Drilling for Human Capital Reserves

In the 1970s, Drucker wrote about the contribution of knowledge workers, long before anyone knew or understood how knowledge would be the essential capital of the New Economy. He was a leader in observing that while many business leaders say that people are their greatest asset, “few practice what they preach, let alone truly believe it.” Drucker insisted that when companies claim they are people-oriented, it’s often no more than corporate hypocrisy. After all, he asked, how can companies declare that they put their employees first when they are willing to lay off thousands while the executive leaders are awarded huge bonuses?

I agree that people assets are too often casualties of short-term financial thinking. Companies driven by the need for short-term results would do well to heed Drucker.

Smart Companies Invest

But if you’re one of those show-me people who need more than Drucker’s advice, I’ve got news for you! A recent report, “Building an Effective Health and Productivity Framework,” shows that companies with the most effective health and productivity programs for their workers have superior financial returns and productivity improvements. The report—by global human resources and financial management consulting firm Watson Wyatt and the National Business Group on Health, a Washington, D.C.–based nonprofit organization—says those companies achieve 20 percent more revenue per employee, have 16.1 percent higher market value, and deliver shareholder returns that are 57 percent higher.

A backbone of management authority, with tactical decision-making authority on the front lines, will nurture the most hidden reserves of brain power in the work force.

The best-performing companies, according to the report, invest in improving the education and health of their employees. They have health management programs that feature single-access-point technology, educational tools, on-site health centers, and safety education.

Lowell Bryan and Claudia Joyce, consultants with McKinsey & Company, a management consulting firm with offices in Minneapolis, report similar results in their book Mobilizing Minds. After years of analyzing the world’s best-performing companies, Bryan and Joyce say that business leaders must put the same resources, energy, and focus into designing their companies to optimize mind power as they have into designing new products, processes, or entry into new markets. They say that a new organizational model that does so could generate tens of thousands of dollars of additional profit per employee.

In short, successful companies of the future will be those that tap into their people’s underutilized talents, knowledge, relationships, and skills, and encourage more rewarding, productive work. Those companies will create significant new wealth at relatively low risk.