#343: The only equity that matters
Yes, we are striving for more equity, but it's not the outcome that is important ...
Isn’t it ironic that politicians pushing equal outcomes also strive for a supermajority to force their will over the minority? Don’t worry, this isn’t political. We take our cues from politics and then try to spin this to fit into the business environment.
There is only one definition of equity; don’t let political marketers try to change your mind. Equity can be found and developed in all of our resources. Those resources are both capital and human. How do we define equity? Simply by subtracting liabilities from assets. What’s left over is equity. If you owe more than your value, you have negative equity; we push our organizations to be positive.
When you are in leadership, it is your responsibility to increase the value of your assets at a higher pace than your liabilities. You can measure that in capital or tangible resources like buildings, plants, equipment, R&D, and land. And you can measure that in human resources by things that add value, like knowledge, engagement, productivity, and training.
Invest in what matters
If you don’t cook, why would you invest in a new kitchen for your home? We invest in things that give us a return. Sure, we might do that if we plan on selling next year, and a $10,000 kitchen will increase the value by $11,000 or more. But otherwise, we leave the kitchen as is if it isn’t in use.
If it costs $50,000 to train an employee, we want more than $50,000 in return. If this employee is only a short-term hire with no goals or aspirations to grow in the company, are we required to invest in them? As leaders, we should strive to add value, but that doesn’t mean adding costs. Do we increase their benefits and time off and give them more flexibility? We measure an employee's return by higher productivity, more sales, and lower turnover. When costs increase, and employee performance doesn’t, we are not adding value but reducing it.
As a leader, your obligation to human resources is that they are provided the tools and the path to increase their value. This is a two-way street. If you give them access to growth, and they take advantage of the opportunity, it is a win-win.
Last week, we wrote about coddling versus leading; this is an extension of the same principle. As a leader, you should focus on increasing the shareholder value to its legal maximum. Any decisions that deviate from that goal is a dereliction of duty.
Don’t let them ‘should’ all over you.
When we speak about DEI, the employees that you 'diversify and include’ are the ones that buy into your culture. If not, they don’t belong. Those that have their fingers pointed at you ‘shoulda-ing’ you to change are the ones that need to look elsewhere. What do I mean by that? It is when you hear these new employees say, “I don’t like your culture. You should be doing it my way.”
If you consider it one of your core values to increase resource equity, that doesn’t mean equal outcomes. That means superiority. You are at your best when you are looking to maximize your profits, market share, and productivity. In short, we look to maximize our equity in all of our resources.
It would be wonderful if everyone rose to their highest potential. But don’t fool yourself; not everyone’s potential is the same. When you lower anyone else’s bar to create equal outcomes, you are doing your company a disservice.
If you struggle with increasing value and equity in your organization, ask yourself what bars you are lowering. Call us at the Kole Performance Group, and let’s refine your expectations!