Human Capital Management & Career Salary

Human Capital Management:
It’s Both a Career and a Salary Issue

Human Capital Management

“I set as the goal the maximum capacity that people have. I settle for no less. I make myself a relentless architect of the possibilities of human beings.”

~ Benjamin Zander ~

Randy knows his company’s HR operation is in need of a makeover. The combination of the down economy, government regulations, new technologies and recruiting challenges has overwhelmed people with paper-pushing and record-keeping. Randy wants to shift the company’s focus from a “personnel department” where staff is giving attention to individual career salary for human capital management.

As company president, Randy assumes ultimate responsibility for all departmental outcomes. But he knows that his people will support what they help create, so he wants his managers to be involved in designing a new HR direction. After a two-hour brainstorming session, they come up with three action items:

  1. Adopt an asset focus
  2. Reward results
  3. Expect continuous improvement

1. Adopt an asset focus. A company that operates with a human capital management philosophy believes that its people are just as much an asset as its buildings, its inventory or its cash in the bank. The career salary for people needs to be equal to the value being provided.

“We can quantify peoples’ value,” Randy tells his staff. “And we can increase that value by making the right kind of investment in them. But how do we do that?”

Truly treating employees like assets involves a new and different mindset for many corporations. Often, especially in a down economy, people are viewed as liabilities. Both philosophically and in actual accounting, they are treated as costs, an overhead item that can be reduced or eliminated for short term gain.

Instead of the traditional belt-tightening when the going gets tough, now is the time to increase investment in our people,Randy decides. That means recruiting top talent with the same analysis and intensity the company would put into buying a new piece of equipment. It also means setting up a comprehensive people development program that includes management training, career coaching, and a comprehensive succession plan that provides upward mobility and salary increases for those who want a real future with the company. His focus is on human capital management in which career satisfaction and salary are priorities for employees.

2. Reward results. Overall compensation, including salary, benefits, and intangibles, is important, but it must be based on results. And the corporate culture should be set up so that the best rewards go to those who achieve the most impressive results. Along the way, of course, the company should also reward exceptional effort with praise and encouragement, even in cases where the goal or expected outcome didn’t happen. Each department manager will be responsible for evaluation and rewards, based on holding employees accountable for achieving specific business objectives, coming up with new ideas, and contributing to the company’s long-range plans.

3. Expect continuous improvement. Randy sees this strategy as a long term change, and long term means continuous improvement throughout the company.

The principle of continuous improvement originated with Dr. W. Edwards Deming, the management guru who helped the Japanese rebuild after World War II. Rather than making radical, high profile changes in company operations, Dr. Deming adopted the Japanese concept of kaizen, meaning “good change.” Kaizen says that each employee responsible for making small but consistent changes to his or her own operation. Over time, those small, incremental changes contribute directly to the company’s bottom line results.

Kaizen is based on five key principles: teamwork, personal discipline, improving morale, using quality circles, and making suggestions for improvement. Randy and his C-level managers base their human capital management strategy on implementing these principles. They provide monetary rewards, and they treat people as tangible assets by providing coaching and training that lead to career advancement opportunities.

The moral of the story, Randy says: “Invest in your people, just as you would any other tangible asset, and your ROI will go straight to the bottom line.”

If you would like to turn your people into tangible assets, Joel can show you how to do that. Contact him today.

Talkback: Are you seeing your people as assets or liabilities? Share your experience here.

Image courtesy of S.John / Fotolia.com

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2 Responses to Human Capital Management:
It’s Both a Career and a Salary Issue

  1. Adrienne says:

    I firmly believe that individuals should be treated as assets by their employer, because they create value or enable value creation. But the reality is, as people we are imperfect. We will make mistakes that will create liability for our employers. And even worse, I have had the unfortunate displeasure of working with individuals who seemed to walk through the front door looking for a lawsuit. While those situations are far from commonplace, when you’ve been on the receiving end of that type of risk management issue, it’s hard for it not to taint your perspective. You become far more cognizant of the liability that any employee can create intentionally or unintentionally. I find this to be particularly true in the case of small businesses who may not be as skilled in effective hiring practices in order to manage that risk.

    This risk issue is part of why I built my career development membership site. There is a significant gap in communication between employers and employees and a predisposition to the idea that employers and managers are fundamentally bad. As members of the workforce, we all need to be developing our emotional intelligence, accountability, ability to manage up and communication skills in order to create clarity and trust in the workplace. And that is how I intend to help move the needle closer to “assets.”

    • Hi Adrienne,

      Thanks for the comment. I really appreciate what you had to say. I agree with your comment that “we all need to be developing our emotional intelligence, accountability, ability to manage up and communication skills”. Too often employees like to maintain the status quo and not work on developing themselves. Be proactive in creating the career you want. Don’t wait for it to come to you.

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