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The Balance People
PortfolioTM
Model Overview
Up and until the mid 1970’s, employees were
referred to as "personnel" and considered little more than
property that was owned by the company. Even when the term Human
Resources began to emerge and we started to hear cliches such as
"People are our greatest asset", the implication remained
that individuals and employees were expendable and their value, as all
fixed assets, depreciated over time. Although the rhetoric may have
called for "investing in our employees", employees were
still viewed as operating expenses. Investing meant training and often
the training was similar to retro fitting of the older machinery. The
paradigm had not changed. People were still resources that were to be
chewed up and spit out. They were renewable resources all right;
another human resource was waiting in the wings.
In the mid 1990’s a newer paradigm has begun to
surface. Senior management is being called to see employees not as
renewable resources worth developing but as investors themselves in
the organization. This model implies a whole different view of how we
treat our employees. They have become shareholders and by definition
management becomes accountable to them. Unfortunately, we know from
experience that the small shareholder is generally ignored. This too
is our fear using this model. On the other hand, it seems that people
tend to place inordinate value on the "almighty dollar". In this vein, a
financial paradigm has been adapted to define, evaluate and categorize
all business components. What happens if we equate each
individual as a type of investment?
We believe that the financial paradigm that has
extrapolated to the world of human resource management can be
repositioned to provide a more meaningful perspective. The author has
developed an investment strategy model known as the Balanced People
Portfolio Model TM
. This model helps decision-makers clarify their approach to
establishing and maintaining a productive organizational culture.
Human Resource professionals who understand the business principles,
especially those who are comfortable with financial, are in a better
place to strategically assist senior management in their quest for
better performance and return to shareholders.
When one invests one’s savings with a financial
planner, a portfolio is developed based on one’s long term financial
goals, propensity to risk, and age. When an individual goes through a
major life change (e.g. marriage, birth of a child, job change, health
considerations) it is time to review one’s investment portfolio to
see if the objectives have changed and hence the portfolio mix also
should be adjusted. When organizations merge or are involved in
an acquisition, the same review of current staffing is required.
Organizations, in their rush to cut costs and "right size",
are prone to loose sight of ensuring that a balanced people portfolio
is left in place. There is a tendency to keep the high potential
growth investments and terminate the lower performing income
investments. The Balanced People Portfolio Model provides a quick
overview of the benefits and risks associated with type of employee
group early on in the process of integration.
The purpose of a model, be it a
LegoR
version of Mount Rushmore, or an architect’s scaled down replica of
the new US Embassy in Ottawa Canada, is to depict in a simpler
framework of the "real thing". It is not meant to show
every little nuance or complexity in absolute terms. We have chosen to
build upon the concept of a financial framework because it is one that
most individuals, particularly business executives, find
appealing. We are, by no stretch of the imagination, trying to
imply that individuals are specific investment instruments and should
be treated as such. We wish to present another model that we believe
will view individual employees with the value and respect that is
often lacking compared to the lip service paid to them.
Table 1: Balanced People Portfolio
ModelTM
Investment
Instrument |
Growth / Income |
ROI |
Main-
tance |
Risk |
Equivalent
Human Talent |
Insurance
|
G |
Low |
Low |
Low |
Corporate
memory |
Collectibles
|
G |
Low –to High |
High |
High |
Myths,
Legends Eccentrics |
Real Estate
|
G |
Low to Medium |
Very High |
Medium |
Prima
Donnas |
Gold & Metals
|
G |
Low to High |
Low |
Low |
Marginal
performer who knows a niche |
Bonds, GIC’s & Money
Markets |
I |
Low |
Low |
Low |
Reliable
old guard
Closer to retirement |
Preferred & Debentures |
I |
Low |
Low |
Low |
Long
service and solid performers |
Blue Chip / Index Stocks |
G & I |
Medium |
Medium |
Medium |
Sr.
Management
Professionals |
Common Stock |
G & I |
Low to High |
Medium |
Medium |
Specialists
Future workforce |
NASDAQ
Indexes
|
G |
Low to High |
Medium / High |
Medium / High |
Knowledge
workers
Recent grads
Generation X |
Mutual Funds
|
G |
Medium |
Low |
Medium / High |
Outsourcing
Alternate Service Delivery |
IPO’s /
New Stock Offers
|
G |
Low to High |
High |
High |
New Grads |
Stock Options
|
G |
Low to High |
Very High |
Low |
Free
agents
Some Gen. X |
Commodities / Futures |
G |
Minus to High |
Very High |
Very High |
Creative
genius |
Chart 2 of the Balance People
PortfolioTM,
which is not presented here, looks at the benefits, drawbacks and
retentions strategies of each human investment group. Both
tables can be viewed or downloaded by clicking below. Adobe
Reader required.
Balanced People Portfolio
Model
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