By Mackie Makitla, Founding Director, Phelekeza
The Undervalued Engine of Business Success
Market value often outweighs a company’s book value, reflecting investor confidence in future growth. This growth hinges on intangible assets like brand reputation and, most importantly, human capital – the knowledge, skills, and attitude of the workforce.
Human capital, unlike machinery, is an intangible asset that’s difficult to quantify. Employees leave, taking their expertise with them. So why is it so crucial? Because skilled, motivated employees drive innovation, productivity, and ultimately, a company’s market value.
The Human Centric Approach
Organisations should transform their perspective. Instead of a closed system perspective, see the organisation as an open system where organisations and society are interconnected.
Here’s how:
- Align organisational purpose and resulting strategy with legitimate stakeholders’ values: Recognise that companies create value for various stakeholders, both internal (employees) and external (customers, suppliers, investors, communities, etc.).
- Focus on sustainable value creation: Financial success is crucial, but it shouldn’t come at the expense of employee satisfaction. Aim for a win-win situation. Balance resource allocation to ensure that, over time, all legitimate stakeholders are satisfied.
- Encourage openness: Support managers in being more inclusive towards all stakeholders, fostering collaboration and understanding, predominantly with their team members.
- Invest in developing emotional intelligence: All organisations are essentially social systems since hardly any production is possible without social interaction. Assist your organisation’s leadership and team members to develop emotional intelligence, allowing them to manage themselves and relationships effectively.
- Building a more scientific approach: Human Capital departments need to be more data-driven. There is a strong link between company performance and psycho-social factors like employee well-being. By focusing on these aspects in a more scientific way, we can unlock the true potential of human capital.
Conclusion
Human capital is the heart, head, and hands of any organisation. It’s the driving force behind innovation, productivity, and ultimately, a company’s market value. By prioritising employee well-being, fostering collaboration, and adopting a data-driven approach, Human Capital departments can transform from custodians to catalysts, propelling sustainable business success and societal well-being.
