Position Paper
“Should employees be characterized as human assets?”
Arthur Lok Jack GSB
Student Name: Mahalia Jackson
Student ID No.: 98708970
HRNM 6310: HR Management Information Systems
2012/2013 Trimester II
Feb. 2013
(Dilbert by Scott Adams 1995)
Introduction
“Our employees are our greatest asset”, is one of the statements that are commonly made by CEOs in organizations almost on a daily basis. Of course this is a true statement, as it is only through people, employees, can the strategic plans of organizations be successfully accomplished. However, do people count as “assets” in the true sense of the word? According to investopedia.com an asset is “...a resource with economic value that an individual, corporation
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These strategies would ensure that employees are retained long enough so that the new knowledge gained from training and development is passed on to others in the organization, and therefore become “owned knowledge” by the organization.
Counter Arguments
There is also the belief that employees and assets are quite different on many levels such as the following:-
* Mobility – assets such as plant, machinery and land do not leave organizations, but people do for various reasons such as resignation, retirement, death; * Ownership – organizations do not own their employees as they do their physical assets; * Creation – physical assets do not create, people do, with their knowledge, skills, new ideas, talents and abilities * Value – over time physical assets are devalued or depreciated as a result of wear and tear, and improved technology, however, with organizations investing in training and development of its employees, there is an increase in the value and contribution of employees over time.
* Financial Accounting – physical assets are recorded on financial statements as assets whereas employees’ salaries and other benefits such as pensions are recorded as expenses or liabilities. This is so because in order for an asset investment to appear on a balance sheet one of the criteria that it must meet is that the company must
“An asset is a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity.” (Myburgh, et al., 2013)
As money is spent statements are updated to reflect the accounts affected by the spending. Managers use these financial statements, such as an income statement or balance sheet, to check the progress of plans and programs. Management uses the information provided by financial statements to monitor financial resources and activities. The income statement shows the results of the organization's operations over a specific period, such as revenues, expenses, and profit or loss. The balance sheet shows what the organization is worth (assets) at a particular point and the extent to which those assets were financed through debt (liabilities) or owner's investment (equity) (Bank of America, 2007).
Assets are to be recorded and valued based of the type of asset there are.
The other fundamental issue that Charles raises is the treatment that the employees get from both the law and the proprietors/accounts. He says that employees in most instances are treated as property that belongs to the owner of the business and recorded as costs (salary/allowances) and not as assets. This effectively means that they are treated as things that are supposed to be minimized just like any other costs. This is a trend that needs to be changed and the employees need to be treated as cherished community together with the proprietors and the stakeholders. It should be a community that has members who are proud to be members of that particular community, allowed to express their views on issue related to them and the organization and generally have a free environment to
The accounting equation: Assets = Liabilities + Owner’s Equity. Assets are the resources of the company. Examples include cash, land, buildings, and equipment. Liabilities are “outsider claims”, the company’s obligations to creditors. Examples include accounts payable, notes payable, and income taxes payable. Owner’s Equity represents “insider claims” of the company or the owner’s share of the assets. If a business is keeping accurate records this equation should always be in balance.
As companies continue to try to come up with a plan for remaining profitable, some are overlooking one of their best opportunities due to their short sightedness and obsession for short term gain. It is the very asset which most firms claim is their most important and the one which provides them their competitive advantage. It is also, in some companies, the asset which is most mistreated and neglected as it is the most costly. It is the company’s employees. I don’t know of any company which would not state that employees and their knowledge of the company, its products and services, processes,
* Intangible Resources – Family commitment, networks, organizational culture, reputation, intellectual property rights, trademarks, copyrights
An organisation needs to carefully manage both physical and technological resources. The physical resources include the maintenance, building and security of the premises. The technological resources include the equipment, the design and also the drawings.
Employers require an investment from their employees and in return employees need a similar investment from their company.
b) ESOP’s: Incentives that allow the employees to buy the share of the firm they are working at lower rates which creates the sense of ownership.
A company’s resources include two types: tangible and intangible. The former is asset that can be observed and counted, such as, office furniture, production equipment, computer, and warehouse, etc. Unlikely, the intangible resources are assets that are rooted deeply in the company’s history, accumulate over time, and are relatively difficult for competitors to learn and copy, such as brand, intellectual property and reputation, etc.
The intangible asset is controlled by the organization. This means the organization has the power to obtain future economic benefits from the asset.
Another practice that helps to achieve career growth and development is offering training opportunities for the employees. The employees are offered benefits that help them to further their education and achieve higher qualifications. This is a strategy which helps to increase the skills, qualifications and competence of the employees. In this way, the staff are at a better position to gain promotions within the organization as education qualification is not a barrier for them. The employees become motivated as they become more competitive in the market which is good for their career (Branham, 2012).
In conclusion, it is evident that Human resources models, concepts and assumptions are of high value to the organisation’s success by valuing and managing is most valuable assets, the employees. If the concepts are wrongly used or
1. The items which do not have any cost are ignored. Thus the knowledge and technical skill built inside the enterprise, a favorable location, brand name and reputation of the business as time goes would find no place in the assets of the business entity.