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Our Least Important Asset: Why the Relentless Focus on Finance and Accounting Is Bad for Business and Employees
A comprehensive and insightful look at the modern workplace and how employees are managed, where the new approach is driven by the quirks of financial accounting to the detriment of employees and the long-term success of the organization.
Real wages have stagnated or declined for most workers, job insecurity has increased, and retirement income is uncertain. Hours of work for white collar employees have increased steadily, opportunities for advancement have withered, and evidence of the negative effects of workplace stress on health continues to accumulate. Why have jobs gotten so much worse?
As Peter Cappelli argues, these issues are not a result of companies trying to be cost effective. They stem from the logic of financial accounting--the arbiter for determining whether a company is maximizing shareholder value--and its fundamental flaws in dealing with human capital. Financial accounting views employee costs as fixed costs that cannot be reduced and fails to account for the costs of bad employees and poor management. The simple goal of today's executives is to drive down employment costs, even if it raises costs elsewhere.
In Our Least Important Asset, Cappelli argues that the financial accounting problem explains many puzzling practices in contemporary management--employers' emphasis on costs per hire over the quality of hires, the replacement of regular employees with "leased" workers, the shift to unlimited vacations, and the transition of hiring responsibilities from professional recruiters to more expensive line managers. In the process, employers undercut all the evidence about what works to improve the quality, productivity, and creativity of workers. Drawing on decades of experience and research, Cappelli provides a comprehensive and insightful critique of the modern workplace where the gaps in financial accounting make things worse for everyone, from employees to investors.
Real wages have stagnated or declined for most workers, job insecurity has increased, and retirement income is uncertain. Hours of work for white collar employees have increased steadily, opportunities for advancement have withered, and evidence of the negative effects of workplace stress on health continues to accumulate. Why have jobs gotten so much worse?
As Peter Cappelli argues, these issues are not a result of companies trying to be cost effective. They stem from the logic of financial accounting--the arbiter for determining whether a company is maximizing shareholder value--and its fundamental flaws in dealing with human capital. Financial accounting views employee costs as fixed costs that cannot be reduced and fails to account for the costs of bad employees and poor management. The simple goal of today's executives is to drive down employment costs, even if it raises costs elsewhere.
In Our Least Important Asset, Cappelli argues that the financial accounting problem explains many puzzling practices in contemporary management--employers' emphasis on costs per hire over the quality of hires, the replacement of regular employees with "leased" workers, the shift to unlimited vacations, and the transition of hiring responsibilities from professional recruiters to more expensive line managers. In the process, employers undercut all the evidence about what works to improve the quality, productivity, and creativity of workers. Drawing on decades of experience and research, Cappelli provides a comprehensive and insightful critique of the modern workplace where the gaps in financial accounting make things worse for everyone, from employees to investors.
238 pages, Kindle Edition
Published June 27, 2023
About the author
Peter Cappelli
48 books15 followersGeorge W. Taylor Professor of Management Director of the Center for Human Resources
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Displaying 1 - 3 of 3 reviews
October 7, 2023
Not my bailiwick, so I either didn't know or hadn't thought about relevance of accounting principles to a lot of the phenomena he was mentioning. And.....couldn't quite follow all of it either, but I did get the point that accounting treats workers and a company's obligations to them as liabilities in ways that may not make sense (ex. if you buy a machine for your business, it's an asset that you can depreciate gradually over time with corresponding tax advantages, but if you spend time and person power on process of hiring a person, that's not an investment you can pay for over time, but an immediate cost and future obligation)
Mentions several times that the treatment of employees as fixed costs is unreasonable given that they can in fact be laid off if need be when there is a downturn.
I'd like to see a critical review by someone who knows more about business -- I was not fully convinced that all the bad stuff (just-in-time scheduling; extreme income inequality; micromanagement of Amazon warehouse workers via relentless performance metrics..........) he reviewed in later chapters really traces in large part to finance and accounting foibles.
Mentions several times that the treatment of employees as fixed costs is unreasonable given that they can in fact be laid off if need be when there is a downturn.
I'd like to see a critical review by someone who knows more about business -- I was not fully convinced that all the bad stuff (just-in-time scheduling; extreme income inequality; micromanagement of Amazon warehouse workers via relentless performance metrics..........) he reviewed in later chapters really traces in large part to finance and accounting foibles.
September 8, 2026
Our Least Important Asset offers a compelling critique of how financial accounting has shaped modern management and the treatment of employees. Peter Cappelli connects stagnant wages, job insecurity, workplace stress, and changing employment practices to the way organizations measure and manage human capital.
The discussion of hiring, leased workers, unlimited vacation policies, and the growing pressure to reduce employment costs is especially thought provoking. Drawing on extensive research and experience, Cappelli makes a strong case for reconsidering how businesses evaluate employees and long term organizational success. A valuable read for anyone interested in management, economics, and the future of work.
The discussion of hiring, leased workers, unlimited vacation policies, and the growing pressure to reduce employment costs is especially thought provoking. Drawing on extensive research and experience, Cappelli makes a strong case for reconsidering how businesses evaluate employees and long term organizational success. A valuable read for anyone interested in management, economics, and the future of work.
July 30, 2023
A sound review of the emerging pivot on the reporting horizon. I only wish Professor Cappelli was not so reserved with his reflections.
Displaying 1 - 3 of 3 reviews