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Thursday, April 9, 2009

FAITH!

Faith

For those who believe, no proof is necessary. For those who don’t believe, no proof is possible. The essence of faith is the belief and acceptance of that which cannot be seen. Of all the measurements in our lives, faith is the one component that is freely given and freely received. Our very co-existence as a society is predicated upon a foundation of belief. We cannot as a whole go unbelieving into a world of doubt and fear, it just doesn’t work.

Today, one day prior to Good Friday in the Christian faith and Passover in the Jewish faith I ponder what has happened to our foundation of commerce and trade. Of course these are not tied to faith directly; however I would like to make a case for a sense of faith in the expansion of any nation’s commerce and business growth.

There are several types of capital, the most prevalent form of which is MONEY. Wall St has forever measured companies by quarterly financial metrics all of which are defined in monetary forms. This has led to CEO’s and other corporate boards to place the entire focus on the derivative of money. Borrowing, lending, venture, revenue projections, margins, profit projections, sales projections etc… all represent plain black and white numbers on spread sheets. Money comes and money goes, it is gained and lost every minute of every day of every week of every month of every year. It is replaceable, it can be recovered. What have we created with this focus? We have created an overburdening sense of greed with this focus. We have created a scarcity based mentality that is driven by fear of loss and no apparent sense of creativity nor ability to maintain a sense of accountability and responsibility.

The world we live in has always been one of great abundance, there is no shortage of resources for our society (there never has been). Yet during the speed and chase of that which we do not have and that which we believe we must have we have overlooked the grand ideal of abundance. We have zeroed in on scarcity and it has led to the position we sit in at this very moment.

The greatest asset of any company is the people that make up that company (human capital). This human capital is the key resource to any future success for any entity. This goes right to the bottom line, as the cost and loss of revenue in re-training, research and development is one of the major liabilities of all companies. Study after study has shown that employees, workers, laborers (whatever name you put on HUMAN CAPITAL) create increased revenues and profits when they are well trained and placed in desirable work environments. Yet, with the advent of arbitrage and such other financial gimmicks the boardrooms see human capital as mere pawns to be moved around a spread-sheet. The intrinsic cost related to this mistake is mind boggling. It is comparable to walking down a street and stepping over hundred dollar bills in order to scoop up several pennies.

I give you one small example; let’s look at a sales force. There are many benchmarks that show a direct cost of $100,000 to replace a sales professional (account executive). You would think that a company would take this cost into account before they make silly decisions such as cutting back a sales executive’s territory and then lowering their commissions or bonus structure. In the end the sales executive leaves for greener pastures (new company assumes the costs of recruiting and developing this dissatisfied sales professional) and the company spends 10’s of thousands recruiting a replacement and then invests another $100K plus in training and development of the new sales executive. Here is the shocking intrinsic cost that goes unnoticed, on average if takes a company 2.5 sales executives to replace the one they lost due to a scarcity mindset. The bottom line is that the company made a boardroom decision to increase profitability by taking it out of the pockets of successful sales force only to find that it cost 3 times more to find, recruit and train a replacement. Talk about your stinking thinking. It is short-sighted at best, morally and ethically bankrupt at worst.

The answers are simple; the focus needs to be on HUMAN DEVELOPMENT. The ROI on human capital is ALWAYS going to be far superior and vastly more profitable then burning human capital. By investing time and money into the self-development of all human capital (if the company won’t invest then the individual must invest in themselves), companies would start showing incredible improvement in the quarterly projections and statements. This is commonly referred as having faith in your people. We need more humanity in the boardrooms and less bean counting mentality. We need a strong commitment to an abundant mindset driven by the capacity and desire for development and maintenance of all human capital over all other sources of capital. Please enjoy an abundantly blessed holiday season.

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