Are We Ready for Return on Impact?
When we hear ROI, we rarely think about Return on Impact as everything around us is about Return on Investment (the mechanical ROI). According to Investopedia, “Return on investment (ROI) is a performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of a number of different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment’s cost.”
Shareholder value for public companies forces reporting Return on Investment (ROI), which includes measuring profitability, growth, efficiency and productivity. In this scenario on a financial spreadsheet, office furniture is considered an asset but people are a liability. Processes are key to creating systemic efficiency and productivity. They do not take into account our human dynamics.
When it comes to business, we have two key elements: mechanics and dynamics. And we mostly focus on the mechanics and operations of how the business is run and forget about the human side (dynamics). We even separate skills into hard skills (mechanics) and soft skills (dynamics); forgetting about wholeness on a human and organizational level. It’s all about what fits into the crisp spreadsheet that tells the story of how well our investments paid off. People are seen and measured like machines in terms of productivity and efficiency.
What if Return on Impact Helped Connect People + Perspectives (Dynamics) + Outcomes?
Return on Impact is where we are headed when we decide to expand our strategy to include the human element at work and integrate it into our operational excellence. People are not machines and life is messy.
So, what’s possible then?
- Imagine if instead of conflict management, we created a shared purpose to deliver the mission, vision and strategies of the organization?
- Imagine people had the information, skills, and support to contribute and were also given a runway to learn and not be penalized for failures?
Return on Impact means integrating metrics that focus on human dynamics from conscious leadership, to trusted relationships and communities that take into account communication, trust and whatever elements and values are foundational to an organization.
What gets measured gets valued and when we only measure the operational side of the business and not its heart, we are simply seeing mechanical “investments.”
Value creation is everything in the emerging world where trust, relationships and community are the cornerstones of healthy living and working.
What if the purpose of business in this century is to provide value for society? This is a turning point where people are starting to shift their views of business, and also changing their relationship with work. The beauty of creation is that if you see life as a grand adventure, you become a creator instead of simply a doer following someone else’s manual. In this transformation, how can business serve society? How can we work with a higher purpose? Can organizations be trusted to produce ethical products and services? And can value include making a measurable positive impact beyond monetary growth and shareholder value?