How to increase the value of a company?

In my article from last week (“What makes a great manager?”) I mentioned that I believe that the most sensible part of the organization is its managers and not just the top executives but everybody who has the privilege to manage people. The reason I say this is because I believe that the people managers are decisive regarding the value creation of a company. But before looking at this let’s highlight what I understand is the value of a company.

The value of a company

To me the value of a company is established by the difference the company makes regarding its brands (products), the people it touches and towards the environment. And as a consequence, it can be expressed in financial terms like ROI, EVA or shareholder value. Important to emphasis that we are talking about a holistic approach involving products, people and the environment at the same time.

How to increase the value of a company?

With that definition in mind lets look what a company can do to increase its value. The world is getting faster and more complex by the day and I strongly believe that you don’t want to respond to increased complexity by adding even more complexity. On the contrary, I think we need to come up with simple answers, simple concepts to complex questions. That is why I like the approach from the Gallup Institute so much on how to increase the value of a company.

It all starts with the identification of talents. Now, talents are hidden in the way people think, feel and act. The funny thing is that everybody has them but most of us are unaware of our own, proper talents. You are getting a hunch of the somebody’s talents by trying to understand

·        Why is somebody doing things?

·        How is somebody doing things?

·        With whom somebody likes to do things?

In the case that you need to fill an opening in your company I believe it is super important that you have a clear understanding of which talents are required to make a great job regarding this specific vacancy. You need to be very clear on this even before crafting out the job description. So, why is that? It is because the talents of people are pretty much fixed before they enter the work life. And believe me it is hard enough to get God-given talents out of people. So, you better don’t want to try to get new talents into people. Which leads me to a completely different subject which is the widely under-valued importance of RH as a strategic building block in the value creation process of a company. But that is another story for a different day.

Very well, after identifying the talents of your people you need to make sure that you find the right fit for them, so that they actually can use their talents at work most of the time. Most likely it will not be eight, nine or ten hours every day but people should be in a position to use their talents most of the time they work.

To identify talents and to find the right fit you need great managers to do so. And a great manager knows that it is her or his main task to help transform the individual talent of a person into performance and she or he acts accordingly (see refer to my article on “what makes a great manager?”). This normally leads to a boost in employee engagement. Engaged employees in turn create engaged suppliers and customers which are the basis for a sustainable growth of revenue. Higher revenue should normally lead to a real growth in profits and ultimately in an increased value of the company.

As I said in the beginning the beauty of this concept is its simplicity but to implement this it is not as simple because it is people who implement. And people have emotions, dreams, desires, attitudes, private agendas, the need for being liked, a past, pressures and many other things which somehow brings me back to the widely under-valued importance of RH as a strategic building block in the value creation process of a company.