Rethinking ROI: The Importance of Investing in People

Group of people celebrating after successful meeting about the importance of investing in people

“People are the most valuable asset in every organization” is often repeated by CEOs. However, when it comes to quantifying the human capital value, it becomes just lip service rather than a deeply ingrained belief. Companies do not put a value on people but allude to them merely as costs and expenses. So why aren't people recognized as assets on a company's balance sheet?


Why Investing in Your Employees Pays Off

A company's investment value is often quantified in terms of tangible assets—profit margins, market share, and physical resources. However, the business world needs to recognize the value of people's contributions to a company from an accounting standpoint. 

Leaders must transform the conversation about recognizing employees' contributions to a company's success. You can hear more in our recent Qonversation episode with Dave Bookbinder, author of “The New ROI: Return on Individuals.” Dave discussed the gap between recognizing the importance of human capital in business enterprises and actually accounting for people.

“The value of the investment is two-fold. One is what we'll call the booked value; there’s a cost associated with things like learning and development and training programs. And those go on as an expense, but what they do is contribute to the intangible side of this whole equation, which is that when your employees are given the opportunity to learn and grow, they feel appreciated. And when people feel appreciated and feel valued, they tend to do a little extra.” ~Dave Bookbinder


Investing in employees benefits both the individual and the organization in the long run, leading to heightened efficiency, high employee engagement, and decreased employee turnover rates. It also enhances the company's overall image and sends a strong signal to potential customers that it is dedicated to delivering high-quality products and services. Additionally, by showing that it prioritizes progress and career advancement, the company will draw in high-quality candidates as the business advances.

Investing in the skills of employees pays off for a number of reasons: 

  • It keeps employees engaged: Skill development initiatives keep employees engaged in their work, as they feel supported in their professional growth and motivated to contribute meaningfully to the organization.

  • Retention of top talent: By providing opportunities for skill development, organizations can retain top talent by keeping them satisfied in their roles, reducing turnover rates, and ensuring continuity in expertise and experience.

  • Attracts high-quality talent: Offering skill development programs and opportunities demonstrates to potential candidates that the company values continuous learning and growth, making it more attractive to high-quality talent in the job market.

  • Strengthening the internal talent pipeline: Developing existing employees' skills helps build a strong internal talent pipeline, ensuring that the organization has skilled and capable individuals ready to take on new roles and responsibilities as needed.

Best Strategies To Improve Employee Development

How leaders manage and value their employees may determine the company's competitiveness in the market. If employees feel their involvement is valued, they will definitely improve their personal engagement, making it a greater contributor to the business. 

Another critical element is empowering employees through coaching and autonomy—creating opportunities for learning, growth, and advancement to drive motivation. Investing in human capital through training and development definitely increases engagement and loyalty.

Using professional coaching program services may improve the quality of an entire organization and drive organizational success. It is a proven way of helping individuals reach their full potential and achieve their goals. As employees enhance their skills, they increase their productivity and efficiency. Teams that experience effective coaching often feel more valued and connected, leading to higher motivation, job satisfaction, and retention rates. 
“Even if you're not of the view that people really matter, or even if you just ‘fake it till you make it,’ do those right things by your people. Treat them well, treat them with respect, treat them with courtesy. Watch what happens to your culture. Watch what happens to your top line. Watch what happens to your bottom line, and that increases your valuation.” ~Dave Bookbinder

The High Cost of Turnover

In the absence of greater employee engagement, the likelihood of having a higher turnover certainly increases, so there is a real cost for turnover. Losing and replacing an employee brings about direct and indirect costs for your business and may cost the business more in expenses associated with frequent recruiting and onboarding. When looking into indirect costs, besides the opportunity costs of replacing an employee, employee turnover has a strong effect on the disruption of the talent pipeline. Employee turnover might be considered a part of business, but high turnover can indicate much deeper issues.

“It takes an intention. Your employees need to know that you are serious about instituting culture change.” ~Dave Bookbinder


What Does It Really Mean To Be People-Centric?

Retaining top talent requires a proactive, people-centric approach to leadership. From encouraging open communication to providing opportunities for growth and recognition, organizations must understand and meet employees' needs and invest in their employee's development and well-being. Great leaders create workplaces where employees love what they do and contribute to the company's success.


Every leader should strive to invest in their employees for long-term success and formally recognize the quantifiable value of their human capital assets on the balance sheet. Employees aren't just a cost to be managed; they are the heartbeat of every organization, pulsating with untold value and potential. And that is where people-centric leadership comes into play. It's time for businesses to recognize, celebrate, and invest in their most precious assets.

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