If people are assets, can we claim depreciation on them?

I sometimes talk about people as resources, even though I am told not to.

Apparently people should be called “talent” or even “people,” but I have an old mindset and I still think of them as people who should also be useful if they are in this team.

I also still think about questions like:

  • Are we the right people to get this done?
  • What do we really need to Excel at here?
  • What can we do at a basic level? and
  • What should we learn from this to do this better next time?

These sound like people focused questions but I am not really being nice – I am looking to exploit the right resources and also acquire and build the resources I need to create value.

Bare with me though, I have a finance degree and studied some economics, so I learned to see things a little differently.

People have intrinsic value

I believe that people have a right to freedom and happiness, because of the simple fact that they are human. I also think that they deserve dignity and other rights.

But I actually think there are two reasons that people deserve things:

  • Because of who they are. All people deserve dignity
  • Because of what they do. If you are naughty you might deserve to go to jail and at the opposite end of the spectrum my friends and I used to rate favours as a “one-beer favour” where I would buy you a beer if you came to the party to me or a “carton” if you looked after my dog for a weekend. You earned the right to a drink if you did something you would rather avoid, but that helped me out.

So – I should treat all employees, customers and suppliers with dignity. This is not because they are useful resources for my team to use, it is because they are people.

But if they want to be people who work in my team, or vendors that I rely on, then I expect something more. If they want to be in the team then they must, through their actions, be useful to the rest of the team.

Here “useful” might mean people who bring energy to the team rather than sucking energy from it, or perhaps they have skills I lack or a viewpoint I would not have come up with on my own. Either way, I expect that they bring value to the team and in return the team should provide value to them.

Why are these people in the team? Do we really need him? Why am I in this team?

Me right before people suggest I word things a little more gently

If I want value then I must provide value

I expect people to pull their weight and contribute if they are in my team.

However that cuts both ways. If a team member is contributing to the team but we are providing them with nothing in return, then that is exploitation.

What do you need from me to do your best work? What are you hoping to learn while you are here?

An early manager I had

Pay for expenses but invest in assets

In economics you can exploit resources if you think of them as expenses (we pay per hour for this resource so that is all the value we need to exchange for their services) or if they are Consumable resources (something we can dig out of the ground until the mine runs dry … then dig another whole somewhere else).

This cold blooded approach might work if I simply hire people for temporary physical labour or if they provide a clearly defined service for a fixed price. But that is not the case with the people I have in my teams.

People are assets

If we are not simply exploiting resources then where does that leave us? If people are not merely expenses, then perhaps we can think of them as assets.

Assets are things you invest in so you can gain some value. I used to hear people say that “people are our greatest asset.” I assumed this meant that, of all the ingredients we need for success, it is the people that I should spend the most time protecting and growing.

But sometimes it seems like this is not what people mean. Sometimes it seems as if people are thinking of team members as Fixed Assets.

A fixed asset is one where we invest something in them (some training, kindness and stuff for humans or a purchase price for a machine). Then we claim depreciation on them until they burn out, at which point we sell them for scrap and purchase a new asset.

People are our greatest asset, which means that we can claim depreciation on them. With that in mind, we should burn them out at a rate that ensures they can still function for the life of the project and then we can sell them for scrap at the end of it.

Said no manager ever

Nobody I work with would suggest that and people assume I am joking when I say it (which I am). But if I observe people’s actions then sometimes I wonder.

If we thought of people as fixed assets, then we would bring people on board and flog them as hard as we could without them collapsing. If some were willing to work each weekend then we would let them, saying its a shame we can’t hire more fixed assets but not really looking for a resolution since people were still capable of delivering.

Then, ideally, they would be exhausted and unable to really give us their best work again – right when we finished our project, completed our mission or delivered something to our clients. We would have gained the maximum return possible and the asset would be disposed of. It sounds so bad when I say it that you would imagine nobody would do it but I have seen it in practice with good people doing this to themselves and others.

The depreciation approach to “fixed assets” might sound like an attractive option if you are, in fact, quite a nasty person. But it is deeply flawed, not just ethically but also economically.

Not all assets depreciate over time

This is because people are not fixed assets that deteriorate with time. They are “Growth Assets.” This kind of asset is worth something today and you pay that value to gain access to the asset, but then the asset increases over time and is worth more in a year than it is worth today.

