How many times do you see or read company statements proclaiming their employees to be their greatest assets? Our strength lies in our employees! Our employees are our greatest and best asset! No asset we have is more valuable than our employees.
We have all read words like these, haven’t we? You might even have similar things as your motto. I suspect for most progressive thinking managers and leaders around the world; this is one of those de facto truth bombs we have been conditioned to believe.
Fact is, it is one of the biggest lies ever invented!
The Definition of an Asset
An asset is a useful or valuable thing or quality. It is property owned by a person or company, a thing regarded as having value and available to meet debts, commitments, or legacies. In financial accounting terms, an asset is any resource owned by the business. Specifically, anything tangible or intangible that can be owned or controlled to produce value and that is held to produce positive economic value.
Simply stated, assets represent the value of ownership that can be converted into cash. Furthermore, assets are depreciable. They are written off over a period of time. In other words, they are depreciated or amortised until they no longer have any value.
About those Employees
In my experience, employees, otherwise known as people, aka human beings, are not ‘owned’ by corporations. They are not available to meet debts, commitments or legacies. While many will argue that they are controlled (i.e. managed) to produce results, I submit, all employees have the free will to walk away, leave or quit at any time. I am pretty sure the outright selling of persons for the conversion into cash was outlawed centuries ago. And in most countries, the law does not take kindly to people-trafficking of any kind.
Lastly, I have never met a human being who actually declined in value as he/she aged on the job. In 100% of the humans I have ever interacted with, the mature humans had far more knowledge, experience and street smarts than the younger humans.
I will grant you, older humans often have a discouraging and cynical ‘been there, seen it all before’ attitude which, without a doubt, can be the most off-putting and annoying part of their personality. However, if one makes the effort to see into the vast pool of knowledge, experience and street smarts that await past that tough exterior, one can immediately see the older employees are vastly more valuable in so many more ways than the newer models.
Your employees do not form your asset base.
No! Your employees form your equity base.
Your. Equity. Base.
The Definition of Equity
The basic definition of equity is the difference between the value of the assets you own and the value of the liabilities you owe. Say your business has assets of $1,200,000, and you have a total debt load of $200,000. All things being equal, your business has an equity value of $1,000,000. That equity arose from the brainpower, the sweat power and the personpower of your employees.
Sure, you might have had most of the ideas, and you likely did steer the vast majority of those ideas into existence. And yes, we know that it was your pen, your word and your personal assets that likely guaranteed the loans in the early years. BUT, it was your employees’ brain, sweat and person power that delivered that equity for you. YOUR EQUITY. Your employees are your equity.
Assets can be replaced. Assets are impersonal. Equity needs to be protected. Equity is personal. Your equity is priceless. And should be treated as such.
Pioneer Flower Farms
Very late in the evening on August 16th, here in beautiful Niagara, this 40 year plus venerable wholesaler of bulbs and cut flowers had a massive fire — so massive the cause was not able to be determined. The damage from the three-day blaze wiped out nearly 70% of its operations. Once the fire was in the ‘containment phase’, the owners flew into equity protection mode.
Here was the order of their priorities:
- find housing for all the migrant workers because their homes on location were destroyed,
- locate alternative jobs for the migrant workers, because their incomes were immediately and negatively impacted,
- send out a 911 call to the community asking for donations for housing and personal supplies to ease the immediate conditions of the impacted workers,
- ensure all employees — local and migrant — were safe, had employment, and adequate supports,
- assess the damage to the farming assets and then,
- issue a 911 to the community to borrow tools and implements to keep the remaining greenhouses and crops going as best as possible.
Within 36 hours, all the migrant workers were taken care of and the company had to put a temporary halt to ALL the donations because they were overloaded and could not handle the extreme generosity.
Within four days of the blaze, the company was happily shipping its sunflower stock and telling the public where to buy.
It is impossible to sugarcoat this company’s situation — the good news — no loss of lives. The bad news is it takes time, colossal effort, generosity and money to recover from any catastrophe when a business needs to rebuild. There is no business anywhere that wants to endure what this company has and will go through.
However, no one should be surprised at how fast this company is recovering. In its first note to the public, while the firefighters were still taming the flames, the owners talked about how its root and its foundation had been hit, damaged and needed help. Do you know what its root and its foundation were? Its employees — spelt out in the first line of its very first communique!
Quite clearly, the owners of the company understand the real value of its employees. And I am confident it will continue to set records it has not yet dreamed of. Simply because the owners understand the source and strength of its equity — its employees!
Making the mental switch from asset to equity is a choice. For some owners and leaders, it is easy. For others, not so much.
I call that choice, definitely changing your thinking for the better. If you are interested in finding out how to do just that, give me a call or book an appointment. Let’s discuss some ideas pertinent to you.
To your success!