve Jobs at the top of the organization, then we will have an engaging vision, a direction, and people will come to work ready to work toward that,’” Davenport says.

Executive leader worship leads HR to prioritize things such as succession planning. “They’re thinking ‘I can find the next Jack Welch, or I can deal with the 500 middle managers that are not performing very well. Which seems easier? Well, the managers seem intractable. I’ll deal with succession planning,’” Davenport says.

The problem with this mindset is that most employees are far more impacted by day-to-day contact with their immediate supervisors than by the occasional company-wide email or mass-distributed Christmas card from the CEO.

Employees today are better educated, more sophisticated, and more demanding of their work experience. “They won’t tolerate micromanagers or leadership abuse or favoritism or all the stuff our parents’ generation had to put up with in the corporate world,” Davenport says. “Organizations will have to respond.”