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While investing in employee training provides immediate results like gaining skills or increasing efficiency, it can also affect employee retention and a company’s bottom line. According to a study released in February 2023 by McKinsey, building human capital (investing in employee training and education) can help increase profits and lead to long-term business stability.
The study analyzed 1,800 large companies in 15 countries and sorted them based on how much they focus on developing human capital and whether they financially outperform their sector peers. Businesses were sorted into four models: typical performers, performance-driven companies, people-focused companies, and people + performance winners. The differences between the models are seen by looking at what they focus their investments on – increasing profits, growing people, both, or neither.
The most successful model, according to the study, was people + performance winners (P+P). These companies excel at creating opportunities for their employees to build skills while consistently clearing the highest bar for financial performance. They are able to achieve more consistent results and have greater earnings resilience, and they also have a superior ability to attract and retain talent – two factors that many construction companies are struggling with today. This resiliency was on stark display during the pandemic, where more of these companies saw growth or did not see the steep losses others suffered.
Companies that want to grow this type of organizational capital, as researchers called it, require not only investing in people, but bringing out their best and channeling their efforts into results. This is done by optimizing the management practices, systems, and culture within each company. Companies need to look at their training programs, workflows, team structure, employee communications, norms, culture, and leadership. When these elements are effective, they can turn a collection of talented individuals into a cohesive team.
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