Rethinking Training

Dec. 21, 2004

New reporting could lessen the penalty Wall Street imposes for investing in people.

Pressure from Wall Street to make their numbers combined with what she calls the "mistake" in accounting principles that treats investments in human capital as a cost and not an asset, produces a "perverse" outcome for public companies, says Laurie Bassi, chair of Bassi Investments Inc., Bethesda, Md. The stock markets penalize those that invest in their workers for incurring costs that lower earnings.

However, Bassi suggests, "there is a relatively simple fix for this." It is for companies to report their investments in people in their annual financial filings, their 10-Ks and annual reports to shareholders. "If we started reporting investments in training, that would make a difference because then analysts would have a new piece information," contends Bassi.

She notes that General Electric Co. currently reports its investments in employees, but "as far as we can tell they are the only Fortune 500 firm that does." Without the new reporting, competitive pressures to keep such investments under wraps and concerns that securities analysts might take companies to task for some of their investments in people make it unlikely that many other companies are going to follow, she indicates. What are the chances for widespread reporting of investments in people? "I am not terribly optimistic that we will get a public fix to this problem in the foreseeable future. I would be delighted to be wrong on that, but I don't see it happening anytime real soon," says Bassi.

9 That Invest In People

Listed alphabetically, these nine publicly traded firms have been cited by Bassi Investments Inc. for their "significant investments" in employee learning.

Applied Materials Inc.
Capital One Financial Corp.
Dow Chemical Co.
FedEx Corp.
General Electric Co.
Intel Corp.
KLA-Tencor Corp.
Lockheed Martin Corp.
Microsoft Corp.

Source: Bassi Investments Inc.

About the Author

John McClenahen | Former Senior Editor, IndustryWeek

John S. McClenahen, is an occasional essayist on the Web site of IndustryWeek, the executive management publication from which he retired in 2006. He began his journalism career as a broadcast journalist at Westinghouse Broadcasting’s KYW in Cleveland, Ohio. In May 1967, he joined Penton Media Inc. in Cleveland and in September 1967 was transferred to Washington, DC, the base from which for nearly 40 years he wrote primarily about national and international economics and politics, and corporate social responsibility.

      McClenahen, a native of Ohio now residing in Maryland, is an award-winning writer and photographer. He is the author of three books of poetry, most recently An Unexpected Poet (2013), and several books of photographs, including Black, White, and Shades of Grey (2014). He also is the author of a children’s book, Henry at His Beach (2014).

      His photograph “Provincetown: Fog Rising 2004” was selected for the Smithsonian Institution’s 2011 juried exhibition Artists at Work and displayed in the S. Dillon Ripley Center at the Smithsonian Institution in Washington, D.C., from June until October 2011. Five of his photographs are in the collection of St. Lawrence University and displayed on campus in Canton, New York.

      John McClenahen’s essay “Incorporating America: Whitman in Context” was designated one of the five best works published in The Journal of Graduate Liberal Studies during the twelve-year editorship of R. Barry Leavis of Rollins College. John McClenahen’s several journalism prizes include the coveted Jesse H. Neal Award. He also is the author of the commemorative poem “Upon 50 Years,” celebrating the fiftieth anniversary of the founding of Wolfson College Cambridge, and appearing in “The Wolfson Review.”

      John McClenahen received a B.A. (English with a minor in government) from St. Lawrence University, an M.A., (English) from Western Reserve University, and a Master of Arts in Liberal Studies from Georgetown University, where he also pursued doctoral studies. At St. Lawrence University, he was elected to academic honor societies in English and government and to Omicron Delta Kappa, the University’s highest undergraduate honor. John McClenahen was a participant in the 32nd Annual Wharton Seminars for Journalists at the Wharton School at the University of Pennsylvania in Philadelphia. During the Easter Term of the 1986 academic year, John McClenahen was the first American to hold a prestigious Press Fellowship at Wolfson College, Cambridge, in the United Kingdom.

      John McClenahen has served on the Editorial Board of Confluence: The Journal of Graduate Liberal Studies and was co-founder and first editor of Liberal Studies at Georgetown. He has been a volunteer researcher on the William Steinway Diary Project at the Smithsonian Institution, Washington, D.C., and has been an assistant professorial lecturer at The George Washington University in Washington, D.C.