Building a business means wearing a lot of hats, especially early in the life of the company. It’s easy to get entirely wrapped up in winning customers, raising capital, and product development –all essential functions to be sure. But add to your plate the important task of developing a solid human capital strategy early on.
The success of any business is directly tied to the excellence of the people who make it run. No one would argue with that, but startups and entrepreneurs in particular can fail to provide an adequate plan to ensure that those people will have what they need to thrive —and remain— at their positions. Newly minted businesses must deal with concerns from investors and short-term budgetary pressures that are urgent, and can’t be ignored.
In many cases, entrepreneurs don’t have a clear idea about considerations like when to hire, what to delegate, and how to create a culture that will attract and retain the desired team. There are several advantages to setting up a well-developed human capital strategy from the get-go.
#1: Competitive Advantage
Creating a company in which team members are engaged and motivated will result in better performance. A cohesive team will get a new business out of the starting blocks at full speed, helping it to get a cohesive team — who feels as if they’re empowered and own their jobs — established in a shorter time. In those critical first months and years of the startup, this can determine whether it will sink or swim.
#2: Attractiveness to Investors
Savvy investors look for companies that place a priority on the workplace culture. They’re aware that an organization’s emphasis on human capital is a major factor in its success. It’s all about the people.
Researchers at Harvard determined that a company’s investment in human capital is important enough to its financial performance that investors should include it as a part of their evaluation process.
The internal stability that comes with well-managed human capital enables a higher level of productivity and performance overall. You need to couple leadership, unbelieveable tools, process, collaboration, and people. This is particularly true for startups, which can experience periods of very rapid growth.
To facilitate productivity, it’s essential that managers avoid micro-managing or setting tight restrictions on their team. These prohibit innovation and risk-taking, which are drivers of productivity.
#4: Attract and Retain the Best
A positive, supportive work environment and well-designed human capital strategy is something that top talent looks for in the workplace. They attract the best and brightest, and help ensure that they stay with the firm.
High quality team members want to work where their talents are recognized, their ideas are listened to, and their creativity is nourished. They prefer an organization that offers avenues for advancement, so clear career trajectories are helpful. When team members — and just people in general — feel that they are valued and working with a clear mission, productivity surges and workers settle in for the long term.
So stop acting like we are robots!
It’s certainly worthwhile to do the work and create this environment from the start, since it’s much cheaper to retain talent this way than to replace team members and invest in new people repeatedly over time. Team members who stay become rich sources of workplace knowledge — and just plain old people you want to hang out with — and are keys to smooth operation ... the “oil” in well-oiled machine. Bang!