The human being – The least valued element in world enterprise and activity

One of the worrisome and rather tasteless human behaviours is to devalue the human being as having the least value in all human enterprise and activity. The few examples below will serve to drive home this point:

• Business: Some of the most studied ratios in financial statements are comparative ratios of employee costs to total revenue, per-employee revenue achieved, % of employee costs in value-added analysis, employees’ productivity, etc.  These ratios will be compared across accounting periods (normally a full year) and across entities in the same business segment.  The focus is to reduce employee costs, which can happen through the process of shutting down/selling businesses, getting work done through the non-formalised sector (shifting certain production to entities who can work outside labour and other laws’ limitations). In fact, a large part of management time goes into looking at ways to reduce human costs in a business.

CEOs and managing directors are expected to cut employee numbers and costs when businesses want to be ‘competitive,’ merger & acquisition activity is under way, or a business chooses to go through reorganization for efficiency purposes. Often, the CEO / MD and top team is paid fancy performance bonus to make the enterprise ‘lean & mean’.  That bonus paid is equivalent to the salary of several hundred employees who may have been asked to leave employment. The more the employees are reduced, the higher is the performance bonus paid to a handful of top executives. There is no real mechanism of checking over a period of 5 years and more whether the hatchet job of reducing employees really served its purpose. The concerned individuals / teams may have moved on, significantly enriched personally. The company carries the scars of battle, and several hundred are left to fend for themselves, carrying the shame or burden of being terminated.

A professional study on the impact of job (rushed and incoherent) losses on enterprises has still not evolved as a science of measure and whether the job losses due to some business decision finally contributed positively or negatively to the corporate enterprises. A classic example (hope business schools are teaching this as a case study) is General Electric and Jack Welch as CEO. His ham-handed manner of handling humans (not as a resource but only as a cost) destroyed General Electric in the decades that followed his retirement (with a very fancy retirement package).

However, the human element in business is not just management to employees. Sadly, in the case of unionized industry – the matter becomes Union actions / philosophy against the corporate (sometimes even industry / country). Trade unions are known to hold corporations/countries to ransom. The Mumbai textiles strike and the British coal miners’ strike in the 1980s destroyed human life and welfare. By not agreeing to modernizing and implementing technology solutions (often routinely opposed by trade unions) – industries wither & die, and the human element (in the form of the employee) suffers the most. We are seeing the effects in India today. Nobody wishes to invest in labor-intensive industry in India, and the nation’s industrial base is shaking and shrinking.

• Battles: One only needs to read the reporting of the Russia/Ukraine and Iran/USA – Israel wars that are going on to note that the human cost is not an important part of the reporting. We report on the destruction of property, military installations, fighter planes, battle tanks, destruction of infrastructure, etc. How much do we know of the loss of humans in these battles? Somehow, these battles are being sustained over weeks / months / years—but the human cost is never truly measured. Who is paying for these wars to be sustained? Young people are either killing themselves in face-to-face fights (country versus country or country versus proxy fighters) or air fights (planes/ missiles/ drones are sometimes injuring and killing innocents). Normal life is forgotten, and the ripples are reaching far, impacting many other nations and their citizens—without them having any role or ability to resolve the conflict. Human philosophy /power/egos are triggering these battles with high human cost all around. We are well aware of the costs of the battles in terms of civil and military equipment. What do we know of the human costs of the number dead/dying/injured/sometimes incapacitated? Battle losses in terms of loss of assets is computed. Where is the computation of the human loss to the family and nation?
• Loss due to nature’s fury or accidents: This is another form of loss where the human element is underreported. Losses due to cyclones, hurricanes, tsunamis, tidal waves, fires, storms, torrential rains—all these reports will focus on the value of lost assets, properties, and infrastructure. The loss in human terms will be barely covered or dismissed with some headlines or visuals. Similar state for road / train / aircraft / ship accidents. The human cost is subordinate to the loss of assets and the discomfort the loss will bring.

What is very self-evident is that humans do not know how to value human life or human endeavour. Linked with asset creation, the value stares us in the face. Delinked from some form of material creation, the human has no worthy value.

Certainly there will be some compensation, some sort of pain relief mechanism, some form of family being taken care of, but that is not in the money-lost reporting game. In terms of loss computations, it will always be the loss of assets, the loss of opportunity, and the loss because some support structures for activity collapsed. Human cost of human decisions and actions will never be valued and included. The human value loss is never computed.

At least for business human loss, some new parameters, measures, ratios, valuation mechanisms need to be evolved. Business decisions must be measured and scaled for effectiveness on the human front.  For example, after a business divestment or a merger & acquisitions decision, has the corporation shown improved financial matrices, compensating for the non-valued human loss that it forced?

Business has to shift from asset management and returns to some form of human management and returns, concurrently measured. Just empty talk of ‘Employees are our resource and valued asset’ will not do. Some recognized measures must be introduced. Once business values it’s human capital better, the other areas will follow.

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