As Strong As Its Weakest Link
All new start-ups are desperately searching for the same thing: Capital. All new companies need money and resources in order to get their new product and service moving and growing. But financial capital is not the only capital needed in order to get your business off the ground towards future success.
Like the old saying goes, a chain is only as strong as its weakest link; a business is only as strong as the people who form it. Without finding the right mix of people to manage capital and resources a business is bound to fail. Human capital is what ultimately determines the success of financial capital.
Finding the Right People
Each entrepreneur is different and desires something different out of his/her start-up. The differences may be in culture, principles, ethics, finances, and the list goes on and on. At the end of the day every entrepreneur has a long term vision of what they want to accomplish with their business. As you look to start your business you probably have a similar vision or end-goal in mind. Find people who are willing to support that end-goal and have similar motives.
Bring in Skill Sets that Add to Your Own Then Build
Nobody is an expert at everything, even though we may try to be. The best thing a new business owner can do is recognize personal strengths and weaknesses then look to build upon them. Often in the early days of a start-up it is nearly impossible to add a significant list of employees but you can seek advice when needed. Build an advisory board and seek out expert opinion on how to handle business matters where you may need help.
As the decision to add employees is made consider the areas where you may be deficient and fill those first. It’s amazing how much more can get done if differing talents are combined. Not always will your employees agree with you, or you with them, but differing opinions lead to good discussions. These discussions are healthy if handled correctly and will lead to better ideas. Good managers will bring in people with unique skill sets and then create opportunities for others to further develop those talents.
The 1/8 Rule
It is important for any new organization to plan the future of its organizational structure. Doing so enhances the ability it has to promote growth and development from its members and leads to organizational competitive advantages. Organizational structure and hierarchy can be a turned into a strategic advantage.
Studies done on organizational behavior (OB) have determined what is called the “1/8 Rule” which states that: Half of all organizations believe that OB is important; Half of those recognize the need for and put into place a comprehensive and systematic approach to effective management of people; while half of those who do see the need will continue to persist with their practices long enough to drive economic profits.
Therefore only 1/8 (12.5%) of all companies carry out organizational changes long enough to see returns. This is pretty profound. Investing in human capital and putting into practice procedures which will develop them eventually leads to an economic benefit but only 12.5% of companies ever see those returns.
Human Capital Is a Company’s Greatest Asset
This phrase has been said often by many businessmen and can seem even cliché at times, but it is indeed true. Human capital drives economic success for any business and investment in its development will lead to economic profits. Careful hiring and training of employees is an expense in the short-run but ultimately pays for itself in the long-run. Your new start-up may or may not be in a place to begin hiring but it will eventually make it there. As that day comes, see future employees for what they are, your greatest asset.