How do we value employeesThere has been a bit of a buzz for a long time about the question ‘how do we value employees?’. The question is on what basis do we value them? After all, if we were to assign them a notional value then we risk commoditising them and succumbing to Taylor’s principles of scientific management.

So supporters of HR are forever talking about valuing employees, meaning that we must look after them. But why? Here is a story that formed part of my University MBA course. It is true but the name has probably been changed and the story embellished a little.

This is the story of Fred’s Head. This term is often used when referring to the tacit knowledge held by somebody, but here it really is the head of Fred!

Fred worked for London Underground (now known as TfL) for many years and like many workers before him, he had the customary retirement party and received a gold watch. Then he left. At that time London Underground had a fairly new line, the Victoria Line. It was unusual in that it was very shallow i.e. the tunnels carrying the trains were relatively close to street level. Because of this, the line had to twist and turn in order to go around the foundations of some buildings.

A while after Fred left, it was noticed that there was a significant increase in the wear on the rails and train wheels on this line. For a while, nobody knew why until someone connected these events with the disappearance of Fred. What had Fred actually done before he left?

Well in order to avoid wear and tear, parts of the Victoria Line had been fitted with automatic lubrication mechanisms that squirted lubricant when the trains came along.

That was an easy problem to solve then! Simply fill up the system with the right lubricant and off we go! Well, the system was filed up and many months’ worth of lubricant were ejected onto the track. Not only did Fred maintain the system, but he also calibrated and tuned it too!

Well finally they got it worked out but this story highlights a few points.

  • What tacit (implicit and uncodified) knowledge is held in the heads of employees?
  • How do we find out about this and ensure that it is retained?
  • What else do our employees know that could be useful for our business?

It is easy to fixate on knowledge itself and try to value that, but there is a much greater value to be placed on the interactions between employees that lead to the discovery and creation of new knowledge. That may not be codified but may get woven into organisational culture through storytelling.

In a way, uncodified knowledge is ideal because it is hard for competitors to copy, even when an employee does leave and work for them.

So yes our employees have value beyond their everyday work but we probably cannot put a monetary value on it other than if anything happened to our employees, how much would we need to spend to get us back into the same position (an insurance value)? But we still cannot assess the future impact.

If you want some help working out what your employees know, how to capture and store it then please get in touch.

Leave a Reply

Your email address will not be published. Required fields are marked *