The trouble with ROI

Like many of you, I ‘fell’ into HR. I came in by way of operations, found HR, fell in love, and never looked back. I have always believed that my operations background brings value to my HR work – I have a holistic view of the business and understand how HR fits into the whole. Because operations looks heavily at profit, it was easy for me to jump on the ROI bandwagon I heard in grad school, and in various HR workshops. How can we sell senior management on learning, development, good benefits, employee engagement? Measure the ROI. Show senior leaders the dollars and cents cost of good programs to ensure retention, and they’ll go for it.

Over the last few years, I’ve been rethinking this theory, and I’ve decided that ROI, when it comes to HR, shouldn’t be looking only at dollars and cents. As HR professionals, we know doing right by our employees will pay off. Engaged employees are more productive and stay with the organization longer, reducing the cost of turnover. And we know that developing skills in our employees will benefit the company’s bottom line, long term. But just like we know that most compliance regulations were created to protect and benefit employees, we also understand that many have become a bureaucratic nightmare that fly in the face of common sense, sometimes to the detriment of those employees it sought to protect. In the same way, I believe that the ROI argument that originated as a way to get senior leadership to do right by their employees has become a stumbling block to doing that right thing.  

If the only reason that senior leadership is willing to spend money on employees is because they see they’ll get that money back, those employees will know and feel bought. Real employee engagement, the kind that leads to the productivity and retention everyone wants, comes from being sold on the mission of the organization, and being able to tangibly align ones work with that mission. Every company has a mission, whether it’s clearly articulated or not. Non-profits often have it easy in spelling out that mission, but for-profits have clear missions as well. Are you selling the best? The most affordable? The most? Is your market families? Singles? Those on a budget or those looking for luxury? No matter what, your organization has a purpose, and employees want to believe in and feel connected to that purpose.

So what does that mean for HR? We can’t throw ROI out the window, and we have to have a basic understanding of the financial picture of our organization to make wise recommendations related to learning and development, benefits, and more. That operations background is still serving me. But our primary focus in building engagement is to make sure that every employee, from custodians and mail room employees to those on the factory floor to those in the C-suite, can directly see how their work connects to and drives forward the mission of the organization. That’s an investment that will continue to yield rewards for a long time to come.

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