Employers apprised of the value of ‘human capital’

Effectively training employees, reducing turnover and investing in human capital could keep
companies from going extinct, according to business experts.

By KAYLEY MENDENHALL Chronicle Staff Writer

"You almost have to consider (human capital) a piece of equipment today in terms of its life
expectancy and potential," said Tom Olivo, president of Success Profiles Inc., a consulting firm
that specializes in marketplace research and business performance measurement. In a seminar
Tuesday morning at the Wingate Inn, Olivo presented ideas on why and how to train
employees.

Backed by a slew of dramatic statistics, he warned business owners that work force issues can
and will sneak up on them.

"Here in Bozeman, our unemployment is less than 3 percent," he said, adding that 5 percent is
considered full employment. "Under 3 percent is unemployable. If you are hiring people, you
are taking them from another business."

The battle for quality employees is expected to get continually worse. Olivo said it is estimated
that by 2010, the United States will have 10 million more jobs than people.

"The only reason people retire is because they can," Olivo said. "We’re going to have to hire
older workers in the future because that pool of younger workers isn’t going to be there."

Older workers tend to stay in the same place much longer than recent college graduates.
Employees ages 25 to 34 only stay at a company for an average of 2.7 years, Olivo said.

"Before people needed companies, now companies need people," he said. "People can
advance in their career faster by jumping from rock face to rock face, than they can staying at
the same company."

But businesses with high turnover suffer economic losses. On average, it costs one-and-a-half to
two times a person’s salary to replace them, said Mark Smith, training director for Zoot
Enterprises. Olivo pointed to Zoot and Printing For Less in Livingston as local companies who
are successfully training and keeping employees.

"If you can increase job satisfaction and morale, that’s what keeps them around," Smith said.

People also want to know a company is going to invest in them. Smith said benefits like
vacation and health insurance are so standard that new perks like training programs have
become important in employee recruitment.

Zoot has a blended approach of instructor-lead and Internet-based training programs. The
company pays for employees to take courses on everything from active listening to checkbook
balancing. Training programs help employees perform better and have more confidence in
their work and help managers learn how to manage, Smith said.

"If I invest in you, you are going to stay," Smith said. "Eighty percent of companies that
increase training report jumps in profitability after one year."

The bottom line is people want interesting and challenging work with the potential for career
growth, learning and development, Olivo said.

"Investing in your people is not an option anymore," he said. "It’s a requirement."

Kayley Mendenhall is at [email protected].

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