Overinvest in People

I was listening to the audio abridged version of How to Become CEO: The Rules for Rising to the Top of Any Organization by Jeffrey J. Fox on my way to work. I have managed to read the book version of the audio MP3 a couple of years before but didn’t have a chance to get a copy. In it, he emphasized something really important about people and employees which I really believe in: Overinvest in People. Think about it. If you are investing in something that you know would have a marginal return on your investments – whether it’s that blue chip stock, real estate or your own business – wouldn’t you be investing more? The human capital is far better than any of these investment portfolios as anybody has the capacity create and produce – they make things happen. Fox highlighted it in a way that companies should hire the best people and that they should pay for their employees’ worth. He states that companies who save money on hiring only the people they can afford are headed for mediocrity. I always take the Asian culture in perspective every time I cite examples as we do not really believe in this principle. The result is a high turn-over rate causing a lot money in hiring, re-training and loss of morale among staff because a key team player “jumps boat.” What would happen if your favourite NBA or NFL team suddenly thinks that their best player is not worth every cent of their pay? I doubt that the team will make it even in the initial round of eliminations. Same goes for organizations. Fox also mentioned about overpaying the employees. He states that if an employee gets paid about $20 an hour, he or she knows it. If an employee receives anything less than his or her worth, he or she will feel cheated. A savings of say $1 an hour will amount to $8 per day. But that is not worth saving compared to the loss that will result in the employee’s behavior knowing that he or she is being cheated. There’s just no way to quantify the amount of loss as an effect of low morale – drop in productivity, sabotage, theft, etc. But paying your employees more than what is expected of them results in high morale and increased productivity. This again highlights the concept on overinvesting in people. Try it out and see what happens. I’ve done my share of overinvesting in people in small, simple ways and have gotten some very good results.

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