Why Human Capital Should Be on The Left Side of the Ledger
In my most recent article on Guardian Sustainable Business, I discuss the need for companies to start valuing humans as an asset. The norm now is to consider employees as a liability because of their wages, pensions and other associated costs. But we are now in an era where more companies create services instead of goods, and with companies constantly crowing about what they do for their employees, it is time for the balance sheets to match the rhetoric. With companies now sorting out how to account for carbon and water, perhaps companies’ most important asset, people, should have their own devoted line item. As I write in the Guardian:
Determining the actual value of this intangible asset is a difficult nut to crack. In 1978, 80% of a company's value was easy to enumerate because it was mostly tangible assets such as factories and equipment. But now 80% of a company's value is comprised of intangible assets such as brand value, intellectual property and, of course, people.Change would be hard. We are talking about a disruption of accounting as we know it, and such a shift is not in the best interest of the Big Four accounting firms. Nevertheless, everyone from the temporary intern to the engineer to the C-suite executives deserve better. Read the full article here. Photo of Wall Street courtesy Leon Kaye.