Your Employees Are Your Most Important Asset. How Do You Value Them?

By Steven E. Sacks, CPA, CGMA, ABC

Skills, abilities, and experience are the elements recruiters use to assess candidates who come before them.  But what is interesting is despite a skill set playing a dominant role in the value that an employee brings to the organization, it may not be recognized as such. This is not a new concept. I came across research conducted in 1918 by Harvard University, the Carnegie Foundation, and Stanford Research Center.

The study discovered that almost 95 percent of job success comes from having well‐developed “soft” skills (better referred to as life skills) and people skills, while only five percent of job success comes from technical skills and knowledge — the “hard skills.” These statistics were extrapolated from the 1918 report A Study of Engineering Education, (Mann-1918-Study_of_Engineering_Educ.pdf (nationalsoftskills.org) published in 1918 by the Carnegie Foundation. (See pages 106-107 for the data used.)

Fast forwarding one-hundred years-plus, are the percentages at similar levels? Then there is the issue of engagement. Are employees as engaged as they were “back in the day”? In other words, do they feel a connection to their colleagues; enjoy their roles; and feel they contribute to their organization’s goals?

On the other hand, disengaged employees think negatively of their organization; have no relationship with the mission, goals, and future strategies of the organization; and are not committed to their jobs. Studies have discovered that disengaged employees cost businesses $450 to $550 billion annually in lost productivity.

To ensure that the value contained in those skill sets does not go out the door, employees must be given “meaningful” work. It is widely known that younger workers want meaning and purpose from their jobs. Otherwise, the loss of skill sets means lost productivity, among other matters.

What and How to Measure?
The cost of replacement and subsequent investment in a new employee to regain some stability will supersede the savings in salary, even if the starting salary is adjusted accordingly to “break-even” in the first year or so. Here is when the penny-wise and pound-foolish mindset should not make a cameo appearance.

Each employee is an intangible asset. With the advent of robotic-driven functions appearing in more industries, will employees be part of the balance sheet? In contrast to physical assets like property, plant, and equipment, employees don’t depreciate (I am not factoring sports figures in this). In fact, with accumulated experience and knowledge, employees increase in value.

About the Author

Steven Sacks is the CEO of Solutions to Results, LLC, a consultancy that specializes in helping individuals, firms and organizations meet the challenges of communicating with clarity and purpose. Visit his website at www.solutions2results.com.

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