Last week I read a LinkedIn comment on how ‘any fool could see’ that HR managers had to ‘demonstrate ROI’, or return on investment, for people development and similar initiatives.
The comment struck me as odd: self-evident and yet somehow misguided.
Indeed, let us not waste money on wishy-washy coaches, consultants who lack imagination or technology for its own sake.
Let us not jump on the bandwagon of political fad or chase the wild goose of vanity. Let us, above all, not invest in mediocre.
Time to rethink ROI
Accountability matters, as does quality of outcomes. All the same, the narrative of ‘return on investment in people’ misses the point.
When did we last ask: what is the investment, who makes it and at what cost or risk and how might we assess any return?
The tacit assumption is that the organisation makes the investment. HR, as champions of people, must prove the likelihood of a return. More often than not, managers are anxious to justify any action in monetary terms.
Yes, the organisation typically signs a cheque. But we have only to look beyond the pound signs to see how it is employees who make the investment and employees who shoulder the risk.
The narrative on ROI reflects topsy-turvy thinking which views people as a means to a corporate end. It places ephemeral financial concerns over human experiences – and, ironically, above what it takes to secure sustainable outcomes.
The narrative of ‘return on investment in people’ misses the point
The ‘people’ investment that matters
As Oliver Burkeman wrote in his bestseller, we each have around 4,000 weeks to live. Data for 2017 shows on average, in the UK, 1,670 hours at work, one-fifth of all hours in the year.
Nowadays, many people also take home work in the form of emails and video calls. Regular overtime, be it to meet deadlines or to pay bills, is commonplace. The stress of work is an abiding companion: 24 hours a day, seven days a week, 52 weeks a year.
As individuals, we pay for work even after we dim the office lights. How many marriages are sacrificed to work obligations? How many parents neglect children in the name of a boss? How many passions and hobbies are put on hold?
The capital of a lifetime
We then add sunk costs. Jenny can only run Accounts because she spent 15 years in school, three at university and half a dozen on professional training. Whilst her relationships make her an industry powerhouse, an asset to the firm, each took her months to build.
The best employees also bring moral character to their work. Such fortitude is developed slowly, by navigating life’s obstacles, dealing with loss and failure and treading the ill-lit path toward personal growth and a sense of self.
Most people, simply by turning up, make a huge investment of economic (which includes time), social, and cultural capital in their work and in their employer.
(‘What about poor performers?’, you ask. In fairness to others, you should have fired such people years ago.)
As individuals, we pay for work even after we dim the office lights
Weigh the two investments
When we think in such holistic terms, we likewise see how the organisation invests capital that is not easy to accumulate: shareholder commitment, balance sheet, brand, research, products, systems, networks, and of course, people.
But take a moment to weigh these two investments. We only have one life, finite in time and place and thus also in experience. Working parents have few hours, and perhaps no energy, for the children and spouse they love. Job-induced stress curtails health, happiness, prospects, and expectancy of life, our one life.
Employee versus employer risks
The investment a person makes in work entails immeasurable costs and risks. Yet there are countless businesses able to yield shareholder return; countless ways to grow a balance sheet; countless new products to build; countless ways to turn the wheels of society.
For the individual, an unwise investment in work can be life-changing. For the organisation, a poor investment in people is almost always recoverable.
Value of organisations
Institutions of government, business and charity are forces that can sustain people and create good. But, in contrast with a human life, the entities we work for have little intrinsic merit. Organisations are a structural means to a human end: they should serve, not rule.
The question of corporate return on investments in people, then, is a red herring. Senior teams must first clarify what return they provide for the unlisted investment that an employee makes simply by doing a good job.
The investment a person makes in work entails immeasurable costs and risks
Three questions of value
As champions of people, HR teams have a duty to press for concrete answers to three straightforward questions:
1. What return do we offer, today, for employees’ investment in us?
2. How do we minimise employees’ investment risks?
3. How can we help employees maximise their long-term return?
The answers to these questions may be found in three interconnected areas:
1. A desirable workplace
2. Personal well-being
3. Learning and growth
This conversation is not too fluffy for the boardroom: lopsided notions of value, geared toward corporate financial returns, propel strategies that harm individuals, society and the environment.
Such negative consequences also limit long-term business prospects. Organisations that thrive into the future will ask first what they can do for their people, and only then what their people might do for them.
