People. We thrive on human interaction and relationships in our personal lives, yet historically, prevailing thinking differs when it comes to business. People become a cost to be minimized and a line item to cut. This thinking is being challenged by a number of entrepreneurs — many in our community — who recognize not only the value of human capital writ large but that an investment in people practices can serve as a competitive advantage, too.
The February IC-SVN Virtual Member Meeting featured one such entrepreneur. Doug Kauffman, CEO of #FundedByIC TransLoc. TransLoc was recently acquired by a subsidiary of Ford, and on the recent webinar, Kauffman shared his experience growing the company. He highlighted his hiring philosophy, outlining TransLoc’s “4 Ps”: Purpose, People, Product, and Profit, in that order. Kauffman hires based on mission alignment, asking whether the new hire has the “right DNA” to join the team and whether the applicant is coming to the organization daily to fulfill a broader mission or simply to collect a paycheck. He believes that hiring for purpose and supporting people in their development leads to a superior product and ultimately to a path towards profitability. This investment in people also paid off during the acquisition as the company had broad-based stock options in place; as such, team members who contributed to the organization were rewarded financially.
I also recently participated in a webinar hosted by the Federal Reserve Bank of Kansas City where Kathy Jewett, the HR Manager of XLT, Inc. , a 60-year old manufacturing company of conveyor ovens and exhaust hoods, discussed how XLT’s people practices have led to their long-term success. This includes referring to employees as team members, not employees, and hiring for character, not skill. Jewett also reinforced that the leadership of the organization needs to believe that people are an investment and not merely an expense.
If you are a business leader, what has been your approach towards human capital practices? How can our investor community support these positive practices? I welcome your thoughts and ideas.