Human Capital
by Thomas O. Davenport
Jossey-Bass, 251 pages, $32.95

Only a few years ago, too many companies bragged that they valued their employees as "our most importantassets," then treated them as costs that could and should be cut whenever possible.

This is changing among knowledgeable companies due in some part to the low rates of unemployment andthe need for more skilled workers.

Positions in modern corporations require knowledge, judgment, and experience. So employees possessing such qualities are being regarded more highly than before.

The latest trend is for employees to see themselves as owners and investors. They own their knowledge,judgment, and experience, and are willing to invest them in the companies offering the greatest return oninvestment.

To the companies, this change means that employees can no longer be seen as assets belonging to thecompany through their years of work. They are free agents, ready to invest their abilities wherever the returnis greatest.

Davenport, experienced in both management and as a principal in an international consulting firm, doesn'ttake sides in what could be a clash of opponents in this new positioning of employees.

Instead, he explains in his clear and engrossing style that given an understanding of this, both sides canprofit. Such firms as Genentech, a leader in biotechnology, and Southwest Airlines are examples.

Challenge to Employees

Employees who wish to succeed in this setting must position themselves sothat they are worth the return on investment they desire.

This can only be done by starting with a good education, then improving their professional skills andexperience so that they can contribute more, make better decisions, and provide better service to customers.

Companies face a greater challenge. They must identify what will attract people to join the companyand then stay.

They must recognize that these employees are not attracted by such things as salaries based on companywide performance, collaborating with others to get the job done, or having senior management that can betrusted.

Their desires are specific: work that is challenging, permits creativity, offers a chance to use abilities, andprovides the satisfaction that only a job well done can provide. Opportunity for growth and recognition foraccomplishments are important.

How to Keep Employees

Davenport quotes the ideas of Brent Frei, CEO of Onyx Software Corp., on ways to hold good employees:Give them the power to judge what it takes to get the job done, hire self-managing people, trust them todo the right thing, and give people the freedom to interact with each other so the best ideas will flow freely.

The author warns that even the most satisfied employees may get the itch to move on after about four years.

Try to analyze the root causes, he recommends, using such methods as talking to employees who have gonebeyond that break point to find out what made them decide to stay on.

Such a study will show what the company should concentrate on to halt the outward flow of employees.

Informs and Entertains

There's a quality in Davenport's writing seldom found in business books - it's as entertaining as it is informative.

Copyright © 1999 Executive Book Summaries.