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Business Advice: Assets In The Elevator

car blogThe late Leon Mandel, founder of AutoWeek magazine, once spelled out some 'policy absolutes'.

Regarding people, he wrote - in the late 1980s, "AutoWeek's assets go down the elevator each night and come back in the morning. Only the best and brightest people will do."

When I think back to all the businesses which I've seen fail in my business lifetime, I can't think of a single failure which could be blamed on machinery or mere physical assets. Generally, a failed business will have pretty much the same equipment as a successful business in the same field - the same brand of plastic molding machines, the same kind of die casting equipment, the same brands of computers, the same makes of saws and routers.

It's not the machinery; it's the people.

In the airline business, Braniff, Frontier, PanAm, Continental, United and US Air (all of which have declared bankruptcy) had the same kinds of airplanes as their successful counterparts. The difference was the people. These bankruptcies were caused by humans - people making bad decisions, people giving bad service to customers, and so forth.

Too many businesses fail to treat their employees like assets. When a firm buys a forklift, they tailor their purchase to their requirements. They will often pay extra to get the most reliable and long-lasting unit available. Yet, when they hire employees, they often try to hire someone on the cheap, hoping that they'll "grow into the job." Or just seek out "another body."

This is nuts. They should be giving the same attention to acquiring a new worker as they give to a new piece of equipment. Both are investments affecting the fortunes of the business.

Then there's the issue of existing employees. When a table saw doesn't work right, a good shop owner will quickly find out what's wrong and fix it. If it can't be fixed, the table saw will be scrapped. Yet, a marginal employee, who lowers efficiency far more than an out-of-whack table saw, is allowed to stay on for years because he or she "shows up every day." Meanwhile that marginal employee is lowering the morale of the entire operation, causing other employees to remark, "Well, if he can get away with this I can, too."

Employees need to be as sharp as the blade on that table saw. They must exercise their intelligence to help prevent problems. They need to use their imagination to come up with better ways to get the job done. If an employee can't be 'sharpened,' they should be discarded and a sharp replacement brought on board.

Leon Mandel is right. Good employees are an asset. And, in most cases, the difference between successful companies and failed ones isn't about differences in physical equipment. Rather, it's about the quality of the workers.

What are you doing these days in your business to acquire and preserve your best assets? What steps are you taking to make sure that only the best and brightest people make up your workforce? If you're not doing enough, act now.

It may mean the difference between success and failure in your business. (posted 11/8/10)

More of my business advice can be found here.

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