For any small business, veterinary clinics, plumbers, even consultants, standing out just a little bit from the competition is the fundamental key to success. In the early 90’s quality was the hallmark spawning movements like TQM and Six Sigma. At the turn of the century flexibility and service were the key buzzwords. Today, more and more companies both small and large alike are placing increasing emphasis on creating a sustained competitive advantage through the use of intangible assets – in particular human capital.
Human capital is a fancy way of referring to your team. I like the term human capital for two reasons. One, it just sounds smart and makes me feel fancy when I say it; but most importantly because capital is usually thought of as a tangible asset – capital equipment, cash, vehicles, and such. In accounting capital assets are any item that can be assigned a hard monetary value. These physical and financial assets are extremely important and not to be devalued. Yet, by some estimates, up to 75% of a company’s value can be found in its intangible assets; human capital being one of four. (Weatherly 2003)
Managing and exploiting this asset requires a dedication to recruiting, selection, training, performance management, and compensation. I have several chapters of my book that attempt to scratch the surface of these topics (you can have it free here). Delving into any of them in detail would require much more typing, and it’s late, and I’m tired so you will have to settle for an introduction to the topic. Basically it can be summed up by looking at Southwest Airlines.
Southwest doesn’t have better planes, tastier peanuts, or by no means more legroom. Yet time and time again they outperform their competitors in growth and profits. Why? It’s all in the way they treat their employees, the company’s dedication to hiring individuals that fit the company culture, a sincere desire to provide a fun and meaningful work environment, and a heavy emphasis on training. Especially cross training; a technique that provides their employees with the skills necessary to do multiple jobs. Cross training benefits the employees through job enrichment and the company through cross functionality. Through their dedication to their employees Southwest in turn sees loyal, flexible, and highly productive employees. Happy employees make two things – happy customers and a happy boss.
I made a post a couple months ago that discussed a not so great customer encounter I witnessed. It was by no means a rare exchange (read it here). It could have been the result of many things, the most probable being a lack of empowerment. Empowering employees means giving them the autonomy, responsibility, and authority for all aspects of their job; most notably customer service. Empowered employees are held accountable for service standards; and in return they share in the rewards and losses of the results. Empowered employees take ownership of their positions, dedicate more of themselves to their work, have higher, lower turnover, and lower absenteeism.
Empowering employees requires a dedication from management; most notably on finding the right team. Once you have them in place there are a few important principles for managing you team in a way that will lead to an environment of empowerment. You can find them in my book. Get it free here.
Weatherly, L. (2003). “Human capital: the elusive asset.” HRMagazine 48(3).
