Why You Need To Invest In Human Capital

Human Capital, I remember when I first heard this phrase as a consultant. I didn’t know what it was then, but now, I realize that it’s every organization’s most precious resource.

Human capital management is the collective knowledge, skills, and abilities within a population. Companies would like to see this set of knowledge, skills, and abilities grow. Within a work environment, the growth of this population’s knowledge, skills, and abilities are considered investments that are made by the organization. So, successful organizations invest both time and money to provide opportunities to improve their human capital.

Human capital investment is the entire premise behind personnel or human resource division. The professionals that work in human resources are trained to ensure that the investments made in employees have a solid return. The term ROI or Return on Investment is a commonly used business acronym. It’s common because businesses want a positive return on their financial investment so that they can make money and continue their operation. Similarly, the Human Resource departments within organizations are looking for returns on the investments that are made into their employees.

Human capital management helps organizations get positive returns from their employees. Organizations that do this the best typically end up on the top 100 list of best employers to work for. Simply put, they care about (and invest in) their employees so that they’re happy and productive.

People are the life-blood of any organization. When you’re taking care of your body and being active, your blood is flowing, you’re much healthier. The same goes for when you take care of your employees in your business. They’re more active and the business is much healthier. Investments in people can transform a struggling business into one that thrives.

Investments cost: Investments cost time and money. Businesses do not want to waste either of those commodities. With that said, here are three basic human capital strategies that can transform your organization into a high performing operation which can help generate a positive ROI.

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Onboarding: The process of helping a new employee get acclimated to their new environment is one of the first things that great employers do well. A new employee has lots of questions. Creating an environment that’s open and inviting can allow the employee to feel that their questions are valued and validated. Having designated, patient, people to answer new employee questions are a great strategy. These designees can inform the new hire about the culture of the organization, the expectations within the position, and develop crucial relationships in the process. The onboarding process officially ends when the employee feels comfortable in their new environment.

Development: Having employees who are dedicated to the organization will lead to their desire to be developed further. A good onboarding process sets the foundation to employee dedication. Once these employees have begun to show promise, it’s time to give them opportunities to grow. Have intentional opportunities for the employee to experience new aspects of their department or the organization. Development can be a continuous process depending on the employee and the organization.
Recognition: Now that the solid foundation of onboarding has been laid and the walls of development have begun to arise, it’s time to put the roof on by recognizing employees for their hard work. Recognition can come in many forms. Since every employee is different, the time that has been spent developing a positive work relationship may give clues or insight into how they may want to be recognized for a job well done. Recognition should be continuous and consistent.

These three strategies are a starting point for ensuring that the return on employee investment is a positive one. Consider each of these strategies individually, but realize that both development and recognition are ongoing. Attention to detail concerning the growth of an organization’s human capital can create a positive return for everyone.

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