Sudden and unauthorized transfers of personnel for whatever reason disrupt hats and lines. Every such transfer is a failure to predict concerning personnel.

By a few transfers (“musical chairs”), an area can be totally unmocked.

(Originally issued as an HCO PL adopted by the Board of Directors and later reissued by the Board of Directors, this Source data is hereby correctly reissued by the Founder as an HCO PL.)

Personnel people tend to undervalue the time and care necessary to train, hat and apprentice people.

The allocation paid out by Finance to an org or activity must BUY SOMETHING.

Even a small unit is a “working installation” if it produces. An order to “turn over the hat this morning and take another post” is quite unreal.

It buys more funds back from the activity than it paid out and it buys the production of that activity.

Prediction is the button that is usually out in personnel handling.

Finance is best understood as a COMMODITY in terms of beans.

How many will we need inweeks or months? is the key question. It is the one Personnel should continually work on. Stressing only “Who can we assign to ?” shows a lack of prediction.

So many beans issued to an activity and so many more beans back.

Man tends to run in today and seldom in tomorrow much less next week or year. The fault will someday destroy him as a species. He is even unable to predict the fate of his habitat, the planet.

Beans do not magically materialize into more beans. What brings back more beans for those issued is the PRODUCTION and INDUSTRY of org staff and how wisely the beans are allocated.

Thus Personnel should be very wary of this fault.

Even the interest one earns on a bank account is earned in fact by someone’s production and ability to get more beans out of an activity than are put in.

Recruiting for tomorrow instead of yesterday, people in full-time training, future executives being sorted out by today’s performance, all add up to good prediction by Personnel people.

Where Finance uses its beans to buy production and industry and projected income at a cost which requires the activity to be viable, it gets back more beans and a raised allocation-production ratio.

One must catch up the backlog of yesterday’s needs by gradual moving up into the future.

The first rule of Finance and any activity is INCOME GREATER THAN OUTGO.

Every key post should have a deputy in training or in apprenticeship for the post. By key post is meant one that has urgent responsibility and great expertise.

Where Finance can skillfully apply this to the divisions and personnel of an org as well as the org as a whole, the additional beans materialize because what is bought is production and the products which add up to the product of raised income and viability.

Personnel will see where it stands by just listing their current answers to these questions:

1. What are the key posts of the org or activity that require great expertise and training? From top to bottom list them out.

Activities that allocate by need and fail to force and pay for production are the basis of failed economies and welfare states.

2. How many of the above list have people in training or apprenticeship for them?

“We need ...” is taken by Finance with a yawn unless followed at once by a projected resulting valuable product or income realistically planned and immediately in view.Finance allocates against proven production and projected income.

3. What will be the personnel scene on these posts in one year?

The FBO looks at where the beans are going and what income and production they are buying.

4. What plans did you have yesterday to do this?

When he finds that the beans issued to an area or division are not buying production or income, he designates a cap-in-hand status to that area and the beans issued become those essential to product only until the product emerges in the expected volume and quality.

5. What plans can be made now to do this?

One org with a soaring payroll particularly in the Tech area while delivering less than five auditing hours per auditor per week had all on full pay and bonuses. The org had finance troubles and found sums needed to promote absorbed instead by high payroll.

Having actually done the above questions, one will see what prediction consists of regarding personnel and a sample of what it means to predict.

How? The org was on fixed pay (high) and gave only small production bonuses, obligating a high payroll expense without regard for production.

This should be done at full org level and then at divisional level and then at department level.

Other errors aside, the Finance error is an absent demand that the beans issued to that area buy more beans or valid full capacity production.

Then one will see that sudden transfers done without training or apprenticeship can be avoided in the future at key levels IF ONE PROGRAMS IT NOW. And then ACTS to make the program work out.

A reversal of this, setting low basic pay and high production bonuses, would have bought production for the beans issued and where there was no production would have issued no beans or a bare minimum.

Where prediction is out, expansion becomes impossible to do without collapse.

For one has to predict expansion as well.

The apparency that income sources devolve upon certain single portions of an org leads Finance into difficulty unless the products and subproducts of the org and its divisions are fully grasped.

An action on expansion would be:

The tracing and reinforcing of income sources, while a necessary and vital action, falls far short of the total action of Finance in its investment of beans.

1. To increase the org’s stats five times (GDSes and GI) how many more trained, hatted people would be needed:

A company receiving income only after the fact of delivery would appear to an inept or unfamiliar Finance person to have DELIVERY as its major income source. If Finance then seeks to raise income by forcing all beans into stepped-up delivery while neglecting the prior promotion and sales, there is soon no demand and nothing to deliver and NO BEANS.

• a. In the C/O or ED Office?

Income sources traced superficially to SALES expertise alone, neglecting promotion and delivery again gives NO BEANS.

A Finance person seeing sales expertise as the company’s immediate and major income source quite rightly issues more beans to sales. But if he leaves promotion and delivery underfinanced, sales suddenly finds itself selling an unknown product due to absent prior promotion, and sales made go undelivered or poorly delivered or even refunded.

Finance tracing income sources to promotion alone and neglecting to follow up with sums to sales and delivery gives the same result.

Thus, in addition to org income sources, Finance and org managers must know the valuable final products and subproducts of the org and its divisions and posts in order to wisely allocate funds.

Income greater than outgo applies equally to each division and person in an org.

If Finance is fully familiar with the products of divisions and key posts of an org and their costing and value to the completed org product and expected volume or capacity, it can skillfully apply income greater than outgo individually to each.

An org has valuable final products for which it collects income.

Each division and area of the org has a product or products which contribute to the whole action which gets the org product promoted and delivered and the income collected.

