We ended series one asking whether your organisation has a PRoI (People Return on Investment) index. We wondered if the organisation considers people an ‘investment’ and whether the organisation is deliberate about defining staff ‘productivity-leveraging’ metrics to measure and monitor PRoI. If the organisation does neither of these, especially the deliberateness around the individual PRoI – we advised that it better start doing so. After all, it’s what is measured that is managed.
We hope that all agree, now, that leadership is indeed a results business; that anyone along the organisation’s value chain is a leader as long as they have and show competence in ‘integrated’-value-chain management (i.e. like a pendulum bob, can swing and link the organisation’s ultimate goals to the work they do daily, backwards and forwards in a seamless manner); and that to get signature-value from employees calls for institutionalising a ‘PRoI-accountability’ paradigm at the firm.
Last week, readers of the Effectiveness lab blog asked us what PRoI metrics are and how they apply at organisations
The traditionalists will know that there is a standard for measuring labour productivity (ELS%). Actually, too many standards for those that like variety. There have also been challenges to existing standards and genuine attempts at innovation for PRoI using multiple cost-factors like ‘Missing Time’ (time that is unaccounted for, measured by comparing the time clock time you are paying the employee to the time tracked by your workflow systems); ‘Indirect Labor’ (work that is not creating direct economic value for your company); and ‘Direct Labor’ (work that creates economic value for your company; what you get paid to do by your customers). While this is innovative, it’s still looking at cost/unit as the ultimate measurement.
At the Effectiveness lab – we consider the above cost focused approaches standard in this age of significant digitisation and automation.
PRoI measurement should go beyond ‘filling’ the allotted daily time by a labourer, to exercising an employee’s full intellectual bandwidth and its impact on results. After all, I can work fourteen hours a day without influencing organisation results.
We recommend you measure PRoI using the variables below:
- Like we do for objectives/goals, articulate ‘s.m.a.r.t’ contribution by individual employees to umbrella organisation goals plus accompanying evidence of a positive shift in results (profit/impact)
- Evidence of the application by individuals/team of learning accruing from the smart activity in one above
- Evidence of institutionalisation of the lesson within the mainstream micro activity (consistently apply positive action by individual staff/team, ever linking it to organisation results)
Do the above, even at your small business and you will be surprised first by the results but second, by how few of us are willing to think this way. No wonder not all of us are leadership material.
Generally speaking, this is an evidence game. And not any evidence, but proof of action linked to the organisation’s macro results framework and subsequently, micro value chain activity.
This is flipped thinking that deliberately mainstreams learning plus turns unique knowledge into everyday practice. It’s everyday practice that directly and positively impacts your end product and ultimately revenue, or impact for the not for profit.
It’s that simple. And we must repeat this: all the other traditional PRoI quantitative metrics are still applicable but as part of a pretty standard value chain. What we measure above, and choose to focus on, are high-end individual value-add/influencing metrics, logically connected to the organisation’s goals.
We opine on this blog that the cadre of staff to deliver the so-called ‘new’ PRoI harbour unique behaviour akin to that of people that have succeeded at leadership. Leadership at the contemporary organisation is fast becoming a ‘standard’ competence and not job/function.
We won’t hold leadership jobs, but leadership abilities to influence value chains. This can be at any level – including the staff at the gate. Like the insurance principle, small contributions positively impact the whole. This is a visioning aspect where exceptional labourers do their daily work as assigned to them, but instinctively get on the balcony and relate work to ultimate organisational goals. Such synchrony isn’t every modern labourer’s cup of tea.
Who is the custodian of this emerging PRoI paradigm?
Our answer: modernist HR souls
The primary custodians of the emerging and so-called new PRoI systems are our HR friends. But we know at the Effectiveness lab that HR practitioners need a new work toolbox to fix emerging and value-siphoning OD. challenges. We wish them lack and guarantee our support all the way.
In conclusion of this series – class organisations shall identify effective means to identify and hire staff ready to lead at every level. To lead at every level requires big-picture thinking and an eye on results for the organisation. Traditional hiring and staff-development mechanisms may not always get you the human resource to give companies such signature value addition.
Categories: You, the Leader!