Private as well as public organizations have special internal control structures to take care of their precious possessions. This function is usually carried out by well-defined administrative structure which involve significance expenditure on controlling
and monitoring of transactions and activities related to assets.
The safeguarding activities normally include procedures for recording of storage and movement of assets. This is done through a mechanism of documentation and authorization procedures. Stocks are periodically reviewed through monitoring and supervision to prevent any kind of pilferage or wastage.
In the public sector, control of asset management is relatively more complex. Apart from internal controls, security of national assets is checked through a matrix of external agencies who act as watchdogs for taking care of the public property.
The National Accountability Bureau (NAB), the Federal Investigating Agency (FIA) and the Pakistan Audit Department (PAD) are some of the main organizations engaged in protection of public assets.
However, these agencies are simply designed to act as a post-check on the internal control systems of the organizations. Although the institution of law-enforcing agencies like police has the potential to take preventive measures, the system, as a whole has unfortunately failed in protecting the national assets effectively.
The prime factor behind this failure is that major instances of mishandling and misappropriation of assets are usually caused by factors within the organizations rather than external factors.
This trend is evident in the entire history of mankind where there have been several instances when the entire kingdoms were devastated and conquered by outside forces due to connivance and conspiracies of close associates of the rulers.
The movie, "Fall of the Roman Empire", sums up this disposition with the dialogue - "a country cannot be conquered from without unless it is conquered from within". Internal control structures of most of the organizations have thus failed to ensure adequate security of their valuable assets.
The ineffectiveness of the internal control systems is deeply rooted in stark negligence of the most vital element of assets that is the human capital. People are treated simply as dormant inputs and are expected to contribute in the production processes just like physical resources. Paradoxically, today's organizations claim that people are their most important asset. In reality, this old adage is merely being used to as a cliche to emphasize their competitive edge over other organizations.
Human capital basically comprises genetic features, education, experience and attitudes. By ignoring these vital elements of human beings, we not only allow wastage and misuse of this resource but actually cause draining out of the intellectual capital from our organizations.
Over-whelmed by material aspects of the balance sheets, neglect of human capital has thus become conventionally institutionalized in private as well public organizations. This is evident from the general strategy in which the mechanics of almost all reports and evaluations used by the management indicate costing rather than value addition in this category of resources.
Physical and financial resources would be of no value without human beings. People are an integral part of assets whose value can be enhanced through investment exactly in the manner we add to other valuable assets.
Traditionally, employees have been viewed as a normal budgetary item, and are therefore made subject to the whims of cost cuts - through economy measures. Another aspect of this problem is that while every effort is made to align an organization's capital and budgeting policies towards achievement of its vision, human capital policies are simply designed to achieve physical outcomes in terms of money and capital.
There is no harm in adopting such a strategy as long as there is a continuous process of growth, motivation and improved productivity. However, the inherent element of human contribution in production processes is being neglected since organizations reflect payroll as the only "quantifiable" indicator of human capital in their balance sheets. This is typically true in case of the public sector which happens to be a major source of employment.
An interesting feature of human resource in any production process is that by virtue of their nature, people are "unpredictable". In case of physical resources, outcomes can be largely predefined and therefore their employment can be planned and budgeted in quantitative terms.
This approach, though necessary, is not a sufficient condition for handling human beings. Getting most out of the employees requires an additional dimension of qualitative appraisal and motivation, to allow value addition in production processes.
While physical inputs mechanically respond to any kind of engineered stimuli, human resources do not give the desired level and quality of output due to their inherent limitations aggravated by lack of motivation and job dissatisfaction.
A mild deviation in allocation of responsibility and authority or uneven distribution of income and perquisites among employees of the same level can trigger permanent inefficiency and decreased productivity.
In the public sector, since the focus of organizations is essentially on physical asset management and implementation of stereotype operational strategies, majority of the employees are engaged in unproductive activities.
This is a more dangerous form of misuse of resources. Shorn of motivation and employee care, employees are thus engaged in activities inconsistent with organizational policies and regulations.
Today's organizations operate in an increasingly complex work environment. They are swiftly getting epitomized with knowledge-based systems that derive human talent on virtual basis.
