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Growth Doesn’t Necessarily Mean Hiring Workers

Champy on Management: Jim Champy

I work in a “high-tech” building. It’s filled with software companies, E-commerce start-ups, and venture investors. As you might expect, it’s also filled with exuberance and excitement.

So I wasn’t surprised to overhear an elevator discussion this morning: “How’s it going?” asked one 20-year-old of another. “Great” was the answer. “We’re doing a lot of hiring.”

It makes sense that a growing company might measure success by the number of people it adds. But it strikes me as odd that managers in technology companies still think that growth necessarily means adding people. It’s becoming increasingly clear that many information-technology services will be delivered remotely over the Internet, without the intervention of a service person. Payroll, billing and accounting services are the early applications that you can now buy online.

Companies, particularly high-tech companies, should be figuring out how to do more with fewer people , not building large staffs. I know it seems antisocial, but bigness in terms of number of employees no longer means bigness in terms of business volume and profits.

Does this mean that fewer people will be needed in the chain of work? Will the old threat of automation finally play out? Will people finally be replaced by machines?

The signals are confusing, but I wouldn’t worry that the world is about to run out of work for human minds and hands.

Here are some of the contradictions we face: First, large companies are continuing to downsize. Pressures to reduce costs are continuing , driven both directly and indirectly by the Internet. Only a small percentage of business is now done over the Internet but it’s auction-like pricing mechanisms are broadly driving prices down. Everyone has to be more efficient and cost competitive, and that means more corporate restructuring.

At the same time, unemployment in North America is at a record low. Jobs are going unfilled. Both high- and low-tech companies are struggling to find people. Retail analysts are already warning that we should expect poorer service this Christmas shopping season since stores just cannot find salespeople.

The demand for jobs is clearly being driven by economic growth , both in larger, traditional companies and start-ups. Older companies are laying people off in one area, and hiring in other areas. But the hiring is for people with different skills.

New companies are also being created at an extraordinary rate. Over a billion dollars a week of new venture money is fueling the start-up phenomena. And these new companies aren’t just fly-by-night enterprises.

Their investors carefully select them for their growth potential. Most of them will be around for a while , competing for people in tight labor markets. One prominent venture capitalist recently told me that his firm sees over 7,000 business plans a year. That will certainly create a lot of jobs.

But in building the human capital of a company, it’s important to keep two things in mind. First, don’t follow old assumptions that growth necessarily means adding people. Of course, if you’re developing products, are in a service business, or still need human hands to exercise the craft of your business, people are a necessary and important component of what you do.

Too many companies, however, just assume they need more staff. Your challenge will be to figure out how to do more with fewer people.

And that will mean carefully redesigning how work gets done. Otherwise, you will just bum out the people that you have.

Second, focus hard on finding the right kind of people. The rate of technology and business change is not going to slow down. We will encounter the new rules of an information-based economy and will have to learn how to adapt to new technologies. The popular term “knowledge worker” does not adequately capture what companies really need of their people. Our staffs need a combination of intelligence and agility.

My advice to companies: Don’t expect that the U.S. public-school system will produce what you need fast enough. The private sector must take a more active roll in education , not just in providing public support, but in programs for a company’s own people. The human resource will be too scarce to waste and just “layoff” in the future. The current phenomena of rounds of layoff and hiring is just too wasteful both for the people affected and for companies.

Write to Champy at Tribune Media Services, 435 N. Michigan Ave., Suite 1500, Chicago, IL 60611, or E-mail him at (JimChampy@ps.net).

& #352;1999 Tribune Media Services

General Atomics Scores Navy Contract

San Diego’s General Atomics will soar into the new year with a $59.9 million U.S. Navy contract.

Under the contract, awarded in late December, G.A. will develop a demonstration electromagnetic aircraft launch system. The system will be used on the Navy’s next generation aircraft carrier, CVNX, which is expected to be in operation in 2013. The system will use state-of-the-art power electronics, energy storage and linear motor technologies to produce significant improvements over existing steam-powered catapults.

The new system is also expected to reduce peak launch forces on Navy aircraft.

The majority of the development work will be done at G.A.’s San Diego facility and will be supported at testing facilities at the Navy’s Lakehurst, N.J., facility. The electromagnetic aircraft launch system team includes San Diego-based Maxwell Technologies; Boeing Co.; J.J. McMullen Associates in Newport News, Va.; Foster Miller Inc. in Boston; the University of Texas Center for Electromechanics in Austin; BWX Technologies in Lynchburg, Va.; SatCon in Boston; and STV in Lakehurst, N.J.

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