Investing in people for organizational growth and profit



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By Dr. M. Haris Z. Deen


The keyword for every business venture is profit. It is hardly necessary to say that the business community will not invest in anything that will not result in profit. In every business, growth is determined by attracting a substantial customer or client base. The spending power of the client or customer base dictates the growth and profit making capacity of the company. Although the power of advertising, product quality and price have some influence, the major factor in any successful business venture is the people who make it happen for their company. Venture capital investors must recognise this and plan to invest in people to produce future profits.


Sri Lanka with a very high literacy rate is not short of capable individuals and as a trainer in the construction industry I have found that Sri Lankan students are very quick in the intake of knowledge and easy to train. All that they need is the extra ‘push’ and guidance in the direction in which the company wants to go. It is said that ‘one of the primary skills of venture capital investors involves the ability to perceive how to invest in people to produce future profits’. People make the company and the people properly cared for will make the venture profitable.


For investors and managers of all levels it is important to recognise this factor and capitalise on it. Needless to say that the first step in people investment is recruitment. What would appear to be the best candidate from an impressive CV might not turn out to be so, as Sir Alan Sugar finds out when vetting through applications for the ‘Apprentice’ (BBC1 –programme). As the Prince of Morocco says in Shakespeare’s Merchant of Venice "all that glitters is not gold". Even at an interview, what would appear to be an excellent candidate might not turn out to be so, not because the new entrant is bad or incapable but because the company culture might be different to what he has been hitherto exposed.  


The recruitment conundrum 


Recruitment of staff or a workforce is not as easy as it sounds. What it really means for businesses is identifying talented and motivated people, whatever the category is, who have the strong potential to take the ‘company to new heights of success’. New recruits with such identified qualities will give them higher chances of having positive impact on the company’s bottom line. The quality in new candidates that recruiters should look for is the inward drive to pursue excellence. Easier said than done!


Most recruiters I have had the privilege of discussing issues connected with the ‘recruitment conundrum’ have expressed the view that even with people recruited after head hunting they have found difficulties in getting the candidates to adjust to company culture. If that is the case with matured candidates, it would even be harder to accustom raw recruits to company culture.


Handy (1993 – Understanding Organizations – Penguin) identifies, citing Holland (1973 Making Vocational Choices) six different characteristics of people enabling recruiters to recognize the suitability of candidates. It might not be discernible from first appearances, but the following characteristics are really worth taking account of. They are:


A realistic person is one who seeks objective concrete goals and tasks with a penchant to manipulate things. Such candidates would be most suited for practical jobs such as agriculture, engineering, outdoor conservation work and other practical situations.


The intellectual person is identified by the fact that they would give importance to ideas, words and symbols and are best suited for jobs requiring abstract and creative abilities.


 The social types are best known for having good interpersonal skills and interest in other people. A career in social work or counselling will be the ideal position for such people.


The conventional sorts are those who are sticklers for rules and prefer roles that are approved by society and customer. Such people will not bend the rules for whatever reason and might at times be a ‘burden’ on the company. However, they would fit in well with tasks such as accounting, administration and general clerical duties.


The enterprising categories are probably the most sought after for positions in sales, marketing, politics or the foreign service. These are candidates with high energy, enthusiasm, dominance and impulsiveness.


The artistic type who is best suited for the performing and creative arts, writing, journalism and such professions are those who uses feelings, intuitions and imaginations to create forms and products.


Extra curricular activities of candidates during college days, their hobbies, their social associations, and participation in sports activities can provide excellent insight into the candidates’ suitability for posts they desire to hold. Management Guru Tom Peters, in one of his lectures in London and relayed by BBC television in 1993 emphasised the importance of giving credit to any extraordinary or unusual activity the prospective candidate might have had. Even some time is taken for voluntary work might indicate the recruits flexibility to adapt to different cultures and situations. It is not always possible to discern innate qualities of people at or from an interview. This is not to say that the wrong people are recruited and the company will therefore be lumbered with them. There is great potential in every one recruited for whatever position. The only problem will be the adjustment to a company culture. First timers straight from college will present different attitudes from those matured and experienced candidates. Therefore, the on-going orientation of, not only of new recruits but also of existing staff for it will certainly acquaint staff of company cultures and changing needs to meet challenging competition and make the venture profitable and row.


Dynamics of company culture


Whatever the nature of the company — manufacturing, retailing, servicing or logistics, each company will have its unique culture dictated by board room subtleties. To react to rapidly changing business scenarios requires equally responsive stimuli. Therefore, it is important that staff are brought up to speed with rapidly changing market conditions. The company ethos has to be reviewed by the board from time to time to keep up with such changing conditions, if the company must make a profit and grow.


