Saturday, July 18, 2015

The True Value of Employees

The 'True Value' of an employee is: 'A total of what the employee brings to a business (quality, creativity, and productivity), now and in the future.'

Let's look at the definition of value in order to brainstorm what is the true value of the employee. Value is something that is held to deserve; the importance or preciousness of something, There is an attempt to quantify the value of an employee in financial terms. To estimate the monetary worth of (something); worth - price - cost - merit - rate; appreciate - evaluate - estimate - appraise - assess. It is easier to look at direct labor costs, burden, and even recruiting/hiring and training costs. But there is an element that is even harder to put into monetary terms. How does one put a value on what an employee can add or take away from culture? How does one negative employee impact efficiency or productivity? How does a creative employee help the organization discover the new way to do things, hence saving the cost or improving the revenue., etc? The 'True Value' of an employee is: 'A total of what the employee brings to a business, now and in the future via multi-dimensional lenses (Quality, Creativity, and Productivity).' You need to look at all aspects of their individual traits, work ethic, influence, creativity, experience, ability, achievements and performance, and the hidden potential each employee has if given the opportunity to excel within the work environment.

The true value of an employee would rather be measured by his or her quality, creativity, and productivity. To measure the true value just by counting all the cost, the company has paid to the employee would be so naive. There is a big difference between cost and quality. The true value of an employee is demonstrated when the employee acts as an ambassador of the organization; brings the advanced mindset, knowledge, skills, abilities and personal attitude that translates into expected performance outcomes; has the capacity to be resilient towards change and acts as a change agent; possesses a capacity to attract and retain quality talent; A valuable employee is a self-leader who makes positive impact in business culture; stays current in their field/profession; freely innovates, creates new efficient ways of working; mentors and coaches others (reducing training and development costs and positively impacting on the performance of others). And the company gives him or her some responsibilities and how well an employee could perform to deliver these responsibilities (even beyond expectation) would be the true value of the employee.

The challenge for HR is the idea of what counts as an investment as opposed to an expense. Corporations often boast that their employees are their greatest asset. While this is true in a sense - employees do provide the intellectual capital and manual labor necessary to establish the foundation of any sort of business, what is the dollar value of every person working for an organization? Although economic theory would suggest that the value of an employee is the wage that they obtain! An employee's "book value" can be viewed as a function of what investments have been made in them. Often times, employees are the innovators in an organization. They bring about cost saving improvements that might be overlooked. HR needs to logistically place a book value to these scenarios in order to explain the importance of an intangible to business executives. There is an impact to the bottom line due to inspiration and culture addition. When there is a negative culture in a company, efficiency, and productivity decrease, employee engagement decreases causing mediocre work, and creativity & productivity is compromised. The intangibles affect the bottom line beyond productivity to objectives. A disengaged employee can meet objectives perfectly well if they choose in order to keep their paycheck, but what happens to the quality and long-term sustainability of a company when the employees are busy wasting time and would rather gossip and complain rather than add to the company's success? Replacing an employee does not correct the larger issue at hand if a company only values the financial proof of numbers.

The true question is:"What is the CONTRIBUTION of an employee to the total output of the organization?" It may be very difficult to quantify the true value of an employee to any company with so many variables to consider, such as productivity, creativity, influence, contribution, and performance, just to name a few. Some employees add much more, but some cannot be quantified. When employees create solutions from an internal combustion of inspiration, the desire to excel, innate capacity, applied skill, and desire for affirmation, it has the potential to generate incredible value for the organization. Putting a value on actual costs is the easy part. It is much easier to quantify a position's value to a business, in terms of accounting and the bottom line strictly by calculating the real salary costs combined with any benefits and other fixed costs. However, the value is multidimensional both in qualitative or quantitative way. Here are a set of criteria:
1). The QUALITY of the output delivered (new ideas, accurateness, value, positive culture influence, etc.);
2). The SPEED in which the output is delivered;
3). The AMOUNT of work (productivity);
4) The INNOVATION of work.
5) The TIME ratio spending on production, innovation and administration tasks.
6) The level of influence (leadership is not equal to title, expertise, culture influence, etc)
7). The effective USE OF TOOLS;
8). The level of HANDLING STRESS, because of throwbacks/resistance/conflicts, etc.
9). The level of COMMUNICATION with colleagues
10). The amount FLEXIBILITY (is one able to do other tasks if needed);
11). The lever of SELF-SUPPORT;
12). The amount of RESPONSIBILITY
13). The rate of LEARNING = How quick does one turn experience into valuable output;

The value of employees can easily be determined by the progress of a company and leadership effectiveness. The firm doesn't own the humans. Humans have free will and are unpredictable. To try and put the "human condition" with all its complexities into an accounting equation is just mental gymnastics. Most managers are involved in transforming inputs and resources into new "value added" outputs, therefore there is value asking if more value could be added by leadership effectiveness, different inputs, and different resources. Some of the leadership characteristics are communications, resiliency, acceptance of change, conflict resolution, influencing skills, confidence, mentoring ability, interpersonal effectiveness. All of these behaviors mentioned are key traits to be had by an effective leader. Statistics shows that employees will stay or leave an organization because of their leader. So if a company does not want to lose the “knowledge,” then they may want to look more closely at their leaders. And valuable leaders will create more valuable employees. Therefore, managers at senior levels in businesses should spend time on finding ways to value their most important assets -people, this exercise will lead to a deeper understanding of behaviors that contribute value, as well as what knowledge is key and which processes are invaluable or redundant.

All organizations face a challenge to evaluate the value of employees in an objective way. Each valuation will obviously vary in outcomes and results as each workplace and position within varies. When you look at the true value of an employee, you are looking at the return on the investment that you have made. It also looks at the overall success of the company. You would really want your employees to be profit centers, which is a new paradigm evolving. This would be contrary to the traditional cost centers that have existed in organizations. The true value of employees is their ideas and promotion of the company brand. Their retention adds maximum benefit to recruitment expense and overall organizational effectiveness. Their value proposition and intelligence drive organizational progression and maturity.


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