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The purpose of a business is to create value. There are endless ways for a business to do this, but for the purposes of this paper, I will focus on the value of satisfied employees. Having satisfied employees is an incredibly important part of creating value in business. By having employees who are satisfied, a business will be more likely to produce quality products which creates value to the customer. So many factors nowadays contribute to an employee’s satisfaction, or lack thereof. Things like monetary compensation, benefits, work environment and work culture. Employees are often driven by different factors. An older worker might value healthcare benefits more than a younger worker. A younger worker might value monetary compensation more than an older worker.
Employee turnover is expensive to companies; the cost of recruiting and training new employees requires time and money which could be better spent ensuring current employees are gratified. When employees leave an organization, the employees left behind must fill in the gap, which affects productivity. Friendships are often formed in work environments, and a friend might be left behind which could affect morale. When turnover occurs, there is the cost of sourcing, hiring, training and onboarding a replacement. These factors affect the productivity of managers and other employees. Hiring and training costs can be offset by the value an employee yields for a business. Buying a piece of equipment is not the same as investing in an employee, but companies should still be able to measure the value added by employees. Being able to quantify how employee performance and hiring costs affect a bottom line is an important part of managing a company’s books. Human Capital Return on Investment (ROI) looks at how much a company earns compared to employment costs. The formula for Human Capital ROI is = (Revenue – Operating Expenses – Employee Compensation) / Employee Compensation. Companies should be looking at the value brought to an organization by employees, and how much they invest in employees.
According to Abraham Maslow’s Hierarchy of Needs, published in 1943, he suggests there are five human needs which are related to human behavior – the needs are: physiological, safety, belonging, esteem, and self-actualization—and these needs are in a hierarchical order in the shape of a pyramid. Basic physiological needs are at the base of the pyramid – food, water, shelter, and clothing. For employees, this includes a regular paycheck, comfortable working environment and perks like coffee makers, cafeterias or restaurants and fitness centers at work. At the next level is safety, i.e., security in one’s person, finances, and health. For employees, this includes things like health benefits, a retirement plan and sick pay. Next is belonging, which is about friendship, intimacy, and family. For employees, this includes a sense of belonging or team exercises. Esteem needs include achievement, confidence, and respect. For employees, this includes accolades for a job well done and respect from managers and coworkers. Finally, at the top of the pyramid is self-actualization, which includes creativity, morality, and problem solving.

