Business Leaders, Your Focus Is The People.

They are your real business.

I wonder how many business leaders actually realize this. I mean, paying lip service is very different from putting our people into every decision we make at the executive level. Maybe we should start thinking about our real assets that are contributing to the operations of the business machinery.

Every revenue line, bottoms line, increase in book value can be attributed to the people of our business. With them, we scale. Otherwise, we are no different from any freelancers working by ourselves, for ourselves, and within ourselves.

I know that the financials of the company often paint a very different picture. The keyword is “seemingly”. If we explore the individual line items in the Profit & Loss statement and think a little, just a little, and not too much — We will conclude that the sales force earns money for the company, everyone else contributes to the cost.

I found it funny before 2020. This year, I no longer feel this way.

This sentiment is real. When the Profit and Loss statement of the company flips from “Black” to “Red”, the default response is almost to cut “Administration, Salaries, Bonus provisions” — In short, trim labor costs.

We treat our labor costs like a Bonzai. Oh, it is out of shape, time to trim it. And don’t worry, it will grow back on its own.

Sorry to disappoint you. With people, this never happens. The highest-paid professional in the company often understands the plumbing of the company way better than the executive team. When they are gone, I am certain they will not want to come back. In fact, business leaders like ourselves will lose a piece of business functional knowledge forever.

That is because tacit knowledge — knowledge created and accumulated as a result of skillset application — cannot be passed on as if a piece of content downloaded and uploaded. This is the exact value of experience.

Experience is the ultimate asset of every professional. Years of practice have allowed them to work with the ability to foresee the next few steps and more, plan for them and mitigate the foreseeable risks beforehand.

In short, companies are not paying them by the hour. Businesses are paying them for what they can bring to the table to allow the business to scale.

So, when the season of austerity befalls upon us, the almost unanimous decision is to release people. Sad to say, well, that is the reality today.

What follows often put me into deep thought. Usually, after trimming labor costs, businesses will start embarking on digitalization and automation initiatives. This is often announced under the pretext of lowering the total unit cost of production.

While that is true, it often leads me to scratch my head. I do have an accounting degree, and I run businesses. Digitalization and automation are initiatives that require Capital Expenditure (referring to spending that is required for building assets, building the company). If businesses are cutting costs, how much cash buffer do they have for Capital Expenditure?

I raise my eyebrows in response to reasonable doubt. I know it is easier to commit to a budget for Capital Expenditure during boom years than the bust. They rhyme and chime with the economic cycle.

While digitalization and automation are a maybe, a labor force diet is certain.

Then, is digitalization and automation going to be used as a firewall from responsibility to our knowledge assets for us to highlight the names in the spreadsheet for the next wave of release?

These are tough times. Businesses and the people who build the business are trying to cope with the rapid technological evolution sweeping across every single business landscape. The early adopters take time to adapt, and the laggards need a longer while to adapt.

This should not be used as an excuse to identify those who are irrelevant. Instead, we need to display our leadership. This is what we can do.

We see the dark clouds looming in the background coming towards us. The early adopters are comfortable taking their time to move into a shelter because they know they can run. The laggards need to be informed ahead of time so they can prepare.

At the very least, give them an umbrella.

This is what we can do. And we do this because we care for the people who build the business alongside us.

I hope I am not alone. Aldric

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