The Business World: Employ clever people and make work fun

The hardest trick of all for companies is to create a greenhouse where staff can develop new businesses under the protection and with the support of the parent

WISE COMPANIES make work fun. Even wiser companies create an umbrella where their creative people work for themselves as well as for the firm. And the wisest companies of all are those that can make their best people bring their good ideas to them, rather than leaving to develop them themselves.

One of the great boom areas in international business is organising events - product launches, "thank yous" for good customers, days out for staff and their families, and so on. If done well, they can be wonderful; done badly they can be toe-curlingly embarrassing. The one thing all have in common is that events are expensive, time consuming and just a little dangerous.

So why do companies take this risk? This answer. I think, lies in two words: "human capital".

Most businesses are very well aware that their key asset lies in the minds of the people they employ. Add up the identifiable value of the total assets of any company, the factories, the product stream and the licensing agreements. Then look at the company's market capitalisation. There is invariably a gap, sometimes a huge one. In the case of some of the fastest-growing types of business - investment banking, management consultancy, software development - there are virtually no conventional assets at all. All the value is in the people.

This raises string of profound questions for company leaders. How do you manage these assets? How do you build the stock of human capital? How do you extract the value of this capital for shareholders? Or, at its simplest, how do you get clever people to work for you?

Unsurprisingly, companies produce a string of different answers to these questions. Many devise elaborate incentive programmes, which has been reasonably easy in a strong share market: you give people shares. One company, Skandia Life in Sweden, has tried to measure the stock of capital in the heads of its employees and deploy the knowledge as widely as possible across the group. It produces a human capital report alongside its financial reports to make its commitment more explicit.

Other groups like Andersen Worldwide, the accountants and consultants, or Motorola, the communications group, have "universities" which are devoted to improving the skill level of their employees. Enormous resources are put into this: the Andersen campus near Chicago feels just like an exclusive US liberal arts college.

Quite aside from the general benefit to the group of putting resources into training, there is a simple business rationale for such ventures. I once asked an executive why his company spent so much on training. What stopped people taking this expensive training and going off and working for some one else?

"You don't understand." he replied. "It is because we spend so much on training that people stay with us. We employ clever people who know their value and who could walk out of the door whenever they want. But provided we go on increasing that value - adding to their human capital - they will stay with us. It is the moment we stop that they take their brains away."

Staff retention is a wholly respectable reason for paying attention to training. But every company can devise a cutting-edge training scheme. Every company can develop incentive schemes. And I suppose every company can dream up yet more glamorous venues for parties, for there are plenty of specialists to help them. As human capital becomes yet more important to company survival, what will be the qualities that distinguish the great from the OK?

I have two suggestions. The first is the great companies will seek to make the whole job fun - not just the events designed to reward key staff. Now of course not every aspect of a company's activities is going to be enjoyable. We all have to do things we don't like doing. But anyone who has spent much time with different companies will quickly pick up the warning signs: an excess of deference to senior staff, and an evident fear of criticism are two good indicators that something is not quite right.

The second is to create fluid structures of employment. To persuade clever people to work for you is not just a matter of offering a better package than the opposition. The rival may not be the company next door, but rather the person starting up their own business.

If a person can make more money (and have more fun) working for themselves, why should they work for an employer at all? The answer for some people may be that there is nothing that can be done. The new communications technologies built around the Internet are almost certainly tipping the balance of power away from most large companies (not all - look at Microsoft) and towards very small ones. But many people will be prepared to carry on working for an employer provided they can bring their personal business under the wing of the group they work for.

These are enormous challenges for business leadership, they represent a seismic shift that is taking power away from the corporation and towards the individual. Few businesses are accustomed to thinking of making their work fun; and fewer still could accommodate employees with an explicit split in their loyalties between their own private work and their job.

But the hardest trick of all, and therefore the one that one that brings the biggest benefits if a firm can pull it off, will be to create a greenhouse where staff can develop new businesses with the support of the parent.

The new industries of tomorrow almost always start with a few individuals and a good idea. They do not start in the established commercial giants. Just as Microsoft was not founded as a sub-division of IBM, the new industries will be created by clever people outside today's commercial giants.

But need that happen? The great prize awaiting every large business in the world is to grow the human capital industries of tomorrow. To win it, they need to create fluid employment structures to retain the cleverest people: then build the greenhouse to develop their ideas.

News
people
Arts and Entertainment
Lena Dunham
booksLena Dunham's memoirs - written at the age of 28 - are honest to the point of making you squirm
Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvDownton Abbey review: It's six months since we last caught up with the Crawley clan
Sport
Frank Lampard and his non-celebration
premier leagueManchester City vs Chelsea match report from the Etihad Stadium
PROMOTED VIDEO
Life and Style
A new app has been launched that enables people to have a cuddle from a stranger
techNew app offers 'PG alternative' to dating services like Tinder
News
Jacqueline Bisset has claimed that young women today are obsessed with being 'hot', rather than 'charming', 'romantic' or 'beautiful'
people
Arts and Entertainment
Jake Quickenden sings his heart out in his second audition
tvX Factor: How did the Jakes - and Charlie Martinez - fare?
Sport
premier league
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave crime series
Sport
Mario Balotelli celebrates his first Liverpool goal
premier leagueLiverpool striker expressed his opinion about the 5-3 thriller with Leicester - then this happened
News
ebooksAn unforgettable anthology of contemporary reportage
News
Britain's shadow chancellor Ed Balls (L) challenges reporter Rob Merrick for the ball during the Labour Party versus the media soccer match,
peopleReporter left bleeding after tackle from shadow Chancellor in annual political football match
Arts and Entertainment
Female fans want more explicit male sex in Game of Thrones, George R R Martin says
tvSpoiler warning: Star of George RR Martin's hit series says viewers have 'not seen the last' of him/her
News
i100
News
i100
Sport
Plenty to ponder: Amir Khan has had repeated problems with US immigration because of his Muslim faith and now American television may shun him
boxing
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments