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Business Unplugged™
This blog features Carol Roth's tough love on business and entrepreneurship, as well as insights from Carol's community of contributors.

There Is ROI in Humanity

Written By: Catherine Morgan | Comments Off on There Is ROI in Humanity

Return on investment (ROI) should never only be measured in terms of top-line thinking, but rather bottom line as well.

Evaluating the net results is a far better way to be thinking if you are looking for long-term success and not just short-term gain.

Top-line thinking is short-term thinking.

Questions top-line thinking companies ask are:

  • What is our weekly/monthly/quarterly gross profit number?
  • How many phone calls did our outbound sales team make today?
  • How many inbound customer service calls lasted longer than 30 minutes this month?
  • How many net new customers did we acquire this year?
  • Was the turnover at an acceptable rate this year within the company as a whole?

None of these questions tell a complete story about who you are as a company, how you add value to your customers or take care of employees, or how profitable you will be long term.

Instead, they are easily measurable things that lead people into a false assumption that the company is profitable and going in the right direction. Countless bankruptcies have proven this set of assumptions incorrect.

A billion-dollar (valued) corporation that has yet to turn a profit is still an unprofitable company.

A company losing key employees loses way more than just the cost of hiring and training new staff. They lose brand value, have unengaged, unproductive, and disgruntled employees, become inefficient and unprofitable due to untrained and unmotivated staff, and lose profitable clients because of this.

Questions that companies should be asking instead are:

  • What was our bottom-line profitability number this year, what caused this to be up or down and what can we learn from either (or both) that will help us be better next year, and over the next five?
  • How effective is our outbound team in closing profitable deals with the customers that we can add value to and will refer us to other departments or other clients?
  • What did we learn about our customers by having them on a customer service call for 30 minutes, and how can we take that information and make our systems and processes better for everyone?
  • Are the new customers we brought on this year the right customers that will help us move our business forward?
  • Why did we lose our current customers, what can we learn from this experience, and is there a way to repair the damage that sent them elsewhere?
  • Why are we having turnover in staff to begin with? What policies, procedures, people, or systems are frustrating them – and how can we make things better so that people stay, want to be engaged, and help support corporate objectives?

Short-term profit is a poor indicator of the long-term success of a company!

We should rather be looking at return on investment to understand the company holistically.

If we look at return on investment not only in terms of profit and loss on a balance sheet, but how the organization functions efficiently and effectively as well, we will have a much clearer vision of who we are and what we are capable of.

Organizations who look at human factors, in terms of return of investment, tend to see a greater overall profitability.  A recent article by Inc Magazine states:

According to a Holmes (a voice of the global PR industry) report, the cost of poor communication has hit an overwhelming $37 billion. Also, 400 surveyed corporations (with 100,000 plus employees in the U.S. and U.K.) estimated that communication barriers cost the average organization $62.4 million per year in lost productivity. 

On the flip side, this same report found that companies with leaders who possess effective communication skills produced a 47 percent higher return to shareholders over a five-year period.

Fixing this is not done by increased activity – it is done by increasing the right activity. These activities include better training of leaders and empowering people, and better avenues for two-way communication and listening, shared vision, and people development.

Yes, all of these things cost money and affect top-line profitability, but over the long run, as shown in the article above, they lead to a more effective organization with increased bottom-line profitability.

Care for and invest in your people and customers. If they believe you care about them, that they are listened to, understood, and valued, and they understand how they matter to the success of the organization, they will engage.

If not, they become a liability and your organization will be viewed as yet another commodity, with clients demanding lower pricing. They will perceive you as providing lower value and you will become easily forgotten and soon replaced.

Wishing you success.

Connect with Ben HERE to discuss how to provide your people with the skills and mindset they need to communicate effectively within the new normal and beyond to differentiate your brand in the eyes of your clientele.

Article written by
Catherine Morgan is the founder of Point A to Point B Transitions Inc., a virtual provider of coaching services to individuals who are in business or career transition. She specializes in helping entrepreneurs transition to corporate jobs they love. Catherine is the author of the eBook Re-Launch You: Discovering Your Point B and Embracing Possibility. An experienced independent consultant who was employed by three of the former Big Five consulting firms, Catherine speaks frequently on topics related to career transition, small business, productivity, and mental health. She doesn’t take herself seriously, but takes her subject matter very seriously.