The Human Capital Game: The Power of Company Culture
The
Human Capital Game: The Power of Company Culture
Ions ago, organizations fought hard to retain and train
the best talent available. Talented individuals came out of college knowing what
organizations they wanted to work for and they set their sights on getting in. Organizations
realized that people were the most important element and they adjusted
accordingly. Fast forward almost a century later and the tide has definitely changed.
The bottom line has changed and so has the endgame for many organizations. Terms
like pensions, retirement and even Christmas parties have become a thing of the
past. Reciprocally, the desires of employees has changed dramatically and now
money truly rules the game.
Human
Capital
First things
first, what is human capital? It is the skills, knowledge, and experience
possessed by an individual or population, viewed in terms of their value or
cost to an organization or country. In a nutshell, it’s the human side
to any organization. Despite today’s take on it,
human capital is an investment. Organizations place their money, and time into
creating an individual that will become a human asset to their business. Let’s
look at it more closely:
Schedule the interview----Interview---2nd interview----paid
training----uniform----probationary period (all paid)
The
above diagram is just a snapshot of the money that goes into hiring one
individual for your organization. Keep in mind, that someone is being paid to perform
all those duties up until the person is hired. Imagine the amount money that
goes into this process when a company has a low retention rate. Retention
refers to the ability of an organization to “retain” or keep their employees
for long periods of time. Low retention means that an organization is
constantly hiring or looking for new employees on a consistent basis. In the
grand scheme of things, companies are loosing millions on the high turn over
rates of their employees. For smaller companies, this can be the difference
between a profits quarter or a quarter full of loses.
The Offset
Despite the myth, retention is not solely the job of your
Human Resources department. Honestly, it falls on the executive and operations
managers to create a company culture that fosters appreciation and respect for
the employees. Company culture encompasses
values and behaviors that "contribute to the unique social and
psychological environment of an organization". In other words, it is the atmosphere of a workplace that
creates the standard by which employees will operate. Devoid of a culture,
employees will create their own standard and that will be created by the status
quo. Allowing the status quo to create that culture, places the future of the
organization in the hands of individuals who all think alike. These individuals,
may or may not have the best interest of the organization and they can create a
revolving door for employees. It would behoove companies to take the time to
properly groom potential talent to move into management. Properly groomed
managers, can help create and maintain a company culture that can offset losses
in Human Capital.
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