This has made this intangible resource even more valuable as compared to physical assets, because of its inherent complexity. It can be argued that human capital is the most important asset held by an organization.
However, despite its high value, it is an extremely elusive element insofar as performance management is concerned. This poses a new challenge to modern organizations engaged in transition from the traditionally mechanized structures to knowledge networking.
In bureaucratic structures, the main problem is the cultured indifference and insensitivity on the part of the higher executives who are engaged mainly in policy making and thinking at the top.
Attitudes of the higher level executives are increasingly over-whelmed by a prescribed set of rule-oriented solutions to every situation. Such an approach closely parallels the concept of conventional wisdom defined by John Kenneth Galbraith, in his book, "The Affluent Society", as ideas which are esteemed at any time for their acceptability. The concept is based on the assumption that we associate truth with convenience, self-interest and personal well-being.
Another serious problem in the public sector is ineffectiveness of professional training in organizational activities. Firstly, the training programmes are not designed in terms of job requirements.
Secondly, there is complete lack of motivation in the sense that there are practically no incentives for a public sector employee to learn any more! Interestingly, even highly advanced countries like Australia have faced critical problems in deriving the benefits of training of their employees.
In the devolution reforms of 1980s, the Australian Public Service experimented with a series of management education programmes. However, the scheme failed to cater for employees' important perspectives like competency profiles, roles and responsibilities.
The main reason behind this failure was that the training programmes were inconsistent with human capabilities and organizational goals. Employee training is thus a major area that needs to be taken seriously.
Training imperatives will automatically gain significance when they are linked with performance and outcomes.The only way to get the best out of human resources is to value them as assets in the real sense.
This vital factor should be categorically recognized in the development indicators of any organization. There must be a strong realization within the organization that people can participate in achievement of its objectives by virtue of their information, knowledge and skills. They need to be encouraged to display creativity, responsibility and act as agents as well as subjects of change management.
Recently, there have been some developments in the name of human resource accounting which allows inclusion of intrinsic value of human capital in balance sheets. However, the new accounting system has two main limitations.
First, organizations have not yet been able to develop adequate performance indicators and human value indices for accurate and reliable evaluation of this category of assets. Secondly, organizational objectives have yet to recognize employees and human beings, in their vision and mission statements.
If the human resource management mission statement of an organization envisages happy and satisfied employees who enjoy their work, one can well imagine the outcomes!
The best way to deal with this major challenge is to establish well-structured human resource development and career planning setups within organizations. The second step should be to institute a progressive performance measurement system aimed at monitoring and increasing productivity of employees.
In addition to quantitative evaluations, this would also require qualitative measurement system based on tested theories of industrial psychology. We need to go far beyond the concept - what gets measured gets done.
That is, information about positive outcomes should be re-cycled to engage employees in a continuous process of motivation and effective involvement in production.
The Great Wall of China was built after tremendous efforts and it was thought to be absolutely impregnable. Yet the enemy breached it - not by breaking through it, but by bribing the gate-keepers! We therefore cannot provide adequate safety of assets if their custodians are deliberately under-nourished and hence rendered vulnerable to engage in connivance from the outside forces.
Apart from psychological motivation and formal awards in the shape of appreciation letters, employees need to be paid to survive. A minimum wage criterion has now become extremely necessary to be prescribed on the basis of real needs of a typical family.
Emoluments need to be linked with a subsistence threshold of a generic family budget - a concept which is yet to be developed and included as a prime standard for determining minimum wage levels. This will act as a vital force for de-institutionalizing corruption in the society.
Above all, we need to change our attitudes, we have to do away with the traditional culture of enforcing thinking at the top and doing at the bottom of hierarchical organizational structures.
Higher level executives need to get personally involved with the operational levels in order to make organizations a better place to work. Some developed countries like UK, Australia and Germany have recently accelerated their talent hunt for highly skilled professionals. It's high time we review our human resource policies lest a huge wave of brain drain hits our economy.
An effective remedy to this critical issue will require a high degree of revisions in policy-making including pay structure reforms, introduction of human resource accounting and a pragmatic commitment to change management in private as well as public sector organizations.
