Human capital is any organisation’s greatest asset. The collective skill, knowledge, and capacity of a company’s employees is the biggest driver of value for clients – and growth for the business as a whole.
While most companies spend a large portion of their operating budget on wages, payroll, and benefits, many fail to prioritise human capital development. Indeed, more than 40% of the organisations surveyed in the 2015 Talent Mobility Research Report admitted that they “rarely, or never, provide career planning or development”.
If you’re a business leader whose company falls into that 40%, it’s time to revamp your approach. Only by investing in your employees can you obtain the most benefit from them.
Various justifications are offered by businesses to support their policy of not providing additional training to their workforce. Among these are a general lack of interest in upskilling their employees, a sense that the costs outweigh the benefits, contentment with the status quo, and a suspicion that for lower-level positions, skill development is unnecessary.
Yet these notions fail to take into account the way that real innovation and teamwork are achieved. The best and most original new ideas within a company rarely come from those who are insulated from customers and isolated from the day-to-day operations of the company. It is precisely those people who have direct contact with customers and the production line who can offer the greatest insight into potential improvements in company operations – if only they are given the tools to succeed, as well as a genuine incentive to help the company reach its goals.
By contrast, employees will end up caring very little for a business that does not care about them. Their motivation will decrease, job performance will suffer, and they will sooner or later begin looking elsewhere for a more promising career.
Businesses that invest in their employees by offering quality training and development programmes, will soon find their investment repaid many times over. We therefore recommend offering extensive career planning development, and frequent on-the-job training, to further the skills of all employees and grow your company’s human capital.
A greater focus on human capital development will greatly improve employee engagement, satisfaction, retention, and recruitment – while at the same time fostering a healthier and more productive corporate culture.
It all starts with employees
The actual value of an employee isn’t measured by the amount of time they spend at their desks. Motivated employees who actually enjoy their jobs produce much higher quality work than their less-engaged counterparts.
To be sure, boosting employee engagement is easier said than done. Worldwide employee engagement remains alarmingly low; only 13% of employees are engaged in their work, according to Gallup’s State of the Global Workplace report.
Offering on-the-job training programmes for career advancement is an excellent way to drive up engagement. Such initiatives help to give clear incentives to employees, who will also see that the organisation cares about their personal growth.
Recent statistics make the connection between employee morale and human capital development remarkably clear. 42% of employees surveyed by the Society for Human Resource Management (SHRM) said that their organisation’s commitment to professional development is “very important” to their job satisfaction.
Moreover, when an employee sees a clear path to career advancement within their organisation, they become far less likely to seek out those opportunities elsewhere. In other words, an investment in employee development is likely to produce the added benefit of reducing turnover costs, which could otherwise be devastating to your bottom line. Replacing a salaried employee can cost the equivalent of up to nine months of their salary.
Beyond improving employee retention, a commitment to human capital development will also help you recruit the next generation of skilled workers. Studies show that the opportunity to learn and grow is a major factor for talented millennials as they determine where to apply for work.
Clear communication creates a positive culture
The benefits of skill development extend even further, however. Human capital development programmes can improve the lines of communication across your organisation, generating tremendous additional value from your workforce.
Mentorship programmes, for example, can foster working relationships between junior employees and senior management. These junior employees will then feel more comfortable communicating their ideas to leaders. Moreover, leaders will have a clearer idea of the capabilities of their workers, and will be more willing to elicit their opinions and enlist their support.
All of these improvements lead the way toward a positive organisational culture, where employees at all levels are eager to learn, pursue fulfilling careers within the company, and work together towards achieving shared goals.