Do you understand the importance of human capital within your business? Your answer is most likely no. Most businesses today do not even know what human capital is, let alone understand its importance. Human capital is similar to other assets you have in your business, such as equipment, product, etc. Human capital refers to your people or employees within your organization.
Human capital and its management are important for your business for a number of reasons:
- Will help you hire the appropriate talent.
- Will guide you in the training and orientation of new talent.
- Will help you in retaining talent.
- Will help you in further development of talent within your organization.
Most businesses need people (employees) to carry out the everyday order of business. Without these employees, business would suffer. Who would conduct customer service? Who would fulfill orders? Who would conduct marketing and sales? Who would keep your books in order? Many times these employees become the face of the company. Because you rely on these employees for your businesses success, doesn’t it make sense to invest in this capital?
When you begin to think of your employees as capital or an asset within your business, you will find that you have a different approach to management of these employees. Your recruiting process will take on a new meaning and become more thorough. Your orientation and training methods will change to reflect the company’s goals and enhance your employees’ skills.
When you become more invested in your capital, it will incentivize your employees to become more involved. They will want to accomplish the goals you have set, and will feel satisfaction when they do. This not only boosts morale, but helps to retain good employees for a long time. Less turnover means less capital you need to expend, and more you can invest in your current capital (or employees).
Many successful companies have discovered unique ways in regards to human capital management. As with any other asset in the company, periodic review and measurement is critical. This will allow you to make the necessary adjustments needed to keep your employees working smart.
Understand the importance your employees have on your organization. Why do they add value? How can they add more value to your business? Are your employees compensated enough? Is morale sufficient? These are all questions you should ask regularly.
You can see why human capital is so important to business today. We live in a society that is driven by technology and information. As we progress forward, it is going to become increasingly important to depend on that human capital to design, build, and run your business. Invest in your people now!
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