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The Building Blocks of ROI
Financial intelligence is all about understanding how the financial side of business works and how financial decisions are made. The principles discussed in this chapter are the foundation of how some decisions—those relating to capital investment—are made in corporate America.
Before we get into this concept called return on investment, or ROI, we need to stop and talk about HR’s relationship to ROI. ROI calculations have traditionally been used by the finance department to analyze capital investments—expenditures on big, long-lasting, tangible assets—and determine whether they will benefit the company. Over the past several years, however, ROI has turned up in every manager’s lexicon, including managers in HR. ...
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