A Most Valuable Asset - Human Resources

By Diane L. Friar, CPA/ABV

Increased competition is forcing many businesses to engage in down-sizing, reorganizing, retooling, upgrading and even shifting geographic locations. In the resulting confusion, it is easy to overlook the value good employees bring to the company. It is also difficult to maintain morale and commitment when combining lean staff with a push to increase the workload and productivity during busy times and changes. People can be a firm’s best asset or a large liability. Any efforts by management to increase effectiveness and efficiency of an organization must eventually be accomplished by people. People carry a company to high levels of achievement and profit or help plunge it to low measures of failure.

So, how can businesses succeed and build an effective and flourishing workforce? As with all assets, continuous investment must be made to maintain and improve value. Consider the following suggestions where you might be able to implement or improve the systems in your human resource areas.

Employees who are well informed about the big picture of an organization will make better and more accurate decisions. Good decisions come with experience and good training and education. Training is a monetary investment, but it can reduce the likelihood of errors and increase the probability that a process or procedure will be done right the first time. Training and seminars represent a commitment by management to the employees. Employees who feel that management cares and is committed will normally care back. Increased trust within the company will increase cooperation and ultimately effectiveness and efficiency. Teamwork is fostered with shared caring. People work best when they feel they are working for their own goals and shared goals not just a company mandate about required levels of production.

Training can increase job rotation and flexibility. Employees allowed more expansive roles can become a more powerful force in increasing the output of an organization. Rotating employees allows them to learn new skills, be challenged by new responsibilities and become more valuable to the organization. These increased responsibilities can sharpen decision-making skills. Staff motivation is highest in companies where information and insight flow up. Ask employees to provide their ideas on how procedures might be improved or problems solved. This gives them the chance to affect future plans, current operations and resource allocation based upon how they view the company and its operations.

Increased employee involvement in decision making creates brainstorming and may generate many new ideas. As individuals become more flexible and adaptable, so does the company. In today’s environment of rapid changes due to technological advances and global economies, organizations must be flexible. Employees in this type of working environment will feel more a part of a community and realize their individual assignments are vital pieces of the total company effort. They become cognizant they are part of a larger team effort - and if the team wins, they win.

Increasing the investment in employees is not easy nor always viewed as wise by some management. Often, salaries and benefits are viewed as a burden to the organization. Payroll can be the first expense to be reviewed when cost cutting measures are being considered. In challenging times, a better strategy may be to communicate that all people need to work harder together to achieve demanding common goals. Train human resource assets to make better decisions while expanding their output and allowing them to become an integral part of the team. Increasing investment in employees is not easy, and it comes with increased costs. The possible benefits to the company can outweigh the costs in the long run. Given all the benefits of maintaining and improving a workforce, the question is not how can you afford it, but how can you not?

Diane L. Friar, CPA/ABV has been associated with Echelbarger, Himebaugh, Tamm & Co., P.C. (EHTC) since 1977 and is currently a Shareholder and Vice-President of the corporation. She is active in the litigation support and business valuation department as well as client consulting. Diane Friar may be contacted at 616.575.3482 or dianef@ehtc.com