It started so well. There I was, explaining the thinking behind Human Assets and the Chief Executive I was talking to was not only agreeing with me, but informed me that everything I was telling him was “all motherhood and apple-pie.” Boy, I was excited! Here was someone who understood – who really understood and so would not need much convincing.
Unfortunately, I was wrong; even for the converted the proposition seems to be hard to follow and the benefits unclear. So let me take a few minutes here to explain the benefits and why it is vital for management to embrace the concept.
Before a business buys any equipment, whether a machine to improve production or a computer to improve service, it assesses its requirements. It identifies what is available in the marketplace and evaluates the best option according to the relationship between cost and benefits in each instance. The ongoing nature of the contribution that such equipment will make to the business and hence the long-term implications of the decision ensure that care is taken to make the best decision possible. Furthermore, the importance of this relationship is underlined, once the decision is made, by recording the equipment as an asset in the books.
But it does not end there: a business investing in a new multi-million pound computer, for example, does not just install the computer in the computer centre and leave it there. It continually enhances the computer’s capabilities, by:
• Developing or acquiring new applications software, or upgrading existing programs.
• Acquiring new components to increase its performance capability.
Management is able to do this because it effectively continues to validate the original cost-benefit analysis, and hence the investment decision, by measuring the ‘return’ that the asset delivers i.e. the contribution it makes.
There is however, no equivalent for measuring people performance.
It is all very well to say that talking about people as assets is motherhood, but the fact is from time immemorial they have generally been easily replaceable and thus treated as consumables rather than as assets. For this reason, they have never been accounted for as assets. Consequently the statement that people are assets has profound implications for the management of a business and the way in which people need to be accounted for.
The duration of the relationship between a company and its employee is just as long as the relationship between the company and its fixed assets, and potentially even longer. Yet nothing like the same care is given to the ‘buying decision’ and even less to the ongoing investment to maintain or enhance the relationship. Yet, if people are the assets that they are increasingly recognised as being, this has to change.
Even more important, management needs to be able to assess its own performance in overseeing this vital asset. If, as increasingly recognised, it is people that give a company its competitive advantage, management can no longer afford to operate in a vacuum with regard to the way it manages them and it is absolutely imperative to find a way to measure their contribution in the same way as for any other asset.
This is the solution that Zealise offers! It provides an empirical, structured and consistent platform for valuing people assets, and the tool for management to measure people performance and – equally important – their own effectiveness in overseeing them.