Return on Human Investment

Employees are investors.

Employees are investors of themselves. Investors of their time, yes. But for a company to succeed, it needs all staff to invest all of themselves. Not just their time.

Human Return on Human Investment

How might you be even more successful if you, your company, thought that way?

While I was at Procter and Gamble, there was an initiative to treat staff truly as human capital. Neither as assets nor as liabilities.

The framing question to ask as a manager is: “am I maximising the human return on human investment”?

This cuts both ways:

  1. Am I maximising the return for my direct reports on their investment of themselves?
  2. Am I maximising the return for the business on their investment of themselves?

Human capital works fundamentally differently to financial capital.. It can only be invested once.

Compare it to the investment in a fried breakfast. The commitment of the chicken versus the pig. A chicken has plenty of opportunity to lay an egg and another and another. A pig has one opportunity to give bacon.

Financial capital can be invested, repaid, multiplied, and invested again. The time human capital invests can only be invested once. It will never be multiplied, never repaid. I can never again have my fortieth year, invested once in Procter and Gamble, gone for good.

By looking at human capital as capital, my job is to maximise all returns on all investments, financial and human.

How might a VC be even more successful by seeing human capital truly as a capital – but with counter-cyclic behaviour? For example, human capital is often at its most valuable when the financial capital runs out. Yet unlike fixed assets, it can walk out at any point.

It is especially counter-cyclic in how to maximise RoI. Motivating a knowledge worker is not done by money. Yes, an uncomfortable life due to a lack of money de-motivates. But adding more money (beyond what allows a comfortable life) fails to motivate. You must motivate knowledge workers via intrinsic rewards, especially mastery autonomy, purpose and a long-term voice in the use a company puts their investment into.

This leads to the thought of wondering what venture capital would be if all businesses, if all venture capitalists, looked at the staff in their organisations as human capital. Where the job of the CEO, of the venture capitalist, everyone, was to first and foremost maximise the return on all investments. Human capital and financial capital.

What do you think your results might be if you maximised the human return on human capital?

Leave a Reply