Human resource (or labour) is a key input for most firms. Labour can be viewed as a resource to be consumed in the production process, and one whose cost should be minimized while its yield is maximized. Or it can be viewed as a value-adding resource which can help a firm achieve its full growth potential.
A firm’s human resource is unique among its inputs in that it can think, reason, and learn. The learning that a firm’s human resource can acquire and contribute can be a key determinant of productivity and profitability.
Accumulated experience represents valuable learning. A firm that can acquire this learning, and leverage it, can build a competitive advantage over rivals.
In many firms, accumulated experience is not leveraged. The learning is not codified, shared, or leveraged to drive improvements in work methods or processes. Leveraging learning means encouraging workers to develop new insights about their work and contribute their ideas for improvement. These improvements drive productivity.
If organizations are to succeed, members need to contribute towards the fulfillment of organizational purpose and goals. It is the job of management to build cultures and structures that encourage employees to bring ideas for improvement forward. Similarly, all employees in a firm have two primary responsibilities: an executive responsibility to carry out their job functions and processes; and a contributive responsibility to bring forward their ideas for improvement.
In many firms, the executive responsibility of workers is emphasized, and far too little attention is paid to the contributive responsibility. Japanese firms excel at eliciting contribution from their workers and their productivity is higher as a result. And not just productivity as measured by efficiency, but productivity in terms of the greater value of output being produced per unit of input.
Productivity can be improved dramtically through innovation and improvements to the way work is done. This is akin to changing the technology base of the firm. Firms that neglect to consider how they will gain contribution for improvement from all employees are likely to find that their productivity levels will stagnate.