Sunday, September 19, 2010

A CEO's Take on the Jobless Recovery

Companies across the business continuum are dependent upon the talent, skill, commitment and creativity of employees to achieve competitive advantage.  That's a long-held belief in the executive suite, right?

Take this glowing assessment from drug company Merck's corporate responsibility Web site:

"Merck's ability to deliver on our strategy is dependent upon our employees — they are our single greatest asset. They are responsible for discovering, developing and manufacturing the innovative medicines and vaccines that treat and prevent disease, and helping to deliver those medicines to the people around the world who need them.  For this reason, the Company strives to ensure that we attract and retain the best talent, support our employees, and help create an environment that will enable them to fulfill their potential."
So, why is Merck firing 15 percent of its work force which represents15,000 employees? 

It's corporate statement explains the decision in the opaque language of corporate attorneys and spin-meisters.
“The goal of the restructuring is to create a flexible R.&D organization that cultivates scientific innovation, facilitates external collaboration and drives pipeline progress and a reliable, more fully utilized and cost-efficient worldwide manufacturing supply chain to support Merck’s broader product portfolio."
One could even view Merck as a microcosm of the job-less economic recovery that has the Washington, DC political institution on edge.  Corporate sales have recovered and coffers are flushed with cash.  So, why no jobs?

Here is one possibility:  there is limited job creation because top executives know most workers are average performers who provide more grief, aggravation and legal liability than they do value.

Employees are, in fact, not an organization's greatest asset.  The best performers are the asset and they comprise a small fraction of the total worker base.

The challenge top executives face is culling the landscape to identify the high potentials.  That takes time and there's currently no pressing business case to rush the process.  The result is lots of interviewing and evaluation, yet little in the way of hiring.  

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