The public sector in Alberta is again facing significant financial challenges. The result of which is that we are seeing some agonizing changes in program and service delivery offerings. These changes are certainly impacting staff and in some cases impacting students, patients, and others who have come to expect certain things from these organizations. These issues and concerns are certainly not just the purview of the public sector, nor are they unique to Alberta. We have all seen a variety of headlines over the years about downsizing in the manufacturing sector, boom and bust within oil and gas, and the dramatic changes in the auto industry. No sector or organization is immune to changes in markets or funding that causes it to rethink how it does its work.Even in the not-for-profit sector, where I have spent much of my career, one iconic phrase that has gained currency is "No margin, no mission." The message being reinforced through this phrase was that if an organization couldn't turn a profit or manage to its budget it could cease to exist and thus be in no position to live its values or achieve its purpose. This phrase came to hold some currency and was subsequently used to justify difficult and even harsh decisions through to and including program changes, staff layoffs, facility closures, mergers and consolidations. Regardless of industry, for many leaders, revenue, cost, black and red became (and is) the strategic imperative. The bottom line was and is the bottom line.
This is despite the fact that if you were to talk to many leaders about what their organization's greatest asset and resource is many of them would respond with an emphatic "Our People!" They might tout how much investment they have put into recruiting and training staff, how important their intellectual capital is to developing and sustaining their competitive edge, how staff in all types of positions are the face of the organization and create so many "moments of truth" with a range of stakeholders and clients on behalf of the business.
Yet the reality of actions taken seems to fly in the face of these strongly stated commitments. There do not seem to be many organizations that don't react with strength, urgency and conviction to slash budgets, reduce costs, or enhance profit when push comes to shove. Often the first cuts fall on education, training and travel. Salaries and benefits may also be tackled. For unionized staff this may take the form of attempts to reopen collective agreements. For non-unionized staff it may take the form of wage freezes. More often than not that doesn't deal with all or even most of the financial requirements and staff changes rapidly follow. This despite the fact that the human resources of the organization have been touted as the organization's greatest asset. This pattern of investment and divestment takes on a degree of regularity that makes for great fodder for a Dilbert cartoon. I've been through more cycles of this than I can now recall in my former healthcare career where we would often invest significant time and resources in recruiting staff - even engaging in heavy overseas recruitment - and then within a year or two start a round of layoffs to meet a new budgetary challenge. The larger economy parallels this experience. For example, business media is starting to note recovery in the US economy and with this rebound the topic of employee retention is getting more play.
So what should the true bottom line for one's organization be? To me it hardly seems logical to manage any enterprise, to sustain forward momentum, and achieve long-term objectives by divesting and then reinvesting in staff every couple of years. I may be cynical, but it appears that too many leaders take more care in the investment and maintenance of the physical assets of their organizations (e.g., buildings, equipment) than they do in their staff. And yet without skilled, qualified, motivated and committed staff those physical assets stand idle or are not used to best effect. I don't believe most leaders would make millions of dollars in investments in buildings and equipment only to idle or shutter them only a couple of years later. It would seem that doing so on a regular basis would start to call into question leadership competence...or so one would think...
Have I just crafted a fairy-tale scenario? Is this a realistic perspective on how to handle pressing financial considerations? Is this at all doable? For some organizations the answer is evidently yes.
Just this week, CNN Money (August 27, 2013) reported that Starbucks would not be following the lead of other US companies in cutting staff or benefits as a result of healthcare reform south of the border. Starbuck's CEO, Howard Schultz, took a stand for its company and said that its current benefits and commitment to staff was non-negotiable. This is no small commitment. In 2010, benefits cost the company $300 million. That's more than the chain paid for coffee in the same year. Starbucks has made their commitment to staff - their bottom line - real. I expect that this commitment puts them at some advantage in recruiting and retaining the most important asset in any enterprise - it's people.
So what's your bottom line as a leader? Do your words as a leader match your actions? Does your vision extend beyond the next quarter's financial results?
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Greg Hadubiak, MHSA, FACHE, CEC, PCCTEC Canada Chair/Executive Coach/Senior Consultant
hadubiak@wmc.ca
Helping leaders realize their strengths and enabling organizations to achieve their potential through the application of my leadership experience and coaching skills. I act as a point of leverage for my clients. I AM their Force Multiplier.
How true Greg, how true. I'm currently writing a paper on the institutional structure in Rwanda, and what structure would make the most sense for a sustainable peace in a country that has so many complicating variables in the mix. And yet, one of the most obvious issues in that country is the need to invest in the people - in addressing the level of poverty, the level of illiteracy and the healthcare issues. I don't profess to know everything there is to know about all of the complexities in this country, but a definite opportunity is to invest in the people in order to make progress on these issues in one of the most populated countries in Africa.
ReplyDeleteThey know they need to build their economy, and they have been working at it, but the people are the ones who are going to make change happen, and the investments of donors and their leadership have to reflect that. In the meanwhile, there is still evidence of ethnic conflict, overt and covert, and evidence of violent factions waiting in the wings. Their leaders stand accused of oppression and supporting rebel armies in order countries, they are almost 20 years post genocide, and there are so many issues that continue to exist. And yet the people continue on.
So where am I going with this - not sure really, but I think part of my point is that so often issues of where to invest first are so complex, and yet leaders don't talk to the people affected in order to know what needs to be done for them, to build internal capacity in responding to "hardship". Again, I don't presume to understand it all, but one of the key lessons from the course is that we have to look at all aspects of the situation, and consider what other variables are at play...