How many small business owners stayed home and dreamed of having employees. I would be very confident by saying not many or should I say NONE!
I know I never once got excited about having employees. I did understand and still do understand that for every successful small business it takes a strong group of people to succeed. The thought of having them isn’t why anyone would start a business.
Here is the reality … you need employees to produce and deliver your product or service. You need them to handle the administrative duties that every business must accomplish to be successful. This can run from the financial side to the customer service side of your business.
As the leader of your business you have two choices when it comes to your people.
The first option is to hire them and hope that they have what it takes to accomplish your business objectives. Let’s be honest we have all heard it before “I hired him because he worked from a competitor … or has x years experience”. Now those aren’t bad reason to hire someone but once you have them what is your strategy to get the most from each and every employee.
Most small businesses don’t have a people strategy … just a lot of hope.
Now here is another option: Hire them then make sure they have and understand what is expected of them by providing a real job description. Then identify their strengths and weaknesses so you can capitalize on their strengths and provide them training in the areas they are weak.
Analyze their performance on a quarterly or annual basis and share with them what they are doing right or wrong. Give them areas to improve and access to the tools to make it happen.
Each year provide them with incentives to accomplish the goals you have outlined for them. Most importantly align their goals with your companies’ business objectives.
This is called a human capital strategy. A solid HC strategy covers the following five key areas: Recruiting; Performance Management; Skills Development; Culture Building and Leadership Development.
Why It Is Important To Have A Human Capital Strategy:
The Harvard Business School has compiled an HR scorecard measuring the performance of 435 publicly traded companies. Companies in the top 10 percent of strategic HR practices tend to perform much better than those in the bottom 10 percent of HR rankings.
Top ranked HR companies tend to have high performing people. They average $617,576 sales per employee while companies ranked lowers only average $158,101 sales per employee.
That is almost a $500,000 difference … with a solid human capital strategy you have the chance to increase your revenue by 5 times!!!
What would that mean to your business?
In looking at another key metric of performance the companies who value their people saw their market value soar to 11 times their book value!
If you want to reach the levels of success you always dreamed about you must empower your people. When you align a people strategy with a business strategy you are on the path to success.