Man vs. Machine

I read an interesting comparison this morning. Pretend for a minute that you are a business owner. You decide that you are going to invest in a new piece of machinery. Something really special that you are going to base the success of your business on. Let’s say it costs you $500,000 to purchase this magical widget maker. If you invest that much in a piece of equipment, you aren’t likely to let it breakdown. In fact, you are very likely going to be well motivated to invest further in preventative maintenance, training and repair necessary to keep this machine, the thing so critical to your business, in peak condition. It would not be unreasonable to expect to pay 10% or even more of the original purchase price in order to keep your investment running. We see examples of these sorts of costs, to some greater or lesser degree in any sort of tool purchase, software or otherwise, that businesses purchase today.

You don’t buy something that important to the business without making a significant investment in training and upkeep. Not if you expect that machine to pay off. Why doesn’t the same logic apply to your employees? Let’s say that you hire 10 employees at $50,000 per year. Just like our hypothetical machine profiled above, it’s a total investment of $500,000 for the first year. And just like any finely tuned instrument, there is going to be training and maintenance required for these employees to live up to the highest performance expectations. What is a reasonable number to expect? Well, I’ll warrant that people are just as complicated, if not substantially more so, than any machine. So, let’s use our 10% number again. That means that we would be investing around $50,000 on these 10 people on an annual basis to help keep them performing at the highest possible level. That translates to $5,000 per person per year.

I’ve never seen a business willing to spend even half that much on employee development. And it’s usually with a bunch of judgmental, only for the best-of-the-best, sort of qualifications that limit that expense even further. The fact of the matter is that most businesses today find it much easier to justify spending money on tools and machines than spending an equivalent amount of money on people. Now to be clear, I’m not talking about stuff like health insurance. That’s just table stakes to even get in the game. You aren’t investing in improving my performance by paying for my health insurance. That’s just helping insure that I don’t die. Thanks. It’s good, but it ain’t investing in improving my performance. 

Somehow, even when we are able to say things like, “employees are our most important resource” we are still unable to invest as much in them as we would in a machine. Why is that? Why is it that we find it so hard to spend these dollars on people?

4 Responses to Man vs. Machine

  1. My main reason to become independent, was this.
    I knew no-one would invest in me as I wanted to.
    After one year I realized I followed 2 days of training.

    I realized that I had not invested in myself as much as I wanted to.
    (I had the excuse that I had no safety net yet, still lame excuse)

    Realizing that, i decided to give myself an KPI or better TPI where T stands from training.
    I decided that every year I would invest between 10 and 20% of my revenu for learning.
    Books, training, conferences, offering free workshops where I learn etc etc.
    Except the two years where we build a house I have done so.

    Best investment ever.

  2. iesavage says:

    Thanks, Tom. This points out how slowly society is transforming from a manufacturing mindset to a software mindset. I hadn’t thought of that.

    My long held opinion is that we in the software world could borrow MORE from manufacturing. You have pointed out that it is a two-way street: We could borrow more but do so mindfully. Excellent.

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