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DQ News: How To Guarantee ROI On Your Biggest Business Investment

This is a guest post from Leon Noone.

How valuable is your biggest single business investment? What return are you getting on that investment? You need to know. Return on investment – ROI – is a perfectly reasonable management expectation. That includes investment in people.

ROI And Your Laptop

Let’s say you want to buy a new laptop: top of the range. You’re prepared to spend up to $1500. At that price wouldn’t you make sure it had all the bells and whistles you wanted and expected before you parted with your hard-earned? After all, $1500 is a significant figure. You’d expect a clear return on your investment.

ROI and New Investment

What would you say to a manager who said, “Boss, I want to spend $50,000 a year on a new machine. And I want you to commit a further $50,000 a year in maintenance costs to keep the machine running. Incidentally, I can’t guarantee that we’ll get any ROI, or even break even. Even if the new machine works very well, we’ll still need that $50,000 a year to keep it going.” Well: what would you say?

The Other Machine

A laptop is a machine. It’s a resource you need for better business results. We also have a special name for the $50,000 a year machine that the manager’s asking for. We call it “employee”. And it often costs much more than $50,000 a year to maintain.

The ROI Contradiction

It’s interesting. We spend a one-off $1500 on a laptop and expect it to perform admirably without further investment. We spend $50,000 annually merely to keep an employee. What ROI do we expect from that investment?

ROI And the Employee Resource

Permit me to make position clear. Work is not a “love-in”. Every resource you use, whether a machine or something else, should make a measurable contribution to business success.  Employees are a resource. Therefore ….ROI is essential for what you invest in employees. But the “machine” resource and the “employee” resource aren’t quite the same.

Machine Expectations

Your new machine is inert. It wants nothing from you. Install it properly. Look after it well. It’ll do what you expect …. perhaps a little more with careful attention and care. And you expect a good ROI from it.

Employee Expectations

The employee resource is different. It has emotions, opinions, expectations, ambitions, values. It has responsibilities outside of the workplace. It’s easily distracted. You can’t just plug it in, switch it on, let it run and wipe it down if it looks a bit tired. That’s not enough.

But it’s still one of the most expensive investments you’ll ever make. All up, total employee costs are one of the biggest – if not the biggest – single expense in your business. It’s essential that you get your ROI.

Some Tips For Employee ROI

1. Decide exactly what results you expect from each employee.
2. Tell each employee exactly what you expect.
3. Decide, together with the employee, how you’ll measure whether the employee has achieved the expected results.
4. Set performance standards so that employees can tell, daily – yes daily – “how they’re going”.
5. Put systems in place to enable employees to implement the performance standards perfectly.
6. Provide resources to enable employees to operate the systems.
7. Reward successful employees as well as you possibly can.
8. Let them get on with  giving you what you want.
9. Once they achieve the results and meet the standards, give them the autonomy and independence necessary to continue to do so.

Why Bother?

Employing people is a huge investment. You owe it to everyone involved to get a good return. But there’s another, equally good reason.

Employees need to know that they’re making a positive and effective contribution to business success. They also need you to acknowledge that contribution. Finally, they need to be satisfied that their contribution is well rewarded.

The Major ROI Benefit

The real benefit is that it enhances employee self esteem and professional competence. It provides great, to use an old expression, “job satisfaction”. It enables employees solid opportunities for genuine self development. These are positive consequences of this ROI approach.

The Major Payoff

Bear this in mind. If, like most managers, you’re always looking for more time to “manage the business”, you’ll only get it when you develop “perfect employees”. That’s what this ROI approach will give you. You, the manager, are a major beneficiary.

Conclusion

It sounds simple. It can be demanding. But it’s much less complicated than some of the gurus would have you believe.

About the Author: Leon Noone helps managers in small-medium business to improve on-job staff performance without training courses. His ideas are quite unconventional. Read his free Special Report “49 Practical Tips for Removing Employee Apathy, Aggravation And Resistance In Your Business”. Simply visit www.staffperformancesecrets.com/ and download your free copy now.

How To Guarantee ROI On Your Biggest Business Investment originally appeared on Danny Brown | Social Media Marketing Blog - The Human Side of Media and the Social Side of Marketing under a Creative Commons license.

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