How Good HR Saves Money
The problem of underdeveloped human capital is that it eats away at your profits. The only way you can address this challenge is through measuring the outputs of your human capital contribution so that you can manage it. Human capital is about people and people are a company’s greatest asset. No doubt you have heard this said many times before that People are your most important asset, it is because people drive Six Sigma, reengineering, and total quality management - it is people that make it happen, your human capital.
The reality of this is difficult to live by, especially when there is a downturn in the economy. The first thing that happens when a company has to cut costs, is that they cut back on staff, because people are seen as a cost that must be managed. People are not viewed as an important asset, rather as a cost that must be diminished to the lowest possible figure.
There are alternatives to this thinking. Investing in your people - your human equity - offers you the greatest potential returns by following a few straight forward rules; the first rule is to think like Warren Buffett - long term.
The DNA of success of investment in human equity are the successful processes of recruitment, training and rewarding, referred to in this article as selecting, developing and motivating.
Selecting - Understanding Exactly What You Are Looking For
If your selection process identifies the required candidate within the notice period, ensures that the new recruit is competent within the first twelve weeks, and establishes strong potential that they remain with you for more than the pay-back period, you will ultimately save recruitment and transitional costs, improve output and develop morale. This results in a positive return on your investment, which, over time, adds up to a substantial sum of money. Many companies are unknowingly throwing this money away.
