Financial Executives spend a tremendous amount of time and energy tweaking their company’s finance sheets, even thought it does not really represent their company’s most valuable resource. Money is actually pretty easy to get for most large companies with good cash flow.
Companies are able to borrow money for almost zero interest
The global supply of capital is almost 10x the global GDP. So, companies are able to borrow money at almost 0 interest and scale of their cash drawers.
However, the hardest thing to get your hands on today is not money, but rather human talent, which can be seen as the time, skill, and efforts your employees put into your company. Time is limited whether you break it down by days, months, or years.
Large companies are more concerned about losing time than they are about losing money. You would be quite surprised to find out that the typical companies thinks that only 15% of their employees are making drastic changes to the company.
Acquiring talent easily, training them, retaining them, and turning them into decision-makers is so hard that companies refer to this process as a “war” for talent search. The amount of energy this requires is also really hard to find for the average company.
Although it can be considered a hypothetical construct, you can still measure this war force by how many dedicated and motivated employees you have at your company. Research shows that motivated employees tend to be significantly more valuable to any company than ones who are not happy with their job.
But, finding these motivated workers at companies is rare. For the average company, only about one out of every eight employees at the company would be considered a MVP who is motivated to see the success of the company.
So, As you can see, money is easy to come by but finding motivated and reliable workers for your organization may not be so easily handy. But, more importantly, companies are not able to manage and understand this phenomenon.
So why is this? Because most managers are trained to only value monetary resources and gains, and ignore the human assets that their company has. A good CEO is recognize as one who is great at management and financial decision-making.
However, companies tend not to put such an emphasis on the importance of employee motivation and productivity. But, if you want to become a successful CEO today, you have to be good at both managing money and people.
So, how can we manage people more efficiently?
As you already know, you can’t really manage something that you can’t accurately measure. You can use the vertical alphabet soup to measure financial capital. However, to measure human workforce, you can use metrics such as the productivity power index.
These scales measure drag within an organization and the benefits of motivated workers on the success of your project or company goals. You can also measure the return on that investment of time and human energy.
Some companies have successfully been able to run this type of test and measure the ability of up to 150 of their new employees to take on new and different projects within the company and measure the impact of those initiatives on the overall financial goals of the company.
Invest human force and energy the same way you invest money
In the world if finance, we have complicated theories and concepts like opportunity cost of money, which is taken into account into a company’s approximate cost to get more financing. We take into account the lifetime value of any investment we are about to make.
Bottom line is, we spend a lot of time and energy before we spend any money on anything. We need to start doing the same thing for human power also. We need to calculate the opportunity cost of a lost hour in the life of any employee.
One way to measure this is to figure out the opportunity cost that comes out of daily activities at work such as meetings and presentations. Some companies have calculated as much as 300,000 hours of combined employee time spent in company meetings alone in a year! Just imagine how else that time could be allocated which could have been more productive for the company.
We should begin to calculate the opportunity and time costs of these meetings when we plan new projects or initiatives. In those calculations we need to take into account opportunity cost, employee time spent, motivational levels of employees involved in the projects, as well as cost of time and talent in the hurdle rate.
We have professional teams who measure the actual and forecast results of financial capital when it comes to financial planing for companies.
We set up financial capital management teams to weigh the pros and cons of new investments. These investment analyses go through extensive board review before they are approved.
We need to start taking similar approaches for human capital as well. We need to calculate how much time is begin spent on collaboration and what we can do to try to minimize it as much as possible.
There are software like RescueTime and Microsoft Workplace Analytics that can be used to monitor employee and workplace productivity. For skilled talent, we need to identify who the top performing individuals are, what their strengths and weaknesses are, and only after very careful evaluation, should we deploy their time and talent into new initiates.
Imagine if you are a sales-oriented company who wanted to know how productive your sales people were at closing deals. You need to consider factors such as, are your employees more productive when they are standing up and working vs. when they are sitting down?
Does along them to use their cell phones at work make their communication more productive or does it become distraction to them? Do sales teams perform better if they are in individual work stations or in big meeting halls and sales call rooms? Figuring these factors our for your company and it’s specific goals is just as important as calculating revenue margins and sales opportunities.
Identify and honor proper management of talent, time, and energy
If you are good at investing, you can probably hack your career and financial success. Your compensation is probably related to some metric of added economic value. Even though most companies today do not hire employees for a lifetime, they should still try to find a way to give their top employees long-term assignments.
A company can find ways to keep recycling their employees to more and more complex and larger initiatives as the employees mature at the company.
As employees gain more experience, they should quickly move onto more advanced decision-making roles where their experience can fully be utilized. This way, you are also giving your employee an opportunity to feel important and recognizing that their efforts are making a difference, so as a result, they are being moved up to higher and more demanding roles.
CEO of LinkedIn promised his employees that the company would do everything it can to advance the careers of new employees who were talented if they joined LinkedIn and made an important contribution.
He either offered them more advanced roles within the company or offered to support their endeavors if they decide to move on from the company down the line. This sort of approach helped LinkedIn attract very entrepreneurial and motivated employees who made a huge difference from the onset of the company.
Leaders should be identified and rewarded based on their motivation and achievements in any company today
These are just a few of the ways we can being bigger disciples to human energy and workforce management. There are probably many other innovative strategies and ideas out there. Time is limited. Talent is rare and totally worth going into war over.
Energy can actually be created or destroyed. The quicker we can act on these new ways of doing business, the sooner we can see a return on our investment in human capital that all companies deserve.
Startup Grind is a Silicon Valley-based organization that educates and mentors entrepreneurs through monthly business events and speaking series in cities across the globe