I figured this headline would grab your attention. Go to any company’s web site, pick up any company’s annual report, read any company’s marketing material and chances are good that you will come across the phrase, “our people are our most important asset”. In some cases in order to emphasize how important, the phrase is often in bold and italics.
Do the leaders of these companies actually believe that their people are assets? If they do then why aren’t they managed in Finance rather than HR and why not use an Asset Management System instead of an Applicant Tracking/Employee Management System?
In accounting, assets are economic resources. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset. Simply stated, assets represent ownership of value that can be converted into cash (although cash itself is also considered an asset). Assets are tangible and include such things as inventory, buildings, equipment, or intangible, which are nonphysical resources and rights such as goodwill, copyright, trademarks, patents, computer programs, accounts receivable, bonds, stocks. But not People.
In his best selling book, Delivering Happiness, Tony Hsieh, CEO of Zappos.com, Inc writes about his company’s strategy for growth. “Many corporations like to say that their people are their most important asset. There are a few problems with that approach. First, if someone leaves, you have lost an asset. Second, if the company grows, there will come a time when the company outgrows an employee because the employee still has the same skill set that he had when he first joined.” Hsieh suggests that for most companies the solution is to let that employee go, and hire a more experienced outsider who may or may not be a good fit for the company.
Zappos’s solution was to not consider their employees(people) as assets, but rather create and build a pipeline of talent for each position in each department, from entry level to the most experienced consisting of current employees and outside candidates (qualified, interested, available). Once the pipeline is built and filled then anytime a single individual leaves the company, there will always be someone in the pipeline who can assume his/her duties and responsibilities. This pipeline is the asset and this pipeline of talent is the company’s most important asset.
This pipeline of talent as an asset concept seems to work for Zappos, just look at how successful they are. Could it work for your company?
Here is a checklist that will help you develop the pipeline as asset mentality.
- Have a clear performance profile, job requirement written for every position in every department.
- Look to both internal and external candidates to fill the pipeline.
- Always have the pipeline filled.
- Always reevaluate the business strategy of the company and department and realign the pipeline to match.
- Provide training and opportunities for every employee to move up in their department and in the company. Provide the tools for them to help manage their careers.
- Invest in your high-potential talent, future leaders and current leaders in the form of leadership development and executive coaching.
- Never be caught by surprise. Employees will leave your company, especially the good ones. Always have a replacement at the ready.
- Keeping each and every pipeline filled and current should be the most important job for your internal recruiters. Reward those who do so.
- Lastly, change the statement regarding employees as your most important asset to the following, “Our Talent Pipeline is our most important asset.”
To be clear, I’m not suggesting you abandon succession planning. It should be an integral part of the pipeline that will include high potential (HighPo) employees. A company maximizing the value of its most important asset (the pipeline) must developing those HighPos as tomorrow’s leaders. You don’t want ALL that growth coming from the outside, do you? Some of the services that our company, BridgeLine Executive Coaching, offers every client is talent pipeline management, leadership development and executive coaching. It is a critical piece to how we engage with our customers for which we receive high praise. We do this well and after reading Tony Hsieh’s book I am even more convinced as to how important our services are, or should be to our clients and prospects.
We are really managing and developing their most important asset. And how cool is that?