Lip Service in Organisations
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This is an often misunderstood concept and tends to be given ’lip service’ by many organisations in terms of ’people are our most important assets’ for example. But what does it actually mean? Please see the attachment based on the ideas of Mayo (2001).
Mayo, A (2001) The Human Value of the Enterprise, Nicholas Brearley.http://eprints.mdx.ac.uk/1385/
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Quantifying people as assets may to a certain extent appear unconventional; given that the value of human capital is difficult to measure due to its intangibility. In contemporary organizations which seek to compete effectively however, human capital should be a highly valued asset as it contributes immensely to an organization’s market value (Rastogi, 2000).
According to Mayo (2001), companies are ‘loaned’ ‘human capital’ by employees including personal knowledge, capabilities, commitment and experience; and this denotes the importance of human capital in contributing to an organization’s market value. Accordingly, taking an audit of the human asset worth is highly necessary for organizations which seek to determine the contribution of people to value addition. Mayo (2001) gives a formula for calculating peoples’ asset worth as a factor of employment costs and the individual asset multiplier (IAM), which is a function of capability, contribution, potential and values alignment.
Rastogi (2000), notes that employees represent an organization’s competitive advantage. Acknowledging people as a valuable asset encompasses recognizing that employees are responsible for organizational growth and profitability and that it is through them that customer loyalty is built (Becker, Huselid and Ulrich, 2001). This insinuates that without good people, the organization cannot thrive no matter how good its strategy is. As organizations consider people as assets, it is imperative that the management recognizes that productivity is tagged to motivation; hence the need to continually promote a working environment that drives commitment and motivation in order to get the best out of people (Becker, Huselid and Ulrich, 2001).
Finally, human capital generally appreciates as employees gain skills, knowledge and experience (Mayo, 2001). This is unlike other forms of assets which are known to have a depreciating lifespan. In this respect, people can arguably be considered a great asset for any organization.
References
Becker, BE, Huselid, MA & Ulrich, D 2001, The HR Scorecard: Linking People, Strategy and Performance, Harvard Business School Press, Boston.
Mayo, A (2001) The Human Value of the Enterprise, Nicholas Brearley, London.
Rastogi, PN 2000, Knowledge management and intellectual capital – the new virtuous reality of competitiveness, Human Systems Management, 19 (1), pp. 39-48.
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