Your people are your biggest investment, so manage them like one.

Back in my LinkedIn days, we had a line we used with almost every client. Talent is your only long-term competitive advantage.

Everything else can be copied, replicated or bought. Your products, your pricing, your technology, even your office fit-out (that one usually gets copied first). The people you attract and keep are much harder for a competitor to replicate.

Fifteen years later, I believe it more than ever.

Which makes it strange how most organisations actually manage their people.

Most organisations treat people as a cost to minimise.

Think about how a business makes its other big spending decisions.

Buying a half-million-dollar piece of equipment? There's a business case, three quotes, sign-off from the board and a maintenance schedule for the next ten years.

Hiring someone on $120,000 who stays for five years? That's a $600,000 decision. And it often rests on a job ad someone wrote in an afternoon, a couple of interviews and a reference check done from the car park.

The investment is the same size. The level of care is nowhere near it.

The way the books work is part of the problem.

I don't think this happens because leaders don't care about their people. Most genuinely do. I think it happens because of how the numbers are presented to them.

Equipment goes on the balance sheet as an asset. It's tracked, it depreciates, and someone is accountable for looking after it.

People never appear on the balance sheet. They only show up on the P&L, as an expense. So every month, the financial statements tell leaders that people are a cost to control.

Alex Edmans, a finance professor at London Business School, has made a sharp point about this. The only immediately visible effect of investing in your people is lower earnings. The return turns up later, and it doesn't have its own line on the report. Add a bit of short-term pressure and it's easy to see why the investment gets trimmed.

Your people are where the value comes from.

Here's what the P&L doesn't show. For most organisations, people aren't only the biggest cost. They're where almost all of the value is created.

Your people win the clients, build the product, look after the customers and come up with the ideas that keep you ahead. If everyone walked out tomorrow, you wouldn't have a business. You'd have a logo, some laptops and a lease.

That's the whole reason our business is called It's the People.

The evidence backs treating people as an investment.

This isn't only a feel-good argument. Edmans tracked the companies on the 100 Best Companies to Work For list over decades, and found that firms with high employee satisfaction outperformed their peers by 2.3% to 3.8% a year in long-run stock returns, even after controlling for other factors that drive returns. A later UK study using a similar method found the country's Best Workplaces outperformed the FTSE All-Share Index over 23 years.

Treat your people well and look after them properly, and the market tends to notice, eventually.

Compare it with how you manage everything else.

Once you start looking, the gaps show up everywhere.

• Customer acquisition. Marketing can usually tell you its cost per lead, conversion rate and customer lifetime value. Very few organisations know their cost per quality hire, or why their best candidates said no.
• Customer retention. Customer churn gets tracked every month, with programs to win back the ones at risk. A top performer's frustration is often discovered for the first time in their resignation letter.
• Asset maintenance. Equipment gets serviced on a schedule. People often get one performance conversation a year, if the calendar allows.

Fixing this rarely needs a huge budget. It needs the same discipline you already apply everywhere else.

It also changes how you compete. When hipages was competing for engineers against Canva, Microsoft and Meta, outspending them was never going to work. So the EVP was built around what makes hipages different, which is a far better investment than a salary war. We've written more about that in If all you offer is pay, you'll always pay more.

Run the investment test on your next critical hire.

Pick the next role that really matters and treat it the way you'd treat a capital purchase.

Start with the five-year value of the hire: salary, on-costs and the cost of getting it wrong. ELMO puts the average cost of a hire in Australia at around $20,000 before you count lost productivity, so a bad hire adds up quickly.

Then ask the questions you'd ask of any other investment that size. What are we expecting it to return? Why would the best candidate choose us over a competitor? And what's our plan to look after it once it's here?

If those answers are thin, that's the job your employee value proposition is there to do. It decides who you attract, why they choose you and why they stay. If you need to take the argument to your CEO, our post on measuring your employer brand the way your CEO would will help you build the business case. And if you'd like a hand building the EVP itself, that's what our EVP consulting work is for.