Our people are our most valuable asset.

How often have you heard these words uttered by some executive or seen them incorporated into a company’s mission and values statement?

Simply stated: “A company’s human capital asset is the collective sum of the attributes, life experience, knowledge, inventiveness, energy, and enthusiasm that its people choose to invest in their work.”

That’s one view.

William A. Schiemann, CEO, Metrus Group takes it a step further and describes it as People Equity or “…the value shareholders gain from the human capital invested in their business. This includes the premium  (or penalty) a company receives in the marketplace as a result of such things as intellectual capital, culture, and leadership quality as well as customer and labor relationships.”

Call it what you like, without employees an organization is a mere shell. Human capital is unlike any other intangible asset because it’s the one that offers the greatest potential benefit and the greatest potential liability.

And that’s why it’s important to measure: because in order for an organization to reach its full potential, so must the human capital that runs it. And how can you manage what you can’t measure?

As Huselid, Becker, and Beatty say in The Workforce Scorecard: Managing Human Capital to Execute Strategy,” Too often we measure what is easy rather than what is right.” And “knowing a lot about the wrong thing not only is unhelpful, but can be misleading.”

So instead of thinking of your human capital, or People Equity, as just a cost, consider the contribution they make.  Those that add the greatest value to the customer are those that add the greatest value to the company.

This entry was posted on Friday, March 9th, 2007 at 10:50 am and is filed under Company Culture, Job Satisfaction. You can subscribe via RSS 2.0 feed to this post's comments. You can comment below, or link to this permanent URL from your own site. Your comments will appear immediately, but I reserve the right to delete innapropriate comments.