According to the AICPA in conjunction with the CIMA (Chartered Institute of Management Accountants), it’s your people.
Rocket science, right? Why do we need to keep wasting money doing studies like this to come to that conclusion? The March 2012 issue of the Journal of Accountancy summarized some of the main findings of the research, and one particular quote completely took me aback:
The most critical theme to come from this research: “Senior business leaders agree that it is understanding and unlocking the value of the human dimension that is most critical to an organization’s success.”
It goes on to say that the employees and customers will have a much greater impact on determining the future success of a business than financial markets, government, and regulators. Again, this seems obvious to me. The value of trained, experienced employees far exceeds their “fully loaded” cost, and the impact of those people either being unhappy or leaving is truly a large negative impact to the bottom line. Unhappiness creates apathy and the rippling effect will influence many aspects of the business. The list of negative effects can be endless, but here are just a few important ones:
- Potential negative impact on peer employees and subordinates, directly or indirectly
- Decreased productivity
- Lack of attention to detail which results in poor work
- Relations with customers and/or vendors can be compromised due to the lack of attention and detail
The facts are that employees ARE the most important asset of your company, regardless of how many millions of dollars of machinery and buildings you have. Treating them as such will allow them to fulfill the strategic vision you have in mind. People who are happy in their work go the extra mile and make the extra effort to help the Company. They will be more productive, make for positive internal and external customer experiences, stick with the company longer and they care.
The results of this report are not something that every employer out there should not already know. If you tell employees “you are lucky to be here—work harder and longer,” you are (or already have) created an acrimonious environment that inherently breeds e a culture where people will never take their productivity up to the next level.
You have accountants analyzing every number imaginable related to the efficiency of the machines and labor and downtime, the list goes on. Is anyone truly assessing the cost of your unhappy employees? Do you even recognize it?
By: Jennifer Kinzel, CPA, CMA, CGMA
