Know Your People as Well as Your Financial Numbers

Denver Business Journal – by Stephanie Klein

While the need for strong financial acumen is a given when it comes to running a successful business, another more crucial measurement is that of a business’s employees. Do you have a system for measuring the value of your company’s talent? The fact is, a business’s financial success hinges on the sum total talent of its employees. Some of the best known and most successful companies judge its overall performance based not only on financials but on human capital as well.

Unfortunately, the truth is it’s easier to crunch numbers than objectively measure people. Employees are as varied as the colors in the spectrum; each has a unique combination of personality, aptitudes and shortcomings. Yet failing to analyze how these traits come together to affect your business is akin to ignoring revenue streams. If you haven’t taken the time to consider your employees, and specifically how your top performers use their skills to drive your company forward, you’re leaving a huge portion of your company’s evaluation blank. Without a complete and comprehensive evaluation of what’s working and what’s not, how can a business expect to grow and thrive? Well-known business adviser Ram Charan said it best when he said, “If businesses managed their money as carelessly as they managed their people, most would be bankrupt.”

There are steps a business leader can take to measure their human capital and use those measurements to improve the company’s performance. Below is a guide for developing and using an employee measurement process of your own.

Create a balanced score card

Begin your employee assessment by implementing a balanced scorecard.  While many large companies with sophisticated human resources departments know about this concept, it is not complex to implement at smaller businesses. By creating an objective scorecard measuring an employee’s specific financial  successes, customer satisfaction level, innovation, timeliness, personal habits, and other traits, you can assign numbers and ratings to each of these traits and identify where an employee excels and where they fall short. The scorecard can include peer evaluations and self-evaluations in addition to your own thoughts. The purpose of the scorecard is to manage your employee as an asset and continually track them in a variety of ways. If used correctly, the scorecard tracks and measures where each employee needs improvement, what programs are working, and what initiatives are falling flat.

Turn shortcomings into strengths through people development

Once you know how each employee is performing in certain areas, you can take the proper steps to transform those deficiencies into strengths. Say one of your sales professionals is great at driving the financial performance of your company but falls short when it comes to one-on-one customer interaction. Once you know that useful piece of information, you can offer training and other opportunities to improve that employee’s performance specifically in customer service. With a scorecard  pinpointing a person’s performance in one area, you can move forward in offering the training needed to improve it.

Go back to the scorecard to figure out what’s working (and what isn’t.)

Once you’ve identified a person’s shortcomings and have provided training and opportunities to improve them, give them a chance to use this new knowledge to improve. Then go back to your scorecard and go through the evaluation again. Have they shown improvement in their formerly deficient areas? In using the previous example, are customers now saying good things about them or are complaints still streaming in? If it’s the former, there’s reason to celebrate – not only has the employee improved, but the training they received has proven itself worthwhile. If it’s the later, you can still celebrate, because you’ve identified a training program that may not work and can take steps to improve it. Either way, you have solid data showing you what’s working and what isn’t, which gives you the opportunity to act accordingly.

If you take the time to objectively evaluate the talent you have in your company, and follow processes that enable you identify and expand the traits of your best employees, you’ll be well on your way to objectively measuring your most valued asset – your employees. By creating a balanced scorecard and committing to using it, you can figure out what’s working both in terms of employees and programs, and take steps to remedy any weaknesses. From there you’ll have a solid launching point to grow your business.

About Stephanie Klein

Stephanie Klein is past president of the Colorado Human Resource Association and President and CEO of Experience Factor, a Denver staffing and placement firm. Contact her at 303-300-6976.