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
Russia Today’s new UK channel began broadcasting yesterday. Discussions so far have included why Britons see Russia as ‘the bad guy’
news

New UK station Russia Today gives a very bizarre view of Britain

Voices
Left: An illustration of the original Jim Crowe, played by TD Rice Right: A Couple dressed as Ray and Janay Rice
voices

By performing as African Americans or Indians, white people get to play act a kind of 'imaginary liberation', writes Michael Mark Cohen

Arts and Entertainment
music
Life and Style
fashion
PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
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

The benefits of Recruitment at SThree...

£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

Trainee Recruitment Consultants

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Finance Assistant - Part time - 9 month FTC

£20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...

Marketing Manager

£40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...

Day In a Page

The drugs revolution starts now as MPs agree its high time for change

The drugs revolution starts now as MPs agree its high time for change

Commons debate highlights growing cross-party consensus on softening UK drugs legislation, unchanged for 43 years
The camera is turned on tabloid editors in Richard Peppiatt's 'One Rogue Reporter'

Gotcha! The camera is turned on tabloid editors

Hugh Grant says Richard Peppiatt's 'One Rogue Reporter' documentary will highlight issues raised by Leveson
Fall of the Berlin Wall: It was thanks to Mikhail Gorbachev that this symbol of division fell

Fall of the Berlin Wall

It was thanks to Gorbachev that this symbol of division fell
Halloween 2014: What makes Ouija boards, demon dolls, and evil clowns so frightening?

What makes ouija boards and demon dolls scary?

Ouija boards, demon dolls, evil children and clowns are all classic tropes of horror, and this year’s Halloween releases feature them all. What makes them so frightening, decade after decade?
A safari in modern Britain: Rose Rouse reveals how her four-year tour of Harlesden taught her as much about the UK as it did about NW10

Rose Rouse's safari in modern Britain

Rouse decided to walk and talk with as many different people as possible in her neighbourhood of Harlesden and her experiences have been published in a new book
Welcome to my world of no smell and odd tastes: How a bike accident left one woman living with unwanted food mash-ups

'My world of no smell and odd tastes'

A head injury from a bicycle accident had the surprising effect of robbing Nell Frizzell of two of her senses

Matt Parker is proud of his square roots

The "stand-up mathematician" is using comedy nights to preach maths to big audiences
Paul Scholes column: Beating Manchester City is vital part of life at Manchester United. This is first major test for Luke Shaw, Angel Di Maria and Radamel Falcao – it’s not a game to lose

Paul Scholes column

Beating City is vital part of life at United. This is first major test for Shaw, Di Maria and Falcao – it’s not a game to lose
Frank Warren: Call me an old git, but I just can't see that there's a place for women’s boxing

Frank Warren column

Call me an old git, but I just can't see that there's a place for women’s boxing
Adrian Heath interview: Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room

Adrian Heath's American dream...

Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room
Simon Hart: Manchester City will rise again but they need to change their attitude

Manchester City will rise again but they need to change their attitude

Manuel Pellegrini’s side are too good to fail and derby allows them to start again, says Simon Hart
Isis in Syria: A general reveals the lack of communication with the US - and his country's awkward relationship with their allies-by-default

A Syrian general speaks

A senior officer of Bashar al-Assad’s regime talks to Robert Fisk about his army’s brutal struggle with Isis, in a dirty war whose challenges include widespread atrocities
‘A bit of a shock...’ Cambridge economist with Glasgow roots becomes Zambia’s acting President

‘A bit of a shock...’ Economist with Glasgow roots becomes Zambia’s acting President

Guy Scott's predecessor, Michael Sata, died in a London hospital this week after a lengthy illness
Fall of the Berlin Wall: History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War

Fall of the Berlin Wall

History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War
How to turn your mobile phone into easy money

Turn your mobile phone into easy money

There are 90 million unused mobiles in the UK, which would be worth £7bn if we cashed them in, says David Crookes