Sunday, October 12, 2008
People Are Assets To Your Business
Look at a set of financial statements. Where is payroll? Is it under Assets (items that produce)? Is it under Cost of Revenue (direct cost that create revenue)? No, more often than not, it is located under Overhead. It costs us, the business owner, to have people work for us. It is often the highest amount, and other than our direct cost of revenue, the greatest impact. Owners often grumble and complain how they themselves don’t receive fair compensation for their energy and effort and when attempting to adjust their costs payroll is often the one area SLASHED first.
We have never felt comfortable with staff being overhead. People are not overhead; they either make money (operations) or save money (administration). Yet, why is it whenever a company gets into trouble, the people are first to go? Because they are the biggest figure on the statement. It is often believed that by eliminating the biggest overhead number (payroll) the problem is gone. WRONG. Eliminate the payroll and the solution is gone!
People are assets, not liabilities or overhead. People should be identified as Assets on the financial statements. They increase the worth of the company. And more importantly, unlike Fixed Assets, which depreciate in time, they appreciate. The more investment in training, coaching and motivating, the more valuable an asset an individual becomes.
Numbers represent only a series of events, not true value. Yet we look at people as overhead, as costing us money. Nay, we say before you rid yourself of the solution; take a look at the other assets first. The system, the machinery, the process, all of which (erroneously) are believed more valuable than a person.
Granted there are times, when a person is not an asset, but unlike any other asset, if it doesn’t produce effectively and efficiently enough it should be replaced. When you are going through any crisis, it is the people, your team that gets you out, not a machine, or a system.
Redefine your Financial Statement, Identify your team as assets, for they truly are assets. Take the time, energy and resources to allow the greatest asset of any company to develop. Through doing this you create a win-win environment.