ROI Power to the People

People are the most important asset of any organization.  Labor cost is the biggest expense of most organizations.  Yet more time is spent by organizations maximizing the return from capital investments and not the return on investment (ROI) in people.  Increasing the ROI of labor has potentially a much larger impact than that of capital spending.

Compare the effort of an organization to acquire a $250,000 software package with the effort to add a new staff member to the organization.  In the case of the software package: market research is performed, a request for proposal written, several vendors are interviewed, product demonstrations occur, the total cost of ownership is calculated, a return on investment analysis is performed, and top level management reviews and approves.  To add new staff: several candidates are interviewed and the hiring manager makes an offer.

The five year direct costs to the organization may be the same for both the new software and the new staff, yet the due diligence is much less for staff.  And it does not stop there...

Once the software is purchased, its environment is constantly tuned to maximize its performance.  A system-wide view is taken to maximize the use of that software with the rest of the hardware and software that it must interact.  To insure overall system performance does not suffer, ongoing investments are made in hardware and software to insure the original investment is maximized.

The same is not true for staff.  Each staff member is expected to adapt to the existing environment.  A system-wide view is not taken to ensure that the contribution of each staff member is maximized with regards to others they must interact with.  Staff analysis is usually done only within an individual organization.  Very little analysis is conducted concerning the overall system performance of all staff, or concerning the ongoing investments needed to insure the investment in staff is maximized.

It’s time to treat people like they are the most important asset of any organization.  With labor costs being the biggest expense of most organizations, increasing the return from that expense by just a few percentage points will dramatically increase revenues and profit.  It’s time to provide more ROI power to the people.