Investing in People for Organizational Growth and Profit

Dr. M. Haris Z. Deen



The keyword for every business venture is profit, profit and profit. It is hardly necessary to say that the business community will not invest in anything that will not result in profit. It is not in their interest to do so. In every business, growth and the need for growth is determined by attracting a substantial customer or client base. The spending power of the client or customer base dictates the growth and profit making capacity of the company.

Although the power of advertising, product quality and price has some influence, the major factor in any successful business venture is the people who make it happen for their company. Venture capital investors must recognize this and plan to invest in people to produce future profits.

Sri Lanka with a very high literacy rate is not short of capable individuals and in my own experience as a trainer to the construction industry I found that Sri Lankan students are very quick in the intake of knowledge and easy to train. All that they need is the extra ‘push ‘ and guidance in the direction in which the company wants to go. It is said that ‘one of the primary skills of venture capital investors involves the ability to perceive how to invest in people to produce future profits’. People make the company and the people properly cared for will make the venture profitable.

For investors and managers of all levels it is important to recognize this factor and capitalize on it. I t is needless to say that the first step in people investment is recruitment. What would appear to be the best candidate from an impressive CV might not tum out to be so, as Sir Alan Sugar finds out when vetting through applications for the ‘Apprentice’ (BBC1 – Programme). As the Prince of Morocco says in Shakespeare’s Merchant of Venice “all that glitters is not gold”. Even at an interview, what would appear to be an excellent candidate might not turn out to be so, not because the new entrant is bad or incapable but because the company culture might be different to what he has been hitherto exposed to.

The recruitment conundrum

Recruitment of staff or a workforce is not as easy as it sounds .What it really means for businesses is identifying talented and motivated people, whatever the category is, who the strong potential to take the ‘company to new heights of success’. New recruits with such identified qualities will give them higher chances of having positive impact on the company’s bottom line. The quality in new candidates that recruiters should look for is the inward drive to pursue excellence. It is easily said than done. As the proverb goes ‘the proof of the pudding is in eating’.

Most recruiters that I have had the privilege of discussing issues connected with the ‘recruitment conundrum’ have expressed the view that even with people recruited after he ad hunting they have found difficulties in getting the candidates to adjust to company culture. I f that is the case with matured candidates, it would even be harder to accustom raw recruits to company culture.

Handy (1993 Understanding Organizations – Penguin) identifies, citing Holland (1973 Making Vocational Choices) six different characteristics of people enabling recruiters to recognize the suitability of candidates. It might not be discernible from first appearances, but following characteristics are really worth taking account of. They are:

  • A realistic person is one who seeks objective concrete goals and tasks with a penchant to manipulate dungs. Such candidates would be most suited for practical jobs such as agriculture, engineering, outdoor conservation work and other practical situations.
  • The intellectual person is identified by the fact that they would give importance to ideas, words and symbols and are best suited for jobs requiring abstract and creative abilities.
  • The social types are best known for having good interpersonal skills and interest in other people. A career in social work or counseling will be the ideal position for such people.
  • The conventional sorts are those who are sticklers for rules and prefer roles that are approved by society and customer. Such people will not bend the rules for whatever reason and might at times be a ‘burden’
  • on the company. However, they would fit in well with tasks such as accounting, administration and general clerical duties.
  • The enterprising categories are probably the most sought after for positions in sales, marketing, politics or the foreign service. These are candidates with high energy, enthusiasm, dominance and impulsiveness.
  • The artistic type who is best suited for the performing and creative arts, writing, journalism and such professions are those who uses feelings, intuitions and imaginations to create forms and products.

