When you’re put in charge of a startup things move quickly! Suddenly you’re a CEO and you’re in control of an entire business. You’re making larger decisions than ever before, you’re dealing with a lot of money, and the success of dozens of people might be riding on the shots you call. But even if the money you’re working with seems plentiful, it’s likely not enough to buy everything you want. This means more tough choices! Should you buy new computers? Should you rent a new building? Not necessarily. Before you do any of that you need to realize that investing in human capital is an absolute mandate for any startup CEO.
In case you aren’t familiar with the term, “human capital” is a blanket term that covers the different skills and competencies that your employees have. This includes what they know, how creative they are, and what tasks they’re capable of completing. Many of your employees will come into your business with a decent stock of human capital already, but this will of course vary.
So how can you invest in human capital? You can start with the hiring process. Screening people for skills relevant for your business is a common practice and you should be doing it. Be thorough and take into account their relevant experiences as well. This can include where they went to school, what they majored in, and even informal things like what they read about in their spare time. You want someone who is legitimately interested in fields related to your business, not someone who just wants a job that is relevant (or kind of relevant) to their degree.
After employees are hired you can increase their human capital through training programs. Teach them new skills as time goes on, make them more adept. If there’s a new task that your company needs to be filled see if any current employees are interested in taking up the challenge before you hire out. Send around surveys of business skills that they’re interested in that, at the same time, could be useful to you.
But why invest in human capital? There’s the obvious benefit for your business in terms of competency, but that’s not the only reason to invest in human capital. By spending time on improving the knowledge and skillsets that your employees possess you make them feel like you – and your company – care about them. When employees feel cared about, in turn they work harder and they feel a sense of loyalty to your business. This makes them less likely to leave when the going gets rough.
Employees also feel more personal fulfillment when they’re learning new things. Their self-worth goes up because they know they have more value. And – once more – they associate your business as the entity that helped them gain this new value.
Just be careful that you don’t force employees to learn new skills that they’re uninterested in. That can make them feel resentful, which is the opposite of what you’re aiming for.
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