For example if you buy the right stocks and shares they increase in value. Some of these assets are “fire and forget” and you simply buy them and hope for good fortune. But other assets, such as a company’s brand, require ongoing investment to help them grow in value. This is similar to buying a house and maintaining or renovating it rather than letting it deteriorate.

Team members (people in our teams) are really growth assets like these. They are resources that help you get the job done today, but rather than losing value they should increase in value as you interact with them.

The more people know about the mission then the more they can contribute. The better you know each other, the better you collaborate. The more someone writes code or publishes research, the better they get at writing code or publishing research.

People are bundled assets

Unfortunately people are also “bundled assets” rather than un-bundled. This means that we take them on as a whole. We cannot just but their knowledge, their enthusiasm, their perspective or their personality as a separate thing. You cannot take Mary’s enthusiasm but discard her lack of expertise and mix that with Michael’s skill in auditing while avoiding any investment in his annoying habit of talking about his hobbies.

So I get that people are human and that as such they have valid expectations that they will be treated with respect, I also get that they should be rewarded for their effort.

But if they are also human resources, then they can either be expenses (pay by the hour only when you need something) or growth assets (continue to invest in them so they increase in value).

In knowledge work and most team work, I think you will quickly see that the knowledge and capability people bring to the team will increase over time with a little investment in the right areas.

To me this seems pretty obvious, but it seems to be missed when some teams are busy. Let me give you some examples of the behaviour I would expect based on how I see the people in the team:

SituationPeople are nicePeople are expensesPeople are growth assets
RestructuresCommunicate well as you move people from team to team, introducing them to new friends as they moveMove people as needed to ensure you continue to gain revenue from them at all times.   

Put teams together on the basis of headcount needed to ensure you apply your expenditure to the right areas  

Shed those who will not transition easily and find new resources to replace them.
Ensure if you move people around that you retain and build the skill, knowledge and relationships that you and they have invested in.  

Structure the organisation with this in mind, ensuring that these things are enhanced rather than diminished with each decision to restructure
Initiatives, sprints and business as usualHave fun and hopefully deliver value along the wayEnsure you get everything you can from people with the limited time and money you have to “spend”Deliver value by leveraging the assets you have (people’s energy, knowledge, relationships, intellect) and simultaneously build these assets so the team is stronger at the end of the initiative than the beginning
FeedbackAlways be nice to people and avoid unpleasant conversationsBe very clear on what you want so you only pay for what you need.
Complain immediately if you don’t get what you want
Give feedback on where you think their capability can be enhanced and ask for feedback on how you can help them to both build themselves as an asset and improve the value they can contribute in the current team

Ask them to do the same for you

OK that is my view. It does not really seem to matter and this probably sounds like me having some fun with terminology.

But I have encountered some agile teams recently who are working people really hard with the apparent knowledge that it is unsustainable. This only makes sense if the team can continue to provide value without depreciating in effectiveness and value (ie they are an expense) or you plan to invest in them later to help them recover and recoup their energy.

I have also seen some teams that treat each other well but are not actually giving people a chance to grow. They are too busy getting their work done to actually question what the team are doing to increase their value. They use stand-ups to remove impediments and retrospectives to look at changing their operations, so their is some growth.

But they are continuing to get more single point sensitive each sprint and they are struggling to find time for anything but delivery. Their backlog of work is slowly growing in complexity, their documented knowledge is way out of date and their products are suffering from technical debt (ie increasing entropy). The team are aware of this but too busy right now to cope. And along with that, they are no longer mentoring people as much (since people can now deliver adequately), people are no longer taking the time to hone skills or grow new ones and people are slowing starting to feel stale and burned out.

This is not the goal we want to achieve if ether we seen people as nice or if we see them as bundled, growth assets that provide a critical resource that we need to protect and grow if we want to create value.

So my next article will look at something that agile teams and high performing teams should truly excel at – succession planning.

If you live in Sydney you might have seen some of my material already and if you read my article on “second loop learning” recently then you know everything you need to know.

But I will still go through some tools you can use to introduce a little more second loop learning to team capability growth beyond going on a training course at the end of the project.

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