Do Contemporary Organisations Really Consider their Employees to be an Assets - Essay Example

Do contemporary organisations really consider their employees to be an “assets” or is this just rhetoric? Name Institutional Affiliation Executive summary Due to the dynamism and competition witnessed in the contemporary business world, businesses ought to adapt accordingly in order for them to remain relevant and competitive. Therefore, organizations should empower and motivate their workforce. Motivation and empowerment entail training, development and creation of a conducive environment where employees feel safe, cared for and valued. Additionally, empowerment entails aligning individual employees‘objectives with those of the organization. However, all these come with additional costs on the part of the organization. Introduction Competitive advantage is a product of motivated, committed and loyal employees. Similarly, increased productivity, improved quality of products and innovation are products of a well-motivated and empowered workforce (Collis, Holt, & Hussey, 2012). To achieve this, it therefore means that organizations must treat their employees as assets and not liabilities. To add value to employees as assets is an additional cost implication on the part of the organization, an obligation an organization ought to meet if at all its workforce is to be motivated. This essay, therefore, aims at arguing out whether organizations in the contemporary world treat their employees as either assets or liabilities. Employees as assets Whereas many organizations many often claim that employees are their greatest asset, they can also be their greatest liability. The proposition of the hack is that employees should be treated as assets and liabilities and account for them in the balance sheet. By organization classifying an employee as an asset, then it would be in the interest of the organization to work on increasing the value of the employee. Poulain-Rehm & Lepers (2012) points out that employee value in an organization can be done through training and mentoring. Employees who feel valued in an organization are highly motivated because of the opportunity for growth given to them. The benefits of valuing and motivating employees, generates to high commitment levels, reduced absenteeism, reduced staff turnover, better qualified employees and increased productivity (Collis, Holt, & Hussey, 2012). According to Collis, Holt, & Hussey (2012), an asset is an item of value owned by a business entity and which is expected to generate future economic cash flows. Assets can be there to stay in a business for a short period of time or for a relatively longer period of time. Employee fit this definition of an asset. However, employees, being assets, are also meant to stay in the business and accounted for as an asset. However, the duration employees stay or exist in a business is dependent on a number of factors ranging from how they are motivated, their career objectives, and the level of satisfaction derived from the job and other factors (Collis, Holt, & Hussey, 2012). Good employees are no replaceable. In this contest, the meaning of the term “replaceable” is that most companies are in a position of hiring someone different to replace another. According to Armstrong, et al., (2015), today’s business world and environment is full and ripe with people willing to take available job offers. Employers who still adopt the view and the mentality that employee are replaceable, thinking that they can just employ others who are more qualified and prestigious, are really fooling themselves. According to Armstrong, et al., (2015), when a company is in possession of a great employee, he has and carries a value that cannot ideally be replaced. Great and valuable employees carry intense and deep institutional knowledge of the entire organization. In fact, Ilic-Pupovac, Vlaovic-Begovic, & Rupic (2012) asserts that great and valuable employees have extensive knowledge regarding an organization’s products and knowledge, besides being also informed as far as organizations’ processes are concerned. Employees in an organization are in a position of creating and holding relationships with various clients. Similarly, employees have to carry information regarding what has and hasn’t worked for the organization in the past (Armstrong, et al., 2015). An organization is a system and a community where workers come together to achieve a common goal. In an organizational setup, great employee have great influences on their co-workers which, when lost, impacts on and organization’s corporate culture and image identity (Yeşil & Hırlak, 2013). Ideally, when an organization loses a great employee, the other employees start worrying and possibly think that there is something wrong with the organization they are working for. This can therefore make them start thinking of leaving the organization for other organizations they perceive are good. This will negatively affect an organization in terms of increased staff turnover, which generates to tainted corporate image identity and reduced productivity in the long run (Yeşil & Hırlak, 2013). Employees as liabilities Yeşil & Hırlak (2013) assert that organizations exist ideally to achieve organizational objectives. However, to achieve these objectives, it means employees should be committed to the organization. Hahn (2015) asserts that for commitment to be achieved employees must be motivated and their objectives aligned with those of the organization. Employee empowerment entails shared power and leads to increased employee motivation and commitment to work towards an organization. Employee empowerment creates an environment where employees are appreciated and treasured, thereby increasing their commitment towards the organization. Poulain-Rehm & Lepers (2012) asserts that to ensure that there is value creation on the part of employees, which consequently generates to the success of the organization, employees must be adequately valued. When organizations train their employees, they are adding value to them. Additionally, when an organization’s management develop structures that ensure that employees’ grievances are adequately addressed, they are creating value (Poulain-Rehm & Lepers, 2012). Similarly, value creation on the part of employees is done or exercised when an organization’s management creates an environment where employees feel loved, cared for and appreciated. All these make an employee motivated and committed towards achievement of the organization’s goals and objectives. When employees are motivated and committed an organization’s productivity, which in turn generates to improved profitability. This therefore leads to improved corporate image identity which is necessary for goodwill sustainability