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At the present time, the companies become more concern in developing their people to compete with competitors in global business and in order to gain the competitive advantage, the companies heavily spend cost to select best people to work in their company and put more effort in improving the existing one, El-Nadi (2006). As a consequence, the human resource team plays the major role to help the company achieve their goals while maintain the wellness of the employees. However, there is still question that the firm should treat their employees as the asset of the business in the same way as any other asset. Thus, this report is going to discuss on such statement and analyze the value of employees comparing with the assets as well as given the case study of international firms which will be useful for reader to understand the meaning of discussed statement.
Some people believe that good image of company, resources and product line meets high customer demand lead to competitive advantage that make the company able to compete with corporate worldwide, Harting (2008), and as such reason are true. No one can deny all of these facts, that is, the reason why most famous company become successful when compares to other competitors. Nevertheless, the most significant resource that makes company achieve in global business is employee, Kaplan-Williams (2009). As mentioned, the employees control the machine, without that, the machine cannot run properly. No matter what business own the most advanced technology, they still need human to control and run all of them.
Human Resource Department is the majority controller whom manages and monitors employee to work in functions. Since the employees gain more experience during their work time that become more and more and cannot be devalued, it is HR responsibility to keep those employees to stay loyal to company while searching for newcomer to replace for workers who have left the firm for some reason as well as maintain good attitude among them.
- Definition of Employee and Asset
- Analyze the Statement
Definition of Employee and Asset
Employee is a person or a group of people who recruited from the company to provide services to customer and complete every day's task that company assigned to them to achieve company's target, for instance, searching for new clients and market, negotiate with suppliers, and save the operation cost, Hicks (2005).
Asset is anything of economic value owned by individual or corporation, particularly, it can be converted to cash, Harrison (1995). There are two type of asset for the company, tangible and intangible asset. Tangible asset is everything that is physical substance that human can touch. For Tangible asset, it can divide into current asset and fixed asset. Current asset is cash or other asset that can be converted into cash easily. For example, account receivable and inventory. For fixed asset, it is the asset that the company purchased for generated the long-term profit. For instance, land, property, building, equipment, and machine, Downes (2003).
For intangible asset, it is the non-physical asset that untouchable and very hard to evaluate. For example, intellectual properties, patent, knowledge, and trademark. (See Appendix 1)
From the statement "Employees are asset of the business and, as such, should be treated in the same way as any other asset", it shows that employees are equal to the assets in which have been defined in above paragraph and hence, should be treated in the same way as any other assets in company, such as, machine in a factory.
Based on the definition of employee and asset, it totally has different meaning and definition, therefore, the firm cannot treat their valuable resource as same as other assets which contrast to the mentioned statement.
There is the difference between human resource and company's asset (in this report will use machine as an example of asset). Human resource will appreciate in value over the time, Writer (2010), in contrast with machine; it will depreciate in value over the period since it has been used, Kennon (2009). Also, human resource has the high value for investment for the reason that employees can stay with the company for long time if they happy with the company. In addition, it is quite difficult for the company to find the replacement of existing employees whom have been working with the company for a long time and know all the process of the job. Moreover, it is not easy to recruits and trains the new one to replace the one who just quit from a job. Unlike the machine, the company can buy new one to replace the previous one immediately which can easily setting up the programs and use it right away. For clear explanation, it can demonstrate how human resources are appreciating in value into four main reasons.
The first reason is innovation. Most humans can increase their innovative idea over the period of time, Winslow (2008). As it precisely show that human or person who is working in company has the capability to generate their idea and create things that benefit to their firms, such as, innovate the technology that help the firm achieving their goals faster than other competitors. Furthermore, employees can innovate or improve products and services to a better one to meet customers need and cope with the change in market trend that can compete with other competitors and lead to the victorious, such as, Apple iPad. The iPad becomes the new trend of net book in this era, which affects other net book brands causing the drop in market growth (see appendix 2, 3). This is because customers who have planned to buy net book preferred to buy iPad instead, Nusca (2010). From this explanation, it shows that the research and development department is one of the most significant departments in the company that used human to brainstorm the idea to make the company become success in business world. For example 3M Company, its employees innovate the new product to the company that presents their image to public as most innovative firm, Dalal (2009).
Second, employee has rational emotive to deal with other people inside and outside organization. Most companies need to deal with customer and they have to negotiate with their clients to solve the problem. In order to deal with customers, companies need their employees to answer all the questions and solve the entire problem that make customers feel unsatisfied to the company and some employees may even know about the product better than the top executive themselves in the company which is easy for them to directly deal with those clients, Parker (2010). Also sometimes company need to deal with their own supplier, El-Nadi (2006), for instance, company may received the big order from customer, so that, they need more raw materials or inventories to produce the products to reach customer demand. Hence, the firm needs to negotiate with their supplier to supply the excess demand at a limited time and it is employees' responsibility to deal with those stresses.
The third reason is that employees can find the best solution to solve serious situation in the company. When company is in hard situation, the more employees are the more alternatives to track with the problem. Each employee has their own opinion in expressing their idea when dealing with problems that is benefit to the firm to collect all ideas and make final judgment to select the best plan for the company. Moreover, the company can mixed up the ideas for further improvement to gain the competitive advantage in the market. From these reasons, it will be good for organization to brainstorm the idea for more solutions in which it helps top executive to see and decide which solution will be the best for the firm, King (2010). For example in business world,
Toyota company recall midsize pickup, Hilux Vigo, more than 100,000 cars in Australia since they found the problem in bonnet striker and shift cable bracket that can cause accident and lead to serious injured that pull down the Toyota's image and lower the confidence toward customers' attitude, Gover (2010).
