Why We Should Treat People Like Machines
Scott Simmons Advisor/member of Cedalion Talent
In over 30 years of working with manufacturing companies, I’ve observed the level of thought, rigor, and investment these organizations put into the selection and care of their fixed assets (machines, equipment, tools, buildings, etc.). What has always been curious to me is that every year, the same companies spend two to five times more money on human assets without applying nearly as much thought, rigor, or investment. I’m convinced that all organizations, not just manufacturing, would have much more engaged and productive employees, realize a greater return on their human capital investment, and get better financial results if they put the “asset” back into “human assets” and started treating people like machines. Here’s why.
Companies Are Thoughtful About Acquiring Machines
Most manufacturing companies have an annual capital planning process. Projects are proposed from the bottom up, and detailed information about each (what it will do, what it will cost, why it’s needed, how many units it will produce, how it supports the business plans, etc.) is reviewed by all levels of the company. The operations, engineering, finance and marketing/sales teams work together for weeks crunching numbers, vetting assumptions, calculating financial returns, and ensuring alignment with business plans. The result is a list of projects and a budget for fixed assets (a CAPEX plan) that everyone agrees will have the best possible impact on business results.
If we treated people like machines, we’d spend an equal amount of time and rigor on a human CAPEX plan. We’d start each year with a clear understanding of our human capital investment and how it aligns with and supports the business strategy and plans. We’d use a review process guided by analysis of workforce productivity, calculated return on human capital invested, business plans, and assessment of current capability and capacity to align our human CAPEX plan with the business plan. The result would be a well thought-out and vetted list of current employees, additions, reductions, and development actions that all stakeholders agree will have the greatest impact on business results.
Machines Are Designed and Built to Optimally Perform
Because a machine is a significant investment, substantial effort goes into defining detailed design specifications (physical dimensions, operating parameters, raw material requirements, components, cost, etc.). Accurately defining these specifications ensures the machine is optimized to successfully produce the expected number of products, at the expected level of quality, over the expected life of the machine, and generate the financial return expected. Work does not start on building a machine until all stakeholders have reviewed the specifications and agreed on their accuracy and completeness. Once a machine is built, it is not put into operation until the designers inspect it in detail, run tests, collect data, confirm it meets specifications, and sign off that it can perform as expected.
If we treated people like machines, we would view them as a significant investment. Every new employee would be hired because they are judged to be the most optimal performer for the role. HR would provide a process and collaborate with hiring managers to define, specific skills, capabilities, experiences, etc. to ensure every hire is optimized to successfully perform at the expected level of productivity and quality during their time in the role. Recruiters would not look for candidates until all stakeholders agree the right amount of thought and rigor have been applied to the specification. Hiring managers and HR would collaborate, using a structured, objective, and fact-based process, to vet candidates against the specification before signing off on their ability to perform successfully. The result of the talent acquisition process would be the selection of a new employee who is the most capable of performing the role successfully.
Companies Put A Lot of Effort into Installing and Starting Up Machines
Once the purchase of a machine is approved, a tremendous amount of effort goes into planning and executing its installation. A design team develops detailed plans for installing the machine and integrating it with the rest of the plant’s infrastructure. A Project Engineer is accountable for developing a project plan, leading the project team, and ensuring the project is completed per the plan. Everyone is focused on one thing; getting the machine installed and producing at expected productivity, on time and on budget. The project team stays with the machine and makes mid-course adjustments until the plant and project team agree it is capable of sustained performance.
If we treated people like machines, all new employees would start out with a detailed start-up plan designed to ensure the highest degree of success as quickly as possible. The HR team would provide a “project engineer” to work with the hiring manager and the organization to develop a detailed start-up plan focused on getting the employee fully productive as quickly as possible. HR and the hiring manager would monitor progress, make necessary mid-course corrections, and support would continue until all agree that the employee is fully capable of successfully performing the role.
Not Just Anyone Gets to Operate A Machine.
In order to protect its investment, a company won’t let a machine operator run a machine until they are trained and can demonstrate they can safely operate it. Training usually includes general understanding of the process, standard operating procedures, performance parameters, and some basic troubleshooting. Operators are assessed against specific criteria in these areas to determine if they are qualified to run the machine. Operators who run the most expensive, profitable, or mission- critical machines generally go through a much more rigorous selection and training process.
If we treated people like machines, we would protect our investment in human assets by selecting, training, and qualifying human asset operators (AKA managers) to manage them. Managers’ would have to demonstrate their ability to manage people before they are allowed to lead them. Managers would be trained on people-related processes, how to set clear performance goals and parameters, how to use established processes to monitor performance, and how to solve basic performance issues. There would be even more scrutiny and training for managers responsible for the company’s top talent and talent critical to the organization’s strategy, competitive position, or customer relationships.
Machine Performance Is Monitored Constantly
Manufacturing companies don’t turn a machine on and measure performance a year later. Once a machine is running, operators constantly monitor a number of performance parameters over time to look for trends that either confirm normal operation or indicate a performance problem early. When a potential or actual problem is indicated, it is proactively addressed before productivity or quality is significantly affected.
In manufacturing, the machine operator is the person accountable for the machine’s overall performance, but they have a team of technical specialists (engineers, technicians, mechanics, electricians, etc.) they can draw on to solve problems, fix performance issues, and make in-process adjustments to keep the machine performing as productively as possible.
