A Company’s Most Valuable Asset – Really?

While some people are very important to their organizations, others are not as important as other key assets. Some examples of this would be:

  • The brand/reputation as in the case of Proctor and Gamble
  • The Mineral and natural resources rights for Exxon/Mobile
  • A secret recipe like Coca Cola
  • Patents like those for a pharmaceutical company

A Company’s Most Valuable Asset – Really?

While it certainly can be said that if any of these organizations were to lose many of its employees at once as in a plane crash, there would be confusion for a while but without that most valuable asset the organization would have little value. When you Register a Company the very next thing you think about is company’s asset.

A financial analyst will build his or her analysis of a company based on its assets, liabilities and equity. It’s the assets that make the company what it is, and the liabilities and equity are how these assets are funded.

Reflected here also is the commonly believed thought that people are a company’s most important asset. Can this really be true?

If a typical manager or supervisor were asked how many of the people reporting to them could they lose without seeing a difference in their department’s performance, it would not be unusual to hear an answer that typically goes as high as 25%. They might even add that it would be a great relief and a morale booster booster if they could let these people go.

The Right People are our Greatest Asset

If this is the case then the statement that people are our most valuable asset cannot be correct. Perhaps the statement should be changed to “the right people are our greatest asset.” The other people are not assets, they are liabilities. At higher levels in the organization the consequences are much worse as the wrong people there can do much more damage.

The rub comes in with human resource specialists who depend on this concept of most important asset to justify their importance in the company. There is good reason for this as employees are the creators of wealth in any company and their collective expertise defines the ability of a company to compete.

How is an Employee’s Worth Measured?

So this corundum leads to the question that with no way to measure a person’s value to a company, how does the company set a limit to how much it should invest in its employees? Investing in people is generally important but sometimes not as important when the value of a business stems from a patent for example.

There are also monopoly situations where both customers and employees have limited alternatives. These companies often don’t invest in staff and quality of service. Some examples here would be the US Postal Service or the Panama Canal.

In short, while people are certainly important assets to an organization, this statement cannot be applied to all organizations or everyone in every organization.

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