Human resources: expenses or assets of the company?
Historically, the observation is unanimously shared: from Jean Bodin’s “there is no wealth but men”, an economic philosopher in the 16th century, to the modern theory of human capital, which won the Nobel Prize for Economics to their authors Schultz and Becker, the importance of the human factor in the performance and growth of companies has been unanimously recognized. And yet, the valuation of the human contribution to the wealth of companies remains inversely proportional to its real inclusion in the accounts that are supposed to reflect its performance.
Far from being considered an asset for the company, the words used to describe and treat the human dimension leave one dreaming: salary costs, FTEs, social charges, training accounts…. All these words are heavy with constraints rather than opportunities and call for a Cost Killer rather than a visionary who values a portfolio of talents.
And yet, it is these talents that constitute the true wealth of the company and represent its most valuable intangible asset, in the accounting sense: “an identifiable item of the entity’s assets that has a positive economic value for the entity, i.e. an item generating a resource that the entity controls as a result of past events and from which it expects future economic benefits”.
Like football clubs, it would be appropriate to include this asset in the capital. Especially since, unlike other assets, it does not depreciate over time, but rather is appreciated in the light of experience, training acquired and commitment to performance. However, we can see today that this asset, far from being valued, is constantly being depreciated: failed recruitments, unsuitable management, disengagement, ill-being, absenteeism, etc.
The evaluation of this intangible asset, imperfect as it may be, would make it possible to evaluate companies at their fair value, current and future, and could give rise to a rating based on its valuation; with a ranking of the best-performing companies, and assessment criteria justifying investments or fundraising, beyond the current financial and accounting rules; not to mention the impact of collateral valuations such as the commercial image of the company, its employer brand, the mobilization of potentials..etc.
Beyond societal considerations, it is the creation of value that is at stake and its consideration for new business dynamics.
For the heart of business to beat.