Handy (1993), writing about the dynamics of company culture, states "organizations gradually change their dominant cultures. Most start as power cultures where the founder sees the organization as an extension of himself, only necessary because he cannot do everything on his own. Time and success lead to growth and to the specialization and formalization of activities". This, in turn, is expected to bring about increase in profits. The time must soon come for the organization to move forward with the least or without the involvement of the founder.


Cultural shifts in an organization are dictated by the need for greater flexibility from the role culture brought about by changes in market conditions. "The market may start to change more quickly or to move in different directions. The technology may develop, with all that entails for new work procedures, new manning levels and new skills. More often, the sheer growth of the organization compounds its complexity. At this stage, formalization and specialization are no longer sufficient to control the diversity of its problems and the organization has to face the fact that it needs a range of different cultures.


"The leadership may seek to retain the clear set of values (the tradition of service, excellence or hard work) that was the essence of the original company, but the more stylistic parts of the culture must be allowed to change to meet the requirements of each part of the organization" (Handy -1993; Understanding Organizations; Penguin). To meet these challenges, staff at every level must be continuously trained and updated. Staff make the firm, and staff properly trained and acquainted with company culture will certainly contribute towards company profits and growth.


If this anticipated increase in profits materializes, it will, in turn, spur growth in the value of an initial investment in their venture, thereby, making the venture capitalist a handsome return on their invested funds. Of course, the challenge here involves correctly identifying such individuals at a sufficiently early stage to make the investment worthwhile. 


Nurturing staff towards company objectives


 Employees in any organization always have the psychology of an inferiority complex. If this tendency is allowed to mature then they will just work for the pay they receive and the organization will have serious problems. The management ethos must be geared to change this attitude of employees and make every employee a part of the organization. People, given the right sympathy and consideration, will feel part of the team and, thereby, contribute towards increased profits and consequently growth of the business.


Training for staff at different levels, including for persons at management level will not only improve performance but make employees feel wanted. Furthermore, giving consideration to each employee’s personal problems sympathetically and taking time off to meeting them, of course without seriously affecting work flow, will certainly make employees feel wanted as part of the organization.  


A considerably more personal method of how to invest in people involves investing your funds directly in a specific individual’s future, rather than in a company they are working for. Such an investment is typically a private arrangement that might often take the form of a loan made to the individual by the investor over a given term with interest and principal payments expected.


Furthermore, in recent years, some enterprising individuals have sought higher education after having obtained a job. This might involve substantial upfront payments from investors in exchange for a modest percentage of their future income. Such an investment proposal would offer an investor a return more like a stock on their investment in that particular   Alternatively, from a business or personnel manager’s perspective, how to invest in people probably refers to the choices that the leadership of their company makes when it comes to furthering the abilities and improving the job satisfaction of its valued staff. Taken in this context, investing in people usually involves such things as employee recruitment and training, compensation, lifestyle accommodation, workplace enhancement and offering attractive perks.


Motivation through Maslow’s Hierarchy of need


US Psychologist Abraham Harold Maslow (1908 – 1970) proposed, in his motivation theory suggests five independent levels of basic human needs. Every individual expects these motivators to be satisfied to meet their needs. Maslow advocates a strict sequence of needs starting with the lowest level as:


Physiological needs for survival (to stay alive and reproduce


security (to feel safe)


Social needs (for love and belonging)


Self-esteem needs (to feel worthy, respected and have status)


Self-actualisation needs (self fulfillment and achievement)


Most fundamental and pressing need identified by Maslow are the first two – survival and security while the final and highest level are the self actualisation needs


Maslow’s theory is based on the underlying theme that human beings are ‘wanting beings’ whereby when one need is satisfied the next emerges spontaneously and demands satisfaction and contnues, in this pattern; the need for self-actualisation, by its very nature, cannot be fully satsified and stopped from generating more needs. This theory asserts that once a need is satisfied, it stops being a motivator of human beings. This theory can be used as a tool in human resource management to design incentive schemes and in marketing it is an excellent theory to design promotional campaigns based on the perceived needs of a market segment a prodeuct satisfies.


In human resources, identifying the need at the right time is the most difficult as fiancial needs out-ride all other factors. Employers have experienced staff movement for very small immediate financial gain. It is not in the best interests of a company to have staff moving seeking short term financial gain and, at the same time, it might also not be in the employees’ interest as well to do so. But this actually takes second place in order of priority for an employee struggling to make ends meet when inflation affects his income.


Taking the overall picture, Malow’s hierarcy of needs appears to offer an excellent guide for human resource managers to motivate their staff towards retention in the company cadres.


Email: deenmohamed835s@gmail.com 


 
 
 
 
 
 
 
 
 
 
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