It feels like I’ve spent much of my career trying to persuade business leaders they need to focus as much attention on their human assets (their employees) as they do their physical and financial assets (infrastructure, equipment, facilities, capital, etc.). Said differently, they should focus the same level of energy on managing their human capital as their financial capital. That’s one reason I’ve supported the migration to using the term Human Capital as a descriptor in functions and titles, instead of Human Resources. Set aside for a minute that the term Human Capital may feel a little colder to some (really though?), it more accurately reflects an equal importance to the “other” capital in achieving bottom-line results.
The challenge is, when we invest financial capital (an asset) in purchasing a new piece of equipment, for example, we can see on paper that the new machine produces X number more widgets per hour almost immediately. From there, we can easily calculate the return on our investment. However, when we choose to invest our leadership time (an asset) in building great, trusting relationships with our teams, we will not typically see the results on a specific line item on the P&L – at least not right away. That makes it much harder to calculate ROI, and more challenging to sell yourself and others on the idea.
While you may not be able to see the specific results on your monthly reports, it’s good to know that there is a significant and growing body of evidence that the investment in Organizational Effectiveness initiatives do result in greater productivity, loyalty and retention. These are longer term measurements of the health of an organization. For clarity, I define Organizational Effectiveness as anything relating to the people, that allow the organization to run faster and jump higher! More traditional descriptions may include: alignment of culture, recruiting, training, performance management, recognition and reward, and retention strategies. At the core, greater employee engagement is the ultimate goal. And by the way, greater engagement can reduce the stress level for everyone – management and staff – and who doesn’t want less stress in their life?
In my efforts to convince leaders of the value of investing in Organizational Effectiveness, I have frequently asked that they show courage (one of my favorite words). Specifically, to show the strength and resolution to commit assets (usually leadership time as well as financial capital) for the long-term benefit – and the financial results that will certainly follow. This requires patience and determination, and you may occasionally be at odds with those who only look at the “hard” numbers through a short-term lens. But if you are truly a visionary leader, and working to build something with sustainable success, it will be worth it!