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How to enhance your ROI on human capital

Monetary investments are never overlooked - but other investments that have the potential to create the foundation of a thriving business are often set aside. Maximizing the return on an investment is the primary lens we all look through, but we sometimes get blinded with tunnel vision as to how to obtain this return or are completely unaware that there is more than one way to achieve any sort of measurable results.

The most overlooked asset class is the investment you have in human capital. Whether it is in the process you take when hiring new employees or even when trying to maintain a balanced work culture. A company’s overall success comes down to its talent pool because every new hire needs to not only provide value, but also be beneficial to the company’s vision — otherwise they could hinder your work environment. By building knowledge and competencies within an individual, the innovation of a company will expand further along.

Unsuccessful companies typically get stuck looking at their short-term objectives and essentially jeopardize their own success and survival because they haven't invested wisely in their personnel. The links between performance and people are a focus that more organizations need to consider. You will begin to appreciate these investments in human capital and will often see the company’s growth reflect its efforts.

The Harvard Business Review created a method that measures the investment in human capital, which focuses on five major sections:

  1. Leadership Practice

When communication is open and effective between employees and management it allows for a more transparent working environment. By management collaborating with employees and welcoming input, it puts the managers and executives in a prime position to provide constructive feedback, eliminate barriers and inspire confidence in their employees. 

  1. Employee Engagement

Job security, recognition of employees and the potential for advancement heightens employee engagement within any workplace culture. Employees’ skill sets need to be used to their best advantage and work should remain organized. The workload needs to allow for jobs to be done well and still grant a healthy work/life balance. To ensure employee engagement, evaluations on a regular basis need to occur.

  1. Knowledge Accessibility

This area focuses on job-related training and information being available to all employees.  Another key factor in this section is that teamwork is encouraged within the workplace so that employees know that their knowledge is valued.

  1. Workforce Optimization

In order to cultivate a productive workforce, there needs to be well-defined processes and training that is an effective use of employees’ time. New hires need to be selected based on skill and high performance should be expected and rewarded within the company. 

  1. Organizational Learning Capacity

Leaders in the workplace need to demonstrate that learning is valued and supported with new ideas and fresh perspectives always welcomed. It is also important that employees have a formal plan for career development. These measurement tools can be focused on within your HR department to fully grasp how well people are being managed and developed during their employment. It is important to focus on these sections in order to implement strategies to enhance the categories that you are lacking with programs that coach, mentor and monitor your team in order to ensure that the management of human capital becomes a fundamental part of your company’s culture.

Is this the only way to provide a foundation for cultural norms in the workplace?

According to the CEO of Centro, Shawn Riegsecker, there is something simpler than that. Centro is a Chicago-based media management software company with close to 700 employees across the United States and Canada. It was ranked as the best place to work in Chicago four years in a row by Crain’s and the best place to work among all mid-size American companies by Fortune.

At Centro, happiness is the new ROI.

Getting culture right from the day you start your company is the largest determinant of whether or not you are successful in the long term. - Centro CEO Shawn Riegsecker at Techweek Chicago 2015

Now happiness is hard to measure and each person probably has a different way of doing so. An easy way of putting your company’s happiness into perspective is just asking yourself these three questions:

  • Can you attract the best talent?
  • What is your attrition rate?
  • Do you attract employees’ friends to your company?

55-60% of Centro’s referrals come from internal employees and their attrition rate has been less than 10% over the past three years. The company provides health benefits to their employees including a 3-week sabbatical that can be taken after 5 years of employment and funding for furthering education, among others.

While other companies may see these as unnecessary costs, Riegsecker believes that human capital is extremely valuable since he doesn't have the cost of replacing employees and has a seasoned staff that best represents his company.

Only the most competitive companies will be among those that manage their employees like the assets they really are - make sure you are one of them.

Hiring top talent and creating seasoned professionals is worth the investment. Whether you’re looking for elite product managers or sales talent, it’s crucial that you work with a recruiter who has the proficiency to construct top-performing teams.

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