Bertrand Duperrin

• ompanies obsess over cost per hire but spend so little time trying to see if they make good hires? Why do they provide so little training when we know it improves performance and many candidates say they’d take a pay cut to get it? Why do firms delay filling vacancies and let work go undone? Why do they spend so much money leasing personnel from vendors rather than hiring their own?
• they’re categorized as a current expense, a type of fixed cost
• By transferring work away from employees, companies get rid of fixed costs and move employment costs into another accounting category. In short, the financial accounting system distorts business decisions in ways that are worse for everyone—investors, employers, and employees.
• In the United States public companies are required to report their financials using standards based on generally accepted accounting principles (GAAP) established by the Financial Accounting Standards Board. Those accounting rules say that items with value are assets—but only if they’re owned by the company. On that basis, employees are not considered assets—even though the tenure of a valuable employee is often far longer than the life of any piece of capital equipment
• But what happens with acquisitions of employees? Suppose a company pays a lot of money—for signing bonuses and so forth—to bring in a team of hot computer scientists who are central to its new strategy. Those costs are current expenses that have to be completely deducted from taxable income the year they’re hired, even though the business’s managers don’t expect to start getting value from them for at least another year or s
• A company also cannot claim to have made an “investment” in current employees on its books, because the accounting rules say it can’t invest in something it doesn’t own.
• Another way financial accounting rules screw up training and employee development is by aggregating outlays on them with other costs in the very broad “general and administrative” category. Are you spending a lot on training employees—or on carpet?
• The irony is that, unlike capital assets that steadily and predictably erode, employees actually become more valuable over time simply through “learning by doing,” which costs nothing.
• Many employee benefits—including vacation time, sick leave, and health care coverage—are accrued or earned by the workers and owed to them in the future. Under GAAP, those benefits show up on the liability side of the balance sheet as obligations that must be offset by current assets
• Drop pensions and move to defined-contribution retirement plans. A big liability goes away, and the company instantly becomes more valuable.
• By moving from an explicit commitment to a vague promise of unlimited time off, the firm removes the liability and immediately looks more valuable. This also helps explain why a growing number of companies are granting employees unlimited sick leave; that too helps them avoid an accrued liability.
• Arguably, a number of rules have been prompting a major effort by companies to move work to nonemployees. One involves treating wages and salaries as fixed costs. Such costs are a big worry for investors because if business and revenue decline and those costs can’t be cut, the profitability and value of the business collapse in a hurry.
• a company that has moved jobs to nonemployees, reducing its head count, instantly looks more successful.
• A company that can move costs from above the line to below it will improve its gross profit margins. Work done under contract by nonemployees that is below the line also looks more like a nonrecurring expense—which is a variable cost, not a fixed cost—than employment does. And a company that pays for leased employee contracts in advance can even include some of that cost in the assets on its balance sheet.
• ne manager noted, the buckets for costs were not the same, and the process and the bureaucracy involved in getting approval for a vendor were far less onerous than those for bringing on an employee.
• The size of the industry that provides outsourced HR services is now well over $500 billion. Some companies are also reducing internal HR payrolls by replacing people with software. HR executives often say that it’s much easier to get money for an IT solution than it is to get the equivalent amount of money for personnel
• 020 PwC survey found that C-suite executives, who tend to focus on priorities dictated by financial accounting, were 270% more likely to believe HR technology cuts costs than the line managers who actually used the software were.
• Research, including my own, has found that using temporary and leased employees hurts productivity and that such workers are less knowledgeable and less committed than regular employees are, make more demands on management, create coordination challenges with regular employees, and irritate regular employees, who worry about their own status and jobs and become less engaged.
• Operating managers often have part of their bonuses tied to their success in keeping their unit’s head count below the ceiling.
• Research conducted by Marshall Fisher and his colleagues at the Wharton School, however, found that this run-lean strategy often backfires because having more and better-trained personnel would boost sales and operating profits at many stores. (See “Retailers Are Squandering Their Most Potent Weapons,” HBR, January–February 2019.)
• Another example is the airline industry. During the pandemic, the government gave airlines substantial subsidies to keep employees on their payrolls. Yet in 2021 airline leaders told Wall Street analysts that they were intentionally bringing back fewer workers than they’d had before the pandemic so that they could run even leaner, according to Peter Coy of the New York Times. The result was a staffing shortage during the holiday season, when demand for travel predictably surged.
• The current treatment of human capital in financial accounting has no real defenders. Investor groups, believing that it leads to a lack of information that makes it more difficult for them to estimate the true value of companies, have led the drive for change. They have pushed companies, including those they hold significant ownership stakes in, to report more HR data—but so far with little success.
• responded to investor groups’ complaints by requiring that companies report on aspects of human capital that are material to understanding their businesses. But instead of stipulating what information companies had to report, the SEC gave each the power to decide what to disclose. The results so far have been discouraging: Seventy percent of companies reported hardly any metrics and seemed mainly to express platitudes about their commitments to diversity and inclusion or other socially desirable outcomes. Giving that much discretion to companies defeats a central purpose of accounting: to present information in standard ways to allow comparisons.
• If investors could see that a lot of “administrative expenses” were actually being used to improve employees’ ability to do their jobs, companies would look more valuable to them.
• he investment community needs to keep pressuring the SEC for change. It can point out that the new reporting requirements have had little effect and that there is an alternative model: the International Financial Reporting Standards (IFRS) used by companies outside the United States. Under those global accounting practices, companies can report more of the asset value of human capital. Arguably the best examples have been in valuing football (soccer) teams, whose assets are virtually all in players. IFRS practices allow their human assets to be amortized and the teams to be revalued when players are traded, released, and so forth.

