Investing in People Assets has Huge ROI
Investing in People Assets has a high return on investment
Our principal, Brooke Bovo, habitually refers to employees as “people assets.” Using this phrase is purposeful. She wants to remind clients that people remain their most important business asset, and that these people need investment as much as any other capital or physical asset to keep them performing at a high level.
Physical assets can’t think, of course, or take unilateral action to improve themselves (machine learning and artificial intelligence prospects aside.) The assumption is that people, as thinking beings, can handle their own improvement program (“learning on the job,” “learning by doing,” etc.) There is some truth to this, but most people still need help, in the following ways:
- Permission to take the time to improve themselves
- Resources to obtain the training needed
- Trust that their own investments will be valued and put to use by their organization
- A sense that the organization as a whole appreciates their contribution
“Betting on people can sometimes be more certain than betting on physical assets,” Warren Buffett declared in his 2018 letter to shareholders last week.
We take a more forceful stance: Investing in people almost always derives greater ROI than investing in physical assets. The cost of one new machine could cover leadership development for 100 front-line managers, for instance. And it offers a key competitive advantage, since most organizations have yet to cotton on to this simple idea.
The Benefits of Investing in People
Consider these perspectives if you hesitate to invest too much into “soft skills” personnel development programs:
- Physical assets do nothing until your people put them to use in pursuit of the organizational mission.
- If the people applying the physical assets to their tasks are not deeply engaged in the mission, the full benefit of physical assets’ tools will not be fully realized, reducing the expected ROI of those tools.
- Engaged people, on the other hand, will not only fully realize the ROI potential of the physical assets, they will innovate around them, improve performance, and point towards further investments in physical and people assets that will keep organizational growth going.
- Talented people stick with you, rather than go elsewhere because you have provided a “greener pasture” within your own organization.
In Bovo-Tighe’s experience, investments in “people assets” raise their capabilities and engagement so much that ROI typically runs 1,500% or higher. We have the evidence to back this claim up, too.
Give Brooke or Dave a call if you want that evidence, and to understand in more depth what effective investments in people assets really looks like.
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