The assets entrusted to managers and supervisors in order to achieve business unit goals and organisational objectives comprise of both ‘hard’ and ‘soft’ assets. Those currently working in HR or in leadership are already working with one of the most valuable soft assets an organisation can have – a team.
What is a soft asset?
Soft assets are valuable assets to every business, but can’t be tracked on a balance sheet.
Soft assets can sometimes be characterised as the human resources of the company. It is the skills and experience of its employees, and their overall productivity. While you might not put it down on the profit and loss sheet, it is a key component to whether your business is and will be profitable or not.
They are intangible, and can also be classed as:
Soft assets still make up a large part of the overall financial health of a business. If a business’ soft assets are weak or find themselves failing – the business can soon follow.
Difference between hard and soft assets
‘Hard’ assets are assets that are able to be capitalised and commonly measured in the balance sheet or profit and loss statements such as:
- Buildings and equipment
- Finance and debtors
- Land and investments
These ‘hard’ assets don’t execute strategy, make sales and so forth – it takes people to do that. People are the ‘soft’ assets organisations use in order to execute strategy.
Mismanagement of soft assets
Mismanagement of these ‘soft’ assets can have very hard consequences – just as there are big payoffs in managing them well.
Essentially, for the same cost, two very different outcomes can be achieved. The better the soft management, the more an employee will increase their effort resulting in higher productivity and engagement – all for the same cost.
While an employer can force attendance, they certainly can’t force creativity, passion, and commitment. These are controlled by the employee, who decides the extent to which they want to get involved.
It is within the power of supervisors and managers to empower their staff to turn on their thinking, creativity, passion, and commitment. It is also very easy for supervisors and managers to de-motivate people. There is an anecdotal saying that ‘people join organisations but leave managers’.
Key soft assets for profit and growth
Managers are entrusted with key soft assets. The assets are the make or break of the company and a strong leader will know how to utilise them to create profits and growth.
These assets include:
Time and talent
Organisations purchase time and talent in order to execute strategy. Purchase costs per minute for a wage of $50,000 is around 55c-60c per minute. A minute of time can be used only once. The cost is incurred irrespective of the outcome achieved by its use – or the lack of it. Wasted time incurs an unnecessary cost for the organisation. Supervisors and managers have managerial responsibility to ensure that time wastage is minimised.
Most employees start off their day wanting to do a good day’s work. Regretfully, some conclude their day’s work believing that they have been messed about by fools. This compromises a measure of goodwill which, in turn, compromises productivity and engagement. Supervisors and managers have a direct responsibility to manage the goodwill of their staff.
The competency of the culture in a work unit has a major impact on the productivity the unit achieves. Functional cultures are more productive than dysfunctional cultures. The better or more functional the standards, the better the relationships within the group. The better the relationships, the better the group productivity.
The degree of functionality of the relationships between a group is the single biggest determinant of its productivity. The functionality of relationships correlates directly with the levels of emotional intelligence within the group. Business units pay a massive price for dysfunction, both financial and emotional. Again, managers and supervisors have responsibility for the quality/functionality of the relationships within their business unit.
Each person has sets of beliefs and expectations that define their relationship with their organisation. When organisations nurture and deliver on these beliefs and expectations, people get engaged and committed. When they aren’t delivered, the relationship starts to fracture. This has a major impact on employee engagement. Supervisors and managers are the human interface between the organisation and its people.
Significance and pride
Every person, even the most humble, has a need for their significance as an individual to be recognised. Organisations, because of their hierarchical nature, often treat people differently based on their organisational position. The reality is that we are all equal – a person can’t give more than 100% of their best efforts.
It is important that each person understands the significance of their role (and its tasks and activities) and understands their contribution to achieving organisational goals and objectives. The sum of an organisation’s success is made up of the contributions of each of its members – some contributions will be greater than others, but the whole will remain greater than the sum of the parts.
The contribution each person makes according to their talent, abilities, and effort should be recognised. People who have their significance recognised feel better about themselves and have the opportunity to take pride in their contribution. Delivering significance and pride can unlock energies and motivation, just as their denial will kill motivation. Supervisors and managers have a major responsibility to deliver on and nurture this crucial asset.
Processes and systems
All work is done through a process and system. Obviously, some processes and systems are far more competent than others. Process and system competency is a major asset entrusted to supervisors and managers. Often, supervisors and managers are captives of the system rather than its managers – they are working in it rather than on it.
Seeing your employee’s as a soft asset will grow your business, and can turn a whole team and business around to drive profits. Soft assets are real assets, so make sure you are investing the time and right management skills to create a great work environment and get profits, and productivity, up.
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