If we treated people like machines, we would hold managers accountable for performance of their human assets. We’d have well-defined processes that help managers set performance expectations and monitor performance on an ongoing basis. We wouldn’t expect managers to be experts in human behavior, but we’d hold them accountable to manage performance and proactively involve technical experts from HR to address performance issues before things get out of control.
Companies Make Sure Machines Don’t Fail.
The more a machine runs as planned, the more money it makes, so it makes good business sense to invest money in efforts to prevent machine failure and extend machine life. Trained maintenance specialists use diagnostic methods, data, and special tools to anticipate potential failure and prevent it from happening. They use operating history and diagnostic data to develop a prioritized list of planned maintenance actions to proactively prevent machine failure and extend the machine’s productive life. Often, a machine is deliberately taken out of operation so preventative maintenance activities can be performed. All of these actions prevent failure and long periods of unproductive time.
If we treated people like machines, we would do everything possible to ensure our human assets operated as planned for as long as possible and did not fail. We’d budget money and allocate time to coach and train them. We’d use data-based tools and processes to help managers coach their employees and identify ongoing skill and knowledge development that ensures they never fail.
When Machines Break, They Get Fixed Quickly
Despite the best operating and maintenance practices, sometimes unexpected things happen. A machine gets out of adjustment or simply breaks down, causing lower than expected productivity or quality. When this happens, the machine isn’t scrapped or replaced, because it would be expensive, lower productivity, and affect customer commitments. Instead, maintenance and operations teams work together with great urgency to troubleshoot the problem, identify and correct it, and get the machine running normally as quickly as possible.
If we treated people like machines, we would accept that sometimes, people’s performance varies and may decrease below expectations. Rather than immediately opting to replace them (except with chronic failures), managers would work with HR urgently, using data and facts, to diagnose the problem, address its cause, and put actions in place to get the employee successfully performing as quickly as possible.
Companies Continually Improve Machine Productivity.
Manufacturing companies always look for incremental improvements in machine performance and productivity. Engineers work with operators and others in the plant to analyze performance, material, and process data to identify changes to the manufacturing process, raw materials, technology, and machine set-up that will result in incrementally better performance and productivity. The focus is not to push the machine until it fails, but to continually improve its effectiveness, output, and value to the business over the long term. The result is a prioritized list of data-guided improvement actions to be implemented as budgets and machine schedules allow.
If we treated people like machines, managers would use available resources to develop and implement plans that continually improve employees’ effectiveness and performance. Our improvement plans wouldn’t be “get more done with less, work harder, and work longer”. We’d use data to identify changes in processes, skills, systems, work practices, and management practices, that improve human asset performance and productivity.
Companies Make Long-Term Commitments to Their Machines.
Companies view fixed assets as a long-term investment. When it comes to machines, companies prefer to avoid overcapacity. They generally won’t invest in a machine unless they are convinced there is long-term demand for all or most of their production capacity. In situations where there is a known short-term demand, but no long-term demand, companies may contract production from another company rather than invest in a new machine it can’t use in the future.
Once a machine is bought and installed, companies do everything possible to operate it over its useful life. If demand goes down, the Operations and Finance teams get very creative to keep a machine running and at least cover its costs. They may retool an asset, spend some money to upgrade it, produce something new that is needed in another part of the business, or even use the asset to make products for another company. Rarely is a machine written off, scrapped, or sold, to improve short- term earnings, and you’ never hear “business is down, so every plant has 3 weeks to develop a plan that will getting rid of 10% of their fixed assets by the end of the quarter”.
If we treated people like machines, we would make a long-term commitment to our human assets. This doesn’t mean creating lifetime employment, but it does mean thinking strategically about adding human assets and minimizing the chance of having excess human capacity. We’d think strategically about how much additional human capacity is required, by whom, in what markets, and for how long. We’d use data, statistical forecasts, productivity models, and workforce plans that look at both near and long-term demand for human assets.
If we treated people like machines, removing them from the organization would be a last alternative, not the customary go-to, for boosting near-term earnings. We would be thoughtful about balancing short-term inefficiency for long-term stability, knowledge/skill retention, and engagement. When demand for human capacity decreased, we would get creative and look for opportunities to utilize the excess capacity elsewhere in the organization before simply eliminating it. These decisions would apply the same thought and rigor used for fixed assets and would be informed and guided by data and facts.
Start Treating People Like Machines
The world has gotten smaller and much more competitive. Traditional capital-based barriers to entry are no longer as powerful as they once were. Scale, technology, access to capital, and the cost of capital aren’t the barriers to entry they used to be. Companies across the globe have unprecedented access to capital and can buy technology, copy machinery, wait for patents to expire, or acquire bigger competitors and their assets. The only truly sustainable differentiator a company has in today’s global economy is its human capital.
A company’s human capital is an infinite source of ideas, perspectives, flexibility, creativity and mobility not available from fixed assets. People can make ideas happen and create new ones. They can build relationships with customers and solve their problems. They can create and execute strategies that prevent competitors from gaining traction. They can convert data into actionable plans. They can combine past experience with future trends to create new products and business models. They can be purposed, pivoted, and repurposed as markets change.
Tapping the full potential of human assets requires a commitment to view investment in people the same as investment in fixed assets. Rather than viewing people as a cost, we need to view them as the significant annual capital investment they are. We need to put much more ongoing thought and rigor into how we plan, acquire, lead, and maximize our human capital investment to create long-term sustainable advantage.
Ironically, a good place to start is by treating people like machines.