Leaders and Managers across every industry stand in front of their respective congregations of pulsing warm bodies and sound off this riff of motivation that fizzles out before the echoes finish bouncing off the production line floor. It is the biggest half-truth ever spoken by any level of management about its employees; “People are our biggest asset.” It should state, “People can be our biggest asset”!
It’s a half-truth because our employees are also our biggest liability. I’m sure if you decide to stop reading this entry right now you can easily convince yourself that I am the worst manager of all time and with an attitude like that will be destined for a swift and justifiable firing. The statement has nothing to do with our employee’s actions that can create litigation or risk for your organization, rather the type of employee that we often fail to nourish and grow.
Lowder Hall on Auburn University’s campus houses the business school. As a sophomore I walked into a large auditorium and sat myself in the back of the class and took out a piece of paper eager to jot down notes in Acct 2110-Financial Accounting. Even through the distraction of the pack of football players around me not paying attention I was able to decipher the main point of the professor’s lecture that day.
Assets = Liabilities + Owner's Equity
Although I’ve purged from my memory almost everything I learned in that class, I’ve never forgotten that simple equality. (I also remember from that class never to abbreviate ASSET and the kid in front of me having a hardcore seizure!)
By accounting standards, assets are not fully realized until all debts against them are settled. The fastest way to convert liabilities to assets while circumventing unavoidable depreciation is to supplement the debt with current equity. For an employee, these liabilities can be minimized and possibly mitigated by creating value in each employee that is perceived as stock, or equity. This is done through empowerment and creating an environment where employees feel essential.
Under my opinion, and adhering to the equality of the equation above, no matter the quality of the employee or asset, their liabilities never create more than a net zero effect into our simple balance sheet equation. The good news is that employee liabilities are merely short term debt that can be eliminated through the transference of “capital” from management. As managers we can elect to make the minimum required payment against each employee or choose to invest additional equity. Both ways will require us as managers to create the environment and supplement the resources that our employees need to be successful. Understanding that without us as managers deliberately providing the equity into the relationship, the best we can ever hope for is a set of unreinforced employees that are touted under a facade as “our greatest asset”.
Try it for yourself. Take your best employee and list all of their admirable assets to the organization. The list will include things like work ethic, dependability, and technical expertise. Now use that same employee, and be honest with yourself, and list out the things that could create production and satisfaction problems. These liabilities include promotion hurdles, distractions outside of work, and benefits and compensation. Those unhinged “assets” soon begin to be neutralized even in our best employees. (It would be terrifying to do with our worst co-workers!)
So, what can we do as managers to eliminate the liabilities? Probably nothing to eliminate them completely, but in the long term we can certainly keep each employee’s balance sheet appearing as an asset through the timely injection of equity into the equation and assuming the liabilities are short-term. Every manager is 100% percent responsible to shift the mathematical equality and make their case that the employees are indeed significant assets. Its sounds unreasonable, but we only eliminate the liabilities through our hard work as managers. From the minute they are hired until the day they retire, it is our job to coach, cultivate, and reinforce each employee in a way that first, addresses and minimizes potential liabilities and second, transfers a trust and appreciation for each task that each employee takes part in. Never doubt the power of how important and essential an employee feels relates to their ability to be a true asset.
Eliminating worry, creating value, and empowering each employee requires managers and leaders to transfer their own equity to their employees. Deferring this equity transfer is a choice. The result is a liability that depreciates the asset to a point that a total reinvest could be required to create a positive value in that employee. Unfortunately, in business when an asset gets to that point we list it in a “write off” or “salvage value” category. This is an avoidable lose/lose situation for both sides of the table. As hard as this may be for us take away from our own value, it’s the only way we can really make employees “Our Biggest Asset”.
Give a Little Bit,