While a company usually has different kinds of assets (for instance, equipment, inventories, capital, supplies, or facilities, etc.); however, its people – employees – are its greatest and most significant asset.
Mark Kay Ash, for instance, once stated that “People are definitely a company’s greatest asset. It doesn’t make any difference whether the product is cars or cosmetics. A company is only as good as the people it keeps.” Moreover, among business decision-makers, it is a well-known fact that the employees (their knowledge, expertise, abilities, skill-set, and experience), although constitute invaluable and intangible assets of a company, accounts for about 85 percent of a company’s asset, which is relevant in securing a company’s future.
In that, it is the efficiency and talent of employees that determine the pace and growth of an organization. However, given that employees invest their time, energy, talents, and the very best of themselves into the growth and success of a company, there is, therefore, need, just like every other asset, to also invest in them.
Basically, a company can invest in its people by increasing their network; offering them personal and professional development; creating team building activities; offering them investment opportunities – like stock options; offering them generous perks and benefits – such as, holiday pay, medical insurance, retirement plans, and education reimbursements, laundry facilities, places for naps, free breakfast, lunch, and dinner, etc.; providing in-house training; building leadership skills; paying for up-to-data technology; and helping employees pursue their career paths among others.
Besides these generous incentives and perks, every company also needs to find the best way to inculcate great relationships with their employees. This can either be by either giving them the opportunity to undertake personal projects, as in Google, in which employees are allowed to spend 20 percent of their time pursuing special projects they feel are worth their time (approximately 1 day per week); listening to them, so as to explore their ideas; or by providing them with challenging projects, then follows up with all the support they need to meet them.
Regardless, a company investing in its people is not just the greatest investment it can ever undertake because employees are the backbone of a company, but also because, investing in employees improves the performance of the company, and it is tantamount to investing in the future of the company.
However, most times, companies see employee training as an expense rather than an investment. Unfortunately, they often end up paying dearly in terms of low productivity and high turnover. According to research conducted by Gallup, disengaged employees cost companies $450-$500 billion in lost productivity each year as a result of poor performance and high absenteeism. Henry Ford was even of the view that “the only thing worse than training your employee and having them leave is not training them and having them stay.”
Perhaps, most companies do not invest in their employees because they are not privy to the benefits attached to such investments. Hence, in this article, we critically consider the significant benefits which tend to be accrued to companies as a result of the investment made on employees.
Why should a company Invest in its People?
Like every asset, investing in employees is not without a return or benefit. Though expensive to undertake, the benefits attached to such investment abounds. However, here, the basic and most significant reasons why every company should invest in its employees are considered.
- Employees are expensive to Replace
To start with, though employees leaving a company can be easily replaced, physically. However, their skills-sets and knowledge, especially when they are highly distinguished, cannot be exactly replaced by a person replacing them, as such an individual possesses a distinct skill-set and experience.
As such, investing in employees can help reduce the possibility of employees leaving the company, thus searching for individuals than can perfectly replace them. In fact, the true cost of replacing employees can even be twice their base salaries depending on their wages, role, and experience. The cost of replacing high performers who often deliver 400 percent more in productivity than their average counter can be even higher still.
- Investing in Employees attract more Talent
It is no longer a secret that all companies want to attract the very best talent and high performers over. However, no individual in his or her right mind, with huge potentials, will ever want to settle for a company where employees are not motivated or valued. In other words, given that potential employees often research companies on sites like LinkedIn and Glassdoor before applying for a role, having bad reviews on the platforms would not attract individuals.
However, when employees are motivated, they tend to share their experience working in a company with people in their professional network and write about it in popular job boards. Similar job seekers will read about it, gain a favorable impression of the company, and want to work there.
- Retaining of Motivated Employees
Besides attracting top talents, investing in the personal and professional development of employees tend to also retain motivated employees. Perhaps, it is true that investing in employees is an effective technique for retaining employees. However, many companies do not take employee training seriously.
According to a study by IBM, it was revealed that employee who does not feel they are developing in a company is 12 times likely to leave it. Rightly so, employees will most likely leave a company in which they lack development opportunities. Employees can even interpret an employer’s unwillingness to invest in training as a disregard for their professional development. In the words of Richard Branson of Virgin, he was of the assertions that companies should “Train people well enough so they can leave, treat them well enough so they don’t want to leave.”
- Engaged Employees are better Brand of the company
Given that employees are well accustomed to the customers, as such, investing in them will not only improve customer service and products but will also help a company establish a better relationship with customers. Arguably, since employees are actually in contact with the customers, the way they are treated can also be reciprocated to the customers.
Even more, than all the marketing and advertisement, how they think and feel is a better representation of a company. In other words, employees are the best brand ambassadors a company can ever have. Thus, employees who have been pushed to the point where they no longer care, will not go the extra mile. They will not take the initiative to solve problems. They will end up treating customers the same way they are treated.
According to a report by Gallup in “State of America Workplace,” it was discovered that employees who are engaged are more likely to improve customer service and can result in a 20 percent increase in sales. Similarly, the Employee Engagement Benchmark Study by Tempkin Group also shows that companies with successful customer experience have one-and-a-half times as many engaged employees as those that are not so good at it.
- Increased Expertise
By investing in employees through training specifically related to the business or their roles, so as to enhance their skill-sets and expertise, in reality, it is also the growth of the company’s expertise and knowledge base. This is because, when employees are up-to-date on the latest business strategies and technology, it enables the company to stay ahead of competitors and provide the best services to customers.
- Increased Employee Satisfaction
Investing in employees can also lead to greater job satisfaction. Apparently, when a company invests in the personal and professional development of its employees, there is a higher tendency that this will also increase their job satisfaction. Thus, when employees feel satisfied with the job, they also feel appreciate, valued, and happy.
Hence, perform better on the job and increased productivity. According to a survey by the Society for Human Resource Management, about 42 percent of employees said their organization’s commitment to professional development is very important to their satisfaction.
Research has even shown that there is an economic link between employee satisfaction and company financial performance. Apparently, a happy workplace culture does translate into better stock returns. That is, a happy employee is equivalent to happy customers, and even happy shareholders.
Beyond understanding the benefits accrued to companies by investing in its people, it is imperative to note that, investing in employees is not cheap. Though investing in employee tend to take some money, time, and effort for the company. However, it is an investment worth making.
Creating a culture of engaged, happy employees are well worth the effort. Training and the provision of opportunities for personal and professional growths for employees help support, develop and sustain a vibrant workplace, which will retain as well attract talented and high performing employees – a plus for the company, and even the employees. Zig Ziglar once said, “You don’t build a business; you build people, and then the people build the business.”
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