Treat People Like Assets and They’ll Create Wealth

If You Don’t, They’ll Take You Down The Tubes!

Marilyn Lustgarten, SPHR

There seems to be two distinct camps when it comes to how people are viewed within an organization. They are considered primarily as assets or liabilities (costs). In my experience, it is the camp that believes its human resources are costs, overhead expenses much like any other expense that can be reduced or eliminated for short term gain, that is more prevalent. Most organizations would loudly protest! After all, they go to great lengths to communicate how they value their employees and make every effort to “do the right thing” by them. However, I believe the ultimate test is in how people are accounted for in the firm’s financials – salary expense, headcount, benefit expense, training expense, etc. all of which are costs typically most affected by “belt tightening” when last quarter’s (or last year’s) earnings turn out to be less than expected.

Treating people as if they truly were assets would not only impact how they get accounted for by the firm, but how, I believe, such treatment would positively affect the firm’s long-term financial performance. If, for example, talent was planned, “shopped for” and selected with the same care and methodical due diligence as a piece of expensive machinery or computer system acquired for what it will do to improve the firm’s performance, then that organization would more likely consider people, its human resources, as an asset. Further, if their intellectual capital was nurtured and maintained in the same way that mechanical equipment was maintained or a system upgraded, then that firm wouldn’t lightly consider cutting the training budget or withholding merit increases when there is a budgeted profit shortfall.  As the saying goes, right or wrong, the side that wins… is the one you feed.

The return on investment in people will pay off like investments in other assets. It’s a long-term strategy like any other asset management strategy. The last thing you should be doing for short-term gain is dumping your assets! Rather, that’s the time that they work for you. Everyone knows intellectually, that without people, no products can be developed or made, nor can products or services be delivered or customer relationships be initiated or maintained. However, the unfortunate reality is that when times get tough, people are typically viewed as expendable. However, you can’t create wealth without assets. Treating people as if they are costs demoralizes and disenfranchises them. Viewed this way, the essence of the firm’s competitive advantage erodes with every people investment cut back or lay off. This creates an interesting dynamic that can take a predictable toll on the health of the organization and on it’s bottom line.

Treat people like costs and they’ll take you down the tubes!

A growing gap in trust and communication between top executives and the rest of the organization can evolve into an US vs.THEM culture. Loyalty and commitment decline or disappear altogether. Even employees who previously would never have even thought of “taking what’s due them”, or considered their job as an entitlement, begin to engage in activities that undermine the organization’s performance. If these types of activities are occurring, it may be a sign of employees showing their contempt for an employer who they believe treats them as overhead:

• Falsely claiming to be injured on the job
• Frivolously claiming discrimination and harassment
• Spreading unsubstantiated rumors about the company or leadership
• Using paid sick days to look for another job
• Complaining and failing to respond
• Treating customers as a nuisance
• Missing deadlines
• Absenteeism, especially at peak demand times
• Cheating on expense reports

Like the “Pygmalion Effect”, treating people as expenses will create a self-fulfilling prophecy – expenses will increase!

Top performing organizations have many things in common, but the most important thing that differentiates companies that consistently outperform their peers is their view of employees as a significant, if not the source of competitive advantage. Not only are employees valued, but nurtured and courted on a continuous basis, especially when times are tough. The last thing they need when they hit a rough patch is for their assets to walk out the door and start creating wealth for the competition!  How would your organization fair by comparison?

The author is a coach, consultant and speaker, and President of The Star Makers Group, LLC, a management consulting firm that inspires stellar performance in individuals and organizations by helping them to solve problems that are barriers to achieving breakthrough results. To learn more or contact her, visit their website www.starmakersgroup.com.

2003 The Star Makers Group, LLC. All rights reserved.