The word capital has many meanings. A number of them relate to the world of finance. Capital and currency, although not the same, have been used interchangeably over time. The problem is we are totally focused on the wrong capital if we are to grow our businesses and our bottom-line.
The word salary stems from the Latin salarium, meaning “salt money.” The Romans paid soldiers, officers, and civil administrators an allowance of salt. (This gave rise to the phrase still in use today of someone being “worth their salt.”) Salarium continued to refer to military pay, even after coins came into use.
On the other side of the world on the Leeward Islands, from the mid-seventeenth century, sugar became the reigning monetary standard. Jamaica, being an important naval base as well as a favorite spot of buccaneers, was always furnished with a plentiful supply of coins. Nevertheless Jamaicans preferred the use of sugar money. Barbados and the Leeward Islands perennially wrestled with coin shortages, emphasizing the expedience of commodity money. In the West Indies, before sugar rose to the forefront, tobacco filled the need as a medium of exchange.
As recently as the 1971, the United States operated on a gold standard in which currency was backed by gold bullion. In October 1976, the government officially changed the definition of the dollar; references to gold were removed from statutes. From this point, the international monetary system was made of pure fiat money, defined variously as any money declared by a government to be legal tender, or money without any intrinsic value. (The term derives from the Latin fiat, meaning “let it be done.”)
But we are not done. Today there is an increasing trade in bitcoins--digital currency that functions without a central intermediary, such as a national banking system. The concept was first introduced in 2008 and is working hard to gain acceptance. (In fact, spellcheck still doesn’t recognize it.)
Now that we have completed our “history of money” class, I contend the focus is in the wrong place. While a means of exchanging units of value matters, we all know that the real value in the world today lies where it always has: in people. People are the real source of value and today that value is not found in the might of an army, but in the brilliance of ideas and the energy of motivation. Fortune Magazine correspondent Geoff Colvin writes of Mahindra Group and Unilever as two global firms that truly “get it” when it comes to people. Underneath the mushy talk of values, integrity, and empowerment lie two firms very focused on competing and winning in business. He states, “... [E]nergy and commitment. These are the most valuable currency in a world where human capital is really every company’s most valuable asset… More than ever, the soft stuff is the hard stuff.”
When people ask me why I teach leadership, I say basically the same thing: Leadership isn’t about making people feel good’ It is about accomplishing an objective. How people feel is a means to an end. Most great leaders were/are masters at getting people to want to go the distance. I do this not to help create a place where people are treated nicely. I do this because a place where people are well-led is more often than not a place that wins.
Salt, sugar, bytes are all transient; the power of people transcends all. When you focus on the money, you lose focus on what really matters. When you focus on the people, the money comes into the picture quite nicely. Recently I reviewed the strategic plan for a contractor. They had a number of goals and then a number of objective metrics they wanted to reach. The problem is all the metrics were about safety, sales, and production. There were no metrics about people despite the fact they had a goal to reduce turnover and become the employer of choice. Clearly they are missing a key element in holding themselves accountable.
One client has retained me as their Human Capital Advisor. The scope of my involvement has increased too and with that the risk profile of what we do for them. What a great opportunity! The firm has set its sights on being recognized as a great place to work in their state. There is a metric for you!
What is your philosophy when it comes to people? I know you will say that people are your most important asset. Unfortunately when I look at your daily planner for what you are doing and who you are doing it with I don’t see time being set aside for training, coaching, mentoring. I know you will say you do that all the time. Great, but it also needs to be intentional and scheduled as well as ad hoc and impromptu. The urgent demands of the day will displace the important needs of your people if you don’t commit to it and measure it.
If human capital is the primary source of competitive advantage today what will you do differently this year to get more return from that capital?
“Fantastic, interesting, well worth my time.”