Quality, not quantity, is what takes an economy forward

We might not be able to put a dollar and cent value next to an entry titled ‘human capital’ in the financial statements, but it remains a fact that without its people, an organisation cannot produce or make profit.

High productivity is all very well – but high standards are what really matter. While China has more or less monopolised mass production worldwide, we do not typically associate “made in China” with quality products. It took Samsung (and South Korea) more than 60 years to escape the image of mass-produced and cheap products to compete in the high-end market. The same is true of Japan and other former developing nations.

“The only meaningful concept of competitiveness at the national level is national productivity, ” argues Michael Porter of Harvard Business School. He defines productivity as “the value of the output produced by a unit of labour or capital”. Productivity is not simply how many units are produced, but is also dependent on the value (or the quality) of the product or service.

Productivity is a function of several factors, and research in this area has demonstrated that at the national level it depends on the labour force’s competence and ability, organisational culture, leadership style, resources available and external environment.

Most of these factors are the domain of human resources – not simply the HR function, but the actual people that work in organisations. It is interesting that a country’s overall competitiveness is a function of its people. In other words, for any one nation to grow and prosper it must invest in its people and ensure there are systems in place to support business prosperity.

From developed nations like the US and Britain to developing countries in South East Asia, this has been a high priority over the past several decades. Britain overhauled its vocational education system to “upskill” its workforce for the advancing service economy. Singapore managed to become a global force in five decades by developing its workforce and implementing mandatory training programmes. Such activities confirm Mr Porter’s assertion that “education and training constitute perhaps the single greatest leverage point available to all levels of government in upgrading industry”.

The UAE is another country that managed to become a global powerhouse in a short time by attracting global talent and developing its workforce. More recently, the UAE announced it is seeking to position itself as a global competitor in knowledge-based economies and Islamic finance. The challenge, if the UAE is to become globally competitive, is not simply maximising productivity, but also ensuring the output is globally competitive in terms of its value to the consumer.

This involves both quality and quantity. While the quantity game can be easily played by attracting expatriate workers, quality is harder to bring on board. Think about environments that foster creativity and innovation or companies that are on the cutting edge of research and development. What do they have in common?

1. They empower their employees to create, innovate and develop.

2. Their leadership teams are inspirational and transformational.

3. They have the systems and processes that enable employees to excel.

4. They hire, nurture, and retain the best people.

How does this translate for us here in the UAE?

First, most of these areas are within the domain of the human resources function in a company. The organisational culture is “owned” by the human resource function in that it has the biggest effect on the company’s culture. Restrictive policies and procedures, ineffective recruitment and development systems and poor leadership development programs can all have a negative effect on the quantity and quality of the workforce’s productivity. Narrowly defined jobs that do not allow the employee room to innovate or bureaucratic structures that require approvals and encourage maintaining the status quo are also examples of practices that not only stifle creativity and innovation but also propagate mediocre performance.

Many organisations remain stuck on viewing employees as a “cost” to the company. We might not be able to put a dollar and cent value next to an entry titled “human capital” in the financial statements, but without its people, an organisation cannot produce or make profit. Developing and training our employees is not a benefit that we grant them, but a necessity for organisational success. Viewed in this manner, development, engagement and positive cultures are investments the company makes to maximise its profits. Viewed at the national level, if every organisation adopts these practices, we move the nation several steps forward towards global competitiveness.

Layla Halabi is a partner at Learnactive, a human resource and organisational development consultancy based in Dubai

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