Smart Leaders Learn How and Why to Invest in People.

by Rob Marchalonis

What is Human Capital? Very simply, human capital is “people value.” In a workplace, human capital can be used to describe your people resources which obviously include employees but may also include volunteers, business partners, suppliers, customers, and anyone else who contributes to or has a stake in your success. Many organizations have invested considerably in their human capital, but are not optimizing their rate of return.

How Human Capital Provides Value. The value people provide to an organization comes in a spectrum of ways. Near one end of the spectrum is simple uninspired manual labor. Near the other end is passionate, innovative, and purposeful collaboration among many individuals who contribute their physical, emotional, intellectual, and creative resources. Where on the spectrum is your human capital providing value? What are you doing to encourage and facilitate maximum value creation? One way to understand this value creation is to assess which of the following human resources are engaged:

• Body
• Mind
• Spirit

Human Capital – Engaging Body, Mind, & Spirit. To better understand engagement, let’s look at examples of how human capital might be utilized in three different organizations in a typical community. In the first example, a business sells a simple service, “You Call, We Haul”. Give this business a call, describe a pile of junk or unused appliance in your basement, and they will come and provide labor to haul it away for an hourly fee. In this example, a body is engaged to provide value. In the second example, a business advertises “Taxes Prepared Here”. They analyze, compile, and process your tax return. You purchase their labor plus knowledge, skills, and experience to prepare your taxes. Body and mind are engaged, providing value. In a third example, a pharmaceutical company brings together medical scientists and others who combine their microbiology education, pharmaceutical chemistry experience, and research equipment training to create breakthrough medical solutions never before thought of. Deeply motivated by the opportunity to promote health and save lives, the group is passionate and dedicated. Body, mind, and spirit are engaged, providing value. From “call and haul” to “cures for disease”, there is a spectrum of ways that human capital provides value in a community.

The Human Capital Challenge. As a leader, what can you do to extract the maximum value from your human capital for the benefit of all stakeholders? How can you encourage people to contribute their manual labor, and so much more? Beyond just hands that assemble products or keystroke data, how can you also utilize the background, education, experience and unique gifts of each employee? How do you encourage, train, and resource their effort? Finally, how might you use a rewarding vision and meaningful purpose to build passion within the organization, build positive energy, and then share the rewards when success is achieved? Consider starting with yourself, and then include your strategic leaders as you expand your human capital outlook. Challenge the expectations you have for people, realizing that many have much greater potential than you may now realize. Be patient, realizing that the process may be slow and evolve one person at a time. Be ready, for even small successes that you can celebrate and use to motivate others.

Build a Talented Team – 5 Easy Steps. As a strategic leader, developing human capital often requires that you assemble a winning team. Use the five team building steps below as a guide. Consider your opportunities to attract, develop, and build human capital in each step:

1. Recruit – connect, network, clarify your organizations purpose and vision.
2. Hire – provide a clear understanding of roles, responsibilities, and rewards.
3. Train – educate, provide learning experiences, benchmark others.
4. Motivate – communicate, encourage, incentivize for results.
5. Retain – care for and share success with team members, encourage personal development.

At each stage of team building above, how can you embrace and utilize the body, mind, and spirit of each new hire? What can you do to articulate the direction and purpose of your organization and the opportunity you provide for individuals who share your interests and passion to best use their talents and energy? Before hiring, discipline yourself to clearly define what will be expected and the potential rewards. Invest in training and education to shorten learning curves and the lead time to results. Don’t assume motivation, but rather be deliberate to encourage and incentivize outcomes. As you develop a talented team, care for them and share with them financially and otherwise to retain and fully engage your investment.

Maximize Your Human Capital Returns. Smart organizations continuously develop people resources with a disciplined and organized approach. The smartest organizations compound their investment in human capital by identifying individual gifts and passion, leveraging those strengths by facilitating team development and collaboration, and then motivating effort and retaining talent by sharing the success of the organization!

Rob Marchalonis is the founder of IncentShare and author of IncentShare: Motivate, Recruit, and Get Results with Incentives, now available at Amazon. Connect with him at