Years ago, I had the privilege of working at a company with a well-earned reputation for how it treated its people. At the time, I was the Director of Organizational Development and Learning, and I was asked to present at a board meeting about our progress in developing our employees.
Now, I’ll admit—I was a little salty heading into that meeting. Budget decisions had been made that, from my perspective, didn’t align with the company’s legacy of investing in its people. Armed with youthful energy (and maybe a little audacity), I decided to challenge the board on whether they were truly living up to their values.
I ran an analysis comparing how much we spent maintaining capital assets versus how much we invested in training and development of our people. Unsurprisingly, we were pouring significantly more money into things that depreciate over time—machines, buildings, equipment—while our only appreciating assets, our people, were receiving a fraction of that investment. I knew my comparison wasn’t perfect, but it sparked a conversation that stuck with me for years.
Fast forward to my time as a CEO, and my understanding of business needs has certainly evolved. I recognize the difference between maintaining infrastructure and investing in talent. But what hasn’t changed is my belief in core argument. Capital assets wear out. People, when supported and developed, only grow in value.
Decades ago, researchers at the University of Michigan attempted to quantify human asset accounting, trying to put the collective competence of an organization on the balance sheet. While they never quite cracked the formula, they landed on an insightful conclusion: the best way to measure the inherent value of an organization’s people is through its market capitalization. Investors aren’t just buying into a business as it exists today—they’re buying into its future potential. And that future is entirely dependent on the people making it happen. I’m not suggesting we match training dollars to capital expenditures dollar for dollar. But I am saying that recognizing people as the only appreciating asset in an organization—and budgeting accordingly—is worth serious consideration. Because at the end of the day, your people are the ones who will determine whether your business thrives or simply survives.