Are Employees an Expense or an Asset? The Answer May Surprise You Resource Management

is an employee an asset

The individual makeup of each employee remains impossible to replicate. No doubt, dedicated patrons, forward-thinking executives, and delivering top-notch products and services contribute to a company’s achievements. However, the loyal workforce, including your employees, frequently stands as a company’s most valuable asset rather than a Liability.

It ignites boundless energy and enthusiasm when we engage in tasks driven by this intrinsic passion.

  1. Health insurance, dental plans, sick days, paid vacations, retirement plans, tuition reimbursements and other benefits all add up to a major employer expense.
  2. Instead of seeing employees as a problem, these leaders see them as a valuable resource.
  3. That’s a financial benefit that businesses can’t get any other way, and it’s the way to outperform your competition.
  4. On the other hand, great leaders see employees as valuable assets.

The outcomes differ among companies — for some it’s sales growth, for others it’s lives saved — but those outcomes are always guided by the purpose of the organization. Their strategy deliberately links worker engagement to team performance to company purpose to business outcomes. I think one of the problems is the lack of leadership training in business schools. Most graduate and undergraduate students take multiple courses in accounting but they may only attend one or two lectures on leadership. The result is we are sending young managers to the workplace with a belief that numbers are more important than people. By accounting rules, the cost of workers is treated as an expense on the income statement.

People also trust companies more when they see real people working there. The true value of employee assets cannot be standardized with a simple, flat ratio. Mark contributions as unhelpful if you find them irrelevant or not valuable to the article.

Utilities, Maintenance, Rent or Mortgage Costs and Insurance

Employees are considered valuable assets for a company rather than liabilities because they are pivotal in driving purpose, motivation, and performance within the organization. Some managers treat their employees as just an expense or liability, something to cut down on to save money. This is because, in accounting, employees are seen as a cost, just like buying materials or equipment.