The true value of a business lies in its people – lose them, and you lose everything.
What is a company if it’s not people?
About six months ago a businessman I know was bragging about how he was replacing his employees with AI driven answering machines. What got him so excited was not only the money he was saving but he assured me the machines were so good I wouldn’t be able to tell if I was talking to a human or an AI bot.
I plead guilty to not having tried his AI “help” line but I’ve had enough experience with AI bots to be pretty sure I can tell the difference. One of the clues that I've been talking to an AI bot is that I’m usually gnawing on my fingers by the time I’ve hung up.
Now to be fair, I pretty much have that same response when I’m talking to an incompetent human (not an uncommon experience) so in that line of thought, I suppose from a profit point of view, an AI bot becomes a logical solution.
But AI isn’t the only way businesses sacrifice quality for savings. Sometimes, it’s as simple as replacing great people with cheaper, less capable ones—a realization I learned the hard way with my pool company.
The Quality of a Company Will Mirror the Quality of its People
Many years ago, I commissioned a pool company to design and build a concrete pool for my back yard. I wanted a unique pond-like look, something that blended into my backyard. So, I called Best Pools (not the real name), who had been around for more than 70 years, and by all accounts were considered the premiere pool company anywhere in the region. The owner was known as a pure perfectionist and he demanded that from the people who worked for him. And they were!
For 20 years the Best Pool company have opened and closed my pool, and tended to whatever minor repairs might be needed. I was well aware that I could find a less expensive company to service my pool, but I didn’t mind paying a premium because everything was done quickly, efficiently, and professionally.
And then about a year ago, I couldn’t help but notice the opening and closing of my pool was no longer the seamless job it had once been. The new people that opened/closed it carelessly dragged their pump across my patterned concrete, leaving deep, irreparable scratches. They dropped something on my flagstone steps and chipped off several large chunks. They began parking on my finished aggregate driveway (rather than the street) leaving oil stains and no apology.
Not long after ALL of the Best Pool customers received an email explaining how “thrilled” the Best Pool company was to announce they had a new and improved way that we could pay them. The long and short of it was that if we paid by credit card, we could now expect a 2% surcharge. Since I had always paid by credit card I was just as "excited" as they were!
Then several weeks ago, in a chance conversation I had with a local business man, I was told that the Best Pool company was purchased about a year or so ago, and suddenly it all made sense.
So that raises a question:
What did this new owner purchase?
Did he buy the name, the customer list, the assets, the knowledge and skill of the staff?
Perhaps the answer is all of the above – and yet, if you remove the experienced people at Best Pool company what do you have? Outside of the assets (buildings, equipment), nothing. The name Best Pool company has no value or future earning potential without the people that make it work.
I don’t know if the new-owner is following the advice of bean-counters or simply thinks that quality is secondary to profit, but hiring cheap labor for a bump in immediate profits has no future, and this new owner will soon realize that Best Pool (like all companies) was an attractive purchase because it was a quality company that met the expectations of its customers. That was its future earning potential. Since that is no longer the case, what was the value of the company at the time of purchase compared to its present value? Most companies are nothing more or less than the people who run them, and when those people are no longer there, neither is the company.
So, when that businessman proudly told me about replacing his employees with AI bots, I couldn't help but think about Best Pool. This businessman was so focused on the immediate cost savings that he seemed blind to what he was actually dismantling. Sure, his AI might handle simple inquiries without the overhead of human salaries and benefits, but what happens when customers need real, problem-solving, genuine expertise, or simply the assurance that comes from dealing with someone who truly understands their business?
Just like the new owners of Best Pool will discover, you can cut costs by cutting people, but you can't cut people without eventually cutting the very thing that made your company valuable in the first place.
A company is only as good as the people behind it. Lose them, and no brand name, customer list, or cutting-edge AI can fill the void they leave behind.
