What's the value of your employees?

Construction You know the immediate value of your plant and equipment, buildings and stock on hand ... but do you know the value of your staff?

Marcus Blackmore figures that each of his staff are a $1,000,000 investment, and may be this should be reflected on the balance sheet.

"My rationale is that you can borrow $1,000,000 from a bank for around $60,000 per annum. If your lowest paid person gets $45,000 per year they cost you (with on costs) $60,000 per year. Hence your lowest paid person in the organisation is a $1,000,000 investment for the company"

My observation in the light of this comment is that if a piece of equipment costs $250,000, are we not more likely to put more effort into rationalizing an equipment purchase than adding one member who is a minimum $1,000,000 investment into our business?

I wonder whether your business spends the same time and energy researching that new member of staff, maintaining them by giving them exemplary training and above award compensation, and ensuring they don't break down like a piece of machinery.