Managers are always claiming, “People are our most important asset.” But deep down, they can’t shake the feeling that employees are costs. Big costs. And they treat them that way. Quarterly earnings off? Cut the perks, rein in training, and downsize. This strategy may increase earnings in the short term, but it’s myopic. Recent studies suggest that layoffs actually destroy shareholder value. And our research shows that treating employees like the assets they are—by investing in their development—boosts returns over the long term.
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Companies that invest in employee development can outperform the market. Just ask their shareholders.
Summary.
Reprint: F0403B
Managers pay lip service to employees as “valuable assets.” But when numbers are down, staffers are often seen merely as costs to be cut. Treating employees like the assets they are can do more for your company than build morale.
A version of this article appeared in the March 2004 issue of Harvard Business Review.