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• Material offerings include compensation, physical office space, location, commuting subsidies, computer equipment, flexibility, schedules, and perks
• Opportunities to develop and grow comprise all the ways an organization helps employees acquire new skills and become more valuable in the labor market—for instance, by assigning them new roles, putting them through job rotations, offering them training, and promoting them.
• Connection and community are the benefits that come from being part of a larger group. They include being appreciated and valued for who you are, a sense of mutual accountability, and social relationships. Their foundation is an energizing culture that allows people to express themselves candidly and engenders a sense of belonging.
• Meaning and purpose are the organization’s aspirational reasons for existing. They align with employees’ desire to improve local and global society. They’re the answer to the core question of why employees do the work they do.
• the factors are either individual or collective
• Other studies, including our own ongoing work, have highlighted the perils of focusing too much on material offerings.
• Another body of research shows that people tend to prioritize satisfying their short-term individual desires
• Companies also tend to address the factors in sequence: They focus on offering competitive pay to hook recruits and then highlight their development opportunities to retain existing workers. That approach ignores how changes in one factor affect others.
• UNICEF arguably has one of the most compelling and motivating purposes anywhere: to protect the world’s children. Not surprisingly, that mission has long been a primary asset in recruiting and retaining talent. But investigations conducted in 2018 and 2019 revealed that the organization’s mission-related “results at all costs” culture had encouraged bullying and harassment and triggered many departures.

• 1. Assess what your company has and what your employees need.

   

  Start by understanding both the supply and the demand sides of the equation

• 2. Change the conversation.

   

  Once you have data on what your organization is providing and what your employees need, make sure managers and their reports are discussing the employee value proposition in an integrated way.

• 3. Continually update.

   

  Employees’ needs are dynamic and should be reassessed on a regular basis

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• Workplace automation is the act of applying systems and processes to supplant repetitive manual effort, thereby improving efficiency, reducing stress and bolstering employee satisfaction
• People like familiarity, they like to know what their job is and what their day looks like. But when you’re able to remove a burdensome aspect of that job, you see a boost in productivity and performance.
• The greatest misconception about artificial intelligence (AI) is that it’s something to be created, rather than something that will inevitably be discovered.
• What we will see, however, is more interaction with machines. And not simply an increase but a complete immersion. Roles across the workplace that may have felt completely disconnected from technology will see some level of automation.
• The skills people will be trained for and in will also shift to fit the needs of the machine.
• Granted, automation itself is designed to make our lives easier but the more reliance we have on it, the more maintenance it will require.

