Our people are our biggest asset???

One of common challenges, or pitfalls, we fall into as CEO’s is the words we use in our speeches to our staff and customers etc. World over you hear the same things from CEO’s – we are great at making grandiose statements about things like innovation and exceeding our customer expectations. It’s a little like we are given a best practice speech playbook as a CEO that we should use if we want to sound like we know we are talking about.

There is one statement that rules them all, and it is one that I have said many times myself – “our people are our biggest asset”.

Now I actually believe this to be true because without your people, what truly differentiates you, but what strikes me as odd is that people, and the capability they have, are the one asset that doesn’t appear on our balance sheet. (Well that isn’t quite true, the one time people appear on our balance sheet is as a liability – usually described as annual leave accrual!)

Our balance sheets are full of mainly innate assets like buildings, vehicles, plant and equipment which are all valuable but generally don’t provide any discernible value from one business to the next

So if our people truly are our biggest asset, does it seem right to you that they only appear on our balance sheet as a liability. Don’t you think it is high time that we take our human capability and truly value it as an asset of the business. One that has true financial value.

If we look at the definition of an asset, Wikipedia says “It is anything (tangible or intangible) that can be used to produce positive economic value”. I don’t know about you but the one asset we have in our business, our people, are the most like to produce positive economic value.

If we look at it another way, human capability is an asset that needs creating and nurturing. It takes planning, investment and implementation. Like any asset, it requires maintenance otherwise it depreciates. So in human terms, it takes investment to build capability but if you didn’t maintain training and exposure, just like any asset, it would depreciate in time.

At the moment we think about investment in capability as a P&L cost. If human capability was a balance sheet item, truly recognising people as our biggest asset, training would be seen as investing in our asset, extending its useful life, driving more economic value.

And how good would it be to able to understand a business by its overall capability score or value. Customers, investors and employees would be able to clearly understand the investment that organisations are making into their long term sustainability of their biggest asset – as opposed to short term gains and the expense of long term investment.

I could write a whole novel on what this could also do to create and understand the true value of an individual’s own investment in their own growth and development – that might have to be a follow up article.

Like most industries, the energy sector actively talks about the need for more capability and the war on talent but we tend to all look at each other when it comes to thinking how we could change the trajectory we are on.

Maybe, just maybe, we would see the world differently if we placed human capability as the biggest asset on our balance sheet and not just talked about it!