Do you have human capital?

Human capital? Now what is this type of capital?

Human capital is the knowledge & skill gained by employees to perform their job so that it can help the company to produce the needed product or service. In this information age, human capital is the most precious and important as IP (intellectual property) is closely associated with this kind of capital. Read more here.

So the grand question is – Is your team a high valued human capital for your firm?

You answer to these questions should be yes but if you need to assess then answering the following questions will be make it clear to you if you breeding top notch human capital for your company:

• Does your team complete all the assigned tasks on time, within budget and with 6 six sigma defects norms?
• Is your team self equipped to complete the job?
• Is their high interaction between team members to help and nurture others within or outside the team?
• Do team members keep themselves up-to-date with latest technology by reading, attending trainings/seminars, etc?
• Does other employees and top management prefer your team to aid them in any project compared to other team?

If the answer to the above questions is yes, then you are breeding top notch human capital for your team.

WIIFM?

Well, if you breed top notch human capital you will keep your job and you help your team also to be safe in keeping their job. As they will be invaluable assets to the company risk of loosing job is minimized.  In addition, you gain respect from others in the company and they will eagerly want to work under you and the top management will reward and recognize you for creating competitive advantage against the rival competition.

So, how do I nurture human capital?

• Hiring & recruiting design – The best thing to do is to begin ahead. This is possible by hiring the right person to do the job. So by hiring the right person you are already starting with the good human capital which only need to be tuned to work under your cooperate culture.

Design the recruiting strategy such a way that it is built keeping business needs in mind. It should compliment the business plan instead of acting as a burden. Few tips here are to use few psychological tools like DISC to assess if the person is fit to meet and fulfill your business requirement.

• Rewards – This is the best and low cost way to built and encourage human capital. It helps the team to excel and perform above their normal efficiency level. If you have read the “one minute manager” (my recommendation for quick reads for managers) their the author talks about using reward as one of the effective tools for being a one minute manager, which I totally agree with.

• Workplace – Give employees an environment were innovation is encouraged. I know in my company this is encouraged with great optimism. Believe me if you give them the freedom and encourage innovation, they will come up with ideas which will make work easy for you and your clients. This will create competitive advantage which cannot be copied easily by rivals.

• Communication – Flawless communication between each other. Here I would recommend having forums, blogs, corporate tweets to improve smooth communication between employees. The idea behind this is to make it simple and keep it simple (KISS), easy and interesting for employees to post and read information. It should be short yet give enough information and this can be done only if you make it easy for employees to post necessary information easily.

• Training – This is another easiest way to breed top notch human capital in your company. Training can be internal and external. Internal can be in form were one or two person are sent to external training in the form of “TTT – Train the Trainer” and he in turn preaches many other employees internally. Thus saving cost but making sure everyone is equipped with information to build necessary human capital for your company.

• Succession plan – This is the item which is not taken seriously. We as managers need to make sure that there is success plan in place for all resources. In our company we limit to top management till the level of team leads, but if it is left to me I would do this for everyone. Time and cost are constraints then I would follow:
  • Success plain to be made compulsory till team leads
  • Ask the team leads to create a list of important/star performers in their team and create succession plan for them.
  • This will make sure the company is well covered and wont lose IP

In a recent annual letter to shareholders by Warren Buffett –

Ajit Jain has been lavishly praised by Buffett for his handling of the reinsurance division — a unit Buffett calls “one of the most remarkable businesses” because it employs only 31 people but generates billions. “From year to year, Ajit’s business is never the same,” Buffett writes. “It features very large transactions, incredible speed of execution and a willingness to quote on policies that leave others scratching their heads. When there is a huge and unusual risk to be insured, Ajit is almost certain to be called.”

This is a typical strength of human capital and the best thing even warren Buffet releases it, then why not you?