As business leaders, we must always consider what is best for the business in our decision-making process around investing. Whether products, services, or solutions, this process must be carefully analyzed and decided upon to support the organization’s financial health.
One of our largest investment areas is our people. Payroll, benefits, training, and so forth are all areas where we sink critical dollars with the hope that we will see a large return on that investment. Certainly, we want to do the right thing for our people. We want them to be healthy and happy in their roles. That is a fact and one that must remain paramount to our organizational purpose.
With that said, as a business, and similar to other areas of our organization, we must also define expectations around this investment area. We must clarify what our expected return must be from it. This is our “People ROI.” Each hiring and promotion decision should be examined through the People ROI’s lens. What return will we get from the investments we make in our team? Defining this can be complicated and, at times, theoretical, but spending a bit of time analyzing this can be very rewarding as the exercise will create a much different focus on your decisions.
Here are some questions to consider:
Will this person improve your team’s current results? How much would you expect?
What training dollars will be needed to get this person up-to-speed on your organization’s processes?
What additional growth areas will this person need outside training or certifications in down the road?
What equipment will this person need that isn’t already owned?
What impact will this person have on the other team members, and will they help improve their results?
In Gapology, one of the key ways to determine where to invest is to begin by focusing on your top performers. When ranked in performance, we call these the “A Group” compared to lower performing B and C groups. We present a slightly different paradigm than many traditional strategies: investing time and energy into top performers will produce a much higher return than focusing on the bottom performers. Of course, the B and C groups shouldn’t be ignored. They need development as well to continue improving. The argument, however, is that the investment in the top performers creates much faster and longer-term improvement and overall results. This group is typically already connected with your purpose and expectations, so they don’t have that hurdle of changing mindset. They already want the best for the customer, the company, and themselves, so they are more likely to be open-minded about new strategies and improvement methods.
Here are five tips to help:
Review your current Commitment Ladder and ABC Ranker to identify the top performers as compared to your Purpose and Expectations.
Define Expectations around improvement areas for A-Players.
Clarify the People ROI for investment dollars to help A-Players improve.
Establish A-Player development processes
Measure improvement results and adjust as needed.
Payroll dollars are typically categorized as an expense on most Profit & Loss statements, but we suggest viewing them as investment dollars. Each dollar you spend should produce a greater return, helping your organization to grow. Take time to define some of those dollars, looking at what they do for you. Start with your A-Group. You may find that by creating a powerhouse team at the top, you might also build the momentum needed for the rest to improve.