The major struggle that organisations seem to tackle these days is managing the human capital. Why so? Because human capital is considered to be the most important asset of any company and many people are looking for opportunities to grow their skillset by taking up different roles. But that's common knowledge! Work culture has become today the most important element to manage human capital effectively.
What is human capital, anyway?
In simple terms, human capital refers to the skillset, abilities, knowledge and experience possessed by the workforce of any company. The growth of the company and overall productivity depends on investing in human capital. Companies invest in human capital by providing training and development opportunities, offering fair compensation and benefits, and creating an environment that motivates and engages employees.
The standard to manage human capital effectively
1. Support Career Progression
One of the major reasons good employees leave the organisation is because they are not given enough opportunities to progress forward in their career path. This is when the organisation restricts or does not promote mobility within the organisation. Most of the employees these days are looking for ways to challenge themselves and cultivate new skills. They want to earn a promotion and move up the career ladder.
To retain good talent, organisations need to make room for internal recruitment and promotions. When employees are aware that their performance is going to be analyzed and it could give them better opportunities, their motivation levels increase. They also feel satisfied with work and are determined to take on more challenges.
2. Upskilling at Scale
Learning and development at organizations refers to the process of providing employees with the knowledge, skills, and abilities they need to perform their jobs effectively and achieve their full potential. By providing employees with the skills and knowledge they need to perform their jobs effectively, organizations can improve overall performance and productivity.
In a Gallup survey, around 61% of employees said that learning new skills were an extremely or very important factor in deciding whether to stay at the job they currently have. Learning and development includes a wide range of activities, including training, coaching, mentoring, and other development opportunities. Coaching and mentorship programs at organisations are becoming widely popular. Coaching programs can also lead to better relations among supervisors and employees. This will provide them an excellent opportunity to interact and learn from more experienced people in the organisation.
3. Skill-based Hiring
It all starts with hiring the right people for the right job. For some decades, college degrees and education were seen as an important indicator of a person's skills and knowledge. Recently, however, things are changing. Due to the changing technology and demands of work recruiters are moving from traditional hiring to skill based hiring.
Hire character. Train skill. — Peter Schutz, Porsche ex-CEO
In a research conducted by Harvard Business studies, the study analyzed around 51 million jobs posted during 2017 to 2020. They found that major companies are shifting their focus to skill based hiring processes. They found that only 26% of Accenture's job postings for a position had a degree requirement.
One of the reasons for this change is that employers are noticing skill gaps among college graduates and skills required for a particular job. A McKinsey Global Survey conducted in 2020 reported that around 87% said that they were facing skill gaps where recent college graduates failed to meet the key skills required for certain jobs.
The most important element of Human Capital: a Positive Work Culture
A hallmark of a healthy creative culture is that its people feel free to share ideas, opinions, and criticisms. Lack of candour, if unchecked, ultimately leads to dysfunctional environments.’ — Ed Catmull, President of Pixar
It all boils down to this. Having a positive workplace culture is crucial not just when it comes to retaining top talent, it is also something that enables them to perform their best. A good workplace culture encourages teamwork and collaboration, leading to better communication and cooperation between employees, increased innovation, and better problem-solving.
A good workplace culture essentially creates a place where employees can thrive. This happens when the organisation promotes employee well-being, reducing stress and anxiety, improving mental and physical health, and creating a supportive environment for employees.
In conclusion, effective management of human capital involves attracting, developing, and retaining top talent, providing opportunities for professional growth, and fostering a positive work culture that values collaboration, innovation, and continuous learning. By investing in human capital, organizations can innovate, adapt to change, and compete effectively in the marketplace.
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