The real value of human capital depends on the willingness to invest in your team.
Many startups today underestimate the importance of human capital — the collective sum of the attributes, life experience, knowledge, inventiveness, energy, and enthusiasm that employees choose to invest in their work.
Research shows that investing in people, particularly those with relevant industry specific knowledge and experience, can have a significant influence on the success of a startup.
Last month Village Capital kicked off its Education: US 2017 program, for startups bridging the skills gap between education and employment. In the spirit of that program, here are three ways you can take human capital seriously.
Develop a purpose-driven vision for your company.
Many people gravitate toward startups because they want to feel like they’re part of something bigger than themselves. Studies like the Society for Human Resource Management’s 2016 Employee Job Satisfaction and Engagement Report show that people who are working for a greater purpose — for something more than just a paycheck — are more satisfied with their jobs.
Developing a purpose-driven vision requires all co-founders to be on the same page in terms of their vision for what the company can become and how it contributes value to the world. A clear vision can become a cohesive force that gives your team something to rally around and work towards when communicated regularly. This can be accomplished by:
- Discussing employee work assignments and priorities within the context of the company’s overarching vision
- Recognizing employees for work that exemplifies company values
- Encouraging employees to think about how their business decisions support the company’s vision when they are making them
- Developing company traditions and team-building activities that align with the company’s vision
Foster engagement to retain human capital.
For startups, retaining human capital can be challenging. Working for a young company often involves long hours, stressful deadlines, and wearing many hats. As a result, startups often struggle with high turnover, which can quickly stunt growth.
Employees who are more engaged in their work and committed to their companies are not only more productive, but also far more likely to stay. Given this, founders need to look for ways to increase engagement from day one. According to one recent survey of 3,000 employees, the top four most effective ways to keep your people engaged are:
- Reward your high performing employees
- Encourage your people to share their ideas and opinions
- Offer training and professional development opportunities
- Provide a comfortable and stimulating work environment
Technology can also play a role in engagement by fostering more communication and collaboration online. However, the real purpose of online engagement is to generate offline actions — getting together with a co-worker for coffee, organizing a company tournament, or bringing friends to the office to see if they might enjoy working there.
Create a company culture that makes employees want to come to work.
Many startups underestimate how important their company’s culture is — not only to attracting and retaining great talent — but also to employee performance, productivity, and morale. With the right company culture, you can unlock the full performance potential of your staff and create an environment in which they become professionally and personally invested in the success of the company.
According to the Human Capital Institute, one of the key elements of a performance-based culture is job satisfaction, underscoring the importance of creating a workplace environment your employees will enjoy that makes them want to come to work each day.
For example, at one fast growing startup employees get together every Friday at 8:45 AM to discuss their week. During this time, employees have a tradition of publicly acknowledging their coworkers for any help they’ve provided or nice things they’ve done by awarding them a single knit sock. They don’t get both socks, just one. But, that’s okay because the important thing is what that sock means. To receive a sock from a coworker means you are appreciated and that you are someone your fellow employees care about and can rely on. Activities like this make people feel good about themselves and at the same time create some fun competition because whoever has the most socks wins.
Small things like these can have a big impact on how people feel about their work, giving them something to feel good about and creating good memories that are associated with the company.
Human capital is the most important investment you can make in your startup.
While financial capital is the most often cited predictor of startup success, ultimately human capital is the most important investment you can make in your company. This is because when you’re building a new company, there are going to be times when things are really amazing, but there will also be times when things are really bad — when you think only a miracle can save the company. When those miracles happen, it’s usually the result of your people, pulling together to push through the challenging times — providing a great return on the investments you’ve made in them.
George Elfond is Co-Founder and CEO of Rallyware.