How much it costs to produce how much product is the COSTING of a division or org or post.

It is not always possible to determine how much income a single post or division contributes to the whole activity.

But one can know to what degree a subproduct is vital to the delivery of the org’s valuable final product and one can know how much it costs to produce it. And one can expect each area and post to be productive and viable as a single activity.

Costing to be real must also take into account the expected CAPACITY or IDEAL SCENE of the activity.

A plant producing at half capacity yet fully manned and running at full expense gives a product which costs twice what it should if the activity is to be fully viable and profitable.

A costing of the Tech Division described above would show that with production at 1 /5 capacity, its product cost five times what it should cost to be viable as an activity and profitable to the org.

Thus, funds allocated to an activity by costing alone will not buy or ensure production or return more beans.

If one were allocating beans by income and products, he would have to consider the COSTING of each product, the importance of each product (how vital it is to the valuable final products of the org) and the expected capacity or volume of each area.

While the last (1 to q) are not properly “Personnel” the personnel action would collide with them so hard that personnel action would be stopped. “Do not hire anyone else!” “Do not” “Do not”

One could juggle these about and assign an allocation value to each product and subproduct and key stat.

So somebody says, “We are going to boost the GI from $100 to $50,000.”

Well, to do that one would have to promote and deliver as well as make money.

Under such a system the FBO would get production and more beans back for the beans put in.

So, when such a prediction is made, what does a good Personnel Officer do?

He does the computations outlined in this policy letter and any other that seem indicated and says, “There you are, chums. This is my part of the deal and (presenting a plan) this is how I’ll go about it, to hire, recruit, get trained and apprenticed the needful personnel. Now what are YOU doing about (1) to (q) in this P/L so you don’t stop my progress doing my job of getting you eighty additional, functional, useful, nongoofing, producing staff?”

What accomplishes this is NOT Finance acting as org management, but Finance applying income greater than outgo to each division and area of the org and handling money as a commodity of which one issues so much and gets so much more back.

This wakes up the prediction elsewhere so Personnel’s prediction doesn’t fall down plop.

Finance becomes org management only where it ceases to handle finance as a commodity like beans and where org managers themselves fail to grasp and understand financial realities.

Once the action is begun, part of the prediction is that it will require continuous guiding, handling and pounding to make it come true.

For instance, it can be predicted that as Personnel loads them in, there will be failures to program, hat, train, apprentice and utilize. One Personnel loaded an org full and a month later fifty-seven nonutilized, nonassigned people were combed out of the debris. “But they are so new.. . .” “But you can’t assign. . . .” etc., etc. And Personnel got blamed for recruiting “unsuitable people.” Because the hatting, training, apprenticing actions were neglected! You can only recruit untrained people, really.

Financial planning is how one uses the funds one has to keep things running well and make more income.

So Personnel regards unutilized people as a backlog on his lines. Recruited not utilized means he still has them as they have not “fed into the org.”

There is some degree of loss in a failure to prevent unreal and unprofitable expenditure.

“Prove you have used what I got. Show me the programing of their training. How many have hats? How many are apprenticed?” These are legitimate Personnel questions. And they are demands.

Orgs and FP bodies are sometimes improvident in their planning and Finance people are alert for this and have to be because they quite rightly expect beans back plus more for beans expended.

Until utilized, personnel are regarded as still on Personnel’s plate no matter where they’ve gotten to in the org.

But the greater loss to Finance is income lost or never made.

Otherwise, Personnel is pounded, pounded for people, people, people when the halls are impassable with nonutilized personnel.

The difference between what an org should be making and what it does gives Finance greater loss than any FP saving could ever recover.

Yet I’ve never heard a Personnel man say, “What’d you do with the guys I got you last week?” It would produce some blushes.

Foolish or unreal expense is prevented because it’s a poor investment. But an org of $50,000 income potential making only $20,000 is a weekly loss of $30,000 to Finance.

Personnel aren’t personnel really until they are utilized.

An org stacking up thousands in collected but undelivered services gives Finance a potential and staggering loss in sums refunded.

Hectic transfers from working posts, “musical chairs,” all come from lack of personnel programs based on predictions.

An org seeking to save ten shillings while neglecting to develop and boom a continent doesn’t make sense.

When programs are made and are in action, a failure to predict probable failures to hat, train, apprentice, post, is a legitimate prediction and should be watched carefully and corrected by Personnel.

One knows the income sources of the org cold and one knows what subproducts promote and sell and deliver and collect income.

One puts finance as a commodity first and most into these and never saves on them except to raise the viability of a vital division or area not producing well and then only to raise production.

One seeks new income sources and means while reinforcing those already successful and reviving any no longer current.

One gets sums already owed to the org collected with industry and in high volume.

One handles emergencies by making more money and has lined up three or four valid income sources each and any one of which would provide the needed funds.

One uses beans to buy raised income and production and refuses to finance nonproduction or fruitless expense.

One knows cold the costing of vital and other org products and demands full capacity production and viability and income greater than outgo of each division and area and post of the org individually.

One predicts and plans for expansion occurring and the future adequacy of materiel and quality of delivery before the sudden absence of adequate staff or delivery facilities becomes a screaming urgency.

And one knows that more profit can be lost than ever could be saved on expense.Money is a commodity.

It is subject to certain realities. Its realities apply to the whole org and equally to the divisions and persons in the org. Its realities have to be fully grasped by Finance and FP members and org managers.

Handled by Finance people as a commodity of which one always gets back from an area more than went in it, brings raised income, expansion and reserves.

[Note: The words “Exec Council” have replaced the words “Ad Council” on page 511, paragraph 11. This and the signature correction are the only changes in the text of this HCO PL.]