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April 27 2004 Home

Trade Event Report
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HRO World's NYHRWeek 2004: I Dissed Michael Milken! But Learned... , + + + +
By Al Berrios (contact Al Berrios)

Last year, I read "The Predator's Ball" by Connie Bruck, a fascinating look at the birth of the junk bond market featuring none other than Michael Milken. Personally, I found it inspiring, not because Milken crossed the line, but because he was innovative, hard-working, and entrepreneurial.

At HRO World's recent conference on human resources at the New York Hilton, I had the honor of hearing Milken speak about "The Promise of the 21st Century", an hour dissertation on education, economics, and society. His perspective on world events from the perch of his think tank, the Milken Institute, was so breathtaking, one is left reflecting for hours.

I regret not taking notes, but did request a copy of his presentation. Out of everything he said that morning, most notable to me was the way in which he pointed out the way society operates depending on the state of their education and healthcare. Everything about outsourcing to hr consulting could be pinned to these forces, too. Although his speech put a spotlight on all things human resources, his focus on this societal truth was so profound, it gave me goosebumps: in a society where higher education is increasingly a minimum requirement to get a job, in an economy transitioning from a manufacturing to a service economy, and in a world where healthcare breakthroughs are extending human lifespans, economic value is ultimately going to be determined by the value of human capital, and intangible and subjective thing, rather than the value of hard, tangible assets. Why is this profound?

Because figuring out the best way to operate a system will no longer be about predicting mechanical energy patterns, but rather predicting emotional responses. That's right folks, human behavior has just leapt up to the forefront of strategic business challenges with the endorsement of the Milken Institute, and al berrios & co. is here to guide you through it.

Remember in the Report, "Education is Bad for the Economy!", we arrived at the conclusion that "for every additional unit of knowledge gained, choice - and the ability to exploit choices - increase. And as choices increase, grunts prefer not to do grunt work and phase out of the pool of grunt workers." (With grunt work being blue-collar work.) As a result, former grunts expect future employers to provide them with workable conditions, health benefits, and great pay as a minimum requirement to having them work for you. And with so many choices, former grunts also expect the companies they buy from to provide them the things they value most: quality, innovation, utility, satisfaction, convenience, and recommendations in the form of relationships. ("An Analysis of Consumer Perception"). But once these things are delivered, how does an employer or company compete? By understanding how behavior impacts the viability, profitability and costs of their business + organizational strategies & tactics. These are exciting times indeed.

Anyway, after he finished, I went over to get his autograph on Ms. Bruck's biography about him. After about 45 minutes standing in line behind the press, he rejects my request as if I were a leper. I told Michael how inspirational I found it and his reply was, "It wasn't inspirational to me". I was heart-broken. Not only had this tremendously intellectual billionaire turned me down, I may have actually insulted him by accident. I dashed off to the lobby with my tail tucked between my legs, mixing disappointment with frustration, anger, then apathy.

The following day, I wanted to just check out the exhibits, but arrived early enough to hear P&G's massive 8,000-person outsourcing project with partner IBM. Did you know that even P&G is divided structurally into a brands, sales, and services division? The services division does all the back-office for the other two, but since it's not a core, was outsourced. What I find intriguing is that even this consumer products giant needs services - services provided by people, not machines.

The term BPO, where the "O" often stands for two totally different things - outsourcing or offshoring - is actually a form of strategic labor arbitrage, because both are ways of removing the costs and risks associated with a segment of your workforce off your balance sheet. Labor arbitrage makes it sounds like people are commodities, and in this high-skill level work environment, low-skill level employees are just that. However, even these employees have feelings, and often, these feelings hinder productivity. How long before all of the jobs being shipped to other countries unionize to demand more rights?

As we move into the next phase of societal evolution, and the functions of laborer and consumer get redefined, organizations must finally recognize that emotions influence our productivity and purchase behavior. Those who fail to adapt will not survive this next phase. Hence why no mammoth businesses or monopolies have ever been able to remain so, despite their size and control of the market.

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