Maximizing Human Capital

If you asked business owners and leaders today what their most pressing need is, what do you think they would say? According to most of the major consulting firms, the answer is human capital. That’s because the ability to attract, engage, motivate and retain the employees who generate value and make the business function is a critical factor in reaching growth and profitability goals. It’s also going to become a greater challenge in the near future.

Consider the fact that the people in your organization (their efforts, ideas, performance and behaviors) will have the greatest impact on your customer experience, innovation activity, revenue growth and profitability. Payroll may also be the largest cost center in your organization. So doesn’t it make sense to focus on establishing Human Resource practices that lead to growth?

“But it’s a cost center”, you might say. “Why would I want to spend any more time or money on it than I have to?” The most important reason is that Human Resource practices, when managed properly, have been shown to have a massive impact on long-term profitability and growth.

Take your culture, for example. Human Resource practices play a massive role in ensuring the health of your culture, protecting it and ensuring that it permeates the organization. Effective HR practices are also designed to ensure that employees remain engaged and focused…bringing discretionary effort to the table. 

Engagement happens when people are clear about the purpose, meaning and value of their work and when their core needs are met. While Managers are often the key influencers of engagement, HR practices support the design, evaluation and development of the career opportunities that bring about growth. Meaningful work, culture, personal relationships, appropriate compensation and development opportunities are five of the most important elements that impact employee retention.

Several HR activities also have a direct impact on the bottom-line results of the organization, including controlling recruiting, benefit, compensation and regulatory costs. The ability to minimize legal risk and related financial penalties is also a significant responsibility.

The effects of performance management, training and development, and general administration may be more indirect but play an equally important role when it comes to long term viability and readiness to drive the competitive advantage that comes with hiring, engaging, motivating and retaining top talent.

The role of HR has clearly evolved over the years. It’s about driving the strategies that create the organizational growth.