They're Not Employees, They're People.
by Peter F. Drucker
Copyright © 2002 by Harvard Business Review School Publishing Coporation. All rights reserved. February 2002
"The key to greatness is to look for people’s potential and spend time developing it."
Free Managers to Manage People
Temps and especially PEOs free up managers to focus on the business rather than on employment-related rules, regulations, and paperwork. To spend up to one-quarter of one’s time on employment-related paperwork is indeed a waste of precious, expensive, scarce resources. It is boring. It demeans and corrupts, and the only thing it can possibly teach is greater skills in cheating.
Companies thus have ample reason to try to do away with the routine chores of employee relations – whether by systematizing employee management in-house or by outsourcing it to temps or to a PEO. But they need to be careful that they don’t damage or destroy their relationships with people in the process. Indeed, the main benefit of decreasing paperwork may be to gain more time for people relations. Executives will have to learn what the effective department head in the university or the successful conductor of the symphony orchestra have long known: The key to greatness is to look for people’s potential and spend time developing it. To build an outstanding university department requires spending time with the promising young postdocs and assistant professors until they excel in their work. To build a world-class orchestra requires rehearsing the same passage in the symphony again and again until the first clarinet plays it the way the conductor hears it. This principal is also what makes a research director in an industry lab successful.
Similarly, leaders in knowledge-based businesses must spend time with promising professionals: Get to know them and be known by them; mentor them and listen to them; challenge them and encourage them. Even if these people are not traditional – read, legal – employees, they are still a capital resource for the organization and critical to its business performance. The administrative tasks that are involved with employee relations can, and should, be systematized – and that means they can, perhaps should, become impersonal. But if employee relations are being outsourced, executives need to work closely with their PEO counterparts on the professional development, motivation, satisfaction, and productivity of the knowledge workers on whose performance their own results depend.
Modern organizations emerged from the Industrial Revolution. The cotton mill and the railroad were first. But while unprecedented, they were still based on manual labor, as was all earlier work, whether it was farming, manufacturing, clearing checks by hand, or entering life-insurance claims into a ledger. This was the case as late as 50 or 60 years ago, even in the most highly developed economies. The emergence of knowledge work and the knowledge worker – let alone their emergence as the chief source of capital in our knowledge-based society and economy – is thus as profound a change as the switch to a machine-driven economy was all those years ago, perhaps an even greater one.
This shift will require more than just a few new programs and a few new practices. It will require new measurements, new values, new goals, and new policies. It will predictably take a good many years before we have worked these out. However, there are enough successful knowledge-based organizations around to tell us what the basic assumption has to be for managing employees in today’s companies: Employees may be our greatest liability, but people are our greatest opportunity.