“People are our greatest asset”. How many times have you heard that said by a leader or seen it written in an organisation’s annual report?
On one level I truly believe that leaders really get the importance of people to the success of the business.
On the other hand, I notice that many organisations these days take an accounting approach to people. So what do I mean by that? Quite simply:
“They treat people as an expense rather than an asset”.
Take a look at the financial statements of any organisation and you will see:
- The costs of salaries and benefits of staff being shown on the profit and loss account as an expense.
- The premises, machinery, equipment and vehicles being shown as an asset on the balance sheet.
Yes, in accounting terms premises, equipment, machinery and vehicles are assets. However by themselves they create nothing. Someone needs to switch on equipment and check that it is functioning as expected. Buildings need something being created or delivered from them to generate income.
More often than not it is the efforts of people that turn these assets into useful resources that generate income and profits for organisations.
When we invest in the purchase of assets we make sure we utilise them and maintain them so they continuously operate at peak performance. We also heavily invest in salaries of the people we employ. In reality, it is the single area of ongoing expense for many organisations. Yet we don’t always make the investment to get the best from people.
So what’s the answer?
- Sit down and look at the investment being made in the payroll each month.
- Look at the percentage of salaries that you are investing in developing people.
- Change your perception of people in the organisation. Start to see them as assets or value creators.
- Make a commitment to get the best from people by providing the best development opportunities you can. Not only will you have more capable people but more than likely you will reduce staff turnover, improve morale, improve the bottom line and gain competitive advantage in your industry or marketplace.
The truth is this is a basic business mistake that you can rectify with ease if you really want to get the best return from the biggest single recurrent investment you make.
Duncan Brodie of Goals and Achievements helps accountants and health professionals to become highly effective leaders and managers. He invites you to take advantage of his free audio e-course Leadership Success at www.goalsandachievements.co.uk
