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14 Jun 2010

How Processes Reduce Need for Talent and Its Cost

A CEO of a 150-employee services company made this astute observation: processes reduce need for talent, and thus, reduce labor costs. This company requires highly talented professionals to deliver its services.

Historically, management allowed them to work without defined processes because the employees knew what to do. However, as the company grew, finding such talent became harder and more expensive.

This CEO explained why processes reduce need for talent.

Processes reduce need for talent in the same way paint-by-number allows non-painters to produce good-looking works.

Processes become the path to training and developing in-house talent. They are analogous to painting by numbers or following recipes in cooking; they improve the output produced by individuals who don’t have a grasp on the entire work. However, just as we wouldn’t confuse painting by numbers with being an artist and following a recipe with being a chef, we shouldn’t confuse executing the steps of a process with being talented. Processes allow the breakdown of a task without necessarily needing to understand the task itself. It’s like following a series of directions; you don’t need to know your destination.

Since an employee doesn’t need to understand the whole task to follow a process, he does not need the talent that that understanding requires. Essentially, the process is making the decisions for him as embodied by its rules and procedures. As a result, the company does not have to pay a premium for that talent. Processes reduce need for talent and the cost it brings.

3 Responses

  1. Pingback : Process vs. Flexibility: The Tradeoff | Mike Lehr's Blog

  2. George Colombo

    With all due respect, I disagree with the conclusion that your CEO has reached. Two quick points: (1) Quality-oriented process management typically eliminates inspection from the control process. This is not something you’d want to do with less talented, less committed employees. (2) Quality-oriented process management relies on continuous input from workers on the effectiveness/efficiency of process. Again, this is something that requires talented employees.

    There are plenty of ways that process control/improvement can save money but hiring lower cost employees is not one of the better ways to do so.

    1. Mike Lehr

      George, the instances you cite are valid. Processes by no means eliminates the need for talented employees; they only reduce it. Also, motivation and talent are independent of one another. Some talented employees are unmotivated; some motivated employees are not talented. I’m also being a bit more liberal with the term process. For instance, computers perform processes many of which were originally performed by humans. Computers have no talent. Once you can process an activity, it has taken the first step towards standardization and computerization. All of this has clearly demonstrated the action of reducing the need for talented employees.

      Taken to a more human level, I find this assumption valid: it’s easier to find someone who can follow a process than someone who can figure out what to do. It takes less talent to follow instructions than to figure out what to do. In the case study I cite, the owner was trying to figure out what aspects of his company’s work could be formulated and documented so lower level employees could perform them. This is very much what happens with accounting software: administrators can do the work normally reserved for full-fledged accountants. I first experienced this in the financial industry when financial software permitted performance and other calculations to be done by administrators rather than full-fledged money managers. Again, software contains nothing but automated processes and workflows.

      There is no doubt it takes talented people to design and monitor processes; however, in the long-term processes reduce labor costs, not only by reducing numbers but quality too. So, while talented people will exist, they will comprise a smaller percentage of the overall workforce. This has been the trend since industrialization began and why we have cheaper goods and services. As for correcting the process, you don’t need talented employees to suggest improvements, just motivated ones. I consider the two different.

      So, again, I believe I might be taking a more liberal interpretation of processes, but I can see specific instances where what you cite would exist. Thank you for visiting, George.

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