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

“Being an employee of several different companies, I can honestly say that I’ve felt like nothing more than a line item on a spreadsheet somewhere that an accountant is desperately trying to eliminate.”

This comment was written by a reader on my recent article, Putting Employees Ahead of Customers, and it got me thinking. Why do so many managers treat their employees like a cost that needs to be eliminated?

My conclusion was that the problem may be related to accounting. Why? Because in accounting, employees are an expense.

Consider this. By accounting rules, the cost of workers is treated as an expense on the income statement. In fact, personnel expense is one of the highest costs a company incurs. Many managers see this sizable cost every month and conclude that people are expensive. They see people as a problem. By seeing people as a costly expense, these managers think that a quick way to more profits is by reducing people or salaries. They look at employees as an expense or a problem that must be reduced or eliminated.

“Assets are company resources which have future economic value.”

Great leaders see things differently. They consider employees as an asset. In accounting terms, assets are company resources which have future economic value. Instead of seeing employees as a problem, these leaders see them as a valuable resource. They know that people have the capability to grow sales, satisfy customers, improve processes, innovate products, and do countless other things that add money to both the top and bottom line. As a CEO, I see daily examples of this in my business, Peak Demand.

If you think of employees as an asset, as I do, you treat them differently. You understand the importance of keeping them happy and operating at peak performance. You recognize the importance of leadership. You realize your team will be at their best when they are loved, appreciated, respected, engaged, and acknowledged.

It seems simple to me but it’s not often practiced. 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.

“Great leaders know better”

In accounting, employees are an expense but great leaders know better. They know people are an asset that represent the future results of a company. They see their team as an important resource that needs to be led properly to maximize performance. They understand their team will be at their best when they are loved, appreciated, respected, engaged, and acknowledged.

Where do you stand? Do you see employees as an expense or an asset? Have you worked for a manager who treated you like an expense or a problem that needed to be reduced? How did that feel? Have you worked for a leader that treated you like an important asset? What was that like? Let me know in the comment section below.

5 Keys to Setting the Tone as a New Leader

Whether you’re a first-time leader or an experienced manager in a new role, the first 100 days are critical. People are watching you closely which can be intimidating but it also can be used to your advantage.

“As a leader you set the tone for your entire team.” Colin Powell

Setting the tone is imperative during these early days. Here are five things you can do to let people know what type of leader you are.

Create a buzz. Do something to get everyone talking. Make it extreme so the message is clear. This is something I always do. In one manufacturing plant, I had the maintenance team paint over all the signs for the reserved parking spaces for managers, including mine. The message was simple, there is no special treatment for managers. We are in this together.

Set the example. Your minimum behaviors will be your team’s maximum performance. If you expect people to be on time, you need to be on time. If you expect managers to get out of their offices, you need to be out of your office. If you expect people to wear their safety equipment, you need to wear your safety equipment. It’s simple. Just as children follow a parent’s lead, your team will take cues from you.

“The reality is that the only way change comes is when you lead by example.” Anne Wojcicki

Signal your priorities. What’s important to you will be seen by your team. If you spend the first hour of the day on your computer and not with your team, they will see that. They will assume they are not as important as your e-mail. If you spend a meeting constantly looking at your phone, they will assume their presentation is not a priority for you.

“You are the leader and the troops will reflect your emotions.” Colin Powell

Establish the mood. We all know attitude is contagious. Regardless how you feel, you need to be upbeat and optimistic around your team. You still need to be empathetic when you have serious issues to deal with, but if you are consistently upbeat and in good spirits, the team will demonstrate the same. In the same respect, if you are quiet, unresponsive, angry, abrasive, sarcastic, or hidden, the life will get sucked out of your team.

“See and be seen. Get out of your office, walk the talk, make yourself visible and accessible.” Bill Marriott

Be open, available, and visible. Go to where your people are. Greet them every day. Show interest by actively listening and being open. Engage them on the subjects they care about. Your team will see you care and are interested in their thoughts and opinions. They will see you as open and willing to listen. They will be more likely to share their true feelings about the challenges they face.

Setting the tone early is critical. All eyes are on you as the new leader, so make it count. Create a buzz, set an example, show your priorities, establish the mood, and be present. These activities will let your team know what kind of leader you are and what your expectations are. This will help you down the line when you need their help to tackle the tough issues.

To learn more about how respected leaders set the tone, read Colin Powell’s leadership book, It Worked for Me: In Life and Leadership.

Let me know what you think in the comment section below.

Great Leaders Aren’t Afraid to Love Their Teams

One frustrating thing I see in leaders from time to time is a negative attitude towards people. Many choose a career in leadership who don’t like dealing with people. Unfortunately, they usually find they are less effective as a leader with this mindset. The reason is that leadership is inherently a people business.

“Leadership is a people business.”

The entire role of a leader is to motivate a team of people towards accomplishing an objective. Great leaders know that. They also know people are messy. People have issues, problems, emotions, quirks, hang-ups, baggage, and can be unpredictable. A great leader can see past the flaws, love their people, and motivate them to do great things. In my opinion, you can’t be a great leader if you don’t love people.

“Great leaders actually love their teams more than they love themselves.” Donald Miller

Donald Miller, founder and CEO of Storybrand, sees it the same way. I like his thoughts on this subject as he reflects on the culture he built at his company. One of the core values he put in place was to “make his employees’ dreams come true by serving clients faithfully.”  I thought it was interesting that he purposely intertwined serving customers with the dreams of his employees. In his view, loving your employees means helping reach their full potential.

“Great leaders can see the greatness in others when they can’t see it themselves and lead them to their highest potential they don’t even know.” Roy T. Bennett

Miller credits the growth of his company to the “secret ingredient” of love. Things changed at his company as they started to live out these core values. As he loved and respected his employees, they loved each other, and they worked as a team to better serve customers. He built a culture of respect with a foundation in love.

He explains that love can be quite scary, though:

Love doesn’t give you complete control over people. Love means you can’t disrespect them when you’re frustrated. Love means you really understand that people aren’t just a cog in a wheel. Love means you have to allow people to hurt you and let you down, and they will, just as you will them. But love also means you forgive, you don’t keep score, you show grace and you protect each other at all costs.

 And sometimes, protecting people means you have to let some people go. People that don’t fit into the culture or try and take advantage of the environment need to be dealt with. The sooner you address it, the better it is for that employee and the rest of the team.

He has two fundamental rules which has helped him create a culture of love and respect:

  1. Hire people who are better, smarter and faster than you.
  2. Never mess with their hearts.

What do you think? Does love belong in the workplace? Can a culture of love and respect boost a company’s performance? How will employees react when they feel their boss truly cares about their hopes and dreams? Why don’t more leaders practice this? Let me know in the comment section below.