and continued profitability (Poulain-Rehm & Lepers, 2012). However, value creation comes at a cost. It is costly to empower employees, it is costly to motivate employees and it is as well costly to create a conducive working environment that suits all employees’ requirements. Shareholders value maximization is the core existence of an organization (Poulain-Rehm & Lepers, 2012). However, in order to maximize shareholder value, organizations must align its objectives with those of employees. This can be done if employees are motivated and committed to the organization. To motivate and empower employees, organizations must be willing to spend. However, whereas most often organizations train employees with an aim of adding value to them and with an aim that the employees will add value to the organization, the sacrifice of training sometimes turns out to be a waste because nothing changes (Lin, 2007). Mostly, organizations spend more on employees and get less from them in as far as input is concerned. This turns out to be costly on the part of the organization. Additionally, organizations can spend a lot of money and resources, training employees who later are fished out of the organization by competitors (Poulain-Rehm & Lepers, 2012). This again turns out to be costly and a liability on the part of the organization. Ideally, employees considered by the company as a liability should be exited from the business because a company doesn’t want to maintain a liability in the balance sheet (Lin, 2007). Contemporary business world The general global economy has experienced a lot of changes regarding how people work and how they relate to one another. According to Lin (2007), the change that is experienced in human resource cycles is as a result of psychological employment contract which is based on continuous improvements and innovations in the workplace. However, in the modern century and particularly in the contemporary world, management has placed a lot of focus on customer loyalty and retention, flexibility in employment, identification and attraction of qualified and talented people and cost reduction in the long run (Ilic-Pupovac, Vlaovic-Begovic, & Rupic, 2012). Lin (2007) asserts that whereas there is diversity in CEO roles, CEOs are still interested in organizational growth, increased profitability as a result of increased productivity and increased shareholder’s value. This leads to a dis-connect regarding the management and valuation of people in the modern contemporary business world (Lin, 2007). Due to dynamism witnessed and experienced in the business environment, organizations ought to remain relevant and competitive. However, to remain relevant and competitive, an organization should empower and motivate its employees and the general workforce. In the modern contemporary business world, on the outlook, view and perception, most organizations’ management have greatly changed. The change has been from viewing and treating employees as liabilities to treating and recognizing employees as assets. This is in line with the assertion of McGuire (2014) that employees are assets to an organization. Most organizations in the contemporary world believe in developing and accordingly advancing existing resources in order to tap their expertise, which can be used in various key areas of business operations. Businesses in the contemporary world have learned that customers are right. Ideally, if a company is seen and known as “the best place to work”, the company’s corporate image is boosted. This will therefore make employees and customers trust and belief in the company and its products (Lin, 2007). Therefore, in terms of achieving competitive advantage and remaining relevant, this is an upper hand over the competitors. In the modern business world characterized by intense competition and high levels of dynamism, businesses ought to treat and value their employees as assets and not liabilities (Lin, 2007). In the modern contemporary business world, if an organization treats its employees as a liability and fails to motivate and add value to them, it stands loosing due reduced productivity as a result of low motivation levels and empowerment, which translates to a tainted corporate image and loss of competitive advantage. I therefore believe that for an organization to achieve competitive advantage, it must treat their employees as assets and continually add value to them. Conclusion An organization’s corporate image identity is an important player in attaining competitiveness in the market place, and this ought to be observed by businesses powering in the modern business world. However, competitive advantage is a product of a well-motivated and committed workforce (Lin, 2007). In as much as it is costly to motivate and empower employees on the part of the organization, it is worth doing if the organization’s objectives are to be achieved. Employees turn out to be a liability if they create less value to the organization than the cost the organization incurred to make them valuable. Employees will turn out to be assets if they create more value to the organization compared to the cost the organization incurs on them. I personally subscribe to the school of thought that treats employees as assets and not liabilities. It is evident from the essay that in order to remain relevant and competitive in today’s contemporary business world, organizations ought to treat their employees as assets and not liabilities. Reference Armstrong, G. M., Boddy, David, & Kotler, Philip (2015). Management of organizations and marketing. Pearson. Collis, J., Holt, A. & Hussey, R. (2012). Business accounting an introduction to financial and management accounting (2nd Ed.). Palgrave Macmillan. Hahn, J.-H. (2015). The effect of ethical climate on employees “ethical behavior and wellbeing: Moderating effect of employees” ethical value. The Korean Academic Association of Business Administration, 28(11), 2829–2849. Ilic-Pupovac, M., Vlaovic-Begovic, S., & Rupic, B. (2012). Economic value added (EVA) and market value added (MVA) in the function of creating value for shareholders. Skola biznisa, 43–50. Lin, H. (2007). Effects of extrinsic and intrinsic motivation on employee knowledge sharing intentions. Journal of Information Science, 33(2), 135–149. McGuire, D. (2014). Human resource development (2nd Ed.). London, United Kingdom: SAGE Publications. Poulain-Rehm, T., & Lepers, X. (2012). Does employee ownership benefit value creation? The case of France (2001–2005). Journal of Business Ethics, 112(2), 325–340. Yeşil, S., & Hırlak, B. (2013). An empirical investigation into the influence of knowledge sharing barriers on knowledge sharing and individual innovation behaviour. International Journal of Knowledge Management, 9(2), 38–61. Read More