Four Steps to Improving Human Capital

Four Steps to Improving Human Capital
By Stephan A. Rutan

Surrounded by economic crisis, your management team is determined to survive the next twelve to twenty-four months knowing that recovery will eventually return strong businesses to financial well-being and "normal" working conditions. Take whatever short-term steps are necessary to address the seriousness of your current crisis and then modify your management mindset to expect that you can do much better than simply survive the slump. Current conditions provide the ideal environment to make gains in upgrading talent and improving corporate culture. Follow these four steps to fortify your foundation for future success:

Optimize your employee base
Scour the market for new talent
Strengthen the corporate culture
Polish your performance management system

Optimize your employee base:
There is no better time to assess your entire staff and make the right decisions about who should remain on the bus. This involves identifying and encouraging your best performers and taking action with those that are below par. Good economic times allow us the luxury of being less demanding about the contributions of unproductive employees. It is never pleasant to address sub-par performance and let people go, but when times are so hard that the company viability is on the line, it provides the necessary impetus for most managers to take action.

Even if your business is fortunate enough to continue thriving during the slump, the well-publicized panic can provide the leverage to make tough personnel decisions. Current business health does not mean that you can afford to shy away from the smart precautions to prevent trouble if the situation changes for the worse.

Eliminating poor performers will not only reduce payroll expenses, but it can send a reassuring signal to the top producers that management is willing to make the moves needed to become lean and effective. In most organizations, the strong players know who they can count on when the high priority projects need to be completed. No one regrets the removal of truly weak team members regardless of the business climate.

Scour the market for new talent
With adversity comes opportunity! Your company will survive and that survival should reassure prospective employees that something positive is happening in your business. The current recession is proving to be more serious than any downturn in most people's working life -- a shock to everyone's long-held perceptions about company health and job security. You can turn this to your advantage if your business is in position to benefit from solid strategy and proven performance in carefully chosen core businesses segments. There is plenty of talent available in the marketplace. Go find it.

Strengthen your corporate culture
You and your employees are still working and have good jobs. Do not take this for granted -- and do not neglect your role in nurturing your employees' appreciation of their good fortune. Managers have a responsibility to provide a positive and secure working environment for all associates. Staff members have a responsibility to take personal ownership of their own enthusiastic contribution to the enterprise. The psychological contract between ownership and employee works both ways.

Once again, difficult times offer management a chance to turn uncertainty into something positive. Think in terms of JFK's inaugural challenge: "Ask not what your company can do for you…". Consider how your management staff can proactively fortify corporate culture and positive attitudes toward achieving success. With the right people on board, this stronger mutual understanding of the company's expectations will unite the team and pay dividends as your goals are realized. Business success means team success which means success and satisfaction for your employees.

Polish your performance management system
Once you have the right pieces of the employee puzzle in place: the right people on board, an infusion of the best new talent, and the right team commitment to company goals, it is up to you to manage these resources for both short-term and long-term success. Formalize this process with an effective performance management system. Communicate the way the system works and how it benefits the company and the individual and improves the overall quality of work life.

Conclusion
These practices are sound advice under any economic scenarios, not just during a business slump. Dire conditions merely provide a unique stimulus and favorable environment to support your efforts. Take advantage of these four steps to ensure that you survive the downturn and are well prepared to ride the next wave of economic recovery.

Steve Rutan is a Consultant with Center for Simplified Strategic Planning, Inc. He can be reached at

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