Figure 1 Maslow’s Hierarchy of Needs
For employees, this includes the opportunity for advancement, allowing ideas (good and bad) to be heard and opportunities for training and skill development. These needs must constantly be met because human needs are constantly changing; one pay raise in 4 years will not suffice, neither will scarce team building exercises or training opportunities.
Capital is defined as financial assets or their financial value in business. This includes tangible things like manufacturing equipment and buildings. But what about human capital? How does a company measure the value created by its employees? Likewise, balance sheets do not include a line item for “people”. If a company were to lose all of its employees, its value would significantly decrease. The value of its tangible assets would still exist, but the intangible value of its employees would not. The ability to replace a tangible asset such as machinery is likely easier to replace than an employee when considering the time and resources it takes to onboard and train a new employee. When an employee leaves an organization, that value goes with him or her. Human capital is the knowledge, skills, and abilities that reside in and are used by the individual.
The customer is often the focus when considering sustainable value in business, but without selecting employees who are properly trained, developed and rewarded, it will be difficult to create value for the customer. Value for customers often means creating a product or service that they find useful. Value for employees means being treated with respect, realistic compensation, meaningful work and flexibility, just to name a few. Employers nowadays are finding innovative ways to lure employees with things like on-site Starbucks, on-site day care or on-site wellness perks such as massage therapy or medical facilities.
Wan Fauziah Wan Yusoff, of the University Tun Hussein Onn Malaysia defines human capital as a form of intellectual capital resulting from the combination of attributes such as knowledge, skills, attitudes, and relationships formed in the minds, bodies, and actions of individuals. All of these attributes are equally important and relevant when considering human capital. Many things contribute to each of these factors; knowledge and skills might be learned through formal or informal education, and attitudes and relationships are generally learned through our upbringing and interactions with other individuals like classmates, or friends.
Many employers are too rigid and won’t budge from the “old school” ways. As an example, with the advances in technology our world has seen, it is possible for many employees to work from home just as effectively as they do from employer premises. Yet employers still want employees to come to work each day and sit in the same chair, in the same cubicle. Allowing employees to be flexible is certainly better for the employee and for the organization as well.
Employees often go to work each day, do their jobs, never really being noticed by employers. Yes, they are noticed when they are seen at their workstations or on the assembly line, but they are not truly noticed for the contributions they make to their respective organizations. Valuable employees take initiative without being asked to do so; they know what needs to be done, and they do it. Often times, more laid-back, relaxed employees create value because they help to deescalate uptight, high-strung employees and diffuse tense situations. One bad apple can ruin the bunch. Inefficiency can derail a business; employees create value when they create effective structure, thus driving a team forward, not backward. Valuable employees research ideas before bringing them to the table. Conducting the proper legwork might ensure that unnecessary time is not spent on an idea that will never come to fruition. Another valuable trait is the ability to look ahead; doing so could help identify a problem before it becomes one. Some employees are often so obsessed with getting ahead, they will sabotage anyone in their path. Valuable employees work as members of a team. Inspiring and encouraging others by creating positivity is another valuable trait; no one likes a Negative Nelly. Being diligent about communicating with coworkers and bosses is vital. No one likes to be left hanging and effective communication ensures everyone is in the know. Company leaders are not the only people with ideas that will help a company gain proficiency. Effective leaders give others the opportunity to grow; it is imperative to allow others to step-up and to support them when they do so. Valuable employees are comfortable standing up for what is right and should be given the opportunity to bring beliefs to the table, even if they go against popular belief. These employees are always on the hunt for knowledge, and employers should encourage that. These employees also create value when they act as evangelists for their company.
Some companies are employing Chief Value Officers. Most organizations define the responsibilities for this role by value created for the customer or the business and are often silent to creating value for employees. Similarly, most companies identify a customer value proposition (CVP), which gives clear reasons why customers should do business with them, but less identify employee value propositions (EVP), which answer the question “why would a highly skilled, talented person want to work here?”. Just like customers have a choice regarding the businesses they choose to engage with, employees have a choice as well. It is imperative to realize however that unlike customers, who only occasionally interact with a company, employees do so on a daily basis. An EVP portrays how employees and the labor market perceive the value employees gain by working in an organization. Companies should give as much credence to an EVP as they do to a CVP. Five attributes are looked at, including opportunity, people, organization, work and rewards. Opportunity includes growth and development opportunities and the growth rate of an organization. People includes the reputation of senior leadership, camaraderie and manager and coworker quality. Organization includes the quality of products and services, market position and social responsibility of the organization. Work includes work-life balance and job-interest alignment. Rewards includes things like compensation, health benefits, paid time off and retirement benefits. It is imperative these items are truly delivered to employees, rather than presenting them with empty promises. If employees do not see follow through on these attributes, they will not stay engaged or committed. Employers with EVP’s often conduct surveys aimed at gathering data from employees regarding what they are doing right and what they are not. It is imperative that employees be able to honestly and openly share their opinions and experiences without the fear of retaliation. Employees are often labeled as whiners, complainers, or trouble-makers when they express anything that reflects a negative light on employers. Using the positive information gleaned from employee surveys is a great starting point for a successful EVP. This includes understanding what employees want and find valuable. An EVP is an important component that contributes to an employer’s branding process, which aims to build a positive and coherent image of a company as an ideal place to work and helps companies compete for the best talent and establish credibility. An EVP is vital to the retention of top employees. Career development and opportunities are often key to retaining them. Once the EVP has been fully vetted, it should be shared with current, prospective and newly hired employees. This will allow a company to effectively articulate the value it provides. EVP’s should be occasionally revisited to ensure companies are staying relevant in the job market, as well as ensuring their EVP is relevant. It is also a good idea for companies to share their EVP’s on customer review websites like Google; this will reach a wider audience than sharing with existing and prospective employees.

Great people want to work with people that have similar work ethics. No one wants to work with lazy incompetent people. Satisfied, happy employees will help to attract more of the same and the employer’s brand will be brought to life by those employees. Brand attributes will vary within each organizations. As an example, an employee of Apple or Google might feel that the organization attribute is important because both companies are leaders in the IT field. In companies that offer high opportunities for growth, an employee might feel that the opportunity attribute is important.
Occasionally collecting employee input such as during employee performance reviews or annual surveys is another way to ensure a company and its values continue to be relevant. In organizations with an EVP, it must always be in-line with the values of a company and what the company offers.

Post Author: admin