“People are our most important asset.” It is the rare corporate employee who hasn’t encountered this hackneyed statement in an employee manual, executive speech, or HR PowerPoint presentation. While it rings somewhat hollow in this age of ever-increasing automation, remote work, and executive salaries, does it still have any merit? Here are some thoughts on the subject.
There is no doubt that staffing costs remain the biggest expense item for many companies, so one might assume that hiring the best employees would be a primary management focus. That assumption would be incorrect. Two thirds of American companies do not take critical steps necessary to ensure that they hire the most qualified workers. According to a recent study by the Wharton School at the University of Pennsylvania, since 2002 US companies have doubled the time spent interviewing candidates; yet, they dedicate relatively little time evaluating the effectiveness of those interviews or the hires that result. Presumably, “people-assets” aren’t important enough to merit such analysis.
The Wharton study also cites these related findings:
▪Interviewing is often haphazard, with managers seeking candidates who will be a “cultural fit” or who share similar interests. More often than not, hiring is based on these subjective, sometimes biased, judgements.
▪Fewer than 33% of hires are internal candidates, even though these candidates are better known than external ones (who take far longer to perform as well as internal candidates in the same job).
▪Firms tend not to hire individuals who are actively seeking employment. Rather, they prefer to lure candidates from other firms. Attracting these (happily) employed workers is more costly and time consuming, with no demonstrably better results.
Despite these findings, I would still argue that people are a company’s most important asset. Just not the employees. I am referring to data about people.
Every firm, particularly startups, is really a digital company. For many, the monetization of data holds more potential than do their products and services. Now, more than ever, it is the daily-expanding database of customers’ ages, genders, interests, contacts, emails, purchasing habits, social media posts and other data that has long lasting value. Employees? They’re OK. But, with an average annual US employee turnover rate (across all industry segments) of roughly 15%, it’s unlikely that John Q. or Joan Q. Employee will be on the payroll in seven years. Customer data, on the other hand, is forever.
So, I feel confident stating that, “People (data) are our most important asset.”
Peter has spent the past twenty-plus years as an acting/consulting CFO for a number of small businesses in a wide range of industries. Peter’s prior experience is that of a serial entrepreneur, managing various start-up and turnaround projects. He is a co-founder of Keurig.