Employees Come First?

This article which appeared in the FT this morning brings a refreshing insight to the way some employees are being treated in the workplace. Whilst at Inspirational Seminars our credo is to train in communication skills, this presupposes that the management want to invest in their staff in the first place.

So where are the priorities in today's cash sensitve environment? Stephan Stern of the FT Writes;

The talk is all of hard-headed realism. So when I received some news about a corporate programme called “Employees First”, I presumed that it must refer to some sort of harsh but honest cost-cutting measure.

I was wrong. HCL Technologies, the Indian IT services company, takes pride in rejecting the “customers first” principle, instead putting its faith in what it calls an “employee first” approach, which “places the needs of employees before the needs of customers,” the company explains.

HCL says it has won both greater customer loyalty and higher revenues acting in this way. “By treating employees as partners and participants in the company’s success, every individual within the company becomes responsible for transforming, thinking, and providing value to customers,” the company says.

Among an array of progressive HR practices, HCL offers its employees the chance to take part in a weekly online opinion poll on key management decisions – those that have been taken already and those that are still to come. (The votes are unlikely to halt or reverse any decisions, but people do get a chance to register their views.) HCL has received a seal of approval from the technology research firm Ovum, confirming its view that “strong customer relationships start with strong employees”.

Hogwash, you may be tempted to respond. Who has time to consider employees’ finer feelings when cash flow is tight? If the staff want reassurance then they should work harder and do better. A greater sense of job security can only be achieved through a healthier commercial performance.

The sort of idealism expressed by HCL or, in the UK, by the John Lewis Partnership will strike many business leaders as bizarre. These businesses will surely have to consider cutting jobs too. Yet the JLP constitution states that its primary purpose is “the happiness of all its members through their worthwhile and satisfying employment in a successful business”.

That is all very well for a non-listed, employee-owned business, but can a public company survive with this apparently inverted order of priorities? One that has – for more than 100 years – is the US pharmaceutical and healthcare company Johnson & Johnson.

Its company credo, which dates back to 1943 and was written just before J&J went public, makes for a challenging read.

J&J is a “customers first” company. “We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services,” it begins.

While “we must constantly strive to reduce our costs in order to maintain reasonable prices,” J&J also argues that “our suppliers and distributors must have an opportunity to make a fair profit”.

Employees come second. “They must have a sense of security in their jobs,” the credo states. “We must provide competent management, and their actions must be just and ethical.” The wider community comes next. “We must be good citizens – support good works and charities and bear our fair share of taxes ...We must maintain in good order the property we are privileged to use, protecting the environment...”.

And only now, fourth, do we get to the small matter of investors. “Our final responsibility is to our stockholders,” the credo says. “Business must make a sound profit...Reserves must be created to provide for adverse times.” And the punchline? “When we operate according to these [above] principles, the stockholders should realise a fair return.”

Customers, employees, community, shareholders – in that order. Not the usual run of things. Not the rather simpler and more direct model that puts “shareholder value” higher than any other concern. Does the J&J order of priorities work? Last month this paper’s Lex column described the company as “typically reliable”, and “balanced” across several sectors.

When banks stop lending and customers are struggling to pay invoices, cash is everything. If you have too many staff and not enough revenue, something has to give – and it is almost certainly headcount. That much is clear.

But it is also clear that, right now, some businesses are better placed than others to see out the next couple of years, and not simply because they have a bigger pile of cash. They have long-term strength and resilience because of their market position, which they have achieved thanks to that costly balance sheet item, their people.

Management’s responsibility is not simply to slash and burn to achieve short-term survival. It is to lay the foundations for future success. You will need to pull off both these tricks to get the cash flowing healthily again.

Thanks to Stephan for this bit of refreshing news. Investment in People is not just a slogan, it needs commitment from managment and input from training professionals to effect the sort of cultural change that this article is suggesting. Management and staff both need training to achieve these goals.