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are dependent upon what type of asset it is, its cost, and use. Capital assets are usually identified in a business by having an individual asset tag and asset number. It is not unusual for maintenance departments to get involved by performing an annual ‘asset audit’ to assure the accounting department that all the assets being ‘depreciated’ are in fact still on the premises.
Several years ago, some crafty accounting loopholes were discovered that allowed for what were traditionally expensed repair activities to be ‘capitalized.’ This seemed like fuzzy math, but it also appears to be legit. The unintended consequence is that maintenance and the storeroom have to track spare parts as capital assets. Very few companies or organizations do this very well. If you track these new capital additions and you’re good at it, then consider yourselves leaders of the pack.
There will be greater discussion on capital assets as this is actually the focus of this book. For now we’ll keep this as just an introductory session.
Earlier I shared my working definition for an asset as, “any tangible or intangible item, thought, process, concept, or substance of value that can be manipulated for financial gain." In Table 1-1, please list a single capital asset in your facility and at least two ways this asset can be (or is) manipulated for financial gain.
Table 1-1 Methods for Manipulating One Asset for Financial Gain
| List one capital asset: | |
| How is it manipulated for financial gain, means #1: | |
| How is it manipulated for financial gain, means #2: |
As an example of what I was looking for in Table 1-1, my fictitious company has a mechanical press. There are many ways my company manipulates this asset for financial gain.
One manner in which they do this is to run the unit 24/7. Secondly, to speed up changeovers, my company has modified the press for quick changeovers to increase its overall availability.
Look back at your entry on Table 1-1 and confirm that your company uses assets for financial gain. This is not a negative attribute. That’s what companies do. They manipulate assets to make money. If it helps, you might consider using the term ‘use’ instead of ‘manipulate.’
Now, the harder exercise: if the asset you listed is truly an asset and valuable, in Table 1-2 please indicate the manner in which your company manifests (or demonstrates) the belief that this particular asset is of great importance to the financial success of the organization. For example: my company has awesome preventive maintenance, clear and complete spare parts availability, and solid drawings and schematics for this mechanical press.
Table 1-2 Demonstration of an Asset’s Importance
| List one capital asset: | |
| Demonstration of asset’s importance #1: | |
| Demonstration of asset’s importance #2: |
Look back at Table 1-2. Can you honestly convince people that your company values its assets, and actively demonstrates the importance of the equipment’s role in accomplishing the mission of the business?
Human Resource Assets
Years ago, I was teaching a class in the middle of the United States and we were just in the ‘introduce yourselves’ phase. A student in the center of the back row was wearing a large, red sweatshirt with a giant letter “N” on it. I asked him if he was a Cornhusker’s fan. He proudly pointed to the letter on his shirt and proclaimed, “Yep, where the ‘N’ stands for knowledge!” I instantly figured him for an OU man (Author’s note: I graduated from Oklahoma State University).
Aside from being a funny story, the gentleman made a poignant observation. It is the knowledge that is important. When companies or individuals tell me that people are their greatest asset, I usually respond, “No they’re not. It’s the knowledge and skills that they possess that make them an asset.” Let’s face it, a new employee is not an asset on day one. Heck, they’re probably a liability. I jokingly tell my classes, “Jerry, stand over there and don’t touch anything.” A human resource asset isn’t truly an asset until they know something and can do something that leads to a fiscal gain for the company.
To truly reflect the value of people as assets, a human asset, there needs to be a comprehensive training and development program built around the person and the position. For example, Figure 1-2 might reflect the different roles of a maintenance planner/scheduler in your organization.
Figure 1-2 Roles of a Planner/Scheduler
If Figure 1-2 reflects the roles that a planner/scheduler might fill at your facility, there should be an objective-based training protocol for each. Take, as an example, what a training matrix might look like for the planner/scheduler for the role of PM/PdM (Preventive Maintenance/Predictive Maintenance) overseer. Figure 1-3 is an example of this matrix.
Figure 1-3 shows the start of a training matrix for the planner/scheduler. The first few columns of this particular matrix are meant to show some skills that are necessary for the planner/scheduler’s role as the overseer of the PM/PdM program. Note that the legend for how to read this matrix is in the upper left-hand corner.
Figure 1-3 A training matrix for the Planner/Scheduler role of PM/PdM overseer
Adapted with permission by Marshall Institute, Inc.
To demonstrate the lengths to which your organization will ensure that a human resource is actually an asset (contributing to the fiscal benefit), in Table 1-3 indicate a single individual’s first name (in your company), one role they fulfill, and two skills they are required to have as part of their transformation into a greater asset for the company.
Table 1-3 Increasing the Value of an Associate Adapted with permission by Marshall Institute, Inc.
Adapted with permission by Marshall Institute, Inc.
Just to recap, for human resource assets to truly be assets, they need to know how to do something that contributes to the fiscal prosperity of the company.
Financial Assets
Financial assets might be the easiest and most relatable concept for us as individuals to comprehend. Why? Because we have so much personal history with this type of asset. Financial assets are the answer to, “How much money do you have, and what are your investments and your level of liquidity?”
I personally have four bank accounts, two business checking accounts, one personal checking, and one personal savings account. Years ago, I was in the bank transferring some money between accounts and getting some cash and the teller asked me a strikingly personal question. “Mr. Ross,” she said, “why do you have four bank accounts?” I responded that I needed four accounts because the bank only insured each account up to $250,000. She looked amazed and asked quite sincerely, “You have one and a half million dollars in our bank?” I did not correct her math, but I did ask her to count back my cash, twice!
The financial assets are basically the portfolio that is the cumulative accounting (pun intended) of all your money and investments. I won’t ask you to list your financial portfolio. But, understand that businesses depend on cash flow.