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• • Inclusion and diversity aren’t prioritised
   
  • Boundaries and work/life balance aren’t respected 
   
  • High stress levels and absenteeism rates
   
  • Rapid staff turnover
   
  • Lack of opportunities and personal development
   
  • Lack of transparency and communication
   
  • A cold, stagnant atmosphere
   
  • Good work goes unrewarded
   
  • A lack of trust
   
  • Discrimination, prejudice and bias
   
  • Employee unrest
   
  • Listen to your gut

• It can direct and coordinate the actions of thousands of people making and selling thousands of products or services across thousands of miles, and do so effectively, efficiently, and profitably, week after week after week.
• capital “H” Hierarchy (a sort of hardware) and the managerial processes that run on it (a sort of software) do not handle transformation well.
• Hierarchy (with its management processes) opposes change. It strives to eliminate anomaly, standardize processes, solve short-term problems, and achieve stopwatch efficiency within its current mode of operating
• the crowning accomplishment of the Hierarchy and its management processes is the enterprise on autopilot, everyone ideally situated as a cog whirring on a steady, unthinking and predictable machine.
• the successful organization of the future will have two organizational structures: a Hierarchy, and a more teaming, egalitarian, and adaptive Network. Both are designed and purposive.
• the Network is where big change happens
• As the environment changes in various ways, this system senses and responds to it, and in turn creates more and more teams with volunteers to address the discrete parts of a larger change.
• I am not talking about a cross-unit “task force” or a new “initiative” built into this year’s plans. I am talking about a whole new system that is much bigger, more powerful and involves far more people.

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• Essentially what the general manager had done was to set up a dual operating system. The left, hierarchical side continued to manage the base business and grow it steadily with safe, evolutionary innovation (See article on evolutionary versus revolutionary innovation). At the same time, the second network of opportunity-driven volunteers who wouldn’t take no for an answer were freed up to experiment and try completely new things and new ways of taking them to market.
• • Many people driving important change, and from everywhere, not just the usual few appointees.
   
  • A “get-to” mindset, not a “have-to” one.
   
  • Action that is head and heart driven, not just head driven.
   
  • Much more leadership, not just more management.
   
  • An inseparable partnership between the hierarchy and the network, not just an enhanced hierarchy.
• • Create a sense of urgency around a Big Opportunity
   
  • Build and evolve a guiding coalition.
   
  • Form a change vision and strategic initiatives.
   
  • Enlist a volunteer army.
   
  • Enable action by removing barriers.
   
  • Generate (and celebrate) short-term wins.
   
  • Sustain acceleration.
   
  • Institute change.
• Virtually all successful organizations… begin with a network-like structure and…evolve through a series of states…into an enterprise that is structured as a hierarchy.
• you must lead different mindsets within the same organization differently
• Where managing is about organizing, coordinating, and telling, leading is about inspiring and enabling and co-creating.
• “Management-driven hierarchies are the way we run organizations. They deliver reliability and efficiency and reduce risk” But, “There is no way to get revolutionary innovation if the system is focused on reducing risk.”
• nstead of focusing on the problem to be solved, focus on The Big Opportunity to create new value
• If all you do is manage the hierarchy, you have no hope of seeing revolutionary innovations. If all you do is focus on the network, your revolutionary innovations will never see the light of day.

