Let's hear from a leader who doesn't share that view. E.W. Deavenport Jr., the CEO at Eastman Chemical (a Baldrige Award winner), said in a recent Business Week article, "I see help-wanted signs at McDonald's, but I still see people trying to knock down the door at our company for good-paying jobs. There's still ample labor out there, despite the labor crunch that people have been hyping."

At the Acme Widget company (a manufacturer of widgets for home and industry), they're very aware of their competitors. Ask them who the competition is and they'll talk about United Widgets up in New England, General Widgets down south, plus Widgets & More out in California. But there are more competitors than that. There are the companies in their town, none of whom make widgets. They're the local chemical plant, the automotive OEM parts supplier, the systems and software house, and the large farm equipment manufacturer two towns over. These companies are employers, and they're in direct competition with Acme for people.

Think about that. If you're having problems finding good people, try thinking outside the box. What can you do to make good people want to come to work for your company, rather than the one down the street? Do you need to start treating employees less as hired hands and more like customers? How can you become like Eastman Chemical and have people "trying to knock down the door" to get hired at your place?

Right now I suspect some of you are thinking: "We can't afford to pay more. We're getting squeezed on costs so hard by our customers that there's no way we can raise our pay scales." Well, maybe that's so. I'm not going to argue with you. But I'd like to call your attention to what might be an emerging trend: Some companies are increasing their hiring standards, not decreasing them as most are doing. An article in USA Today late last year cited companies that are raising the bar on hiring standards: Mutual of New York, Collective Technologies, Texas Instruments and Guardsmark, a security service. These companies, the article pointed out, are "convinced higher standards will pay off in reduced training costs, less employee theft and higher morale.

"Quality expert Armand Feigenbaum says the counter trend is similar to the quality movement that caught on in Japan in the 1960s and in the U.S. in the 1980s. Before, companies assumed products of higher quality would cost more to make. But Japanese car makers drove the cost of production down because of, among other reasons, less time fixing mistakes on the factory floor and less warranty work. Leading edge companies are holding out for total quality workers." They're doing this even though they have to pay them more.


Maximize People's Values
Is it possible that the route to lower people costs is higher people quality? Well, why not? We all know today that it costs less to make higher quality products. But 30 years ago, if someone had suggested that phenomenon (anywhere but Japan), they'd have been laughed out of town. Not any more. Today, when someone says paying more for people can actually reduce costs they'll most likely get laughed out of town. But 10 years from now, probably not.

The challenge, I submit, is not to minimize the cost of people but rather to maximize their value. Minimizing the people cost sounds like suboptimization if it results in greater hiring and firing costs, uncertain yields, increased training expenses, more scrap and rework, poor attendance with its negative impact on output, lousy morale, theft and more. What, I wonder, is the cost of all this? Do we know?


The Golden Rule
The truly high performance organizations that I've seen in my travels — companies like Hewlett-Packard, Moog Aerospace, Procter & Gamble, Tellabs and others — don't treat people like commodities, to be acquired as cheaply as possible and to be disposed of at the drop of a hat. In companies like this, people are viewed as resources with enormous potential benefit to the bottom line. They're well compensated, sure, but equally important is that they're treated with respect. They're treated, very simply, the way we all like to be treated. Do unto others.

One of the beneficial results of the quality revolution is its focus on the customer. Most companies have learned how to deal with customers better and more effectively than before. Many companies are learning how to do the same with their suppliers. Maybe now it's time for the next wave: learning how to treat our employees as well as we treat our customers.

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