Are your employees a good investment?

I know that no one likes to be thought of as "just a number" and that we talk a lot about morale, mood and other feel-good aspects of the workplace on this blog. But at the end of the day, a business needs to make money - and if its employees aren't contributing to the bottom line, there's a problem.

The term ROI - return on investment - is bandied about quite often in financial circles. But what if you applied this same formula to your company's personnel? How valuable is Ken, Katie and Karl to your business compared to the cost of employing them (salary, benefits and other company-provided perks)? Do your employees' contributions outweigh the cost of keeping them on board?

While it's not always easy to put a dollar sign on a person's efforts and achievements, it can be an interesting exercise - whether at review time or any time. 

For example, is Ken in sales securing enough sales to cover his costs? While he may be pulling in great numbers, if his sales are spread around to multiple customers and require you to hire additional customer service representatives, his value isn't as strong. 

Or how about Katie, the customer service advisor who's great with her team but moody on the phone? If her snarky attitude has caused a handful of customers to take their business elsewhere, her value suddenly drops. How much did each of these customers spend a year - profit that you lost?

Then there's Karl in the warehouse. He's a solid, hard-working guy, but a bit accident prone. In three years, he's been in two workplace accidents that involved lengthy and costly workers' compensation claims. Your investment in Karl, then, involves more than just his hourly wages.

When it comes right down to it, you're looking at the same qualities you typically consider: attitude and actions. The difference with ROI is whether those qualities are advancing the success of your business, making each employee a worthwhile investment. Ideally, your employees bring in a positive ROI, making your "personnel" portfolio as robust as your personal financial investments.

No comments:


Labels :

Copyright (c) 2010. Blogger templates by Bloggermint