18th March 2019
Powering Up Performance: The ROI of Investing in People
Return on investment (ROI) is a key indication of how well a business is performing. If we asked you to name the first investment you can think of in order to boost performance and yield a more impressive ROI, you might start thinking about better software. Or perhaps you’re considering more up-to-date technology that you think your competitors are using.
Other common investments include:
- Improving infrastructure
- Expanding marketing outlets
- Outsourcing talent
- Building emergency funds
- Hiring new staff
We live in a world obsessed with data, and organisations continue to place significant emphasis on analysing figures and improving profit margins. Yet the truth is, if you’ve failed to recognise the correlation between valuing your employees and improving business outcomes, you’re missing out on the most valuable investment you can make.
And that’s your people.
The biggest single predictor of a company’s ability to beat its direct competitors in its industry and the overall stock market is the amount the company spends on its people. (The Good Company)
According to Gallup’s ‘The Engaged Workplace’, 87% of employees worldwide are not engaged at work. When we consider that companies with highly engaged workforces outperform their peers by 147% in earnings per share, this is a deeply troubling statistic. This is further emphasised by the work of Dr Laurie Bassie, whose book ‘The Good Company’ highlights the fact that the biggest single predictor of a company’s ability to beat its direct competitors in its industry and the overall stock market is the amount the company spends on its people.
But how can investing in people possibly surmount other, more tangible investments? In our previous post, ‘Learning in the Modern Workplace Part 3: Why is Engagement So Important?’, we noted that engaged learners play a key part in the success and growth of an organisation. How? Ed O’Boyle, global practice leader at Gallup, believes that an employee who is highly engaged isn’t “someone who just shows up and fills a seat; they are enthusiastic about coming to work, they go above and beyond expectations, and they find meaning in what they do.” In essence, they work harder and perform better.
Imagine you’re working for a company that has just splashed out on the most up-to-date system on the market – let’s call this workplace Organisation A. All the right infrastructure is in place, but the people you pass in the corridor every morning can barely muster a greeting. You’ve been in the same role for over a year with no idea how to progress – or whether there’s even any role you can progress to. You clock in (slightly late; you dragged your feet a little on the way in), take your seat and log in to your computer. You tap away on the keyboard and make a call, certain that this has helped you kill at least an hour. You’re not sure what you’re supposed to be doing today and your line manager is, as always, too busy to clarify. You glance at the clock. It’s been twelve minutes.
You slump in your seat and start daydreaming about the overpriced, limited sandwich options you’ll face for lunch (eaten, as usual, at your desk) and spend half an hour fantasizing about walking out.
Now imagine you work for a different company – let’s assume this one is named Organisation B. Organisation B does not have technology that’s quite as up-to-date as Organisation A. However, when you clock in here you are greeted warmly by every colleague you pass. Your line manager knows exactly what you’re working on and you’ve worked together to set some goals. She knows about your development ambitions and so you’re currently taking all the right steps towards progression. You log in to your computer, update your task list for the day and get to work, determined to smash your daily targets. If you have any queries, there are always other colleagues on hand to contact.
As you put down the phone after your third call of the morning, you’re surprised to see that it’s lunchtime already. Fortunately, there are plenty of great facilities around where you can go and recharge with a decent meal before powering through to the end of the day.
See the difference? Employees are clearly not a priority in Organisation A and this is reflected in their attitude. Disengaged workers are turning up late and getting through the bare minimum of tasks per day. Management is far more concerned with getting people in front of desks and throwing money at new-fangled systems – yet even after splashing out, business leaders are dismayed to find that the ROI has been minimal to what they’d anticipated. In Organisation B however, communication is healthy, goals are clearly articulated, training and development is incorporated in the culture and there are great facilities on-site to help employees recharge. Everyone here is engaged and eager to contribute – and this is reflected in the way they consistently surpass targets.
The result? Impressive performance and a staggering ROI.
Investments are futile if the people using them are being overlooked. Who wants to work for a company that doesn’t value them? When employees arrive at their desks eager to work, that enthusiasm will shine through in their job performance and consequent company growth. It’s what makes the difference between good performance and top performance.
Ultimately, this provides a greater return on investment.
So why aren’t more business leaders taking action? Some of the reasons many companies fail to invest in their people is because the ROI of people is difficult to measure (it’s hard to assign value to people) and the results are not immediate (it is, after all, a long-term investment). However, perhaps the key here is to stop calculating and start comparing outcomes. Make the investment now and you’ll reap the rewards in the future. How does increased employee retention, greater skill sets, improved morale, future growth, a positive company culture and a high-performing workforce sound to you?
“There are only three measurements that tell you nearly everything you need to know about your organisation’s overall performance: employee engagement, customer satisfaction and cash flow.” – Jack Welch
In today’s highly competitive global environment, the companies that see their people as an expense will be consistently outperformed by those who see them as an investment. And as Jack Welch said, “There are only three measurements that tell you nearly everything you need to know about your organisation’s overall performance: employee engagement, customer satisfaction and cash flow. It goes without saying that no company, small or large, can win over the long run without energised employees who believe in the mission and understand how to achieve it.”
The power of performance lies in your people.
If you would like to learn more about how our cutting-edge blended learning ecosystem can help you achieve your performance goals, we’ve got the tools and expertise to help you succeed. Request a demo to arrange to speak to one of our experts.
- To learn more about performance, check out our previous post ‘Secrets of High-Performing Learning Organisations: 3 Ways to Power Up Your People for Maximum Performance‘
- If you want to learn how to measure and maximise ROI from learning and development, our handy expert guide can help guide you through it.
We’re always exploring key trends in the learning and development world, so keep an eye on our blog and social media channels to see when new insights are published:
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