Last week we looked at the statement “people are our greatest asset” and found that it was more than a cliché. The definition of assets substantiates the claim that employees are assets. Unfortunately, we also discovered that an “awful accounting mismatch”, actually reinforced by generally accepted accounting principles (GAAP), perpetuates your accounting for people as costs rather than as assets, making you an inadvertent, and even involuntary, hypocrite whenever you refer to them as assets, simply because accounting for them as costs inevitably means managing them as such.
The remedy is simple. You have to start accounting for people as assets. Only then will you start managing them as such and so rectify the anomalies that this “accounting mismatch” creates. So our first challenge is to figure out what accounting for people as assets entails, before we embark on changing GAAP!