“In the ‘60s, it was plastic; in the ‘70s and ‘80s, it was oil; today, it is information and data,” said Jack Smalley, a veteran of human resources management in the oil, chemical and packaging industries, in pointing out the driving force of today’s business growth. “It used to be between the large and the small. Now, it is between the fast and the slow,.”
Smalley was on the last leg of his recent West Coast workshop tour for his company Express Employment Professionals, where he is the director of HR Learning and Development at its international headquarters in Oklahoma City. He gave a brief presentation on “The Top Five Threats Facing Businesses Today” in a breakfast session last Thursday at the Marmalade Cafe in Santa Barbara.
Smalley named companies that were overtaken by those with data advantage: Yahoo! by Google; MySpace by Facebook; the local video stores by Blockbuster then Netflix then Redbox, now by pay-per-view; the local sandwich shop by Subway; the local newspaper by the Internet; the mailbox by gift cards; and — perhaps a classic in this digital age — Kodak, which controlled 60 percent of the market for many a lifetime, by every person with a digital camera.
“Topple rate of slower companies has more than doubled in the today’s rapidly changing business environment,” Smalley said. “Major organizational change occurs in successful businesses every 18 months.”
(The figure does not seem surprising when one thinks of Moore’s law, a term coined by Caltech professor Carver Mead referring to Intel co-founder Gordon Moore’s description of the recent trend in technological and social changes that doubled every two years, mainly based on the impact of digital electronics on the world economy. The later 18-month formula was from a prediction by another Intel executive, David House, based on the speed of chip performances.)
Smalley further described how information, which translates to knowledge and power, works for a company — putting that company ahead of the game: fast thinking, fast decision-making, first to market and a capability to sustain its speed.
He enumerated the threats as well: inability to innovate, losing competitive advantage, high costs of reckless hiring, poor leadership and communication, and regulatory nightmares. The last takes its adjective from the latest statistics of 224 new federal major rules and 500 new regulations in 2010 alone — or a new one every two hours — and 3,500 other new ones from regulatory agencies. He said California ranks first in this category, with twice more than second-place New York.
He related Apple’s outstanding ability to innovate — launching its product even when flawed, contrary to the old practice of holding off introduction of a new technology for several years in an attempt to “perfect” it, a practice that certainly cost companies billions of dollars in lost revenue. Apple already makes money from its invention prototypes, launching new versions as it polishes the product.
He also stressed the importance of recognizing the most valuable asset of a company: its employees.
“In a $350 billion company, only $100 billion is product; the rest is ‘the stuff in people’s heads,’” Smalley said.
He added that “there is no shortage of talents,” noting, however, that companies lose their employees because they fail to engage them in the company goals. He mentioned the “sleepwalkers,” the unmotivated, underproductive workers, who do only “minimal expectation.” According to Smalley, there are those who “quit and leave,” but this type of employees are those who “quit and stay.”
He warned about “job sniffers” and “cyberprowlers” and that employers must understand the impact of social media in today’s world where three-quarters of adults are already online and 45 percent use social networking.
“Allow your employees to embrace social media and let them use it” on the premise that this will generally augment their engagement in their job, he said.
“Customer service must begin internally,” which, he said, means seeing to it that you have happy employees who will deliver the customer satisfaction, citing Southwest Airlines.
He sees this as a way of further motivating and engaging the employees to participate in the company objectives. He said that in the old system, management was a top-heavy pyramidal scheme with limited access to leadership. Today’s innovative companies use the concentric circle with a tiny leadership nucleus and total access to and from that leadership for all its employees, as with Zappos.
As important as “hiring people who fit the job” is employee retention. He noted that the average cost to replace a productive employee in a $100,000 job is $75,000 — to hire, train the new employee to be as productive and to retain customers.
He showed an interesting present-day demographics: “There are 80 million baby boomers, 60 million of whom are leaving the work force in the next 12 years. Their replacements are the 72 million millennials and the somewhat-lost 40 million GenXers. A good way to use the wisdom of experience of these boomers is engage them in a mentoring program for their replacements.”
Business owners, take it from Jack Smalley. When it comes to tapping the human resource potential, his 38 years of experience in the field can be construed as more than adequate expertise!
— Alice SanAndres-Calleja is a Santa Barbara resident and editor/publisher of The Mesa Paper.