15/05/2017

ROI + VOI: the winning combination for employee ..

To assess the impact of their benefits and rewards programs, leading companies have traditionally used the “hard data” approach of Return of Investment (ROI). However, the “softer measure” of Value of Investment (VOI) is now gaining ground as organizations recognize improvements that clearly exist – but are harder to quantify. A major study carried out by Sodexo supports the VOI approach, revealing that business leaders around the world see clear performance benefits from having happier employees.

Recognition programs target employee engagement In the field of benefits and rewards, studies conducted by key industry players such as Gallup, the Corporate Leadership Council and Willis Towers Watson have shown that recognition is highly correlated to improved employee engagement. In turn, this engagement dramatically influences job performance and related behaviors. Companies that actively seek to improve engagement will also capture business value and financially outperform their competitors.

So, while the benefits of investing in engagement are undeniable, accurately measuring the impact of specific programs is more crucial than ever. Traditionally, companies have focused solely on determining whether the benefits of a program, expressed in monetary value, outweigh its costs. In other words, determining the ROI. These measurements can include quantifiable outcomes such as turnover rates, productivity or absenteeism. While this approach has been the go-to measuring stick for years, its measurement ability is one-dimensional and doesn’t capture all the factors that impact performance. Industry experts are now signaling a need to explore and evaluate the more intangible benefits that recognition creates.

Measuring the “unmeasurable” The concept of intangible assets contributing to organizational performance was first introduced by Gartner, the world’s leading information technology research and advisory company. The long list of intangible examples includes knowledge building, the ability to collaborate, creating a strong global corporate culture, increased employee morale and engagement and changing cultural values and attitudes in the workplace.

But how do we assign a dollar value to improved communication, more collaborative relationships, or being recognized as a “best place to work”? What costs are associated with losing a highly talented employee to a competitor? How much does a company save if employees are committed and satisfied? While intangible, this Value of Investment (VOI) delivers real value to the business and its workforce. VOI shows the “big picture” of business returns – including monetary aspects as well as “softer” measures of value.

A great example of the benefits of a “softer” measure of value is employee happiness. While it may be trickier to measure than other quantifiable ROI indicators, it can be measured and analyzed through employee satisfaction surveys. Researchers have found that when recognized, 86 percent of employees feel happier, 85 percent become more satisfied with their jobs and 70 percent even claimed to be happier at home. Creating this type of “best place to work” atmosphere goes a long way in making employees feel valued and can also lead to other, more measureable, outcomes. For instance, companies with happy employees outperform the competition by 20 percent. Happy employees are also 12 percent more productive, produce 37 percent higher sales and are sick 10 times less than their unhappy colleagues.

These VOI measures came to light when Sodexo surveyed 4,805 business leaders around the world in its SME study. The study found that nine out of 10 leaders noticed a boost in workplace ambiance and corporate reputation when they focused on enhancing employees’ quality of life at work. While these returns were qualitative, 70 percent also claimed that it indeed benefitted their financial turnover.

“In today’s economy, harder-to-quantify resources such as reputation, collaboration and retaining scarce skills are key to gaining a competitive advantage,” says Mia Mends, CEO at Inspirus and Sodexo’s Benefits and Rewards Services, USA. “While ROI may be sufficient for tactical analysis, focusing on these “soft data” points more robustly assesses the strategic potential of recognition programs and the total long-term value of the investment.”

Finding the right balance

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