One of Aesop’s fables tells of a farmer who was poor, down on luck and quite desperate materially. Walking in the forest one day, the farmer saw what looked like a golden egg that a goose had laid. He picked up the egg, turned it around in his hand and cast it into the bushes. He did not believe that he really could be in such luck.
After a while he came back and picked up the seemingly golden egg. He did the necessary tests to prove whether or not the egg was really gold. It was. He excitedly went to town, sold the gold and used the money. Having taken the goose home with him, the next day he found that the goose had laid another golden egg. The same thing happened day after day and the farmer became very rich.
One day a thought crossed his mind; ‘Why should I have to wait until the next day to collect these eggs one at a time? Why can’t I get all the eggs out of it at once?’ Driven by greed and impatience, the farmer strangled the goose and opened her up, only to find not a single egg inside. The goose could only produce one egg per day. With the egg supply gone, eventually the few eggs that he had managed to keep ran out and he was back in poverty again.
Any organization, families included, has three assets or resources:
- Physical resources – The machinery that produces the physical outputs that translate into profit or gain
- Financial resources – The capital investment for buying that which will keep the organization going
- Human resources – The people that use/operate the physical and financial resources in order to keep the organization viable
All these three resources, interacting with each other are the goose that lays the eggs. The first two are inanimate and cannot make any decisions. Yet if they are not taken good care of by the humans who make the decisions, the goose will die. Extra good care must be given to the human resources in order for them to make sound decisions on usage of the physical and financial resources. The humans in the organization are the cog that keep the wheel (the organization) going (profitably productive).
This then brings us to the delicate balance that determines the degree of effectiveness. Effectiveness boils down to a ratio called the P/PC balance.
P = Production of the desired results (More golden eggs)
PC = Production Capability (The health of the goose)
As a mother, I desire to have a clean and tidy house. A clean and tidy house is the desired result, the P. For that to happen I need to have children who are willing to clean their rooms and do any other chores assigned to them willingly without being threatened, bribed, constantly reminded and monitored. They should have the skills to keep the house clean voluntarily. I could choose to do the work myself and I would do it faster and better. But that would not be time and cost effective for the family. It is better to build the capacity/capability to clean the house in my children (PC) so that they can produce the results that I want (P) and release me to do what only a mother can do.
An employer needs employees who are willing to give their time and use their skills (PC) to produce goods and services that customers will gladly pay for and bring in profits to the company coffers (P). If the employees can do this without being coerced, then the employer is released to do the higher role of planning for the strategic expansion of the company.
So, effectiveness is having the clean house at home and satisfied repeat customers in business (P) plus have relationships and attitudes in the home or workplace where people want to do their own chores/work willingly (PC). A healthy balance of the PC (Live and healthy goose) and the P (Continuous production of golden eggs) will ensure profitability and longevity of any organization.
In the next post we are going to look at more examples that illustrate the importance of the P/PC balance in the management of the physical, financial and human resources of an organization.
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