QUICK! What type of capital investments appreciate over time?
Did you get it yet? The title of this article should have told you the answer: Human Capital!
Most companies see the value in fast computers (reduces down time), fancy phones for audio clarity, etc. But when it comes to people, few companies view their people as an investment. Just like all investments, they need to be executed intelligently.
The Uniqueness of Human Capital
I would like to start with stating I dislike the title human capital. It makes me feel like humans are mindless drones no different than a computer desk. I’d rather call it your human investment.
So how do you invest in people?
We have all heard it time and time again… every company professes their people are their number one investment and priority and all the other warm and fuzzy things they love to say to make you feel good. But their actions are contradictory to these statements with their bad people culture, micro management, in-human decision-making, and general company structure. How many times have you wanted to allocate time to learning a new skill or branch out and your manager gives you this look?
Followed by a flat, “no” or the more diplomatic version along the lines of, “I really like your initiative…this is something to consider in the future…but right now we can’t afford any downtime…”
I think hiring managers often genuinely want to see initiative and creativity and all those great characterizes, but many do not actually know how to manage people. Even if you can recruit great people, poor management tends to organically discourage people from staying.
To make this concept tangible, we are going to assign dollars to characters… kind of like an appraisal for a real estate investment:
Worth Ethic for Time Given to Company = $20K
Moral Ethics = $20K
Drive for Mastery = $20K
Drive for Learning = $20K
Intelligence to Achieve Mastery = $20K
Intelligence to Achieve Learning = $20K
Emotional Intelligence = 20K
Resourcefulness = $20K
Business Creativity = $20K
Coaching/Mentorship = $20K
Leadership = $20K
Diplomacy = $20K
Loyalty = $20K
I’ve made each characteristic equal value for this purpose. When someone has a characteristic, they gain $20K in their appraisal. When someone does not, they lose $20K in their appraisal.
Example #1:
Robin is an account executive with a lot of drive. Robin is at the office early and leaves late. Robin works really hard to achieve mastery and learning, is resourceful, helpful to others, and very very loyal. Unfortunately for Robin, while very well liked, Robin’s results are not consistent with efforts.
| PROS | CONS | TOTAL |
| Work Ethic | Achieve Mastery |
0 |
| Morals | Achieve Learning | 0 |
| Drive for Mastery | Business Creativity | 0 |
| Drive for Learning | Leadership | 0 |
| Loyalty | Emotional Intelligence | 0 |
| Resourcefulness | $20,000 | |
| Coaching Spirit | $20,000 | |
| Diplomacy | $20,000 | |
| TOTAL VALUE | $60,000 |
Robin has many really great attributes, but ultimately, without results, Robin’s value is only $60,000 out of a possible $260,000 scale. In a pay realm, this is about right. Robin doesn’t have the ability to move too far out of entry level.
Example Two:
Taylor is really smart. Taylor learns new information effortlessly and is highly creative when focused on a task. Taylor is a true thinker. Unfortunately, Taylor’s creativity is also a distraction. Work attendance and focus are poor. Taylor isn’t always liked by colleagues, as emotional intelligence is a struggle. Because Taylor understands complex ideas easily, Taylor also struggles with coaching and leadership. Because Taylor can’t lead, but can do, Taylor will always be a doer.
| PROS | CONS | TOTAL |
| Moral | Work Ethic | 0 |
| Intelligence for Mastery | Drive for Mastery | 0 |
| Intelligence for Learning | Drive for Learning | 0 |
| Creativity | Emotional Intelligence | 0 |
| Diplomacy | Leadership | 0 |
| Loyalty | Coaching | 0 |
| Resourcefulness | $20,000 | |
| TOTAL VALUE | $20,000 |
Are you asking yourself why the person who is really smart has a lower score than the one struggling to learn?
Because the other person bettered the total team by sharing what mastery they did have, putting in extra time to compensate for being a bit slower, utilized resources, but mostly, had an overall positive impact on the team and culture. Taylor, on the other hand, has high potential but does not use it. Taylor also brings down the team culture and is generally lazy. Taylor’s impact overall brings down others.
Example Three:
Mickey is rather young and has drive and smarts. Mickey understands learning new skills are critical to success because Mickey is still inexperienced. But Mickey is driven, smart, and creative. More so, Mickey is a great coach, always lending a hand to colleagues and a natural leader. Mickey is never boastful and respects the expertise of colleagues.
| PROS | CONS | TOTAL |
| Work Ethic | 20,000 | |
| Moral Ethics | 20,000 | |
| Drive for Mastery | 20,000 | |
| Drive for Learning | 20,000 | |
| Intelligence for Mastery | 20,000 | |
| Intelligence for Learning | 20,000 | |
| Emotional Intelligence | 20,000 | |
| Resourcefulness | 20,000 | |
| Creativity | 20,000 | |
| Coaching | 20,000 | |
| Leadership | 20,000 | |
| Diplomacy | 20,000 | |
| LOYALTY!!!!!!!!! | -20,000!!!!!!!! | |
| TOTAL VALUE | $240,000 |
Do you know why I listed loyalty as a con? This is really in the hands of the company. People like Mickey, while smart and great, are also smart enough to know their worth. As you can see, the worth is high. Not only can people like Mickey bring the team up, teach others effectively, build a culture that attracts more Mickey’s, but they can also complete tasks with high competency, lowering their personal risk factor.
When you invest in Mickey’s, you have an appreciating asset. When you invest in Robin’s, you are about neutral in terms of cost and value. And when you invest in Taylors, watch out! Because your long term impact is going to be a loss.
Sorry Taylors, but lazy is lazy and it completely squashes any intelligence potential.