Too often, traditional corporate values overlook this significant asset. Companies focus heavily on tangible assets, while their most crucial resource - their employees – are sometimes neglected. It's time we shift our perspective and recognize that our human capital is our most valuable asset.
What am I talking about when I use the term “human capital?” Human capital refers to the economic value of the combined skills, knowledge, abilities, experience, training, intelligence, and other attributes of an individual that can be used to perform in some capacity to produce economic value. It emphasizes that the quality of employees can be improved by investing in them – for instance, through education and training – thereby enhancing their productivity and potential output. The concept of human capital recognizes that individuals and their unique abilities can be seen as assets that contribute to an organization’s bottom line.
Retention is a super trendy part of the human capital discussion right now – but this has not always been the case. Traditional societal and corporate values often ignore the value of human capital. Organizations frequently prioritize short-term financial results over long-term employee development and well-being. This oversight is not just a missed opportunity; it can result in high turnover rates, low employee engagement, and ultimately, diminished performance. Recognizing the value of human capital is not a mere philosophical change; it’s a strategic imperative for organizations seeking sustainable success.
And I don’t mean to imply that this is some kind of archaic corporate issue: we only have to look “as far” back as 2016 with the Wells Fargo Banking Scandal (reported on as recently as 2020 in The New York Times) to see an example of this type of complete disregard for the value of human capital. Just to recap: in 2016, it was revealed that the bank’s employees had been creating millions of fraudulent savings and checking accounts on behalf of Wells Fargo clients without their consent. The scandal led to a fine of $185 million by the Consumer Financial Protection Bureau (CFPB) and cost then-CEO John Stumpf his job. The more recent article says “the price has grown by $3 billion” – and the costs to the company’s credibility are almost immeasurable.
This scandal was rooted in an aggressive sales culture where employees were heavily pressured to meet daily sales targets. The unrealistic expectations and high pressure led employees to engage in unethical practices to meet these targets. Wells Fargo failed to value its human capital, creating an environment where employees were seen as tools to drive sales, rather than valuable assets to be nurtured and developed. The fallout from the scandal has not only damaged the bank’s reputation, but also resulted in significant financial losses.
Human capital is not “just” about retention and retention is not “just” about keeping employees; it’s about maintaining the wealth of knowledge, skills, and innovation they bring to the organization. When an employee leaves, the loss extends beyond a headcount. The organization loses expertise, internal networks, and potential future leaders. Additionally, recruiting and training replacements can be costly and time-consuming. Therefore, promoting employee retention should be a central aspect of any corporate strategy.
Wondering HOW you can stop ignoring the value of your human capital? (I’m glad you asked!) Here are 3 tips and their potential pitfalls on how to do just that – and a few case studies to help back up each one.
• Tip: Prioritize Employee Development
Employees feel valued when their growth and development are taken seriously. Create opportunities for learning and career advancement to demonstrate your investment in their future.
Case Study: AT&T’s “Workforce 2020” initiative is an excellent example of this. In 2014, the company realized that the skillset of their employees was not evolving fast enough to keep up with their industry’s rapid pace of change. In response, they launched “Workforce 2020,” a $1 billion web-based, multi-year effort that includes online courses and collaborations with universities. The program offers employees the opportunity to gain the skills needed for future roles. According to a 2020 study by LinkedIn Learning, AT&T’s program has had a positive impact on employee retention and productivity.
Potential Pitfall 1: The training doesn’t match employees’ needs or aspirations, leading to disinterest and non-participation. Overcome this by conducting regular surveys to understand what skills your employees want to develop and tailor your programs accordingly.
Potential Pitfall 2: Employees are overwhelmed with workload, and training becomes another burden. Overcome this by integrating development into the work process itself, making learning a part of the job rather than an add-on.
Potential Pitfall 3: Training is seen as a one-time event rather than an ongoing process. Overcome this by creating a culture of continuous learning, incorporating regular upskilling and reskilling opportunities.
• Tip: Foster a Culture of Recognition
Regularly recognizing and appreciating employee contributions can significantly increase morale and loyalty, leading to higher retention rates.
Case Study: Google’s peer recognition program, “gThanks,” allows employees to publicly recognize their peers’ contributions. The data-driven company found a strong correlation between areas with high usage of the recognition program and areas with high performance and retention. Google found that peer recognition could be even more motivating than manager recognition, showing that recognition from colleagues also has immense value.
Potential Pitfall 1: Recognition feels inauthentic or forced, leading to cynicism. Overcome this by encouraging genuine, specific praise rather than generic acknowledgments.
Potential Pitfall 2: Recognition is given unfairly or inconsistently, leading to resentment among employees. Overcome this by establishing clear criteria for recognition and ensuring all employees are equally considered.
Potential Pitfall 3: Recognition focuses solely on big wins, leading to a lack of appreciation for consistent effort and small victories. Overcome this by creating a culture where everyday achievements and effort are also celebrated.
• Tip: Encourage Work-Life Balance
Promoting work-life balance not only enhances employee satisfaction but also reduces burnout, leading to better retention.
Case Study: American Express’s “Healthy Living” corporate wellness program is an excellent example of promoting work-life balance. The program offers health coaching, disease management, access to nutritionists, and fitness challenges. The company has found a strong correlation between employee participation in the program and increased retention. American Express reported that its employees who participate in their health programs are more likely to be high performers and are three times more likely to stay with the company.
Potential Pitfall 1: Employees feel pressured to maintain an unrealistic balance, leading to stress. Overcome this by promoting a culture of flexibility, where employees have the autonomy to determine what work-life balance looks like for them.
Potential Pitfall 2: Work-life balance initiatives are seen as a “tick box” activity rather than a genuine commitment. Overcome this by leading by example; when leaders prioritize their own work-life balance, it signals to employees that they can do the same.
Potential Pitfall 3: Initiatives are implemented without considering individual needs, leading to reduced effectiveness. Overcome this by seeking employee input when creating these initiatives, ensuring they meet diverse needs and lifestyles.
Creating and fostering a non-toxic corporate culture plays a pivotal role in retention. A positive, supportive work environment encourages employee engagement, fosters loyalty, and boosts productivity. Employees in such environments are more likely to feel valued, motivated, and committed to the organization. This nurturing environment helps keep human capital right where it should be – within your workforce, driving your organization towards success.
As we navigate the ever-evolving business landscape, we MUST begin to embrace a more holistic view of our organizations. Let’s recognize and celebrate our human capital, fostering a corporate culture that encourages growth, inclusivity, and recognition. By doing so, we can cultivate a workforce that’s not just present, but fully engaged, motivated, and committed to driving our organizations forward. Remember, your human capital is your most important asset; it’s time we stop ignoring its value.