Don't call us `assets'

Not so long ago the idea that we were living in a knowledge-driven age was a secret shared by a few radical thinkers and leading-edge practitioners. Now, it seems, every man and his dog trots out the phrase. The Prime Minister is a frequent proponent, while last week Peter Mandelson, the ex-Trade and Industry Secretary, popped up at a conference on the subject.

Or rather the conference was concerned with managing all this knowledge. And there lies the problem. This emphasis - inevitable, given the obsession of business with measurement and process - has led to the concept of intellectual capital and hence to the almost de rigueur chief executive's insistence that "our employees are our greatest asset".

Forget for a moment that many companies pay little more than lip service to the idea. What this is all about is conjuring up some kind of explanation for the fact that Microsoft and all those other hi-tech stocks have such huge market capitalisations and so little in the way of traditional assets.

Just as accountants invented "goodwill" as a catch all to explain why companies seeking to acquire businesses laden with brands had to pay so much more than the plant and machinery were worth, so management consultants have developed "intellectual capital" as a method of understanding the value of all that knowledge, expertise and intellectual property.

But as Thomas Davenport, a consultant himself, points out in a book published last week, this argument goes only so far. He says employees can't be assets as assets depreciate in value and people should become more valuable as they become more experienced. He suggests that we should see employees as investors. The idea put forward in Human Capital (Jossey-Bass) is that organisations should not seek to own or control employees - as the term asset implies. Instead, they should see them as free agents who invest their abilities, energy, behaviour and time in companies that give them the best return.

It is a powerful notion, and Mr Davenport claims to have seen it beginning to be put in place in a few organisations. But one can't help feeling that just as senior executives never truly adopted the idea of people as assets rather than costs, they're not readily going to see them as investors. Doing so would require a fundamental rethinking of the realities of business and, in particular, a full abandonment of the command and control attitudes that linger on, despite protestations to the contrary.

The challenge is particularly tough for human resource departments - not least as human beings can hardly be regarded as resources.

More seriously, though, the only way that such a move towards "deals" between employers and these free agents can possibly come about is if the HR departments devolve many of their traditional functions to line managers. The problem then is for the HR specialists to find something meaningful to do.