Do You Invest In or Neglect Human Capital?
At most companies, more time and energy is spent investing and analyzing the financial end of things rather than looking closely at the human capital side of your company – how you attract, develop, engage and retain the talent required to execute your strategy.
Financial Health Matters
Don’t get us wrong. You need to keep a careful eye on the key indicators most important to the financial health of your business. In fact, if the business is not growing and making money, it is very difficult to attract, develop, engage and retain the very talent we are referring to.
People Health Also Matters
Our point is that too many businesses spend too little time evaluating and taking care of their human capital. Our employee engagement research suggests that too many companies neglect human capital compared to financial capital.
Unless you invest in your employees by choosing them well, developing them in a way that supports your business strategy, engaging and retaining the best ones, you will eventually suffer financial consequences.
It is at least as important to invest wisely in your employees as it is to be smart with the way you invest your hard-earned investments and profits.
How To Better Manage Human Capital
What should you be doing to better manage the talent, time and energy of your workforce? Do just what you would do to better manage your business finances.
1. Apply People Metrics
Define relevant, meaningful and clear talent goals that are aligned with business priorities and diligently measure progress. Do you want to raise the level of performance? Then determine what behaviors define success, make your expectations for performance clear, and then assess those behaviors regularly.
Do you want to know how well you are retaining your top talent? Then identify those “A” players and monitor their engagement and retention.
2. Invest for the Future
As part of your strategic plan for the business, evaluate what skills and what competencies will be most critical for future growth. Then decide whether you will hire for those skills or build them internally.
Yes, this will take time and money. But you need a workforce that can meet the challenges of the future. And don’t forget succession planning. This is another part of human capital development that puts your best talent where they need to be.
3. Keep Track of Progress
Monitor and review performance so you know where people stand and if you are getting the best from them. Be sure that your team managers know how to coach for improved performance and that they are held accountable for the results of their team.
4. Recognize and Reward Success
Just as you should reap the rewards of sound financial investments, make sure your best workers are rewarded. And see that your leaders are rewarded for building strong, effective teams.
How good are your leaders and managers at hiring, developing, engaging and retaining the best players? They deserve to be compensated for building human capital value through developing employees who can make a real difference.
The Bottom Line
Do not neglect human capital. When you can apply the same measure of discipline and the same amount of attention on your human capital as you do on your financial capital, you will greatly enhance your chances of success.
If you want to learn more about what it takes to wisely invest in human capital, download Why Talent Is Surprisingly Only 1/3rd of the Talent Management Recipe for Success
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