Are They Assets? Liabilities? Or Capital?

Ask a collection of corporate executives about their respective organization’s single greatest asset and after a moment’s reflection their answers might range from, “Our brand identity,” to “Our patents,” “Our intellectual property,” or “Our customers.” And why not since these and similar highly prized intangibles (depending upon the industry) are part and parcel of what potential owners and acquisitors covet the most. On the other hand, if those same executives aren’t thinking about stock price they might answer the question about their organization’s greatest asset by saying, “Our people,” (whether they genuinely believe that or not). Nor should there be any surprises in that answer since “our people” has long been the single most politically correct thing to say in response to that particular question – especially for any organization that purports to value its corporate culture.

Yet allow those same executives to linger with that “people” answer for any length of time and then ask them to give a name to their greatest liability (or source of problems) and they will likely offer the same response: “Our people.” At least that’s the answer many give in private.

So how is it the same resource can be thought of as both asset and liability? There are several plausible explanations one might offer starting with “our people” often includes everything from the stars to the pretenders, the prima donnas to the quietly effective. However, rather than take you through a lengthy list of possible causes let me state that my undergraduate major was accounting. And though I don’t have much call for those skills today I was nonetheless schooled in the model of double-entry bookkeeping (for every debit there is an offsetting credit and visa-versa; plus, assets will always equal liabilities plus capital).

With that as part of my orientation let me suggest the real issue is not whether or not an executive thinks of his/her people as assets but rather whether they also see them as the source of many problems and therefore a collection of liabilities or he sees them as an incredible reservoir of ideas and energy waiting to be unleashed on real problems and real challenges. In the latter view it’s people as human (intellectual) capital – not liabilities. In that light an organization’s people become what the leader(s) expects to find. The technical term for that is confirmation bias (you tend to find what you expect to find). Thus, when a leader sees and treats their people as valuable – they become valuable. More than that, they become fully engaged partners in the work. So, if as a leader you understand your people to be human capital, then just like the stockholders’ financial investment in your organization, your people and their individual and collective time, talent, views and gifts are something that can and should be properly leveraged.

Precisely how a leader understands and goes about leveraging that precious human capital is what tends to distinguish the average leader (and organization) from the poor, the good from the average and the great from the good. So I’ll ask you two questions: “How do you see your people?” And, “If you can see them as human capital, then what are you doing to put that capital to more effective use?”