The Human Capital
Updated: Apr 21
At dinner, a close friend and a partner in a company mentioned how frustrating she finds seeing talented people leave for other companies. The reasons? They missed out on a promotion, or they were not given an opportunity.
As a coach specialising in transition, this is not new to me. My clients often complain they don't feel valued; this is one of the main reasons why they consider taking their expertise somewhere else. No matter what the industry or their role is, the same mistake is being repeated over and over again. Still, in our everyday life, we know how important it is to be surrounded by professionals - from the waiter, the nanny to the doctor- who, by loving their work, make our life easier.
A trillion dollars is, according to Gallup, what U.S. businesses are losing every year due to voluntary turnover. The cost of "replacing an individual employee can range from one-half to two times the employee's annual salary" (Gallup, 2019). So why is it so difficult for companies to acknowledge and take care of their human capital?
Let's start with the definition of capital: "wealth owned by a person or organisation available for a particular purpose" (Wikipedia). For any company, I suppose it would be skills, money and employees. If we were to take money out of the equation, it could still self-sustain. The workforce or the service provided could still generate money. The opposite wouldn't be possible. Money can only acquire talent and expertise, but it is where its utility ceases to be.
It is evident that a company's success lies in the people who, day after day, dedicate their time in exchange for money. However, although there has been much progress in protecting workers' rights in the 19th and 20th century, very little has been done to acknowledge that a company's success is made by the sum of its parts. The reason?
It could be as simple as holding on to power.
In small to medium-sized organisations, the CEO and the executives are keen to drive the strategy so they can be credited for their success and be rewarded with a larger share of the profit. If things don't work out in their favour, they are more than happy not to be questioned or blamed for their decisions. In larger companies, the structure's complexity – too many departments and many unprepared managers in charge – could be the obstacle to developing and maintaining a "human-centric" culture of work.
To add a layer of complicacy, the way we work has changed so that it makes it challenging to value talent and loyalty.
The internet has created a generation of NOMAD – people who can work from any country they choose, liberating them from the 9 to 5 drudgery of office work. And the so-called shared economies platforms have traded personal freedom for employment rights, ironically reversing the progress of the last two centuries.
In recent years we have indeed seen Silicon Valley companies trying to hire and retain talent with ping pong tables, free croissants and the vision of a utopian community of intent. With more change coming our way in the post-Covid era, it will be even more essential to find a new metric to evaluate, reward, and hold on to the people we have employed.
What Can Be Done?
Fifty-two per cent of voluntarily exiting employees say their manager or organisation could have done something to prevent them from leaving their job. A few simple, cost-effective strategies can help to retain staff and improve the working culture for everyone.
Mentor your employees. The beauty of mentoring goes far beyond "showing the ropes" and providing opportunities. It creates a closer and more personal relationship between the mentor and the mentee and helps identify strengths or opportunities to build on new ones. It improves communication; it's easy to open up when we feel safe and ultimately allow both parties to tackle controversial issues before they get more complex.
Create a climate of trust and transparency. Some decisions like promoting a candidate rather than another will always create unhappiness. If there is a logical and fair explanation, recriminations will not escalate to discontent.
Be fair. Be open and sensible in the way you remunerate people or give responsibilities. Ensure that there is consensus on the criteria and that goals are achievable so everybody can feel part of the group and get their shot at the more prominent roles.
Evaluate better. Make sure you have better tools to evaluate your people.
Suppose we insist on evaluating performance in numeric terms (number of sales or more extensive portfolios). In that case, we run the risk of feeding a dangerous culture of winning at all costs while at the same time penalising other aspects of the performance.
Collaboration, creating networks, promoting business, creativity, and great mentoring may not translate into a quick buck but, in the long run, make companies more agile and profitable.
Reward, reward, reward. What do people want? Easy. They want to be valued, and while usually, this can translate into more money or promotion, it's possible to offer more sustainable ways of saying "thank you! "congratulations!" "well done".
A restaurant voucher, a simple bunch of flowers, a surprise celebration in the office, a post on LinkedIn. Take your pick. It just needs a little thought - which is what all acknowledgement is about- and there will always be somebody in the office who will have fun taking care of it. It's easy, affordable, makes people smile, and divert the obsessive focus away from the bigger goals.
Actively listen. It is as simple as that. Take your time and really listen to what your employees are saying. I mean, give 10 minutes of your time to fully trying to understand what they want to tell you. Validate their concern. Ask questions to get at the underlying issues and concerns, and then add your perspective. They will feel you care and they are important to you. At the same time, you will gain important knowledge and will be able to deescalate any present and future issues.
Create a safe space to ask questions. An office culture that allows people to be curious, ask questions, and provide their perspective means direct involvement in the success of a project, a team or a company. This will translate into a higher purpose and buy-in when it comes to future decisions.
Lastly, be the agent of change. Too often, I hear people in executive roles who say that it is too difficult to change the company's culture. Well, why not start from your team? Change is a step by step approach, and minor tweaks create a ripple effect and build to more significant modifications over time.
Post-Covid will be all about redesigning the relations between individuals, their work. There will be the need to integrate the demand of the job and the desire to maintain acquired freedoms and the flexibility necessary to maintain a balance with family life and personal choices. Sustainability goals will have to start "at home" by cultivating, as the World Economic Forum puts it, "a human-centric vision of the future of work that recognises people's knowledge, talents, creativity and skills as key drivers of a prosperous and inclusive economy."