Leverage Your Assets

100281353-gold_bars_piles_gettyP.600x400“Live better through leverage!” Does this comment sound familiar to you? Perhaps it is because this very statement is very often the mantra of the financial advisor. Their intent, as I understand it at least, is to ensure that you leverage your financial assets appropriately. The basic concept being to use other peoples funds to maximize the financial return to your business.

This concept is in no way being challenged or downplayed by the writer. Rather, I would propose that you consider this very statement from another just as meaningful perspective. The perspective being referred to here is your organization’s human resource assets.

Time and again, business leaders hear the word “Assets” and conclude the reference is solely related to physical premises / equipment or their financial holdings. As a former employee in the financial services industry, I would be the last person to say that this assumption should be discarded.

That being said, premises; equipment and money produce a positive result for your organization only after application of some effort by a human resource. The question then becomes one of “Are you maximizing your human resource asset”.

Let’s suppose for a moment that you have all the staff you require to perform the service provided by your company. Clearly if there is the right amount of people applied to the process/ task, than the result should be the return expected, right?

However, after you check your numbers, it becomes clear that your return on investment (ROI) is not what you expect nor near the average for your industry. In many cases, the assumption is quickly made that reducing the number of staff will result in an increase of the ROI.

There are countless examples of where this logic has been applied. Unfortunately, in many instances, they are from companies no longer in operation.

Another fairly common response to a low ROI for human resource expense not meeting expectations is to change the human resource itself. This may be completed through either re-organization or perhaps wholesale staff replacement. Again, analysis of this response indicates less than satisfactory results.

So what is a firm to do? Is there a magic solution to ensuring that your ROI on human resource expenses improves? Unfortunately, there is not a “one size fits all” solution. That said I believe there is a solution to this dilemma, leverage your assets.

Appropriately leveraging human resource assets simply means that you have:

1. The right people;
2. doing the right things;
3. in the right way;
4. at the right time;
5. for the right reason.

To accomplish this goal, it is necessary to first assess your staff as individuals; do you have square pegs in round holes? Once the people are appropriately placed it is necessary to ensure that they are doing the right things; i.e. do a job task analysis for all positions.

Simply having the right people do the right things is not enough however. They need to be doing things the right way and at the right time. Clearly, a process review will help you assess whether the tasks are done in the right order (the right time) and a without a doubt documented processes allow for the measurement of doing things the right way.

The final question in this equation is: “are they doing it for the right reason?. Here it is necessary to assess your compensation system and rewards programs. Remember it is hard to gain team successes if you are rewarding people for their individual effort. A fair market comparison of financial compensation for your industry will tell you whether you are compensating in line with the norm for your industry.

To properly leverage your (human resource) assets you should be able to respond with a resounding YES, to each of the five points noted above. If not, what are you doing to change?

Gordon J. H. Newman, CPT