The Significance of Human Capital
Human capital is the engine that drives our business. Just like a car engine when it is not firing on all cylinders, our business does not run smooth when we have personnel gaps, issues, unplanned departures, or retirements. In each case the answer is to make it a priority to always be looking to acquire top talent whether you think you need it or not. Especially if your business needs minimally skilled or entry level talent, the hiring landscape has changed drastically in the past 18 months. Traditional methods of posting positions based on tasking and wage, having an approval process that is too long, or waiting until you have an opening to look for candidates, will not work any longer.
In today’s post-pandemic employment environment, it is not enough to ‘find’ the right talent. They need to believe that your business is the one they want to invest themselves into. You need to be able to cast your vision for the ‘why’ you are in business and ‘why’ they want to be a part of it. Simply competing on wage or salary alone is no longer good enough to attract and retain top talent. Employees have re-thought their entire reasons for working over the past 18 months. There are more intangibles than ever before. They want significance, purpose, and a mission they can believe in. The fierce competition for top talent has given job seekers the ‘choice’ of what they want to do, where they want to do it, who they want to do it with, and why they want to invest 40-50 hours per week into it. What is the culture? How do people advance? Are my opinions and ideas valued? Am I comfortable working with these ‘other people?’ Do I feel my work here will be rewarding? Does the environment fit my working style? Do they offer ‘hybrid’ workplace policies and technologies?
Who Do You Need?
For professional services businesses, the value is in its’ people and human resources with the talent to provide the service consistently using the tools and expertise provided by the company. This includes everyone from the individuals providing the service, the sales staff that communicates the service differentiation, to the administrative personnel who schedule, communicate, follow up, and prepare reports. For a company that sells a product, the individuals who determine the target markets, communicate the value proposition, prepare estimates, and sell the product are often referred to as the Business Development group. Once a product is sold, it must be produced. This involves designers, engineers, supply chain specialists, quality inspectors, production personnel, material handling, and many other types of talent.
Talent Acquisition is the process of growing the business with the right resources to accomplish the mission. The first step in defining what talent is needed is to map out the functions of the business from the concept stage through sales, fulfillment, delivery, and customer service. Knowing your ‘Core Competencies,’ the functional steps your business needs to accomplish its mission, the processes by which you operate and train, and defining the roles necessary to achieve the desired results are essential steps toward finding, recruiting, hiring and retaining the right talent. In any significant business there are many different roles to be filled by different individuals with widely varying characteristics and skills.
What Organizations Want
An owner’s job is to create the infrastructure to support the business growth. This includes the organizational structure, the processes, the measurements of progress, and the roles of the individual team members. For today’s worker, knowing their role and how it supports the mission of the business
is of key importance when choosing how to spend 30-40% of their lives. The global pandemic caused us to re-think this part of our work life. In Michael E. Gerber’s book, The E-Myth Revisited, he sums up what people want in a job: “What most people need, then, is a place of community that has purpose, order, and meaning. A place in which being human is a prerequisite, but acting human is essential. A place where the generally disorganized thinking that pervades our culture becomes organized and clearly focused on a specific worthwhile result.”1 This should change the way we recruit and retain our talent. We need to understand why someone would want to work for us and be able to articulate that in our job postings.
Filling The Gaps and Dealing With The Issues
In every business there will be times when there are gaps, created by growth or departures. Unfortunately, we will also have ‘issues’ with employees that we need to perform, but they are not. We feel trapped into accepting their sub-par performance by not having someone to backfill their role so we can ask them to take their ‘excellence’ somewhere else. This not only hurts their function, but also drags down the rest of the team when they see a co-worker not pulling their load and we are seemingly doing nothing about it. We must constantly recruit talent before we need it. This does a couple of things for our business. First, when we do have a gap, we can quickly fill it with the right talent through ongoing recruitment activity. Secondly, if you know there are people waiting in the wings to take your job if you fail to perform, you are more likely to do the job to the best of your skills and ability.
Succession Planning and Cross Training
People will leave. Either through career advancement, retirements, or unplanned departures. The key in all cases is to have a plan. Having an open and transparent environment where everyone can be open about their personal goals helps us plan and prepare. We should not be surprised when someone announces they are leaving or retiring. A good practice for any significant business is to be planning for succession. This can be through formal mentoring programs, identifying replacements beforehand, or having a ‘succession plan’ for key employees. We can also foster an environment where multiple individuals are ‘cross trained’ to perform critical duties. The more senior the position, the more critical this becomes. In the perfect world, we would begin to train our successor long before we plan to retire so it could be a gradual transition. But we all know that our world is not perfect. Therefore, as owners, we need to make an effort to evaluate these key positions, discuss the options openly, and create a plan for it. This is not only for mentoring and training for the role, but often involves additional payroll dedicated to taking over a position during the transition. If you have a habit of promoting from within, this creates a ripple effect as people advance and move within the organization. This makes even more critical that we have a recruitment engine that is constantly seeking to fill in the gaps as a result of these promotions.
No matter what business we are in, if we plan to grow, we will need more talent. The better we have defined the ‘what’ we are looking for and articulated the ‘why’ they would want to work for us, the more likely we will attract and retain top talent. From the perspective of the employee, we are typically not satisfied with just ‘making the donuts.’ We must give our team a reason to work for us through clear vision, mission and culture. We must constantly be looking for top talent, and finding places to plug them in. By having options, we are able to weed out the bottom performers, fill our gaps, and plan for key employee departures. Our future growth depends on constantly recruiting this additional talent.