Reflecting on cost v value in business. Do you know the difference?

Cost and value
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Robin Hoyle
Senior Consultant
Learnworks Ltd
Columnist
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Robin Hoyle is a writer, trainer and consultant. He is the author of Complete Training: from recruitment to retirement and Informal Learning in Organizations; how to create a continuous learning culture both published by Kogan Page.

The IT meltdown which saw British Airways flights cancelled over the Bank Holiday weekend was a sober reminder of how important IT systems are to every aspect of our lives.

Perhaps it reminded us of other things organisations sometimes overlook. GMB Union members were quick to point to recent redundancies among experienced (and therefore expensive) UK based IT personnel when the management of BA’s IT infrastructure was outsourced offshore.

Adam Cruz, BA’s CEO, was quick to deny that recent cost cutting measures were in anyway responsible, but outsourcing something as vital as an IT infrastructure which can bring your whole organisation to a grinding halt, seems a brave decision at best, foolhardy at worst.

The problem is that although we rely extraordinarily heavily on IT systems and the skilled individuals who operate them, we don’t really value them. Computer systems have become commoditised and as with any commodity the only variable which matters is price.

As an L&D person, this leads me to think about two issues.

The first is, ‘how well do senior staff really understand some of the backroom operations which make the organisation work?’ 

I have had several conversations about these unsung services – not just IT but legal, regulatory, supply chain and, especially, HR – and in each case I have been amazed about how little detail people at the board level understand about these departments. 

The common feature of each of these functions is that they can wreak untold havoc on an organisation’s reputation as well as cost them lots of money.

(The BA IT system outage is estimated to have cost £150mn over the course of one weekend and triggered a large fall in its parent company’s share price – think about the reputational and financial costs of legal breaches in banking, or supply chain problems in food production, or regulatory breaches in motor manufacturing, or discriminatory HR practices in retail.)

Unnoticeable when things go right, it is only when the smelly stuff meets the air conditioning that some bosses wake up and take notice of the work these functions perform.

L&D are often seen in a similar light. Alongside each of these other teams, we need to demonstrate our value – both in terms of reputation and as an investment in future organisational wellbeing.

The departments which give our organisations that fixed backbone are these unsung heroes, the backroom boys and girls, the nerds, the quiet experts.

To constantly be overlooked and under considered means we can be seen as a necessary evil rather than a contributor to the organisation’s key capabilities. Necessary is good, evil less so.

My second thought is ‘how do we demonstrate the value of a skilled, experience workforce when things don’t go wrong?’

Hindsight may be a precise science, but experience shows us that one person’s interpretation of where things went wrong is often the 180 degree opposite of the view of someone else – even when looking at the same event.

Unsurprising as when something does go wrong, the people who decided to downsize the organisation’s skills, memory and capability, find other circumstances at which to point the finger.

Take this quote from McKinsey on Organisational Agility and Organisation Design:

“In our experience, truly agile organizations, paradoxically, learn to be both stable (resilient, reliable, and efficient) and dynamic (fast, nimble, and adaptive).

Our recent fascination with disruption at any cost may have created instability in an environment where resilient, reliable and efficient is seen as being just too damned expensive.

To master this paradox, companies must design structures, governance arrangements, and processes with a relatively unchanging set of core elements – a fixed backbone.”

Surprised? 

Our recent fascination with disruption at any cost may have created instability in an environment where resilient, reliable and efficient is seen as being just too damned expensive.

The departments which give our organisations that fixed backbone are these unsung heroes, the backroom boys and girls, the nerds, the quiet experts.

They are the experienced ones who counsel against headlong rushes towards risk and look to systems and process, checks and balances.

They are worthy of investment in their continued development and their ever evolving expertise and experience is worthy of being shared beyond their own worlds and into the flash harry functions which are useless without them.

They have a value in the every day. Don’t wait until disaster strikes to share that value up and across your organisation.

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