Our CFO-in-Residence Chris Astle, along with co-author Laura Ellera, give us an excellent argument as to why it’s vital that people are genuinely considered as assets in their organisations- even though in accounting rules they are classified as expenses on the income statement and liabilities on a balance sheet.

This approach is out of step with how we understand how most companies, especially the more successful ones, operate around the world. In recent years, a huge change has taken place in which most of the assets of a company are now intangible- rather than in physical assets of plant and machinery.

Knowledge of a process, relationships with suppliers and customers, trade secrets and a company’s brand are some of the areas of intangible value that are at the heart of many companies’ real value. It’s not just the obvious companies, such as Silicon Valley tech giants, that have found ways to capture as much value as possible through harnessing human intellect to create all these areas of value.

The challenge has been to find ways of bringing together finance and HR to effectively measure the power of the human contribution to value creation across an organisation. Although it’s still a conundrum trying to measure as precisely as possible, some companies have sought to do so.

For example, Indian tech giant Infosys has put a measure on how much  its corporate university-the world’s largest- raises the value of its staff, even the value to wider society of those that have left the company.

As human value becomes an ever more important element in determining which companies become winners and losers of the future, it raises a profound question: Are our accounting rules fit for purpose in measuring the value of our people and of the intangible value they create?