The author Dave Bookbinder has a quote that I live by: “The value of a business is a function of how well the financial capital and the intellectual capital are managed by the human capital. You’d better get the human capital part right.”

Companies spend a lot of time focused on employee performance and on the performance of their own bottom lines. However, far too often, they’re missing the point by dividing these conversations into two silos — finance and personnel — rather than focusing on how intrinsically the two are linked.

At the end of the day, it doesn’t matter how much a business invests in its sales plans, technology or product marketing if the right people aren’t in place to execute these plans. Without employees who are placed in the right positions and performing to their fullest, the machine will cease to function. Human capital is the key to a business’s success and can’t be replaced by any other entity.

Outcome-based Development

To maximize employee performance, companies should link talent to value and create an action plan that invests in the development of their people in order to bring those values to fruition. Outcome-based development can target actionable goals and offer employees the tools and support to reach them. This is not only a perk, but an essential business move.

A survey by Accenture shows that 94% of employees would stay at a company if their development was invested in. And 75% said that an investment in learning and development (L&D) initiatives increased their engagement at work.

In a study from the Bersin group, 90% of human resources (HR) leaders believe that L&D has a positive effect on productivity and the numbers prove it — that same study showed that companies who invest $1,500 or more per employee show earnings that are 24% higher than those who don’t.

But when it comes to L&D initiatives, leaders need to move with intention. The L&D department plays an important role in continuously bringing new solutions to the business. You have to always match two things: what the individual needs to know and what the organization needs to remain competitive.

Adopting a Talent-to-Value Mindset

Throwing spaghetti at a wall in hopes that something will stick is a recipe for wasted time and resources. To increase employee performance, coaching needs to be targeted, based on specific desired outcomes and with a mindset that links talent to value.

There is no business plan without a talent plan. Implementing value-based coaching can ensure that financial capital and human capital are deployed together to achieve business objectives. This is the most direct and effective method of increasing employee performance, which in turn can increase profitability and stability for the organization as a whole.

Traditionally, employees’ value to a company has been based on top-down hierarchy that presumes the roles with the biggest offices and biggest paychecks are also those with the highest level of importance. This is short-sighted. In contrast, a talent-to-value mindset puts the most capable people in high value roles, and often, this new pecking order has nothing to do with hierarchy.

McKinsey studied multiple organizations and produced an analysis from 30 different companies across seven different industries. The results were strikingly consistent: Regardless of the size or type of company they looked at, they could see that the most value was being created by a small number of roles. Often just 15 people were driving 50% of a company’s value, and when they zoomed out, 80% of the value was being produced by 40 people or fewer.

But if you immediately thought that among these handful of high-value employees you’d automatically find the C-suite, you should think again. More often than not, these select, high-producing employees were located two or even three rungs down the ladder from the CEO.

To put the best people in your organization in the most value-producing roles, you can’t rely on chance. You need discipline and you need to ask a number of important questions. These include:

  • What are your organization’s value aspirations?
  • How are you going to reach those values?
  • Which roles are key to getting you there, and do you have the best talent matched for those roles?

Clearly Defining Outcomes

The key to implementing professional development opportunities is figuring out how to measure impact. Define your organizational needs and understand your participants. Be specific.

Clearly defining the outcomes you are hoping to achieve can help you hone in on the individuals who can benefit most from training and what those trainings should entail. Human capital is just as important as business capital and you can demonstrate this by investing in your top talent’s development.

If we don’t put the same emphasis, if not more, on human capital as we do on the business, we won’t be able to deliver on our value. Learning leaders need to deeply understand the organization’s goals, and then need to deliver training that can help upskill employees with the skills they need to achieve them.

Then, learning leaders can zoom in on the people who are filling those critical roles and make sure they’re each in the right spot and being managed carefully, with the entire organization’s support behind them in terms of coaching and continuous learning.