What’s The Best Growth Strategy For Your Business? Human Capital
Investing in the people that work for you turns a higher ROI and profitability.
Businesses cannot afford complacency in our hyper-competitive economy. The latest cutting-edge technology or innovative products are no longer enough to gauge a brand’s success. The people within an organization serve as a key indicator of its market performance, reflecting their skill sets and factors like retention, sense of purpose and the overall workplace environment.
Forward-thinking leaders like The Hush Collaborative’s founders recognize that the workforce is not merely a cost center but a powerful engine for profitability and growth. There’s a critical connection between investing in human capital and boosting the bottom line—savvy companies turn their employees into their most valuable assets.
“Your employee experience is your number one indicator of your customer experience,” states Lauren Buckley, cofounder of Hush Collaborative. “Your customer experience is the number one leading indicator to your profit. What shocks us is, as we talk more about how leaders need to be data-driven, there’s this huge cannon of data that seems to continuously be ignored, which is how the employee experience is directly attached to your profit. They’re often and almost always considered a sunk cost when it comes to [building better strategies]. They’re not the sunk costs. They’re the investment.”
Lauren Buckley, cofounder of The Hush Collaborative
Companies that strategically develop their employees often see a direct correlation between their human capital efforts and profitability. On average, brands investing in comprehensive training programs experience a 24% higher profit margin than those not prioritizing employee development. Employees with the right skills and motivation contribute more and foster innovation and adaptability, which are essential for staying competitive in today’s markets.
Buckley, along with Allie Fendrick and Kate Meehan, launched Hush Collaborative to assist organizations with co-creating more fulfilling and effective working methods that benefit everyone by improving brand and employee experience metrics and achieving strategic goals.
The genesis behind Hush came after Buckley was physically assaulted at work. The witnesses didn’t intervene. She had to advocate for herself in human resources. To her dismay, the company didn’t have a no-tolerance policy for violence. This situation made her think about how brands could operate from a place of seeing workers as resources and investments rather than as dispensable.
The cofounders noticed a common theme: growth strategies failed 90% of the time at the execution stage. As they pivoted their approach, they focused on the human element of the workplace.
“When we think about the 90%, and then we think about the 70% that’s trying to fix the 90%, it’s pretty difficult to argue that there isn’t an issue,” she states. “But the way that we talk about it is, first and foremost, leadership. A lot of leaders use short-term thinking. It’s what’s going to be the quick fix, what’s going to be the move fast and break things; what’s going to be the technology solution, what’s going to be the process solution where I don’t have to get into the messy people part. People are messy. Businesses are made up of people. Businesses need to change to grow. People don’t want to change. That’s fundamentally the issue, which is why our solution truly focuses on starting with the people first, and how we do that is by applying community organizing or organizing principles to strategic and systems design.”
The Financial Case For Investing In People
Investing in human capital may initially appear costly, but the return on investment (ROI) proves otherwise.
Improved Retention
High turnover rates are expensive, with costs including recruiting, onboarding and lost productivity. By investing in employee satisfaction, training and growth, companies create an environment that fosters loyalty, reducing turnover-related expenses.
Increased Revenue And Profit Margins
Well-trained employees deliver higher-quality work more efficiently. Studies show that businesses with robust employee development programs often outperform competitors in profitability and revenue growth.
The Hush Collaborative founders (left to right) Lauren Buckley, Kate Meehan, and Allie Fendrick.
Key Areas Of Investment In Human Capital
Organizations must be strategic about where and how they invest in their workforce. The most effective human capital investments include:
• Training and skill development
• Employee well-being and engagement initiatives
• Competitive compensation and benefits
• Career growth opportunities
Measurable Benefits Of Investing In People
The benefits of investing in human capital are tangible and measurable. Companies that prioritize their workforce often report:
- Increased retention
- Enhanced productivity and performance
- Improved customer satisfaction
- Fostering innovation
Strategic Approaches To Human Capital Investment
To maximize the ROI of human capital investments, businesses must align these initiatives with their strategic goals. Here are some approaches:
• Aligning development with business goals: Training programs should focus on skills directly impacting organizational objectives.
• Creating a culture of continuous learning: Encouraging employees to embrace lifelong learning ensures the workforce evolves alongside industry demands.
• Leveraging technology for personalized development: Digital platforms can deliver tailored training, enhancing effectiveness.
• Measuring human capital metrics: Tracking metrics like employee engagement, retention rates, and training ROI ensures investments are data-driven and impactful.
“There have to be rules of engagement that everyone has agreed upon and that at least someone, and this is where I often say it cannot be the leader in the room, is responsible for holding that group accountable to those rules of engagement or holding them accountable to the decision-making protocols,” Buckley concludes. “It’s such simple, small things that can help organizations accelerate this quickly. Some people feel it’s too restrictive or you’re putting handcuffs on people’s creativity. It’s just reinforcing the idea that leaders at the top don’t want to be held accountable for their organization’s values or their behavior; it’s to let more people at the bottom feel safe.”