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• Les coopérations horizontales (entre pairs) ont été laminées par des logiques d’évaluation individuelle qui mettent les gens en concurrence.
• Quant à la coopération transverse (avec les bénéficiaires du travail), elle est très dégradée : souvent, on ment aux clients dans les centres d’appels pour améliorer ses propres résultats… Au final, les gens ne travaillent plus ensemble car ils ne peuvent plus ou ne veulent plus
• Et la place de l’approche « ludique », c’est quand les managers essayent de ressouder artificiellement par du team building des équipes dessoudées par leur organisation du travail.
• pratiques ludiques mises en place par les travailleurs dans le cadre de leurs stratégies de défense, sans qu’ils sachent toujours pourquoi ils le font, mais cela leur permet de lutter contre la souffrance.
• Lutter contre cette souffrance passe par la recherche de nouvelles trouvailles grâce à l’intelligence pratique, l’ingéniosité, mais ce n’est pas si simple.
• Le problème, c’est quand on ne trouve plus aucune solution et que les défenses sont également fragilisées ; alors on peut basculer du côté pathogène. Prenez tous les anglicismes ineptes très à la mode actuellement comme « quiet quiting », « brown out », « bore out » et autres. Ce qu’ils nous disent, c’est que les travailleurs n’ont plus suffisamment de défenses solides pour affronter l’ennui et la perte de sens dans leurs activités, alors que le jeu défensif pourrait intervenir pour lutter contre les affects négatifs 
• On vient au jeu pour le plaisir, et éventuellement pour gagner, et cela doit rester une opportunité de s’amuser, de se retrouver hors du temps et de l’espace quotidien. Rapatrier ces éléments-là hors de leur cadre, c’est dangereux. Le jeu a une puissance immersive certaine qui nous emmène et fait que l’on oublie la notion de temps. Rapatrier uniquement les ressorts ludiques qui vous intéressent pour les projeter dans l’ordre économique, voire politique et organiser un rapport à la société, c’est dangereux

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• Key performance indicators aren’t focused on customer satisfactio
• Incentives for collaboration are piecemeal
• Rewards are tied to input rather than output.
• Rewards for visionary goals are lumped together with those for short-term objectives.
• Cross-selling is confused with collaboration.

• Component One: Ambitious Cross-Silo Goals

   
• Broad shared goals that focus on big challenges and can be achieved within a year help break down organizational silos and get teams working together across functions.

• Component Two: Team Goals

   
• Organizations need to break down barriers to collaboration not only across functions but also within them. Team members must share best practices and ideas, learn from one another, and work together to achieve collective targets
• Component Three: Individual Goals
• Well-designed individual targets not only promote personal accountability but also directly connect to team and organization-wide objectives. They help each person understand how his or her specific actions contribute to higher-level success.
• Component Four: Long-Range Programs
• To focus employees on longer-term, multidisciplinary initiatives, a fourth component is needed. Goals here might include developing white papers that showcase a company’s cutting-edge ideas; sizable pro bono projects that draw on an array of capabilities and allow employees to stretch their skills; and significantly upping diversity at all levels of the company.

• Revamp Supporting Processes

   

• Separate discussions about development and compensation.

   

  If you meet with your boss to discuss your annual bonus and your development goals for next year, which part of the conversation do you really focus on? For most people it’s the bonus. So discussions of compensation should only address individuals’ success in achieving the goals in their scorecards. Conversations about employees’ professional development—their strengths and areas to improve, the training and growth experiences they need—should take place in a separate meeting

• Don’t assign numerical ratings.

   

  People would rather hear “You’re meeting, not exceeding, expectations” than “You’re a 3 on a 5-point scale.” In our work across industries, everyone from top executives to recent graduates tells us that being reduced to a number is demoralizing. Even worse is the practice of forced-curve benchmarking against peers. Studies have shown that it destroys collaboration because it’s a zero-sum game. You can’t expect coworkers who are pitted against one another to work together effectively

• Align the frequency of feedback with work milestones.

   

  Most companies have moved away from a strictly annual feedback process and have either implemented shorter cycles, perhaps providing formal feedback quarterly, or instructed managers to deliver it on an ongoing basis. A better approach is to link the cadence of feedback to milestones in work.

• Discuss how performance was delivered.

   

  Two people can produce the same result in very different ways: One might be constructive and collaborative, and the other “me-first” and sharp-elbowed. The second person may hit his or her targets, but the collateral damage can be real.

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