Why You Should Manage People Like You Manage Money
People management, as any successful business owner will tell you, is not easy.
While juggling the finances and understanding your profits and losses can be relatively simple, putting the right people in place in your company and getting the most out of them is a much bigger challenge.
So, can you learn something from managing your business finances that can also be used in people management?
Research by Bain and Company found that just 1 in 7 employees in a company are what are called star performers.
These are the people who make a difference and contribute to the growth and success of the company by bringing their A game.
This ratio seems to apply uniformly, whether you are a large corporate organisation or a medium size business.
We give great kudos to executives who are able to manage their budgets and boost profits.
It’s all about how they contribute to the monetary value of the company and it often decides how they are rewarded.
Bringing this kind of a management ethos into how people deal with people can also make a big difference, however.
To use a financial term, here’s the bottom line:
- Good human capital is a scarce commodity.
- There’s a continuing battle to attract the best talent.
- Finding the leaders who can inspire your workforce is vital.
- We manage our financial capital pretty well.
- The same can’t always be said for people capital.
Steps to Managing Human Capital Better
Whether it’s done through complicated software or in a ledger book, we measure, track and collate our financial information all the time.
Businesses need to do the same with their human talent.
How productive are teams?
What is the ROI for the time spent and results achieved on a particular project?
How is your top talent contributing to the working of your business?
Investing Human Capital in the Right Places
While we are used to investing money to get the best return, we often don’t do this when it comes to human capital.
Are people in the right place? Who is contributing and what is the return on their efforts?
Some activities in your business could be counterproductive if they use up too much time for too little return.
Meetings are a prime example – they can take your top staff out of the loop and lose you productivity.
They can also occupy support staff because they are preparing stuff for the meeting.
While all this is going on, they are not making your business money.
Invest your human capital wisely.
In other words, understand that it can work for you better if you understand what it’s supposed to be achieving.
Monitoring Your Human Investment
We check up on our financial statements, monitor how investments are doing and look at where spend and return is making a difference.
Again, you can do the same with your human assets.
Methods of collecting data and using it to inform decision making has dramatically improved over the last decade.
Monitoring also enables you to differentiate what the top performers are doing well compared to those that only have an average performance.
That should help you to set the parameters for attracting new talent to your business.
Rewarding the Best Leaders
If someone makes your business a financial killing and delivers those results time and again, you’re going to want to reward them.
The same goes for leaders who can inspire their teams and attract other top performers that make a difference.
For example, you could have a balance sheet of who gets taken on and who gets let go and how long top talent remains engaged with your team or company.
The key here introducing a greater level of discipline and monitoring when it comes to human capital.
Get it right and you begin to enable your business to attract and retain the best people.
That’s important in a current landscape where top performers are a scarce commodity because there are so many competing opportunities out there.
