Every Company Has Human Capital -- Not Every Company Develops It

For the past year, human capital strategies have hinged on keeping humans safe by sending them home to work -- a noble and necessary measure. But remote work was a safety response, not a human capital strategy. A hedge, not an investment.

Human capital is serious capital. Up to 84% of the value of an S&P 500 company rests in the talents, skills, knowledge, work ethic and even the health of employees. Unsurprisingly, therefore, the SEC has started demanding human capital transparency in S-1, 10-Q and 10-K reports so that investors know exactly what they're buying.

Meanwhile, the UCLA Anderson Forecast says "the '20s will be roaring" with 6% growth in 2021's second quarter and, says the Conference Board, year-over-year growth of 4.7% to 6.9% in 2021.

If they're right -- and we must all hope they are -- companies need to prepare for roaring consumer demand.

In other words, it's probably time to stop hedging and start investing. And Gallup research shows that the highest levels of organizational success come from investing in the human part of human capital.

Workforce Development Is Capital Development

Gallup defines strengths as the ability to "consistently provide near-perfect performance in a specific activity." Those strengths can be identified and categorized -- that's what the CliftonStrengths assessment does -- into 34 broad, scientifically validated and profoundly powerful abilities.

You won't find CliftonStrengths assessments in the typical SWOT analysis or human capital framework. Nonetheless, a 2015 meta-analysis found that companies that develop their employees' CliftonStrengths have achieved:

• 7%-23% higher employee engagement
• 14%-29% increased profit
• 10%-19% increased sales
• 6%-72% lower turnover

Best Practices That Lead to Client Success

Clearly, strengths impact outcomes but, just as people born with perfect pitch sing better with voice coaching, people perform better with strengths development. From that perspective, strengths coaching is an intangible asset on par with brand identity or intellectual property -- maybe even a noncurrent asset, as the value of coaching is distributed over time. But a haphazard approach to coaching fritters away its impact.

So, between the CliftonStrengths assessment and better business outcomes lies an organized implementation program.

Highly effective programs are adapted into the organizational culture with the unique business needs in mind. Strengths rollouts are always tailored operations.

Still, in general, Gallup's clients have found that the following best practices speed the strategy's ROI:

• Start with leadership. Leaders should have coaching on their strengths before anyone else. Top leaders should have at least one individual session with a Gallup-Certified Strengths Coach. That helps leaders conceptualize strengths as part of a human capital strategy, aim it at business imperatives and explain it to their direct reports.

• After that, cascade assessments and coaching through the organization. Some companies implement strengths level by level, but businesses tend to spur momentum with a companywide rollout that announces the strategy and communicates the "why" behind strengths in the organization.

• Prepare managers for their employees' questions, and equip them with the tools and resources they'll need to make strengths functional from the start. Well-equipped managers can productively apply their teams' strengths more successfully and coach them more effectively.

• Design an ongoing internal communication plan to infuse strengths throughout the organization. Building strengths into communications, recognition, tools and resources helps keep individual strengths aimed at essential business.

• Designate a strengths champion. This person -- or in big companies, this team of people -- should be well-versed in strengths philosophy and the architecture of communication plans. On-call strengths champions keep strengths as part of the daily conversation, which multiplies the human capital strategy's influence.

A "Roaring" Human Capital Strategy for Professional Development

Those practices aren't about human capital development.

They're about creating an asset class out of human capital.

Considering the returns, a strengths-based development program may be the least-risky, highest-return investment a leader can make. And our research shows that those returns can be multiplied -- and indefinitely sustained -- with talent selection, engagement and good management: Organizations that select for talent in employees and managers, develop their strengths, and engage them can increase productivity by 59% (if all business units use those four strategies).

That's a fairly sophisticated approach to human capital, and some companies aren't ready for it. But all companies have human capital. Most companies inadvertently misallocate it by fixating on weaknesses and muffling strengths. It's like putting a Ferrari engine in a lawnmower: incredibly wasteful.

If the economists are right about watershed consumer demand in 2021, the time to stop wasting, or even hedging, human capital is here. If we really are looking at "the roaring 20s," leaders will need human capital working at the peak of their strengths. And that means a human capital strategy that roars as loud as the times.