Maximize Your Human Capital Investment
Many printers regard staff as a cost of doing business. Actually, this perception is incorrect. Although the money spent on payroll could well be your largest cash commitment, a staff of properly hired and maintained employees can increase your profits far beyond their cost. Your staff is therefore an investment-easily the most important investment your business ever makes.
Calculate ROI on hiring
Most businesses in the printing industry have two major common expenses: equipment and personnel. Best practices suggest that when evaluating your capital equipment investments, you calculate your return on investment (ROI). Often equipment manufacturers will help you determine your ROI on their equipment as a sales tool.
Considering your staff as human capital, can you measure your ROI equally effectively on your personnel investments? The answer is a qualified yes - even though personnel expenses can be unpredictable. Variables such as salary demands, employee benefits, education, training, and job market conditions can throw off projected employee budgets considerably. Also, since many returns on personnel investment do not result in a tangible product, their measurement requires more subtle calculations - but they can still be measured to a useful degree.
As with equipment, when you prepare to invest in human capital, you first need to evaluate the potential fit between your new acquisition and your company's needs. Simply put, you can do this by determining what your company does best, then hire for matching skill characteristics in job candidates. Similarly, you can identify areas where your business may have shortcomings and seek new hires who can fill in these vital gaps. Additionally, your customers have certain requirements your company must meet in order for them to give you their business; so you need to analyze and hire for the skills your staff need in order to give your customers what they want.
Ideally, you could integrate all the above concerns by charting a comprehensive workflow strategy that maximizes your business's efficiency and productivity while enticing customers to come back for more. Keep in mind your equipment-tools that will only perform if operated effectively and according to an efficient production plan. Next, define what levels of staffing your company requires to execute the strategy - senior, intermediate, entry - and how many people you require at each level. Use industry guidelines for a ratio of your gross billings against staffing count. Then hire accordingly. Above all, remember that the productivity of your labour force leverages all other assets. It is pivotal in executing a business strategy and improving profitability.
Increase hiring return
Other factors to ensure a good return on investment in human capital are:
- Create a description for each job function and identify the skill sets involved, considering not just educational and technical but also "soft" skill requirements. (More about soft skills later.)
- Use industry salary guidelines or a similar one already established by your company.
- Hire at the appropriate level. Someone who has the skills and seniority to command a higher salary than an intermediate or junior may be more efficient and accurate. At the same time, don't overhire. Keep in mind the role needs to appropriately challenge the employee.
- Hire for fit. Your ultimate goal when adding new employees is their seamless integration with the rest of your staff. If you make personnel decisions that build a cohesive team, the return on human capital investment will skyrocket.
- Invest enough time to hire effectively, or to streamline your hiring process, take advantage of the services of an industry-specific staffing firm. At PrintLink, staffing managers know the industry and what it takes to identify and meet your hiring objectives. You only receive resumes from qualified professionals that fit your job requirements, saving you valuable time.
Evaluating potential employees means assessing their ability to perform their job, including whether they possess the necessary technical or "hard" skills, appropriate certifications, and work experience. But don't forget about the so-called "soft" skills - skills that are not so obvious from a candidate's resume.
Soft skills are defined as interpersonal skills (remember the phrase from your report-card days: "Works and plays well with others"?) In practice, these skills often translate into things like courtesy, teamwork, effective communication, and conflict resolution. They can also include learning ability, adaptability, work ethic, self-confidence, or capacity to handle pressure. Additionally, they can include any number of task-specific abilities.
Research has proven the value of soft skills. For example, after American Express provided some of its financial advisory staff with soft skills training, the portion of the staff who received the training saw an immediate increase in sales - 12 per cent more than the control group. Among the most beneficial soft skills that excellent employees can contribute to your business are energy, initiative, and the drive to search for solutions and strategies to help the company grow ever more profitable. And at their highest level this encompasses leadership ability to encourage other staff, gain their confidence and cooperation, spark their creativity, and inspire them to contribute more to the business.
So how do you measure a candidate's soft skills for yourself? References are an excellent tool. While most candidates aren't likely to offer references who would speak negatively of them, you can still gain valuable insight by asking the right questions. Firstly, inquire about candidates' ability to work in similar functions to what you will require of them. Secondly, try to assess candidates' working relationship with co-workers and subordinates. Thirdly, remember to ask questions geared specifically toward the information you are seeking. For instance, "Can you tell me some ways that Mary was able to motivate other staff members?" will probably gain you more insight than, "Did Mary get along well with others?"
Boost return after hiring
Once you've hired wisely, further essential steps are needed to maximize your staff ROI:
- Clarify expectations - Most importantly, make sure each member of your staff - new or old - is trained in your procedures and understands your customers' expectations.
- Provide training - As you continually review employee performance, try to determine and fill gaps in training. These missing elements may be depriving staff of the tools they need and hindering you from getting the best return on your salary investment. Don't worry that if you train someone that person will leave your company and reward his or her new firm (your competitors) with your investment. More often than not, employees will appreciate their employer's commitment to building their skills and reward it with increased loyalty and superior job performance. Even if your employees do depart for other opportunities, you still want each of them to perform as effectively as they can for the duration of their tenure with your company.
- Develop incentive or reward programs - These can be easily established by defining a benchmark, then developing a scale of rewards for exceeding the benchmark. As long as the benchmark you establish contributes an appropriate measure to your profits, you are assured that the incentive or reward program brings a far greater return than its cost.
- Listen to what employees say about your business - After all, they're the ones who have the inside perspective on your day-to-day operations. Be open to making changes in procedure and policy, and accept constructive criticism from your staff gracefully.
- Treat staff well - Acknowledge them as people - not merely cogs in the manufacturing process. Help them work through any of their personal issues, either on the job or at home, and you'll have a friend for life - or at least a long time. The dedication, loyalty and commitment to excellence resulting from this support will yield a far greater return than your investment made.
- Never underestimate loyalty - The cost of employee turnover goes far beyond dollars and cents. When you are forced to replace a departing staff member, your business incurs costs for lost productivity, increased overtime, and decreased staff morale. Realize that other employees can suffer setbacks professionally and emotionally when a co-worker departs.