So, Your People are ASSETS, eh?
There is one group of phrases in the business language that really burns me to my core.
“Our employees are our greatest assets! Our strength lies in our employees! Because those are our greatest and best asset! No asset we have is more valuable than our employees.”
Those phrases are the largest pile of poppycock ever invented. Let me tell you why.
An asset is a useful or valuable thing or quality. It is property owned by a person or company, a thing regarded as having value and available to meet debts, commitments, or legacies. In financial accounting terms, an asset is any resource owned by the business. Specifically, anything tangible or intangible that can be owned or controlled to produce value and that is held to deliver positive economic value.
Assets represent the value of ownership that can be converted into cash. Furthermore, assets are depreciable. They are written off over a period of time. In other words, they are depreciated or amortised until they no longer have any value.
In all my experience, employees, otherwise known as people, aka human beings, are not ‘owned’ by corporations. They are not available to meet debts, commitments or legacies. While many will argue that they are controlled (i.e. managed) to produce results, I submit, all employees have the free will to walk away, leave or quit at any time. I am pretty sure the outright selling of persons for the conversion into cash was outlawed centuries ago. And in most countries, the law does not take kindly to people-trafficking of any kind.
Now I gotta tell you, I have never met a human being who actually declined in value as he/she aged on the job. In 100% of the humans I have ever interacted with, the mature humans had far more knowledge, experience and street smarts than the younger humans.
I will grant you; older humans often have a discouraging and cynical ‘been there, seen it all before’ attitude, which, without a doubt, can be the most off-putting and annoying part of their personality. However, if one makes an effort to see into the vast pool of knowledge, experience and street smarts that await past that tough exterior, one can immediately see the older employees are vastly more valuable in so many more ways than the newer models.
Your employees do not form your asset base. Your employees form your equity base. Your. Equity. Base.
The basic definition of equity is the difference between the value of your assets and the value of the liabilities you owe. Say your business has assets of $1,200,000, and you have a total debt load of $200,000. All things being equal, your company has an equity value of $1,000,000. That equity arose from the brainpower, the sweat power and the personpower of your employees.
Sure, you might have had most of the ideas, and you likely did steer the vast majority of those ideas into existence. And yes, we know that your pen, word, and personal assets probably guaranteed the loans in the early years. BUT, it was your employees’ brain, sweat and person power that delivered that equity for you. YOUR EQUITY. Your employees are your equity.
Assets can be replaced. Assets are impersonal. Equity needs to be protected. Equity is personal. I will even go so far and say YOUR equity is priceless.
People are human beings. Human beings are social. People social creatures in need of protection AND in love with all things personal. Between you and I, at the end of the day, people are priceless. And deserve to be treated as such.
Making the mental switch from asset to equity is a choice. For some owners and leaders, it is easy. For others, not so much. For great leaders, the switch is natural. Because the only way to do business is People First.