How Talent Management Drives Performance

Alexa Thompson
Tags: talent management

Business managers have a tendency to view employees as investments that are necessary to complete projects. However, many workplace psychology experts argue that the most effective corporate leaders take a more humane approach to management. By investing in human capital, these leaders not only build positive relationships with their workers but also increase their professional abilities.

Ben Bernanke, in his “Principles of Macroeconomics,” writes that human capital is “an amalgam of factors such as education, experience, training, intelligence, energy, work habits, trustworthiness, and initiative.”

In theory, the success of a company is dependent upon the number of employees with a high level of workplace competence; as such, each worker should be viewed as a valuable asset. Human capital investment refers to the development of employees who are competent at their jobs, committed to the work and able to meaningfully contribute within their company. Managers who invest in human capital are more likely to earn support from employees and retain their services in the long term. However, simply spending money on behalf of employees is ineffective; the investments must serve the employee by optimizing their talents and increasing their workplace accountability.

Arguably the broadest and most commonplace form of human capital investment is job training. The nature of job training often reflects the industry in which it is implemented. Ultimately, the goal of any training is to create skilled laborers who can accomplish tasks much more quickly and efficiently than unskilled laborers.

In lieu of job training, some companies invest in collegiate education for their employees. The recipients of this training and educational opportunities are often determined using a cost-benefit analysis, during which the overall cost of the investment is weighed against the potential improvement of the employee – and returns for the company.

In addition to fostering positive relations between employers and skilled workers, Osmond Vitez of Demand Media notes there are other advantages to training and educating employees.

“Using education and training to improve human labor helps companies create a competitive advantage, as when companies train employees to produce goods or services not available from other businesses,” he writes. “Business owners and managers with specific technical skills can train employees to duplicate processes effectively and efficiently.”

Job training and other educational opportunities represent a monetary investment in human capital. Cori Hill, director of high-potential leadership development at PDI Ninth House and co-author of “Developing Leaders and Organizations Through Action Learning,” recently explained to Forbes that investments of time are also crucial for human capital development. Business leaders are essentially responsible for building talent within their company’s workforce. But in many cases, they fail to set aside the requisite amount of time for coaching their employees and developing their talents.

Hill says that managers should adopt a personable approach to leadership and foster a positive working environment in which vulnerability is viewed as a universal trait and mistakes are seen as learning opportunities. The manager should consult with each worker about his or her professional goals, both within the company and in the long term. They should also discuss areas where the employee needs to improve, as well as their important role in the company’s overall success. This type of open communication allows employees to become more confident, competent and career-oriented.

Human resource management is not a static concept. People are dynamic, and so the ways in which business managers relate to their employees are also constantly changing. But as long as experts emphasize the importance of human capital investment, companies who follow suit will continue to prosper at the hands of their highly skilled and content workforce.  

About the Author

Alexa Thompson is a writer who also contributes to, a website that discusses the role of organizational psychology in the workplace.