Thursday, April 26, 2007
Return on talent
Lowell Bryan has argued here that companies should concentrate on return on talent (profit per employee) and use return on capital as a sanity check. It is good to see we are getting there !
I think Lowell Bryan is right to concentrate on financials, as they drive decisions in most cases. And I am more than happy to see efforts in the direction of making talent the driver of wealth creation. I am just worried about the implications of concentrating on profit per employee. You will not get a higher profit per employee only by shedding "C-workers" (even if this mechanically does the job). Employees are not just employees, they form the social body of a corporation and as such it is difficult to account for them on an individual basis, without taking into account interactions.
An employee with a low "profit ratio" can be a relationships nexus allowing other coworkers to accelerate their own performance.
We need a new mindset to really approach talent financials, probably the one that goes with the "networked economy".
And we definitely need to think about the relation between talent and the assets they create for a company.