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How do Organizations Capitalize on their Human Capital?

  Oct 25, 2019

Human capital is a fundamental determinant of a country’s growth, and competitiveness. It can be broadly defined as the measure of economic value that an employee provides to an organization, through their skills, ability, and knowledge.

Human capital costs make up almost 70 percent of an organization’s operating expenses. Which then begs the question, how do organizations capitalize on their human capital?

Employees are the most important asset in any organization which is important to invest in your human capital. Often, the human capital development strategy will directly stem from an organization’s overall strategy. Before embarking on human capital development, organizations must then identify the specific goals with which their human capital is to be aligned.

The Talent Mobility Research Report of 2015 found that more than 40% of organizations surveyed rarely or never provided career planning or development for their employees, yet human capital development works to improve every aspect of employee performance which eventually translates to better performance of the organization.

Human capital development and management is happening the world over, not only in Kenya. Speaking at the Strathmore University Business School, World Bank Chief Economist, Roberta Gatti said that though middle- and upper-income countries have sorted out the issues that prop up in the early years of the life of their population, they are also struggling to develop their human capital.

Increased employee satisfaction is one of the many benefits an organization gets from developing its human capital. According to a 2014 survey by the Society for Human Resource Management, 42% of employees surveyed said their organization’s commitment to professional development is “very important to their job satisfaction.”

Organizations must recognize the role that Millennials play in the workplace; by 2025, Millennials will make 75% of the decision-makers in organizations. According to a survey by Deloitte on Millennials, 70% of Millennials surveyed cited a lack of leadership development as the main reason for wanting to leave their current position.

An organization that offers staff opportunities for career advancement and invests in their development gives them a reason to be more engaged at work. Increased employee engagement should be a priority for every organization since engaged employees translate to more productive and more loyal employees. Developing human capital not only keeps employees engaged but also plays a major role in the hiring and retention of talent.

At the end of the day, investing in human capital development is key for every organization; a developed human capital translates to a more productive workforce, thus higher profits for the organization.

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