In this month’s Human Resources Magazine, Richard Donkin’s column carries this subheader:
The tired assertion, ‘people are our greatest asset’, has been disproved by the credit crunch.
Tosh.
To be fair, a lazy sub-editor may have added this sub on to the full article before popping out to do the Christmas shopping, but it is more or less the gist of the article.
The piece is a bit of let down – sad, because normally Donkin is a good read – it’s riddled with false logic.
Here’s the logic, paraphrased:
1) RBS was widely praised for its great HR work, particularly in performance management. It was almost the epitome of the phrase ‘our employees are our greatest asset’.
2) RBS is in bad shape (stock down about 75% since September), not least owing to its over-priced pre-slump purchase of ABN Amro.
3) Outside influences can clearly drive a company’s financial strength down. Therefore ’employees are not our greatest asset’.
Eh?
This sort of syllogism just doesn’t hold up. Who made the decision to buy ABN Amro? A machine? Who approved it? The birds on the trees? It looks to me as if RBS’s performance management system had one problem: it did not extend widely – or high – enough.
Here’s how Richard Donkin wraps up his piece:
The credit crunch demonstrated that a business is not people alone. Nor is it a building or the services it provides. There are abstract, human, emotional, constituents – trust, love, anger, panic. We can never truly value these things. They will remain the hidden, perilous, measures of performance.
So let me get that straight. A business’s value is not entirely made of people, therefore people cannot be its greatest asset. (Hhm – my house isn’t entirely made of bricks, therefore it can’t be made mostly of bricks?).
The title of this piece, though, is exactly right: Don’t ignore trust, anger and panic. Yes, these things are crucial. They are also human, and yes, you cannot measure them. But just because you cannot measure them, doesn’t mean that they aren’t important. And precisely because they are human, they demonstrate how crucial people are to any organisation.
I blogged in March 2007 that People are our greatest asset – you just can’t say it, and nothing here causes me to revise my opinion, except perhaps to add this codicil: as well as operations, people are responsible for good governance and good shareholder advice, too.
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Donald H Taylor 
Sorry, Don, employees are not an organisation’s greatest asset. They’re much more important than that!
People are our greatest asset – but not necessarily of any value to the company.
I think it might be that some people read the word ‘greatest’ or ‘important’ as meaning valuable. I think an employee is an asset and of significant value to an organisation when their efforts and skills are aligned with the company who employs them. When however they are not, due either to poor management, poor recruitment, poor training or redirection of the company they can be of little value to the organisation but all the more important because of that.
As no organisation is perfect and they all have imperfect (in varying degrees) HR Strategies we are always going to find misaligned individuals or teams. In those circumstances whether these people can be defined as of value (to the company) is questionable though they are most definitively an asset which has become a liability in terms of a corporate item or balance sheet entry. And in today’s climate despite being an important asset they and we can very easily discover that we have become of little or negative value.
I accept the fundamental premise that people are the greatest asset an organisation has. I would just propose that that does not necessarily equate to value.
Garry, you point out something that I have failed to give sufficient emphasis to here, and it’s a good point, well put.
Don,
I’ve made some comments here:
http://strategic-hcm.blogspot.com/2008/12/human-vs-financial-capital.html
Jon.
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If people are a company’s greatest asset why are employment costs not listed on the asset side of the balance sheet?
The answer is that people are a cost and often a company’s biggest cost. This is why so many people are being made redundant just now.
It is also why I am much more comfortable with the concept of human capital – that people are an investment and probably the most important investment a company can make.
I was arguing that the RBS debacle has exposed the limitations of human capital reporting. It doesn’t matter how great the HC or HR system, if the boss makes an unfortunate decision, it can all be wrecked. I haven’t yet found any HR checks and balances that can prevent this.
I can understand why some persist in describing people as a company’s greatest asset – it sounds great and makes everyone, including HR, feel wanted. But it’s dishonest.
Richard
Thanks for your well-thought out reply. Actually, I am closer to your position than you might think – particularly on the need for honesty in what HR and others say.
I’ll be posting another piece on this in the near future.
Don