Over the years I have seen and heard many descriptions or labels for employees some better than others, some have been straight out disparaging.
Today I read an article by Eric Bigelow (Employees are Colleagues, not Assets). His reference is all about the terminology, calling the employee an “asset”, where an asset is a chattel, an object that is owned). Eric’s proposal is to have employees called colleagues, equals. This is not to say all employees carry the same authority within an organisation, rather all employees should be treated with respect. It is from this basic assumption where everyone in an organisation will work for the success of the “team”, working towards the same goal.
Although the term “an asset” sounds pretty innocuous, it is a label and by placing a label on someone they are often treated in a certain way, especially if it is negative. Even worse the label may (and often does) affect the way the person being labelled acts in response. For example, a person labelled as “lazy”, is often treated as if they are always lazy and so attract more attention to their non-performances rather than their achievements and in turn this encourages them to behave in a lazy manner. Whether the person actually is, or is not lazy, by labelling them as such encourages negative actions – if it really is laziness, then appropriate coaching and retraining needs to be undertaken, labels do not fix problems.
Another article I read in 2012 by Leon Kaye (Time to start valuing human capital as an asset on the balance sheet) says different, but for a different purpose. As Leon states, employees are usually only shown as a liability on the balance sheet due to the salaries, over due leave, etc. His argument is that more focus needs to be placed on the asset value of the Human Capital. Now we have more terminology, Human Capital, this is not the employee rather it is their competency, knowledge and personal attributes that can add value to the company. It is this that must also be listed on the balance sheet. But as Leon states, this will be very difficult with the current accounting standards and legal practises.
This is where we have our conundrum, how should employees be labelled, if indeed they must. Financially, they are both a liability and an asset. But this is not the person, to ensure this ‘asset’ is valued correctly on the balance sheet this same asset must feel they are part of the organisation and encouraged (even allowed) to perform at their peak and this in turn provides for not calling them an asset.
So it seems both are right, but the label must be used in the right context. When talking in a financial context, it is the skills and attributes (capital) of the employees that are assets (just as salaries and wages are liabilities). When talking in a HR context, they should be called (not ‘labelled’) colleagues – or maybe just employees. It is so easy to use the term indiscriminately; then again, everyone should be made aware of the meaning of the terms, including the employees.
Put simply: the employee is a person, a team member. When labelled an asset, it is their skills and abilities that are being referred to, not the person
Employee: A person who is hired to provide services to a company on a regular basis in exchange for compensation and who does not provide these services as part of an independent business.
Human Resources: the set of individuals who make up the workforce of an organisation, business sector, or economy.
Human Capital: the stock of competencies, knowledge, social and personality attributes, including creativity, embodied in the ability to perform labour so as to produce economic value, i.e.: the set of skills which increase the employee’s value in the marketplace.
Asset: Any item of economic value owned by an individual or corporation, especially that which could be converted to cash. Examples are cash, securities, inventory, real estate, a car, and other property.
Liability: An obligation that legally binds an individual or company to settle a debt.
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I think it is OK to label employees as assets/liabilities etc when working with finances/numbers, but we must treat our people as individuals/teams when motivating and inspiring them to deliver results. Good post.