Vista Development: Are you sitting on a gold mine?

Are You Sitting on a Gold Mine?

Your largest expenditure may offer the biggest, yet least understood, opportunity for return on investment.

When it comes to maximizing the return on investment for human capital, some get it, some don't. Those who get it can reap substantial returns while building powerful competitive advantages.

In a typical organization, around 60% of the operating costs go to the human aspect of the business.

How much is 60% of your operating costs? Monthly? Annually?

Is this an expense, an investment, or both?

By strict accounting definitions, costs are expenses. Cutting unnecessary expenses is the best path to improving your bottom line. Case closed? Or, are there other pieces to the puzzle?

Considering the scale of human related costs, is there opportunity for improving your return on investment in human capital? Here's a clue:

Studies show that 70% of lost customers depart not because of price or quality issues. They are lost because they didn't like the human side of doing business.

What is your management doing to maximize your human capital R.O.I.? Most organizations address two obvious areas: the hiring process (hire people with potential) and financial incentives (reward them for performance). Isn't that enough? When it comes to turning their potential into peak performance, most executives don't get it. Some can't make the connection between improving intangibles and the bottom line. Most lack the processes for developing peak performers and cultural, strategic alignment. Robert Haas gets it.

"Everyone looks at the wrong end of the telescope, as if profits drive the business. Financial reporting doesn't get to the real stuff - employee morale, turnover, customer satisfaction, on-time delivery, consumer attitudes, perceptions of the brand, purchase intentions - they drive the results. I believe that if you create an environment that your people identify with, that is responsive to their sense of values, justice, fairness, ethics, compassion, and appreciation, they will help you be successful. There's no guarantee-but I will stake all my chips on it."

-Robert Haas, CEO, Levi Strauss.

Your people can either cost you money or bring you significant economic value. Those who get it understand where their battles are really won and lost. These inspired companies are leveraging their human capital and waging war in their marketplaces by developing competitive advantages through intangibles. They establish robust processes for improving and exploiting them.

As you approach your next payroll date, ask yourself: What should we be doing to improve our return on human capital? Are we sitting on a gold mine of potential? How do we get to the gold? Will our competition get it first and stake claim on our customers?