The stately-looking gentleman in the impeccable gray suit paused for effect, then said to the table of business leaders, “We need to recognize that only a handful of people in an enterprise actually add value. This is usually the CEO and his or her direct reports. The rest of the workforce is essentially fungible.”
The definition of the word “fungible” is: “being of such nature or kind as to be freely exchangeable or replaceable, in whole or in part, for another of like nature or kind”. Hmm. “Freely…replaceable”.
As the rest of the group around the table let this sink in, I saw heads nodding in agreement. All of them were senior executives who, of course, belonged in the elite group that Stately Looking Gentleman was referring to. And I’ve heard this philosophy espoused many times over the years, usually when a senior executive or board member is proposing differentially high compensation for themselves and their compatriots, justified by this kind of statement. Whenever I hear such elitism expressed, I’m reminded of the First Law of the Body.
You’ve heard it, I’m sure. It comes in many forms, usually as a joke, told by one “fungible” employee to another: Seems that while a person slept, his body parts argued over who was most important. The brain said, “I’m the most important, because I do all of the thinking and I’m the only one who can decide to act voluntarily.” The heart said, “Sure, that’s true, but without me, the body couldn’t carry out any of your commands.” The stomach begged to differ: “Without me, you would have no energy to pump your blood, nor the body to move.” The sphincter simply looked at the brain, the heart and the stomach. They all bowed to it and admitted its preeminence.
The point of the First Law of the Body is that all parts have a vital role to play in the health and well-being of the organism, and even the most lowly function can be critical to that health. This Law certainly applies to a corporation, which means literally a “body” comprised of people, but which has a life beyond that of its constituent humans, and has authority that is independent of the people who may temporarily reside within it. I was able to see this Law in operation early in my career, in a way that was both literal and figurative. A rare opportunity.
Many years ago I worked for a company that made biopesticides, i.e., organically grown bacteria and fungi that killed weeds and non-beneficial insects, respectively. My job was human resources, facilities and quality assurance. An odd collection of responsibilities, to be sure, but then that has been the story of my career. In this role, I was responsible for such things as recruitment, building out complex laboratories, maintaining the facilities and implementing regulated research and manufacturing methods that would pass audits by the Environmental Protection Agency. While on a business trip to our research station in Louisiana, I got an angry call from the CEO. Apparently the San Diego facility had run out of toilet paper, and no one knew what to do. The entire staff was ready to go home, rather than try to conduct their “business” without the proper accoutrements. The company was actually shutting down, for want of soft paper products. I made a couple of calls to our janitorial service. Problem solved, business continuity assured.
The First Law of the Body immediately occurred to me, and I felt grateful to be able to experience just how true it is. And it’s not confined to functions that involve waste product. Every part of the corporate body is essential. Without research and development, there are no products to sell. Without sales professionals there is no revenue. Without finance staff, there is no visibility to decision-making, risk-taking and performance results. Without every essential function represented, the CEO and his or her direct reports have nothing to direct. And without that CEO or the executives, the company has insufficient planning and problem-solving to ensure its long-term viability. Each member of the company takes a lot of time to find, recruit, train and develop. If people were truly “freely replaceable” we’d spend a whole lot less time in these efforts.
Everybody is important. Except the person who thinks he’s the only one who is.
Stan Sewitch is CEO of KI Investment Holdings, LLC, conducting an investment experiment in long-term principles. He can be reached at stan@sddt.com