Capital appreciation, market evaluation and the growth expectation of a company are all steeped in the intellectual capital of its people. Yet when businesses merge or reorganize, employees are in many cases undervalued, let go or thrown to the side when owners seek to cut costs.
The stock market, however, with its technical and fundamental analysis and economic indicators, values these key measures of a company because of the direct input made by its executive leadership and employee stewardship. So how should a business recognize and use this investment more wisely?
The true value of a business is a direct result of an employee’s efficiency in the execution of their work. As organizations seek to come up with a better solution for placing a value on assets, they better quantify the differences between market value and the replacement value of that business or assets. It is the employee’s contribution to the intangible value recorded on the balance sheet that provides long-term benefits for all stakeholders.
Executive level, senior division, and department heads along with human resources, specifically, need to measure this aspect during a change initiative and provide data that objectively supports retaining employees who add to the valuation of the firm, instead of losing significant assets to the competition.
Entity Versus Humanity
Focusing on the human contribution to an organizational change optimizes vendor relationships, community interests and continued employee stewardship of the newly formed business. This long-term inclusive perspective provides a multifaceted approach to capitalizing on the true value of a business.
To ensure the needs of customers and clients alike are met, it is important to embrace the client-facing employee from the initial stage of any given project, organizational change initiative or new production process. This approach ensures that a firm has employees in place (customer touch points) to minimize process interruption. These client/customer-facing employees ensure the new environment will deliver what the client wants in a way the company can perform.
Proactive Project Planning
Where does capital appreciation, market evaluation and growth expectation come from? From the physical contribution of your people on a daily basis.
Recognizing the value of your frontline employees’ knowledge of client needs and capabilities achieves two key metrics.
1. It creates a willingness from your employee to offer more servicing to the client.
2. It shows the client you are building a process around their needs.
From an acquisitions perspective, this permits existing relationships to flourish and new relationships to develop despite the disruption, because you have retained key personnel that knows the market and understand the client and operational capability of your processes. This gives your employees an experiential role to play in the whole change process. Without taking these steps, we typically see low levels of engagement in the new process and equally reduced percentage use of new systems adaptation.
If only more C-level executives and their front line management teams were aware of the American influence in building the Japanese economy by American-born engineer, statistician, and professor Dr. Edward Deming. Perhaps the involvement of employees in such change initiatives would be more commonplace.
Dr. Deming visited Japan by invitation in 1947 and again in 1950 to share his studies in the statistical quality controls he established for industrial use. His team addressed far more than an ideological shift toward industrialization. They addressed the human element of work and measured the success of the production, ultimately determined by the level of engagement and use of people.
He recognized people as an integral aspect of the capital value of a business that forges new capabilities and levels of production. Since the intelligentsia of a proud country can recognize the benefits of such observations, how much further along the scale of utilized efficiency could we be? Can you as a manager or executive see how this mindset could catapult your business to an entirely different plateau, especially in today’s economy?
A Valued Process To Change
While much change is based upon perceived change and/or late-in-the-game need for change, those who experience “middle-of-the-game” strategy changes expect all parties, especially the front line employees, to conform to the new order of business. This is exactly why mediocrity and apathy rule the day at many companies.
It’s the inclusion by way of participation of your employees in any system or process of change that gives rise to their feeling of value and, in turn, the key reason why employees feel respected. It’s the use of their intellectual capital.
This ultimately delivers the level of results that are sustainable with the minimal oversight that is self-evident in well-managed companies. If you recognize and encourage the involvement of your employees at this level through proactive engagement despite the chaos, uncertainty and overall discomfort due to a merger of entities, your employees will navigate the rough waters and bring your ship into port safe and sound, along with new and existing customers.
First seen in Forbes Coaches Council Sept 2017
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