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The value of human capital: A leader’s guide to developing people

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A capital idea ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ 

Brought to you by Liz Hilton Segel, chief client officer and managing partner, global industry practices, & Homayoun Hatami, managing partner, global client capabilities

When companies invest in employees, the returns are not always quantifiable. Yet some organizations are much more effective than others at turning human capital into a tangible competitive advantage, according to new McKinsey research. The best companies are good at both developing their employees and turning in stellar financial performance. This subset of our respondents—companies that we call People + Performance (P+P) Winners—are more consistent and resilient performers than the rest; they also are better at attracting and retaining talent, an important advantage at a time of severe labor shortages. In addition to being heavily people-focused, P+P Winners emphasize organizational capital—the unique management practices, systems, and culture of each company. “This concept encompasses everything from training programs to workflows, department and team structures, employee communications, norms, culture, and leadership,” note the McKinsey researchers. “When these elements are effective, they can turn a collection of talented individuals into a cohesive team.”

59%

Remember virtual watercooler meetings and video cocktail hours? To some participants, those pandemic-era corporate rituals may have seemed like “forced fun.” But conducted properly, rituals can be powerful acts that help define company culture, state McKinsey talent leaders Bryan Hancock and Bill Schaninger in a recent episode of the McKinsey Talks Talent podcast. “As a leader, you’ve got to be thoughtful about how a ritual advances togetherness,” says Hancock. Whether you do that through team lunches, meditation breaks, or celebrations of birthdays or promotions, the goal should be to build a sense of purpose and connection at work—including face-to-face interactions. “Let’s remember that the majority of workers are not hybrid,” Schaninger says. “And those folks desperately need rituals. There’s a huge swath of the workforce that does not feel respected or valued. So I would encourage us to keep thinking about rituals for people who still go to the workplace daily.”

The ‘quiet quitting’ trend has set off variations. People are showing their dislike for work in a growing number of ways. In fact, 38 percent of employees globally say that they wouldn’t wish their jobs on their worst enemies. More employees may be experiencing “resenteeism,” which describes workers who hate their jobs but stay in them resentfully for fear of not finding better alternatives. Or they could be displaying “digital presenteeism,” where they feel pressured to show constant online availability to bosses and colleagues to prove that they are working. (In traditional presenteeism, workers make sure to be seen sitting at their desks for the same purpose.) Leaders may want to try “career correction,” whereby employees work with their managers to help find different and potentially more interesting roles within the organization.

Lead by developing human capital.

— Edited by Rama Ramaswami, senior editor, New York

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by "McKinsey Leading Off" <publishing@email.mckinsey.com> - 02:29 - 13 Feb 2023