Your People Are Your Greatest Asset

Several human talent publications I follow predict a sparse year for people development in 2024.? Many businesses laid off a significant number of employees in 2023, with the technology sector topping the list.? Even with a continued shortage of qualified talent in many industries, most forecasts indicate budgetary cutbacks in hiring, learning, professional development, and leadership development over the next 12 – 18 months.

All this caution about people budgets in 2024 got me thinking about the almost universally repeated phrase, “Our people are our greatest asset.”? If this is true, why would we cut back on growing our people, especially in cautionary economic times???

Labor costs are one of the largest costs in most organizations, so we can have the largest impact on our financial performance by reducing our numbers and reducing or discontinuing learning and development programs.? Though I understand the temptation of a quick fix, upon further reflection, ceasing investment in people doesn’t make sense for those committed to the long-term growth and success of an organization.??

Warren Buffet follows an interesting philosophy for optimizing his return on investment:

1. Look for a margin of safety.
2. Focus on quality.
3. Don't follow the crowd.
4. Don't fear market crashes and corrections.
5. Approach your investments with a long-term mindset.
6. Don't be afraid to sell if the scenario changes.
7. Learn the basics of value investing.

Why shouldn’t we apply a similar set of principles in optimizing our return on people?? Let’s use the same general framework.?

1. Look for a margin of safety.??

“Knowing” your people helps you understand what is possible, what is not, and what represents unnecessary risk.? “Knowing” is a dynamic, sometimes complex task for leaders since people are unique, multi-faceted, and full of potential. Understanding your people can be made easier through using the right tools; I have experienced the power of assessments that measure behavioral traits, underlying motivators, cognitive processes, emotional intelligence, selling skills, leadership skills, and the impacts of stress.?

All these factors help us to know our people in more meaningful ways.? The deeper conversations that often occur around these assessments will open a treasure chest of new possibilities for individuals, teams, and organizations.??

1. Focus on quality.?

Knowing your customers and the problems they are experiencing opens great avenues for value creation that will make your organization more relevant and aligned for financial growth.? The better your people know your customers and their problems, the more opportunities for the creation of new outcomes will emerge, including financial rewards.

Investing in your people also helps to develop them into high-quality employees. Many businesses complain about a lack of developed talent, but how are workers supposed to develop without the right resources? If you can hire individuals with a drive to succeed, you can teach them the skills they need to add high-quality output to your organization.??

1. Don’t follow the crowd.??

When others are cutting back on their investments in people, you can become a magnet for the best talent.? High performers love to work in an organization that swims upstream, accomplishing what others think is impossible.

Focusing on employee performance also helps to develop your talent pipeline. It will strengthen your organization’s resilience, engagement, and talent acquisition. It will also help prevent employee turnover.?

1. Don't fear market crashes and corrections.?

Strong leaders spread their investments among a broad spectrum of their people, realizing that not everything is predictable. Some high-potential people will plateau below expectations, while others will surpass what we thought possible.??

Smart leaders spread their investments and don’t overreact to bumps along the path of great talent management.?

1. Approach your investments with a long-term mindset.?

I have often heard consultants speak about the “lifetime value of a customer,” and their observations are impressive.? It is not unusual for the lifetime value of a customer to exceed six, seven or even eight figures.? (I started tracking how much my wife spent at our local grocery store as we raised our six children and understood why all the check out folks knew her name and asked about our kids when we when patronized their store.) Returning customers are incredibly important to any business.?

What about the “lifetime value of a team member”?? How much future return on payroll is lost when we lose sight of the long term because of the knee-jerk responses of cutting back on human resources? Think of your workers as the investment they are, and plan accordingly.?

1. Don't be afraid to sell if the scenario changes.??

This is the other side of the coin. There are times when you know that in order to build a championship team, you are going to need to make changes to the roster.? Valuing your people doesn’t mean employment without performance.? In fact, when you don’t make changes because of toxicity or underperformance, you almost always lose your best people, either through exits or disengagement.

Make sure that your leadership team focuses on communication through regular check-ins with their direct reports. Set realistic goals and KPIs, and track metrics to monitor performance. Keep an eye out for opportunities to coach; sometimes, all an employee needs is guidance to course correct. This will help you prepare for situations that reach the point of being unprofitable so you can make the right decisions regarding their employment status.?

1. Learn the basics of value investing.??

Value investing means investing in businesses that are creating long-term value for themselves, their customers, and society at large.? There are three distinct ways I have seen this show up in successful organizations:

• Knowing how to build synergistic, highly collaborative teams, where the magic of the total is greater than the sum of the parts. This creates streams of innovation that can make businesses immune to economic downturns.??
• Knowing how to build an organization of trust and collaboration unleashes a shared energy for overcoming the external pressures of pessimism, fear and division damaging our culture and generating the forecasts of economic hard times.
• Knowing how to identify and eliminate waste in an organization frees up resources to be reinvested in all the above.? Quality management experts have long claimed that most organizations waste at least 20% of their top-line revenue through broken systems and processes.? The key to identifying and eliminating this waste is your people.? They experience the frustrations, inefficiencies, and bottlenecks of poor systems daily.? They can identify, analyze, and fix the sources of recurring waste in your organization.

Cutting back on growing your people may seem like a smart move for many leaders, but I view it as a lost opportunity. There is much greater potential for success; it requires truly believing that your people are your greatest asset.

Ron Price has served in leadership positions for over 50 years. He has been a student of Talent, Strategy, Culture and Innovation. Ron is the author of five books on various aspects of leadership that are all available on Amazon.com. In this newsletter, he shares his insights in his continuing quest to grow great leaders because of his deep conviction that it is great leaders that change the world. Ron currently services as president of TTI Success Insights LTD.