Group of ProfessionalsAn often-heard phrase in business is that a company’s empl
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Group of ProfessionalsAn often-heard phrase in business is that a company’s employees are its most important asset. However, where in the financial statements do we account for this value? Employees are accounted for in terms of the cost of salaries and benefits. Even the financial ratios mentioned in the background materials measure mostly costs.
Does labeling employees as human resources make them more of an investment in the future rather than a current cost? Are employees an asset or expense? How do you define the value of a company’s employees? What about the ethics of treating employees, who are, after all, responsible moral human beings, as costs? Does placing a value on human capital promote or demean human dignity?
RESPOND- We have all probably experienced a situation where we questioned whether our value as employees even existed. Is the work I’m submitting really being accepted as meaningful? We have all probably heard a leader say something like, “You are the most valuable asset to the team,” or something similar. I can speak from 15 years of military service in a variety of jobs when I say that I have heard this and, as a leader, that I have said it myself, but are employees truly an asset, or is the rhetoric that is being spread to the public just smoke?
Employees are unquestionably the foundation of any business. Without the staff, the business would fail. It would disintegrate not just because the worker bee is not completing the work, but also because they leave behind the information, skills, and experience they have acquired. A team member with years of knowledge and experience in the organization is invaluable to lose, yet it is simple to replace a part and continue.
A company makes an investment in both the employee and the firm when it recruits a new employee. A business will spend about $2000 training each new employee they bring on (Taylor, 2018). However, it excludes the additional expenses related to training. As with any training, the business will require personnel to train the learners, training tools and materials, and dedicated training time away from the activity at hand (Taylor, 2018). Thus, it is crucial for a business to pay attention to its workforce and make investments in their satisfaction. Promoting and retaining employees from within the company is one of the most cost-effective methods to stop this, but how do businesses achieve that? Companies can achieve this by treating their teams like assets rather than as costs. An organization can influence the work ethic of its team by taking the time to get to know each member personally.
In the end, contented workers are more imaginative and productive (Johnson, 2022). We achieve this by being open and honest with our staff, allowing them to advance and grow within the business, and recognizing and rewarding their efforts when they succeed (Johnson, 2022). These are just a few instances of how a firm can save money by keeping its current employees and how it can consider its workforce as an advantage rather than a cost.
Reference
Johnson, S. (2022). 12 Secrets to Keeping Employees Happy Without a Raise. Retrieved: https://www.businessnewsdaily.com/6084-employee-happiness-without-raise.html
Taylor, T. C. (2018). The Costs of Training New Employees, Including Hidden Expenses. Retrieved: https://www.adp.com/spark/articles/2018/10/the-costs-of-training-new-employees-including-hidden-expenses.aspx
RESPOND- Employees in a business are an investment in the future. Adam Smith outlines this idea in his book Wealth of Nations when he says, “The improved dexterity of a workman may be considered in the same light as a machine or instrument of trade which facilitates and abridges labour, and which, though it costs a certain expense, repays that expense with a profit” (Smith, 1954). Smith likens workers to operating equipment in that they are investments that will pay off over time. Expanding upon Smith’s ideas about workers being considered in the same light as equipment, workers can also be considered assets to a company.
The assembled workforce of a company is its human capital; measuring this capital requires integration of values from all aspects of a company (e.g., accounting, HR, management, etc.) (Merriman, 2018). Harkening back to Smith’s quote, workers should be valued by a number of factors much in the same way as operating equipment. Does the employee or equipment do their or its job well? Are they/is it meeting your explicit expectations regarding quality and efficiency of work? Will further training/upgrades and maintenance improve their or its performance? Do they/does it work well with other people or machines in the workplace? These comparable and integrated performance measures further liken employees to necessary operating equipment as investments and assets.
It may seem silly to be comparing human workers to operating equipment, but in many of the ways previously discussed, these two assets are the same when it comes to a company’s bottom line. However, this does not demean the worker in any way. In the same way operating equipment must be maintained and upgraded to sustain and increase production, workers must be taken care of by employers in terms of company climate, salary and benefits, and further training. If employers value the maximum output from their equipment operations, they should place the same value on the productivity and well-being of their employees.
References:
Merriman, K. K. (2018). Workers as an Asset vs. Cost. In Valuation of human capital: Quantifying the importance of an assembled workforce (pp. 7–7). essay, Palgrave Macmillan.
Smith, A. (1954). Of Money considered as a particular Branch of the general Stock of the Society or of the Expense of maintaining the National Capitol. In The Wealth of Nations (Vol. 1, pp. 247–247). essay, Dent; Dutton.
