If I Could Add 5% to Your Profit Margin

Home/Publications/CIDM eNews/Information Management News 08.02/If I Could Add 5% to Your Profit Margin

Robert N. Phillips
CEO, Lasotell Pty Ltd.
www.lasotell.com.au

If the above statement were true, would you hire me? If I could add only 0.5% to your profit margin, would you hire me? You might think that the answers to these questions are no-brainers, but it is amazing how many companies do not think in terms of what impact hiring someone has on the bottom line.

For example, I know a company that spends over $1 billion in software development each year—yet it has no formal change-control process. People are always coming up with different ways to do things or buying software that will “save lots of money.” Some of the software even gets purchased, but nothing changes. Whenever the idea of imposing change management is raised, everybody ducks and runs for cover, howling about the enormous cost impact of a bureaucratic manager and the loss of flexibility that will ensue. The fact that they would save in the order of $100 million in the first year alone is completely ignored.

Part of the overall impact of the silly “shareholder value” mantra has been the dumbing down of the work force. It has always been assumed that technology will fill the gap. But those same technology suppliers have also dumbed down their work force, which means the gap is much greater. The end result is that the bottom half of many companies has been hired not to think—but the top half of those same companies is getting older and leaving.

This silly process is coming full circle in the Australian banks. One bank had a policy of capping its retirement benefits at 55 years of age so that the “old staff” would leave the bank. That practice was considered a good management approach for keeping employment costs low. However, during the last few months, that bank has finally realized that Australia has a rapidly expanding grey population and a declining birth rate. They have also just realized that this grey population is the sector with all the cash and appears to be the fastest growing customer segment for the next 15 years. But the bank has a problem: They have discovered that the 55+ market does not like taking financial advice from youngsters. Now the bank is looking to employ nearly 1000 people who are 55 and older. And you know one of their big worries? None of these new hires will have experience with the bank’s ways to maximize the relationship with these customers.

The lesson they are learning is that it was very easy to dumb down the work force but making it smart again is going to be a significant cost.

The common factor underlying companies that have taken this path is that they do not have enough people left who know how to Think (with a capital T). This factor is why the industry is finding it so hard to get on top of document-management and content-management systems. Management wants the information made available in these systems, but they have yet to understand they have thrown away the very people who created the base information in the first place. These days, everybody wants to organize the information, but no one wants to do the hard bit: create it. (That reminds me of Weinberg’s comment: “There are two groups of people in the world, those who do the work and those who take credit for it. Stay in the first group—there is much less competition.” from Gause and Weinberg Are Your Lights On [Dorset House 1990].)

Visit amazon.com for more information about the book.

Having the best practice is not worth very much if you do not have the appropriate people practising. For example, technical writers who do not or will not create an Information Plan and a Content Specification are functionally limiting themselves to only two tasks: editing the work of others and making documents look pretty. (Such people have to learn the value of the saying: “Failure to plan is to plan for failure.”) So if companies continue to pay salaries and rates suited to non-thinking people, it is going to be interesting to see who can create the technology that thinks for the non-thinkers and how much the total cost of ownership of that technology will be in comparison with hiring (or keeping) a few Thinkers in the first place.

All the content management and document management in the world will not add two pence to the bottom line if there are no Thinkers producing the base information for others to access. If hiring some Thinkers can reduce the number of calls to the Call Center (by making the right information available in the right format), that should be a no-brainer—even if only because they are not technology vapor-ware; they are alive and available today. They are just hard to find, but most things of any value are.

We use cookies to monitor the traffic on this web site in order to provide the best experience possible. By continuing to use this site you are consenting to this practice. | Close