Thursday, July 23, 2009

Human capital only appreciates if you appreciate it

This seems to be the ultimate secret of human capital management. You may think you know this, but do you really?

If you look at any financial statement you will see debits and credits, which in turn represent assets and costs.

That's the secret of accounting, by the way.
Most assets become less valuable over time. Again, nothing mysterious happening here, if you buy a new SUV (shame on you!) it will depreciate the microsecond you drive it off the lot because now it's: a) used; and b) already outdated.

Within the realm of non-animate assets, this depreciation rule seems to be universal: Stuff becomes less valuable over time. Our economy hinges on this so it's pretty important.

The only exception to this asset depreciation rule - besides antiques, that is - is human assets, which can actually appreciate before they depreciate. If only financial accounting could measure this as it occurs executives might finally put some effort into hiring good people managers instead of fiddling around with spreadsheets.

Because people don't appreciate automatically. You have to invest in them and manage them well.
Heady stuff, huh?

You already know this? OK, then answer this question honestly: How happy are the people at your company with their direct reporting managers? Because managers are the front line embassadors of appreciation or lack thereof.

So, unless you can say 'estatic' or at least 'pretty happy' (maybe estatic is overkill) your company doesn't really get this, no matter what verbage you have on that mission statement poster in the lobby.

Appreciation of human capital begins, not surprisingly, with appreciation. Appreciation can take many forms, both monetary and non-monetary, and the good news for the bottom line is that non-monetary appreciation can be extremely effective. Not to mention cheap.

But what it comes down to is this:

Do your employees feel appreciated?

Here's an idea: Ask them. If the answer is no, don't be surprised if you find yourself with an office full of depreciating assets that are captured in your general ledger as costs.


  1. I wish my bosses read you! They are not very good at appreciating - but are only slowly getting better...

  2. exactly right. The line manager role is so key for this and also the one most abstracted by the HR function. I find this the biggest challenge of Talent Management, you need to get a lot of people doing the right things to move the dial sufficiently.

  3. SOooo...feel like running for Mayor of New York far I'm voting for the Naked Cowboy...but you'd be a shoe in.

  4. must say that overall I am really impressed with this blog.It is easy to see that you are passionate about your writing. If only I had your writing ability I look forward to more updates
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