Human Resources from a Finance Professional
My marketing class had a simulation in which groups of 5 competed against the class. The task was to market a generic software product in competition with the rest of the groups of five. The resources were advertising, retailing (brick and mortar in combination with internet), R&D, marketing reports, and a few more – allocation of scarce resources, the bread and butter of economics
Our team invested the vast majority of our resources into direct marketing while ignoring such frivolities as marketing reports. We crushed the competition and, in the end, ruled the brick and mortar retailing while ceding our on-line position. Note that this was the period of early internet so the positioning was somewhat appropriate at the time.
It was not until we wrapped up the project that we could see our strategic mistakes. As in life, success buries a multitude of errors.
Two mistakes stood out:
- Spending money on marketing reports would have been a huge waste, not because they were useless (we did order a couple) but because there was a plethora of information available to us in our own strategies that we did not tap into (this was, of course, a class project and since we ruled the marketplace we could spend more time on other courses).
- The second (the lesson learned in the first mistake): when analyzing our data we found that we had plateaued. When we increased retail staff the result was immediate and obvious. Since we were not really watching our project, we did not know until project end (shortly afterwards) that we plateaued again.
In my finance position, after a slow decade prior to the millennium, our company had six years in which we were flush with business. Because of my position and our business model I was not able to analyze our revenue streams but I can say with confidence that our operations were overloaded. The result was that operations could -and did – cherry-pick their accounts. When the economy tanked in the late 00’s we found that after cherry-picking there was still a lot of revenue to be generated. Once again, success buries a multitude of errors.
The first problem was not recognizing and utilizing our human capital.
The second problem was not quantifying the cost of mis-allocating our human capital.