One of the fundamental keys to building a successful business is about how you recruit, develop and retain your human capital. What is human capital? Essentially, human capital is the skills, knowledge and experience of your staff based on the value they bring to your business. Innovation, customer relationships and operational excellence all rely on your human capital, making it central to success.
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Here are four important considerations to help you enhance how you develop your human capital:
Consideration One: It’s no longer just about money
Employees today want more from their working lives than just earning lots of money. This is particularly true of millennials who will comprise 75% of the workforce by 2025. Millennials prize meaningful experiences. As revealed in research by Deloitte, they want work that allows them to learn and grow. Moreover, Deloitte’s study on Human Capital Trends notes that many of today’s workforce are much less loyal and more inclined to move on to new jobs if they don’t feel engaged and purposeful in their current position.
These changes mean that traditional approaches to human capital management will no longer work. Millennials have grown up in an era of always-on social networking and mobile technology; continuous feedback and interaction are the standard mode of operation. They desire less formality and increased flexibility. These changes must be reflected in your organizational structure, in how millennials are listened to and they are managed if you want to retain your human capital.
Consideration Two: The three stages to developing human capital
An organization’s relationships with its employees must be nurtured and developed. These relationships progress through three stages of maturity:
- Stage One: Employee Satisfaction
Are workers broadly satisfied with their job? Are they happy to stay with the company?
- Stage Two: Employee Engagement
Are employees being inspired and motivated to work in the company’s best interests?
- Stage Three: Employee Mobilization
Are employees empowered to respond to opportunities and threats without instructions from management? Do they use their experience and understanding of the company to deliver on business objectives?
Employee mobilization represents the most mature stage of human capital development and will also produce the biggest rewards. But, it is also the most difficult to achieve. You need to aim high and be willing to experiment, adapt to change and explore new ideas.
Consideration Three: Helping managers achieve maturity in human capital management
Leadership is central to how you manage your human capital. You need to work with individual managers throughout the organization to ensure they assume a core responsibility for employee development, taking employee engagement and feedback as a crucial means to achieving business objectives. This should be a continuous process, meaning that a company’s leadership eventually matures to the point that it has sufficient insight to align workforce competencies with business objectives.
A mature leader uses quantitative management based on real metrics from the business and soft data such as employee feedback to ensure the right changes are made to empower employees and integrate human capital into the business. This means making adjustments to some of the following operational areas along the way:
- Work processes
- Organizational change and competencies
- Employee feedback management technology
- Human capital management strategy
Consideration Four: Know where you are
The first step to improving the way you manage human capital is to identify where you are today. How engaged is your workforce? Are employees satisfied, engaged or mobilized? And how mature is your leadership? You need access to accurate, timely feedback data about these areas to assess where you are and what will be required to achieve where you want to be – human capital management software can help deliver this information. Using this data to understand where you are in terms of maturity allows you to then make informed investment decisions about your human capital strategy. If for example, you find that most your employees have not yet achieved a basic level of employee satisfaction, there’s little point in trying to aim for a mobilized workforce. Achieving excellence is a process and journey in the development of your employees and creating an environment that nurtures and sustains them.
Human capital is often defined by the value an employee brings to the business relative to their cost. To benefit from this value, you need to listen to employee feedback to understand their satisfaction and engagement. Then, use this knowledge to better organize, manage, develop and align people, while simultaneously enhancing the maturity level of your management. In this way, you can ensure that the value of your human capital outweighs the cost, and most importantly, drives continued business success.
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