The New Economy is being built on a new kind of company, one that depends on intangible assets like information and knowledge the way Old Economy companies depended on tangible assets like real estate and factories. That, at least, is the theory. What the theory doesn't tell you, is if you're a leader of one of those intellectual-capital companies, how do you manage your company's assets if those assets are primarily what your employees know?
If you want to manage a company whose major asset is a cadre of Java programmers or fiber-optics engineers or biotech researchers, do you have to throw away everything you know about managing an Old Economy company?
One leader of a successful intellectual-capital company advises not to panic. Even in the New Economy, the manufacturing model still works, says Jay Gast, because managers must look at the business as a process. Well-run companies have always tried to motivate and retain their best employees, and not necessarily with stock options and signing bonuses. Gast manages on the theory that what's good for his employees is good for his company. Flexible work hours and telecommuting, for instance, can be even more important today than money.
Gast is president of Thomson & Thomson, based in Quincy, Massachusetts, a company that, since 1922, has provided trademark research services, advising its clients on the protectability of their product names and logos. Over time, the business has expanded to provide copyright, title and script clearance solutions designed to protect a wide variety of intellectual property.
The Manufacturing Model Still Works
For Gast, the manufacturing-process view is important, because, he says, "the fact that people are knowledge workers doesn't eliminate the need to look at the business from a process orientation. Even if this is a business where every call is for a unique product, the basic building blocks of putting that product together are the same. We have millions and millions of bits of data that come from many places. That's a purchasing metaphor: We have to get the raw materials into the plant, warehouse them, and deliver them to the plant floor. And in the plant we have a standard process in place to put that data into a product and ship it to the customer."
He's careful not to push the analogy too far, though. In an intellectual-capital company, the people who build the products exercise more judgment than the workers on an assembly line, and the success of a business like this depends on the judgment of its employees. He says if the company is going to succeed, you have to give those people three things:
An understanding of how to do things in a quality way.
Latitude for their judgment with established reasonable boundaries.
Training and support, both in terms of technology/tools and lifestyle needs.
The company also needs to provide a great deal of support. He cites a couple of important feedback loops:
Employee reviews are an important part of the process, not just a once-a-year formality. "We do regular feedback sessions during the year. This also gives us the opportunity to adjust goals and make changes, and we build the results of those reviews into our training program." The support has to match the expectations, he says. If the goals change, then the support process has to change, too.
Customer reviews and other external measurements are also critical. "We conduct regular customer satisfaction surveys. And these go down to a deep level of detail. We ask them, if you use this particular product line, then evaluate it on these criteria. We use this data to identify the attributes of our business that are important to our customers and how we're performing on them, so we can see where we might invest to improve."
The bottom line, says Gast, is to make sure people understand the link between their work and the business's objectives.
Being the Employer of Choice
This kind of intellectual-capital business depends on the quality of its employees, and Gast is keenly aware of what it takes to make an employee into an asset. "In our business, the training cycle to get an analyst up to speed is probably a year. That's a significant investment; it's not just a recruiter's fee. We're looking at 12 to 15 months of investment before an analyst begins to provide a return on that investment."
The enemy of that kind of capital creation is employee turnover. The current environment is a seller's market, he says. "It's especially acute in the high tech sector and in our market here in the Boston area." Gast recognizes that having well-trained, well-supported employees doesn't mean much if they don't stick around -- a major problem for many companies, not just those in the New Economy. The answer for Thomson & Thomson, he says, has been to develop a strategy to become an employer of choice.
Money is a factor but not the most important one for most employees. "We want to be seen as a place where people want to come work," says Gast. "The total package has to be attractive. With the lifestyles people are choosing, they aren't inclined to work eight hours a day, seven days a week. Many people want to work at home, and home may be in Seattle or San Diego."
The employer-of-choice approach involves being very flexible in allowing employees to set their working hours and locales when feasible. Telecommuting is encouraged. Training and education programs are liberal. The goal, says Gast, is to have people say, "I'm working in cool technology, I'm learning and the compensation is competitive."
Clearly, he says, there are some jobs that don't lend themselves to flextime and telecommuting. In IT, for example, developers can work from home more easily than people in operations can. And when employees do work from home, managers still need a system for checking their work.
But doesn't this all sound perilously like a belief in employee loyalty that's way out of style in these job-hopping times?
"If you mean staying until retirement and getting a gold watch, I'm not saying it's still like that," says Gast. "But if an employee can feel that they're growing and developing and properly compensated, they'll stay."
This article originally appeared on Monster.com.
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