The last reason is creativity. Every mankind is born with the ability of creativity, Kilby (2001). The staffs in a company create the advertisement to promote their firm to the public to gain the image as well as selling their products and services that easily reach through their target customer. Customers consume the media from every source that they see or hear, for example, Television, radio and Internet. For Internet, it is one of the most powerful tools to send the message and information to all customers around the world, Platt (2007). Moreover, the advertisement can also create to harm competitors, for instance, the comparison of technology among three car manufacturers.
Nissan Company is going to launch their product to the market, called LEAF, which used full electricity to run the engine. Nevertheless, Tesla Company claims to public that Nissan LEAF battery is not good enough when compare to Tesla batteries, Garthwaitw (2010). They claim that LEAF battery is worse even when comparing with prototype of Tesla batteries. After Tesla advertised to public that their batteries are better than Nissan, Ford Company also attack both Nissan and Tesla by claimed that their new model, Focus EV, uses liquid thermal battery which is better than Nissan and Tesla, Lombardi (2010). From these it shows that Tesla use their advertisement to attack their competitor in which Ford join these fight by advertised to customer that their products are far better than those two companies.
As explained in four reasons, the machine dose not has such characteristic like human. Hence, the firm should place an importance on employees rather than machine or other assets.
- International Cases
- Compare Cases
In recent years, human resources have been being widely asserted as the most valuable resource of the firms. Organizations are unable to grow and develop without the human resource element, Barlow (2004). A source of labor is required in any business sectors, Morrell (2001). Employees therefore should be treated well with dignity and respect. However, based on the researches among various companies, top executives of these companies could be categorized into 2 portions: employees were seen as a valuable resource to be developed in smaller portion, nevertheless, larger portion still saw their employees as a cost to be cut off, Cascio (2003). The firms in larger portion certainly placed itself in an insecure position as lack of human resource management and fail to recognize their own employees. The one of recipe for failure in business is the failing to recognize and appreciate own staffs for their skill, knowledge, and loyalty, Humber (2008). The Circuit City Company is a good lesson-learn of failure to recognize its employees.
Back in 2007, the Circuit City, an electronic retailer, was confronted with the downfall in sales due to the growth in competition by both online and offline merchandisers. Circuit City abandoned the human resource practices by announced the plan to lay off 3,400 of its most experienced, talented and effective sales people in order to cut the cost and disburden their high salary payments, Humber (2008). It was true that cutting the paid resulting in decreasing in overall expenses of the firm and would consequently make the firm strive in the battle of survivor in business, Cascio (2003). However, there certainly was a drawback of ignorance in recognizing and appreciating the talented and experienced employees. The result of lay off the huge number of effective employees was the declining in quality of customer services that is unquestionably the most important thing in the retail sector. Customers walked into the store and found un-experienced and apathetic staffs caused even more plunge in the Circuit City's sales. The cutting of experienced people of Current City was a slow motion of self-destruction. "Current city cut its own throat by not realizing their own competitive advantage is", Carr (2008, P. B1). Suddenly, the company was bankrupted.
In contrast of the Current City case, the SAS Institute, business analytics software and services provider has placed importance on human resource management by treating its employees well as a valuable resource to be developed and retained. The SAS Institute was continuously ranked in "The 100 Best Companies to Work For", Fortune Magazine, Cascio (2003). Many of human resource management programs have been executed in order to meet its employees needs and keep employees motivated and engaged, for instances, individual recognition rewards at annual sales meeting are rewarded to outstanding sales people, internal job transfer which allows its employees to simply move around from one job to another within the organization, the on-site health care that promptly services employees and even the creation of summer camp for employee's children, Hein (1999). The company has operated on a fundamental of treating people with dignity and respect as well as making work fun, Cascio (2003). The result of emphasis and focus on quality of life of SAS's people has been phenomenal. The turnover rate of its employees has been lower than other companies in software industry by 16 percent in average, Leonard (1999). One hundred million US dollars saving every year is the translated version of 16 percent lower turnover rate than competitors and that money has been spent in developing the business as well as continually funding more benefits for its employees including training and developing at all levels, Cascio (2003). Beside of the benefit of money saving on low rate of turnover, retained employees also retain their customers. The companies that have high rate of employee retention likewise have high rate of customer retention, Koblenz (2003). More than 98 percent is the rate of license renewal of SAS's software programs, Cascio (2003). These benefits of the SAS Institute have been returned by well human resource management practices which emphasis and focus on well treatment on its employees and recognition on their expertise, experience and knowledge.
Two sample cases exemplify the different result of different treatment on their employees. On one hand, failure to recognize value of employees apparently leads to the failure in business. On the other hand, treating employees well and recognizing their abilities, skills and expertise certainly returns in a success and profitability to the firm.
Conclusion and Recommendation
Conclusion and Recommendation
Back to the statement of "Employees are asset of the business and, as such, should be treated in the same way as any other asset", from the findings, it can prove that employees are more valuable than other assets. Hence, the firm should carefully treat their employees in a better way in order to keep their merit performance that lead to successful of company. However, if the firm cannot treat their employees as good enough as other firms, the employees of the firm itself will then look for another company to work for and that cause in high investment on recruitment and training, and if look in a worse case, the employee who is not happy with the firm will try to destroy or spread the rumor to public.
To conclude, the firm and the HR department should not only treat an employee as an asset, on the contrary, should treat them better than asset.
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Type of Asset