Discover and use the full range of skills available from your Human Capital

One of the questions that people ask all the time is, "Why do company executives talk about employees being an investment, on the one hand, and treat them as an expense, on the other?” 

The reason employees are treated as an expense is that, from an accounting perspective, they are. That isn't to say that they ought to be, but in strictly financial terms, employees and virtually everything to do with employees - their salary, their bonuses, their development, their benefits - are booked as expenses along with other operating costs.

In the meantime, despite pressure to do otherwise and regardless of accounting treatment, it is still prudent to think about human capital as an investment.

 

Following are five reasons why: 

• Learning and deftness are the only sustainable competitive advantages. Product and service attributes come and go. Today's competitive advantage is tomorrow's competitive necessity. The ability of people, individually and in teams, to learn and adjust on the run to changing competitive conditions is the only real enduring advantage. 

• Human capital is underutilized. Most companies don't even know what they know. 

• People can easily move on. Competent people. Smart people. Emotionally intelligent people. Creative people. These kinds of people have options. If you don't value them by aligning their interests with your company's interests, developing their capacity to contribute and rewarding their contribution - Ciao, Adios, Au revoir! 

• People have been overmanaged, undermanaged and mismanaged. Historically, downsizing has been the primary refuge of uncreative minds groping for efficiency. "If we can have five people do the work of six, let's get rid of one," is how the thinking often goes. From a training and development point-of-view, companies spend way too much time, money and energy helping people develop their weaknesses. The end result is that you haven't aligned strengths with organizational needs; rather you've made the weakness less weak. In what we think is his most important quote, Peter Drucker said that "the primary purpose of management is to make strength productive". 

We think that the following STRENGHTS EQUATION will be by far more successful:

Increase the strenghts of your Human Capital

Motivation and Commitment goes Up

= YOUR FINANCIAL SERVICE QUALITY WILL BE LEVERAGED

• Customers judge the quality of your company's financial services with surrogates. Look at the "strength equation" again.

Bottom-line: If your employees are perceived by your current or prospective customers as uncommitted or incapable, they will draw conclusions about your financial service quality, and the consequences are foreseeable. 

The following four questions are those that you must answer in order for human capital to leverage value creation in your company:  

• What knowledge, skills, talents and attributes does your company require, and in what amounts and combinations, to create value for your customers/clients?

• How best can you recruit, select, develop and leverage relevant knowledge, skills, talents and attributes that create value for your customers/clients? 

• What must you do to translate people's capabilities, skills, talent and commitment into performance? 

• What must you do to integrate individual people's performance into a complementary "whole"?