Employees are not Overhead

Standard terminology, at least in the non-profit sector, refers to employees as overhead.

This needs to change.

People are not overhead. People are the force that makes any company effective. That is not overhead.

Matthew Kelly and Peter Drucker make this point better than I ever could:

It has been almost forty years since Peter Drucker observed the single greatest error of our accounting system: people are placed in the liability column on the balance sheet. Machinery and computers are categorized as assets and people as liabilities. The reality, of course, is that the right people are an organization’s greatest asset. (Matthew Kelly, The Dream Manager, page 2.)

Of course, just about everyone is willing to say “people are our greatest asset.” But largely this is still in the realm of theory–it hasn’t penetrated the way we actually work and think. Kelly goes on:

We may have acknowledged this truth in theory, but we have not allowed it to sufficiently penetrate the way we manage our organizations, and indeed, the way we manage the people who drive them.

One indication of the fact that we haven’t yet started taking seriously the reality that people are assets, not liabilities, is that we still use terms like “overhead” to describe them.

October 31, 2008 | Filed Under Management | 6 Comments 

Comments

  • http://fireandknowledge.org Josh S.

    Of course they’re not overhead — they’re human resources! ;)

  • http://www.csaproductions.com/blog/ Brendt Waters

    Resources, coming in at #9, just below toner cartridges.

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  • Matt

    My intention at my company is to rename the department from “human resources” to “talent.”

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  • Kelli

    However, The bottom line is you call them talent, or your peeps or the President, but in the end, employees effect the bottom line and they are overhead.