There are several advanced technology solutions that address asset management—on-line condition monitoring and diagnostics, preventive maintenance, machine-to-machine communications and the like.
In the drive for improved asset-management, many companies tend to forget that people are their primary assets. Technology solutions and asset-management software suites are available to global competitors, leveling the playing-field. The key competitive differentiator is management of people— attracting, motivating and retaining knowledge workers.
More than profits
Peter Drucker, the great management guru, died peacefully in his sleep at home on Nov. 11, eight days short of his 96th birthday. For over a half-century, he wrote continuously on management and social issues. He originated the view of the corporation not just as a profit-making machine, but as a human community built on trust and respect for its people. He coined the term “knowledge workers.” In his later years, his comprehensive articles covered an amazingly wide spectrum of human affairs.
More than 50 years ago, Peter Drucker was the first to assert that people should be treated as assets, not as costs or liabilities to be eliminated. In a 1992 article in the “Harvard Business Review,” he observed that while all organizations say routinely that people are their greatest asset, “Few practice what they preach, let alone truly believe it.”
When companies make the claim that they are people-oriented, it’s often corporate hypocrisy. After all, how can companies claim that they put their employees first when they are willing to lay off thousands to boost share price?
The core problem is not that companies don’t value their people—it’s that it’s not easy. People orientation is not simply a matter of buying additional equipment and software to “manage the assets.” It’s part of the corporate culture, a slow and deliberate process.
To value people, companies must move beyond the notion of human resources and toward the notion of human capital. The term “resource” implies an available supply that can be drawn upon when needed. The term “capital,” however, refers to something that gains or loses value depending on how much is invested, and how it is invested.
Here are some issues that stem from the idea of “human capital”:
People are not financial assets that depreciate in value and can be written off; they are dynamic assets that can increase in value with time.
Unlike capital equipment, ownership of which can be transferred, “human capital” cannot be owned. Today, many bright people have abandoned organizational loyalty and consider the continued development of their own skills as their personal passports to survival in changing times. Nurturing of loyalty is a key ingredient of “human capital,”
The systems created to recruit, reward and develop people form the major part of any company’s value.
Company value, and therefore, shareholder value, is maximized when human capital is properly managed and motivated. Google, founded just eight years ago, is built on a culture of smart, loyal people, and has a market capitalization of more than $125 billion—more than ABB, Emerson and Honeywell combined.
Human assets are not just limited to company employees. The best companies are making a significant extension beyond conventional corporate boundaries—collaborating effectively with suppliers and customers, developing people and company relationships that yield significant results.
In a new, global business environment, the development of human assets is the best investment.