Extracurricular activities of candidates during college days, their hobbies, their social associations, and participation in sports activities can provide excellent insight to recruiters about candidates’ suitability for posts they desire to fill. Management Guru Tom Peters, in one of his lectures in London and relayed by BBC television in 1993 emphasized the importance of giving credit to any extraordinary or unusual activity the prospective candidate might have had. Even if some time off taken for voluntary work might indicate the recruits flexibility to adapt to different cultures and situations. It is not always possible to disseminate qualities in people at or from an interview. It is not to say that the wrong people are recruited and the company will therefore be lumbered with them. There is great potential in every one recruited for whatever position. The only problem will be adjustment to a company culture. First timers straight from college will present different attitudes from those matured and experienced candidates. Therefore on-going orientation of, not only of new recruits but also of existing staff for it will certainly acquaint staff of company cultures and changing needs to meet challenging competition and make the venture profitable and grow.

Dynamics of company culture

Whatever the nature of the company manufacturing, retailing, servicing or logistics, each company will have its unique culture dictated by board room subtleties. To react to rapidly changing business scenarios requires equally responsive stimuli. Therefore it is important that staffs are brought up to speed with rapidly changing market conditions. The company ethos has to be reviewed by the board from time to time to keep up with such changing conditions, if the company must make a profit and grow.

Handy (1993) writing about the dynamics of company culture states “organizations gradually change their cultures. Most start as power cultures where the founder sees the organization as an extension of himself, only necessary because he cannot do everything on his own. Time and success lead to growth and to the specialization and formalization of activities”. This in tum is expected to bring about increase in profits. The time must soon come for the organization to move forward with the least or without the involvement of the founder.

Cultural shifts in an organization are dictated by the need for greater flexibility from the role culture brought about by changes in market conditions. “The market may start to change more quickly or to move in different directions. The technology may develop, with all that entails for new work procedures, new manning levels and new skills. More often, the sheer growth of the organization compounds its complexity. At this stage, formalization and specialization are no longer sufficient to control the diversity of its problems and the organization has to face the fact that it needs a range of different cultures.

“The leadership may seek to retain the clear set of values (the tradition of service, excellence or hard work) that was the essence of the original company, but the more stylistic parts of the culture must be allowed to change to meet the requirements of each part of the organization” (Handy -1993; Understanding Organizations; Penguin). To meet these challenges, staff at every level must be continuously trained and updated. Staff makes the firm, and staff properly trained and acquainted with company culture will certainly contribute towards company profits and growth.

If this anticipated increase in profits materializes, it will in tum spur growth in the value of an initial investment in their venture, thereby making the venture capitalist a handsome return on their invested funds. Of course, the challenge here involves correctly identifying such individuals at a sufficiently early stage to make the investment worthwhile.

Nurturing staff towards company objectives

Employees in any organization always have the psychology of an inferiority complex. If this tendency is allowed to mature then they will just work for the pay they receive and the organization will have serious problems. The management ethos must be geared to change this attitude of employees and make every employee a part of the organization. People given the right sympathy and consideration will feel part of the team thereby contributing towards increased profits and consequently growth of the business.

Training for staff at different levels, including for persons at management level will not only improve performance but will make employees feel wanted. Furthermore, giving consideration to each employee’s personal problems sympathetically and allowing time off to meeting them, of course without seriously affecting work flow, will certainly make employees feel wanted as a part of the organization.

A considerably more personal method of how to invest in people involves investing your funds directly in a specific individual’s future, rather than in a company they are working for. Such an investment is typically a private arrangement that might often take tile form of a loan made to the individual by the investor over a given term with interest and principal payments expected. Furthermore, in recent years, some enterprising individuals have sought higher education after having obtained a job. This might involve substantial upfront payments from investors in exchange for a modest percentage of their future income. Such an investment proposal would offer an investor a return more like a stock on their investment in that particular person.

Alternatively, from a business or personnel manager’s perspective, how to invest in people probably refers to the choices that the leadership of their company makes when it comes to furthering the abilities and improving tile job satisfaction of its valued staff. Taken in tills context, investing in people usually involves such things as employee recruitment and training, compensation, lifestyle accommodation, workplace enhancement and offering attractive perks.