Your business probably has many assets of various sorts. You might have physical property (such as a store or a factory), intellectual property, contractual agreements, and some unique tech that makes you stand out from the competition. But all of this is dwarfed in importance when compared to the all-important asset that is “human capital.”
“But what is human capital?” you may ask. It may sound like we’re referring to people as currency, but that isn’t quite right. Dictionary.com defines “human capital” as “the abilities and skills of any individual, esp those acquired through investment in education and training that enhance potential income earning.”1 To put it more simply, it’s the useful skill sets that your employees possess and make use of to help your business.
You might not have ever considered an employee’s skills to be an asset, and who can blame you for that? They’re intangible and often taken for granted. But the more you think about it the more it makes sense. How could you manage your physical store fronts without employees that were skilled in retail services? How could you manage your intellectual properties without employees that are skilled in creative work? How could you use any technology without employees who understood how it functioned? Without human capital – without the specialized skills that your employees keep honing and improving – you would have nothing.
You might be thinking “So what? Everyone has some sort of skill and it only makes sense to hire the people with skills relevant to me.” This may be true, but you should think of human capital like you think of every other asset you have. And what do you try and do with your assets? You try to increase their value.
To increase the value of human capital is to train your employees in new skills. This has two benefits for you: you get more talented employees in the end and your employees feel more fulfilled for having more use to you. Most of them will also be grateful for the option to take free lessons in a new, useful skill. This in turn raises their morale and productivity. Teaching someone a new skill can really make them happy, and it’s in your best interest to keep your employees happy.
Of course, forcing someone to learn a new skill that they don’t care about could lead to dissatisfaction. This would have the opposite effect on their morale and if they quit they might take the new skill with them when they work for a competing business. The solution to this is to make sure that they have a choice in what they learn. Even if it isn’t a huge choice, the sense of agency that it will give them might be enough to prevent the aforementioned negative consequences.
Hopefully from here on out you can utilize human capital to its fullest extent. With the right efforts your business will flourish into something greater than ever.
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