People may often wonder why some organisations, such as companies, universities, and hospitals, are able to grow into large, global institutions, while others fail to grow, decline, or even go bankrupt. Ideally, an organisation should continue to grow as it becomes older. Yet organisational age does not guarantee organisational growth. Consider relatively young technology companies such as Facebook, Netflix, TikTok, and Instagram, which have successfully expanded across the world. So, who determines the progress of an organisation? Is it the owner, the leader, or the employees? Let us explore this further.
Are Employees Really Assets?
‘Employees are assets.’ This statement is frequently used in discussions by organisational leaders and owners. But is it really true?
Empowerment and employment are two important concepts that determine whether employees truly become organisational assets. An asset is something valuable, important, worthwhile, and of high quality. Therefore, describing employees as assets means that employees are important, valuable, and capable individuals who contribute meaningfully to the organisation. The question is: how does an organisation develop its employees so that they genuinely become organisational assets?
Employment is a concept that supports the process of turning employees into assets by fulfilling their extrinsic needs, such as salary, facilities, benefits, incentives, and bonuses. Empowerment, in contrast, develops employees by fulfilling intrinsic needs, such as recognition, personal development, and the authority to make decisions. Employment tends to tolerate fewer mistakes because employees' extrinsic needs have already been provided for. Empowerment, however, allows greater tolerance for mistakes because employees are given opportunities to learn, try something new, and exercise authority—even when those decisions may not always produce positive outcomes for the organisation.
These two approaches to developing employees as organisational assets are fundamentally different. The next question is: who chooses between these two concepts? Is it the leader or the owner of the organisation? Is it possible for a leader to favour empowerment while the owner prefers employment?
The Owner Determines the Direction. Not the Leader.
This is one of the factors that determines organisational growth.
Owners who lack the competency to empower people are more likely to choose employment over empowerment. Yet large organisations tend to place greater emphasis on empowering both their leaders and their employees. Owners who constantly interfere in day-to-day matters may find it difficult to embrace empowerment. By contrast, owners who manage multiple businesses are more likely to rely on empowerment because they cannot personally control every aspect of every organisation.
An owner therefore needs leadership competency. This is one of the core ownership competencies. Empowerment is a concept that enables a leader to develop other leaders. Owners need to create many leaders who can help realise their vision. Visionary leadership that grows and spreads throughout an organisation can only emerge when the owner embraces empowerment.
The Owner as a Leader, Investor, and Manager
In addition to leadership competency, an owner must also be able to perform two other important roles: investor and manager.
When acting as an investor, an owner must have competency in financial mathematics as a basis for evaluating organisational growth. The ‘abacus’ must always be running when monitoring the growth of the organisation. Acting as an investor enables the owner to focus on the market value of the organisation rather than merely on organisational profit. An investor is not a trader. A trader tends to be preoccupied with short-term gains, while an investor places greater emphasis on long-term and sustainable returns. It is this role as an investor that enables an organisation to grow into a larger organisation because the organisation is not simply viewed as a cash cow. An investor-oriented owner focuses on spending money to build people, reputation, and excellent business processes, which ultimately become the drivers of profit. When profit is accompanied by the development of people, customer satisfaction, and reputation, the organisation’s market value will soar. This is what an owner acting as an investor hopes to achieve.
Meanwhile, an owner who acts as a manager must have competencies in organisational governance, including vision, mission, organisational values, organisational culture, organisational structure, and management systems. The owner needs to understand how to use the organisation’s vision, mission, and values to direct, motivate, and control every strategy and business process that ultimately contributes to organisational competitiveness. The owner needs to understand how organisational culture should be developed as a guide for how everyone thinks, speaks, and behaves within the organisation, providing a foundation for building organisational competitiveness. The owner must understand how hierarchy, the grouping of people, chains of command, accountability, and interaction within the organisation contribute to organisational competitiveness. The owner must also understand strategic planning systems, performance management systems, information systems, remuneration systems, and various other management systems that determine organisational competitiveness. The owner needs to understand the various management tools that can be used to strengthen the organisation’s competitiveness.
So, how about you? As an owner, do you already have the competencies required to act as a leader, investor, and manager within your organisation?
