Is the Human Being Really an ‘Asset’?

We often hear our organizations referring to their workforce as their greatest ‘asset’. But are they really?

Let’s first define ‘asset’ from a financial perspective:

“In financial accounting, an asset is an economic resource. Anything tangible or intangible that can be owned or controlled to produce value and that is held by a company to produce positive economic value is an asset. Simply stated, assets represent value of ownership that can be converted into cash (although cash itself is also considered an asset)”

Now let’s do the same for ‘liability’ :

“Liability in financial accounting terms is a current obligation of an entity arising from past transactions or events”.

From a strictly financial accounting perspective, the human being is a liability, NOT an asset. Our equipment is an asset because it can be converted into cash. The human being is a current obligation or expense.

In today’s environment, if an employee was considered an ‘asset’ per the defined financial terms, they would be the equivalent of what plantation asset ledgers referred to as a listing of hands, horses and stock of all kinds (observed at the National Museum of African American History and Culture in Washington DC). This is because these assets had a convertible cash value to the owners. So this adds to today’s paradox of comparing humans to equipment and calling them both assets.

When following our GAAP (Generally Accepted Accounting Principles), there is typically no specific value placed on the intellectual capital of our workforce. Individuals are not differentiated by their intellectual value to the organization. This is often evidenced when layoffs come about, especially in union environments, where organizations will indiscriminately layoff a certain % of the workforce based on seniority, not on intellectual contribution to the organization’s bottom line.

Now let’s look at the term ‘asset’ in a practical manner and see if employers really treat their employees like they treat their equipment (or their financial assets):

1.      Do they have a PM plan for their employees?

2.      Do they refurbish employees when they show signs of lowered performance?

3.      Do they upgrade the programming of their employees to the latest version?

4.      What predictive maintenance indicators are actively monitored and tracked for each employee?

5.      Are employees listed as tangible assets along with buildings, furniture and equipment?

So what’s one to do? The key is having effective champions and mentors as part of the management culture. In a discussion with Holcombe Baird, he stated “I was once told I was effective because I managed as a servant leader’. 

We have written about this extensively where the supervisor’s role is no longer to be ‘the pusher’ of the workforce to ensure tasks are done, but rather to coach and provide their employees everything they need to properly and effectively carry out their duties and responsibilities.

Perhaps managers need to simply think that their employees’ are their “most valued contributors”. That puts the role of managers as coaches, mentors and enablers to allow the employee to meet or exceed their potential.

This is just a ‘food for thought’ article to give you something to think about when we hear organizations refer to their employees as assets…are they really treating them like assets or does it just sound good for the annual 10k report and marketing campaigns?

This article was co-written by Robert J. Latino, CEO, Reliability Center, Inc. (blatino@reliability.com) and Holcombe Baird, Sr. Reliability Consultant, Reliability Center, Inc. (hbaird@reliability.com). For more articles, case study videos and other resources/tools please visit www.reliability.com/resources.