Labor management: Investing in human capital

Without an educated and motivated workforce, labor management systems and tools will take you only so far.
By John M. Hill, Director, St. Onge Company
August 18, 2010 - MMH Editorial

During the past year, the potential of labor and workforce management systems using engineered standards for warehouse productivity improvement has been widely heralded in the press and on the Web. New tools focus on integrating these systems with demand-based planning, scheduling and warehouse management systems (WMS) to improve customer service by better matching the workload to predictable workforce capacity. 

In classic economics, three factors are traditionally cited as being critical to goods-producing enterprises – land (or natural resources), capital (or the means of production) and labor.  Codified by Adam Smith in 1776, Karl Marx referred to them as “the holy trinity” of political economics.  The variable in the equation toughest to manage, of course, has been labor (or as many call it “human capital,” although there is a world of difference between the two terms).  With equivalent “land” and “capital,” why is it that some companies so dramatically outperform others – even when using the latest tools for performance management?  I think that the answer boils down to management’s understanding of the distinction between labor and “human capital” and its willingness to make the investments necessary to turn the former into the latter.

Years ago, I took a summer job as a night shift turret lathe operator in a well-equipped automotive feeder plant.  Paid by the piece and trying to put away enough money for my sophomore year at college, I didn’t need rocket science to figure out how to set up a pair of lathes and nearly double my output.  Within a few weeks, I had three lathes going and was earning twice as much as my peers.  And then, the roof fell in!  As opposed to taking my offer to show them how to set up the line to match my performance, my fellow workers found my Beetle in the parking lot, slashed the tires and sunroof, and smashed the windshield.  The following day, I put on a white shirt and tie and reported to work as the newly appointed assistant supervisor of inventory control – and production numbers returned to status quo levels.

In my example, the company had the land, the capital and the labor, but had not made the investment in education, training and motivation necessary to convert that labor into “human capital”, an asset that differentiates the winners from the also-ran’s.  The point is that tools and systems alone will not get the job done – indeed, they should be enablers that allow an engaged, motivated and well-managed workforce to meet or exceed collaboratively established performance targets. 



About the Author

John M. Hill
Director, St. Onge Company

Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

The 'Internet of Things' or IoT is a term that has rapidly taken center stage in business and consumer technology circles, with tremendous amounts of hype in both. Don't be distracted if some of the hypothetical consumer examples of the IoT seem far-fetched; the trend has serious implications for businesses. This complimentary whitepaper takes a look at some of the opportunities afforded by the Internet of Business Things.

Of special interest to readers of Logistics Management will be “Americas Update,” which will look into the future of the market in the Americas and assess how firms will be able to favorably position themselves to compete and win market share.

After 20 years, two congressional mandates and countless lawsuits and lobbying efforts, safety advocates and the Teamsters union still say there are too many inexperienced rookie truck drivers hitting the road without sufficient behind-the-wheel training.

Congested U.S. port terminals, harbor and over-the-road truck and driver shortages, slower trains and longer rail terminal dwell times due to increased domestic rates have not only disrupted service but also driven intermodal rates and cargo handling costs up sharply.

Southern California shippers are getting a break on container dwell expenses for the next ten days as the Port of Long Beach announced that it had added an extra three days to the time that overseas import containers can remain on the docks without charge.

Comments

Post a comment
Commenting is not available in this channel entry.