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Your most important investment

01 February 2010 Esm? Davies, Celestis

If you think that staff costs are probably your single biggest expense, you’re no different to most practices. However, a mistake that business owners make is to see staff costs as an expense, rather than as an investment on which you should achieve a return.

But in a financial environment where return on investment (ROI) is determined by a simple formula (value of benefits divided by cost), trying to put a handle on the value of intangible benefits is viewed with scepticism. After all, how do you value the benefits of knowledge gained from an expensive training programme? How do you measure the return on your investment in staff?

Measuring the benefits

For the analytics out there, you can measure the ROI on staff investment using sophisticated tools such as the Philips ROI Methodology™. But is it really meaningful given that most of the benefits derived are intangible?

For many of us, we need to change our thinking. First decide what you want from your people (i.e. your expected return) and then resolve what you are you prepared to invest when it comes to your staff? It need not only be money. Both elements (your return and your investment) are quantifiable and therefore measurable.

Encouraging “ownership”

The most rewarding result for both the business and the employee is to achieve a culture of “taking ownership”. This means, for example, that staff take full responsibility for client satisfaction, proactively establishing a service culture, building healthy relationships with your clients and taking over some of the advisors’ or principals’ client service functions.

What does it cost you by way of investment? Having established what you want your staff to own, it is a relatively simple matter of giving them the space to perform (delegation) and equipping them to achieve (personal development).

Alternative approaches

In terms of salaries, suffice to say: “you get what you pay for”. But there are other “investments” that can significantly enhance motivation, performance and loyalty, a few of which are detailed below.

• Incentives - cash or “in kind” rewards - for the achievement of predetermined targets or goals linked to the practice’s business objectives.
• Development programmes that enhance knowledge and skills and enable staff to go the extra mile or provide extraordinary services. For higher (tertiary) qualifications, consider offering a bursary.
• Flexible working hours and perhaps even an afternoon off each week.
• Parking and transport subsidisation - transport could be a substantial financial drain and parking subsidisation could be a much-appreciated benefit.
• Fund contributions - subsidising contributions to medical aid and pension schemes is a sought-after benefit, but consider the costs carefully.
• Childcare facilities are a major benefit for working mothers.
• Leave and time off - while minimum leave periods are legislated, additional leave or ad hoc time off for deserving employees could be a significant benefit.
• Gym contracts - encourage physical activity by subsidising gym contracts. Health and exercise are acknowledged contributors to productivity and performance.
• Healthy food and snacks including light meals and fresh fruit are always welcome.

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