Following on from the Prime Minister’s announcement on Monday 22 February, many businesses are now gearing up for re-opening.
This is the perfect time to take a moment and think about your company’s current position. What got you to this point and what is going to help take your business to a whole new level?
Arguably, the most valuable asset of any business is their people. The employees who work within your business are the cogs in the machine that keep your business running on a day-to-day basis. Keeping your employees engaged and happy will drive productivity and profit.
Every business needs to invest in human capital. What is human capital?
Human capital is an intangible asset or quality not listed on a businesses balance sheet. In short, it is the economic value of an employee’s experience and skill. This includes assets like education, training, knowledge, skills, health and other things employers value, like punctuality, dependability and loyalty.
The concept of human capital recognises that not all labour is equal. But employers can improve the quality of that capital by investing in employees – the education, the experience and abilities of employees all have economic value for employers.
Since human capital is based on the investment in employee skills and knowledge through training, these investments in human capital can be easily measured. As an employer you can calculate the total profits made before and after any investment, and any return on investment (ROI) of human capital can be calculated by dividing the business’ total profits by its overall investment in its people.
Hiring the right people is the number one strategy to drive profits for your business, but success is more than that. After you hire the right people, you need to keep them, and this requires an HR plan. Making a plan that focuses on human capital is something you should have at the top of your agenda. The plan needs to include putting the right people in the right positions. The vision, value and goals of the business should be communicated regularly to the employees. Celebrate success as a whole business; identify the business drivers to create the strategic plan; devise the leadership principles; and set accountability measures.
HR has never been more uniquely situated and placed than right now, in terms of helping businesses achieve bottom line results.
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“When done well, measures that utilise technology to bring efficiency to administrative processes have the potential to reduce costs on average by 30 percent” – Brian Lowenthall, Director of Hackett Benchmarking and Research.
There are effective ways that HR can build value. These value-adding efforts go by various names including: Transformational HR, Strategic HR and Culture Support. They all in essence refer to the same thing, the ability for HR to select and retain the right employees and help them do their best work. This is where real profit gains are to be found.
More HR strategies that can increase profit for your business:
Training and development – employees want to develop within your business and develop their skill sets. Offer them opportunities to become better and more productive.
Reward programmes – Give your employees an incentive to do a better job. Reward them for their hard work. Recognise their accomplishments and let them know they are valuable.
Open communications – Promote a working environment which encourages open discussions. Honesty is the best policy and feedback is valued.
Goal setting – Create SMART goals: Specific, Measurable, Achievable, Realistic, Targets, which are common goals for employees to achieve.
Mentors – Create a mentorship programme where new employees can embrace the culture and the knowledge of your experienced employees.
Flexibility – Telecommuting, virtual working, flexible schedules and work life balance are important to your employees. By being flexible your employees will ultimately work harder for you.
Compensation packages – Money, perks and benefits are important to every employee. What does yours currently look like? Can it be improved?
Team building – Individuals are great, but teams will make your business successful. Build a team that works together and wins together.
Tools to do the Job – Give your employees the right tools to do the best job possible.
Company culture – Take time to create the right business culture, a positive and open honest culture, that attracts the right type of people. It makes a difference.
Values – What are your values as a business. Do you believe in honesty and integrity, fairness, trustworthiness, customer experience and accountability? Your values are what you represent as a business.
Recruitment – Know your current employees’ strengths and weaknesses. Establish what type of person you are looking for to balance the skills and personalities of your team to make it stronger and more productive.
When you have all these elements in place your business will be stronger. Your employees will be brand promoters, who will drive your products or services to make your business a great success.
Even though HR may not immediately show profit for your business, it is most certainly directly responsible for increasing your profit. Invest in good HR now to increase profit for your business. MAD-HR are here to help you and your business with any of the above mentioned. We are a bespoke HR Consultancy who work shoulder to shoulder with you to really make a difference.
If there is anything we can help with, please contact us.