Employees Are 70 Percent of Net Worth

Your employees are 70 percent of your organization’s net worth.

Gary S. Becker, a Nobel laureate in economics, estimates that 70 percent of a company’s challenges are met successfully by its human capital – the men and women we call employees.

Without employees – the human capital -- you have nothing at all, including net worth.

To maximize the effectiveness of human capital, organizations should consider developing strategies that specifically address this mission-critical solution to success. In a knowledge-based economy with its dynamic challenges – especially those facing healthcare organizations – the quality and value of human capital can easily add (or subtract) from an organization’s net worth. For that reason alone, CEOs should structure their human resources department as a strategic business partner for the executive team.

Talent Mapping, an ongoing component of a corporation’s Total Onboarding Program (TOP), is an essential process to ensure that an organization maximizes the economic contribution of its employees. Talent Mapping is a multi-faceted process. For the purpose of this post, let’s simplify the definition. Talent Mapping is essentially a process for performance criteria in concert with an organization’s strategic plan and then distinguishes between high-potential, high performing and low-performing employees. It is NOT to be confused with the vast majority of annual employee evaluations that have become more about “merit” raises and less a systematic approach to assess and elevate the performance of departments and entire divisions.

Far too many organizations focus enormous resources, time and energy in reviewing monthly and quarterly data, ranging from financial reports, performance metrics and other so-called dashboard-driven reporting as well as new product or service plans and capital requirements. Remarkably, I would argue that is more than just a little ironic that many organizations fail to invest a similar amount of time and effort -- for some even one-tenth of the time -- to a formal periodic review of human capital. All this investment would ensure is that executives, managers, and supervisors receive the benefit of a regular performance review of their accomplishments, contributions, developmental needs and potential for advancement.

This breakdown or failure is all the more amazing when you realize that the most successful companies in the world have this type of program in place. Implementing Talent Mapping will ensure improved performance in productivity and financial returns.

Talent Mapping’s focus on developing supervisors and managers for promotion is all the more important when you consider the recruiting industry’s dismal overall performance: 40 percent of candidates recruited from outside an organization are forced out, are fired, or quit within the first 18 months, according to several recruitment industry studies, including one of 20,000 senior level executives. The cost of that level of turnover alone is staggeringly high and is, without question, an unnecessary drain on profits. So why do so many health systems, hospitals and other companies put up with it?

There are signs that they want to change. More and more, healthcare organizations are using phrases like “becoming the employer of choice” and that their employees “are our most important asset.”

Organizations that seek to become the employer of choice for their industry or market – to treat their employees a mission-critical asset -- are easily identified by the following human capital components:

Total Onboarding Program
Best-in-industry recruiting practices
Talent Mapping that rewards high performers, strengthens teams and boosts morale

While there are signs that some healthcare organizations realize that their future success hinges almost solely on their human capital, most are still trapped in the emphasis on short-term financial reporting. They are focusing more on the upfront costs of these initiatives and less on the extraordinarily high long-term return on investment in the organization’s human capital through a multifaceted approach to supporting their success.

John G. Self is Chairman and Senior Client Advisor of JohnMarch Partners. He is a Co-Founder of the Firm.

A former investigative reporter and crime writer with more than 30-years of healthcare leadership experience in public relations, national marketing, business development and as Chief Executive Officer of hospitals and consulting firms, Mr. Self is highly regarded for his keen insight into operations, business culture and for his ability to consistently select the right leaders.