March 30/April 6, 2015; Volume 28/Number 20
By Wally Adamchik
The word “capital” has many meanings, and a number of them relate to the world of finance. Capital and currency, although not the same, have been used interchangeably over time. The problem is we are totally focused on the wrong capital if we are to grow our businesses and bottom lines.
The word “salary” stems from the Latin “salarium,” meaning “salt money.” The Romans paid soldiers, officers and civil administrators an allowance of salt. (This gave rise to the phrase still in use today of someone being “worth their salt.”) Salarium continued to refer to military pay, even after coins came into use. On the other side of the world on the Leeward Islands, during the mid-17th century, sugar became the reigning monetary standard. And today, there is an increasing trade in bitcoins—digital currency which functions without a central intermediary, such as a national banking system.
Now that we have completed our class on the history of money, I contend that the focus is in the wrong place. While a means of exchanging units of value matters, we all know the real value in the world today lies where it always has: in people. People are the real source of value, and today that value is not found in the might of an army, but in the brilliance of ideas and the energy of motivation. Fortune magazine correspondent Geoff Colvin writes that Mahindra Group and Unilever are two global firms that truly “get it” when it comes to people. Underneath the mushy talk of values, integrity and empowerment lies two firms very focused on competing and winning in business. “…[E]nergy and commitment,” Colvin said. “These are the most valuable currencies in a world where human capital is really every company’s most valuable asset. More than ever, the soft stuff is the hard stuff.”
When people ask me why I teach leadership, I respond with something similar. Leadership isn’t about making people feel good; it is about accomplishing an objective. How people feel is a means to an end. Most great leaders are masters at making people want to go the distance. I do this not to help create a place where people are treated nicely, but because a place where people are led effectively is, more often than not, a place that wins.
Salt, sugar and bitcoins are all transient; the power of people transcends all. When you focus on the money, you lose focus on what really matters. When you focus on the people, the money comes into the picture quite nicely. Recently I reviewed the strategic plan for a contractor. The company had a number of goals and objective metrics it wanted to reach. The problem is all the metrics were about safety, sales and production. There were no metrics about people, despite the fact that it had a goal to reduce turnover and become the employer of choice. Clearly it was missing a key element in holding itself accountable.
What is your philosophy when it comes to people? I know you will say that people are your most important asset. Unfortunately, when I look at your daily planner for what you are doing and with whom, I don’t see time being set aside for training, coaching or mentoring. I know you will say you do that all the time. Great, but it also needs to be intentional and scheduled as well as impromptu. The urgent demands of the day will displace the important needs of your people if you don’t commit to it and measure it.
If human capital is the primary source of competitive advantage today, what will you do differently this year to get more return from that capital?