Copyright by Dan Erling

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Chapter 18. Test the Return on Investment: Step 14

It has been my experience that competency in mathematics, both in numerical manipulations and in understanding its conceptual foundations, enhances a person's ability to handle the more ambiguous and qualitative relationships that dominate our day-to-day financial decision making.

Alan Greenspan

People have a natural aversion to any exercise that attempts to express human behavior in terms of numbers. This is especially true when you try to quantify the impact the employee has on an organization. You can almost hear rock singer Bob Seger in the background screaming, "I feel like a number! I'm not a number!"

At the simplest level, for-profit organizations survive on the ability to make more money than they spend. Nonprofits differ in that they must satisfy their mission without exceeding their capital resources. As such, all organizations must (at some level) compare the costs of a hire with the value of the employee's contributions. There is nothing new here, though it often seems forgotten that long-term survival is based upon allocating people resources in such a way as to ensure that more money is coming in than is going out.

Note

Sticky Notes:

  • Create a system for evaluating hiring ROI.

  • Hiring ROI can be measured by calculating and avoiding the cost of a mishire, increased revenue/efficiency, and measuring the cultural impact.

  • Challenge your organization to question and improve your hiring ROI.

Evaluating hiring return on investment ...

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