Employee Investment: Is It Worth It?

A company is as good as its employees. We are used to talking about a company as if the organization itself is a person. But an organization does not generate ideas, does not give service, and by itself is neither efficient nor productive. People make all of those things happen.

Companies are accustomed to paying competitive wages and good benefits to attract talented managers and professionals. Yet often relatively little attention is paid to creating the best circumstances for each individual in the organization to perform at his or her best potential.

The effectiveness of HR-related technology or programs is regularly assessed in an isolated manner. Human Resource Management Systems (HRMS) are judged by how much more efficient the HR worker becomes and how the software helps the HR department accomplish daily tasks. The Return on Investment (ROI) is measured as a result of the total costs saved or efficiency gained, divided by the Total Cost of Ownership (TCO).

But this approach is old fashioned and doesn’t do justice to the real value modern human resource management brings to finding and retaining talented employees. From recruiting to on-boarding, from motivating and developing talent to supporting people managers and creating an engaged workforce, the effectiveness of employee management has a direct impact on business results and competitiveness.

The cost of employee management technology is actually an investment in employees. These investments will reward the company with a return that will impress any CFO.

Cost vs. Investment

Each and every employee costs money. Organizations pay their employees wages and benefits. There is also infrastructure cost, including office space, tools and equipment, administration, and other employee-related costs. Those are necessary costs, but are not always investments. An investment is a cost that creates future value and pays out over time. In other words, an investment in the workforce should help employees achieve their full potential, improve their motivation, and strengthen engagement.

When a carpenter needs a saw, he has the option to purchase the cheapest one. Or he can achieve better results and get more years of use out of a higher quality professional grade tool.

Similarly, the HR professional has his or her own “toolbox” when it comes to optimizing the company’s workforce. Strategic investments in the organization and its employees can make a huge contribution to the bottom line. The right investments can both prevent unnecessary expenses, such as high employee turnover, and boost the productivity of the workforce by better engaging the employees.

Learn more about investing in your employees by downloading this informative whitepaper, “ROEI: Return on Employee Investment”.