Human Capital in Business Simulation Games: Why it Matters
Why business simulations should teach human and business strategies as one inseparable element.
Organizations are more than money
Our society is growing to understand that putting all the focus on profits, at the cost of people’s wellbeing and development, and at the cost of the environment, poses major threats.
As experts in business education and business simulation games, we still feel a strong divide within corporations when it comes to the question of how people are or should be considered in strategy. On the one hand, those who wish the organization was human-oriented, on the other hand those who argue that the organization should be profit-oriented.
In between, there are also people and organizations like us, who believe this is not an either/or situation: companies need to integrate their human and business strategies into each other.
For that matter, we developed with HEC Paris a business simulation game about human capital and business strategy.
Talent is the engine of business growth
A company may develop an amazing product or offer an exciting service, but without a sound financial situation, its future is jeopardized and its ability to grow, or even to secure its market share, is limited.
Organizations therefore need to develop a good understanding of their customer profiles, so they offer the best product or service and remain competitive, and at the same time, they need to develop their employees’ financial acumen. This is the baseline of business, and of all our games about business strategy.
Attract and keep the right talent: a challenge for most organizations
To keep the product or service evolving, so it gains even more relevance, and to sell the product or service successfully, organizations need the right talent – that is, people who understand the product or service and who understand who it is targeted at.
Depending on the nature of the product – e.g. whether it is technology-intensive – and depending on the nature of the work to be done – e.g. mass production or more customized – the organization needs to attract various talent profiles.
Said profiles require different levels of onboarding, depending on the nature of the product and of the work, and they also have different expectations in terms of learning and development, and career progress. Depending on the scale of production, the number of talents you need to attract will also vary substantially.
As an organization, you will want to attract the right talent and the right number of people, onboard them effectively and fast, so they can be productive as early as possible, and develop them as much as possible so their efficacy and expertise increases over time.
Yet, should you fail to live up to employees’ expectations regarding learning and career development, your organization will face attrition, that is, employees leaving your organization: very costly loss, because you trained those employees and it represents a fair amount of money and time, and even more, it may disturb your team dynamic. The cost also includes hiring new talents and onboarding them correctly.
The cost of human capital plays an important role in the P&L
Talking about cost, salary plays a fundamental role, not only in our business games, but also in real life: people want to be paid the right amount of money for the work they perform, and salary differentials across management levels should be representative of that. Failing to pay your employees enough could result in them going to the next competitor who pays better for a similar job. Yet, you want to balance out between expectations and what your business can afford to become, or remain profitable.
Team leadership is a metric of how you allocate your human capital
Another threat is linked to team leadership: if you do not promote enough people to management positions, or too many, teams might either become very bureaucratic and slowed down by processes, or completely anarchic, in both cases hurting the efficiency of the production line, and potentially leading to even more attrition.
In our game, just like in real life, successful organizations will be those who develop a sound business strategy, with a value proposition that lives up to customer expectations, in line with their human capital: a pool of talent that is engaged, feels supported and considered by their management in the overall strategy.
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