The Business World: Employ Clever People and Make Work Fun the Hardest Trick of All for Companies Is to Create a Greenhouse Where Staff Can Develop New Businesses under the Protection and with the Support of the Parent

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WISE COMPANIES make work fun. Even wiser companies create an umbrella where their creative people work for themselves as well as for the firm. And the wisest companies of all are those that can make their best people bring their good ideas to them, rather than leaving to develop them themselves.

One of the great boom areas in international business is organising events - product launches, "thank yous" for good customers, days out for staff and their families, and so on. If done well, they can be wonderful; done badly they can be toe-curlingly embarrassing. The one thing all have in common is that events are expensive, time consuming and just a little dangerous.

So why do companies take this risk? This answer. I think, lies in two words: "human capital". Most businesses are very well aware that their key asset lies in the minds of the people they employ. Add up the identifiable value of the total assets of any company, the factories, the product stream and the licensing agreements. Then look at the company's market capitalisation. There is invariably a gap, sometimes a huge one. In the case of some of the fastest-growing types of business - investment banking, management consultancy, software development - there are virtually no conventional assets at all. All the value is in the people. This raises string of profound questions for company leaders. How do you manage these assets? How do you build the stock of human capital? How do you extract the value of this capital for shareholders? Or, at its simplest, how do you get clever people to work for you? Unsurprisingly, companies produce a string of different answers to these questions. Many devise elaborate incentive programmes, which has been reasonably easy in a strong share market: you give people shares. One company, Skandia Life in Sweden, has tried to measure the stock of capital in the heads of its employees and deploy the knowledge as widely as possible across the group. It produces a human capital report alongside its financial reports to make its commitment more explicit. Other groups like Andersen Worldwide, the accountants and consultants, or Motorola, the communications group, have "universities" which are devoted to improving the skill level of their employees. Enormous resources are put into this: the Andersen campus near Chicago feels just like an exclusive US liberal arts college. Quite aside from the general benefit to the group of putting resources into training, there is a simple business rationale for such ventures. I once asked an executive why his company spent so much on training. What stopped people taking this expensive training and going off and working for some one else? "You don't understand." he replied. "It is because we spend so much on training that people stay with us. We employ clever people who know their value and who could walk out of the door whenever they want. But provided we go on increasing that value - adding to their human capital - they will stay with us. …