Every organization has its own unique culture—it’s the secret sauce. Change any ingredient ever so slightly and you change the taste of the sauce. What is your organization’s secret sauce? Who are the critical people within your organization? Consider for a moment what makes them indispensable. Is it their innovation, team building finesse, ability to motivate and inspire, decisive leadership, transferable knowledge?

When you take high performers, the people who know what to do and are able to do it, and put them together with other high performers, you begin to increase productivity that equals more than the sum of its parts. It is the unique blending, simmering and stirring of knowledge, skills and behaviors that make a company’s secret sauce. It also represents one of the most difficult assets to manage and measure.

Human and organizational capital
It takes human capital to get organizational capital. By building the value of your human capital, you exponentially build organizational capital.

Equate your human capital to individual players and positions on a football team. Winning games is your corporate strategy. Is it logical that quarterbacks with identical physical conditioning, equal intellectual ability, and equal amounts of experience would perform equally the same? Why not? The answer lies in how they take their accumulated experience and knowledge and apply it to the team. Those elements make up a person’s behavior. What each player contributes to the team is human capital. How all these players perform as a team is the organizational capital.

The strategies and processes of each team are unique to that specific team at that specific time. Replicating strategies and processes from one team to another will not yield identical results because the people’s behaviors are different, not their skills and knowledge.

Central to the human capital idea are two key principles. The first: People are an asset whose value can increase through investments. Second: Human capital policies must be in alignment with the corporate vision. Most organizations have made the leap to viewing employees as assets to be valued rather than as costs to cut.

The more an organization recognizes the intrinsic value of its employees, the more it recognizes that this value can be increased through developmental investments.

A person’s ability to screen and execute concepts, processes and ideas that create greater market share is more important than the amount of knowledge the individual may have. In other words, it is not what a person knows, it how they apply their knowledge and share it. The more an organization recognizes the individual talents, skills and motivations of its employees, the greater their ability to create an environment that will yield the greatest contribution to the organization’s performance. When these high-performing individuals come together with information technology and corporate values, they create high levels of return. Such organizational capital is intangible, not tradable, and distinctive. The organizational capital is what allows companies to be more competitive, productive and innovative.

Organizational capital drives productivity and profits
Companies that recognize the value of organizational capital have revolutionized the way their businesses are operating. The link between management quality and economic growth is becoming more and more apparent. Organizational capital is the optimization of the way businesses do business to drive profits. The quality of a company’s organizational capital correlates to the quality of its human capital. Human capital rests on the skills, knowledge, and abilities of people. It is why companies with identical resources differ in performance.

We are seeing a surge in productivity. Business leaders have discovered that less can do more if properly equipped. Labor productivity increased 9.5 percent during the third quarter of 2009, according to U.S. Bureau of Labor and Statistics. A high number of the currently unemployed will not be hired back into the same jobs they left. The companies that have made the largest gains in productivity have improved the quality of their work and management processes. While these processes initially take a lot of time and effort, they build up a stream of value that lasts a long time.

Building organizational capital
Define what the organization wants to accomplish, determine what jobs within the organization are needed. It’s necessary to make sure jobs fit across all levels of the organization; people who can be highly successful in their situations.

Organizations are defined by the way they approach the marketplace. The way the organization approaches the marketplace is a function of the way people perform. How people perform is a function of what they know and what they do. People in the right roles will do the right things.

Short- and long-term human capital gaps identified during planning sessions often go ignored, with devastating consequences. Manage your human capital proactively and strategically. Take a deep breath and look at your current labor pool. Who is not needed? Who is not performing? What positions are still open? Commit to either developing or hiring leaders for positions that are critical to the organization.
High-performance organizations need senior leaders who are drivers of continuous improvements. Knowing when to supplement internal knowledge and skills with outside expertise from consultants, professional associations and other organizations is important.

When a company understands the appropriate engagement style that will drive their culture and goals, they often need help in identifying those people who are best suited to engage it. When you bring together the knowing/doing piece in harmony with the culture, goals and objectives of the organization you end up in a situation that yields the kind of high productivity that will drive your organizational capital.

For example, front-line supervisors and managers are empowered to make more decisions about the people, products/services, and processes under their responsibility than ever before. Business leaders need to know which behaviors are necessary in that job for success prior to hiring or promoting. Proper job-fit is critical. People must be sufficiently prepared and trained. Placing people in positions without the proper skills, education and behaviors necessary to be successful goes against common sense, but still it happens.

What does it take to develop a culture of people who are highly productive in their situation? It takes an understanding of corporate goals and objectives, the knowledge required to do the job, and a clear understanding of the behaviors required of the person who is going to do the job. Highly productive employees drive corporate culture. The most difficult of all these to measure is the behavioral piece.

How do you know which people are the right people?
Companies are often fooled into thinking they are hiring the right person based on a resume, an interview, or successful completion of skills and tests. We have all been witness to new hires who were highly successful in a previous job, but fail in the new job simply because the environment changed. It becomes imperative to know how a person will fit within the organization’s culture. Companies are in a wonderful position right now to profile their highly productive people and use that data to drive their productivity forward.

Identifying the behavioral portion of a person is the rub. More and more companies are relying on behavior assessments to help. Using the wrong assessment, however, can be just as dangerous as not using one. For instance, my company’s tool, Predictive Index, understands that leaving out the culture, the goals and the situation in which the person is to be performing omits crucial information.

Consideration of a person’s behavior in relation to the environment in which he or she is to be working is imperative for optimal success.
When you have people of high value and an organization with a higher percentage of highly productive people, you drive the value of the company’s organizational capital.

Ultimately, the recipe of your secret sauce comes down to the quality of ingredients you put into it, the environmental conditions it is prepared in and the presentation of the product.

Cindy Mallard, a Predictive Results consultant, can be reached at cindy@predictiveresults.com. Predictive Results is a PI Worldwide Member Firm.