Perhaps one of the biggest and most commonly used buzzwords for businesses in the 21st century is organizational transformation. Faced with a multitude of internal and external business risks, organizations have to do make an insane amount of efforts to stay afloat. New businesses, in particular, have to juggle a number of things at once including entering the market for the first timing, meeting budget constraints and eventually becoming profitable. In the midst of all the frenzy of staying relevant and competing with market incumbents, organizations have to look for ways of becoming efficient, unique and different, all of which lead in one way or another to organizational transformation. A number of business strategies have been developed to allow and aid organizations in undertaking the journey towards relevancy and productivity, including a comprehensive idea of organizational transformation.
Regardless of the nature of the organization and the type of products and services it deals in, ultimately every organization has one palatial goal of growth and profitability. All kinds of new and fad based interventions have been introduced in the contemporary business environment; however, most are problematic in the sense that they either increase operation costs dramatically or require third party assistance consistently due to which the progress achieved cannot be sustained once the aiding, alleged business development experts exit the intervention. Decades of organizational growth and development related data and experience suggest that organizational transformation is the one holistic strategy that allows businesses to transform from what they are into what they want to become. Once the realization that change is necessary kicks in the next logical step is pursuing organizational transformation.
As a thorough and holistic organizational transformation methodology, organizational transformation relies on a myriad of factors for its execution and success. One of the said components is human capital. Defined as the sum total of an organization’s non-financial and non-tangible assets, human capital represents all qualities and capabilities possessed by the people employed in an organization. As a depiction of all the assets not listed in the balance sheet, human capital includes the recognition that not all labor is equal and hence acknowledges and values equity in a business. In order to truly enhance its human capital, an organization must invest considerably in its existing employees through learning and development in order to truly create productive labor and human capital. Despite being a relatively new theory in finance and economics human capital theory is widely regarded as one of the most revolutionary and powerful business theories today.
Various meta-analytical analyses of entrepreneurial data suggest that despite the considerable importance of other factors human capital is the most crucial element for organizational efficacy. All investments dedicated to improving human capabilities, expertise and skill-sets result in substantial economic value for the organization. Crucial to an organization’s performance, human capital creation and effective engagement lead to higher productivity, employee turnover, quality of work and ultimately, customer satisfaction. Based on the premise of growth and evolution, organizational transformation is ideologically similar to human capital development. While some organizations tend to focus more on finances, operational management and strategic management, nothing can truly be achieved with a workforce that lacks motivation, commitment and creativity.
In order to achieve organizational transformation, human capital development is decidedly the most crucial element that change managers must address and prioritize. By investing in human capital development organizations not only have a considerably more productive workforce; they also establish a positive image for themselves in the marketplace. Clients that seek growth also seek to work with organizations that manifest and pursue growth in their own organizational culture, in order to help them achieve their goals faster and more cost-effectively. The process of organizational change is not linear or one-dimensional and requires dedicated efforts from each and every stakeholder and element of the organization. Unless human capital is created and generated, employees will not only lack the motivation and productivity to bring about the change, they will also fall short on innovation and creativity which are some of the most important attributes for success in any kind of organizational growth endeavors. If organizational transformation is the desired outcome, the current priority must be to steadily invest in the very engine for change; human capital.
