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How to Improve Human Capital Management
Posted by Insightlink on 06/21/22
Employees are not just cogs in the organizational machine when it comes to improving human capital management. Instead, they are individuals with different goals, preferences, and personalities. Therefore, you must understand each employee's motivation, communication, and work preferences as a manager. For example, while some people may benefit from frequent check-ins and email communication, others may prefer face-to-face communication. Here are a few tips for improving human capital management:
Investment in training
The return on investment (ROI) of human capital is a compelling case study of how training increases business productivity and profits. Few employees enjoy the direct benefit of higher wages, but most productivity gains go back to the employer. Investment in employee training and skill development plans can significantly increase the ROI of human capital management programs. Moreover, these programs can provide tangible benefits, including reduced recruitment and training costs. But how can organizations measure the ROI of training and skill development?
According to the National Bureau of Economic Research (NBER), the productivity of a company's workforce directly relates to their skills and knowledge. A skilled workforce increases productivity, and on-the-job training improves the skills of existing employees. On-the-job training can increase employee productivity by nine to sixteen percent. Incentives also play a role in developing human capital. While some companies penalize deviations, others reward creativity and innovation.
Investment in education
The OECD recommends investment in education reform to achieve the goal of improving the human capital of a nation. However, quantifying the impact of education reform has proven difficult, and researchers have yet to identify quantitative measures. Generally, human capital can be defined as a country's stock of knowledge, skills, and personal characteristics. Investment in education encompasses early childhood education and adult training programs, but informal learning is also a form of investment in human capital.
Increased education spending is an economic boost. In OECD countries, education expenditures comprise a large portion of the GDP. Private individuals and governments make this investment, but ultimately, the decision is economical. Investment in education has a multiplier effect on productivity and long-term prosperity. In addition, education policy improves the ratio of teachers to students and increases investment returns. But what is the impact of this improvement on aggregate human capital formation?
Investment in benefits
The effectiveness of an organization's human resources investment can be measured by considering its wage conditions and business benefits. Investing in a company's workforce entails rewarding employees with appropriate compensation for their job duties. Traditionally, employees were compensated on a piece-rate basis, middle managers earned contract wages, and top management received a proportionate remuneration. The time factor and size of the investment are also important considerations in strategic planning for human resources.
The importance of investment in benefits is often overlooked, but businesses must consider the ROI of employee retention strategies. Benefits should not be seen as an additional expense but as a potential source of income that will pay off in the long run. As a business owner, you should understand that your success depends on your employees. So don't ignore the importance of your workforce - and find ways to improve it.
Focus on employee strengths
One way to better utilize your human capital is to focus on your employees' strengths. For example, you might hire someone with particular organizational strengths, but you should also look for other talents, such as creativity. You might try giving them new projects to work on or delegating them different tasks. You can also offer flexible scheduling for those with creative abilities, but ensure that the work is not too creatively demanding. This way, your employees will not burn out.
Research shows that playing to your employees' strengths can enhance business performance. According to Harvard Business Review, employees taught how to tap into their unique strengths saw a 10 to 19 percent boost in sales, a 14 to 29 percent increase in profits, and a 22 to 59 percent reduction in safety incidents. In addition to improving overall business performance, playing to your employees' strengths helps your company's culture and morale.
Communication with employees
To improve your team's performance, communication with your employees is critical. When employees know exactly what's expected of them, they are more likely to go the extra mile and perform better. Moreover, accurate communication helps build employee trust and creates an employee-brand connection. However, good communication needs to be two-way, so you must offer your team members the option to give feedback formally.
Employees should feel free to share their thoughts with their managers during performance appraisals. Having regular conversations with them boosts their morale and increases their sense of respect. Regular feedback also minimizes stress and creates a good scope for improvement. When employees know exactly what is expected of them, they are more likely to do their job well. It is important to remember that two-way communication builds sacred trust between the organization and its employees.
Where does your company stand on each of the critical "4Cs" of employee engagement and satisfaction?
How many of each do you have?
AboutInsightlink Communications are experts in employee survey design, data collection and analysis. Since 2001 we've helped companies of all sizes measure and improve their employee satisfaction and engagement.
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