Managing personnel for sustainable corporate growth

Outstanding companies are separated from pedestrian ones by their Return On Employee Investment (ROEI). Big or small, great or not, every company makes investment in its employees with the expectations of getting returns in form of high revenue generation. A company whose ROEI is high will create great value for all its stakeholders; shareholders, employees, customers and government while those with low ROEI are usually strugglers.

ROEI is the value in monetary terms that the average employee contributes to a company. This is usually calculated by dividing the total revenue generated by a company over a period of time by the number of its staff members. The higher the ROEI, the more profitable and sustainable the company is and the high its market value is.

In 2014, UACN Plc, with staff members numbering 2,423, generated a revenue of N85,654,346,000. In the same year, the company invested expended a total of N6,550,832,000 in the staff. The import of this is that the average staff cost for that year was N2,703,000, while the ROEI was N35.35m. In essence, for every N1 million expended on a staff member, the company realized N13 million.

In the same year, Cadbury Plc, with 847 persons on its staff, generated a total revenue of N30,518,586,000, while expending N1,488,817,000 on its personnel. The company’s average staff cost was N1.76 million while its ROEI was N36.03 million. So, on every N1 million invested in its staff in 2014, Cadbury Nigeria Plc realized N20.5 million.

Academy Press, also in 2014 generated N2,347,106,100 with a staff strength of 352, while expending N365,037,000 on the staff. This put the average staff cost at N1.03 million and the ROEI at N6.66 million. Consequently, the company got a value of N6.5 million for every N1 million spent on its workforce.

It is clear from the foregoing that the growth rate of a company is directly proportional to its ROEI. So, for a company that wants to be the darling of workers and the toast of investors, having a high ROEI is sine qua non.

How companies hike ROEI

To increase their ROEI, companies have to take certain steps. Here are some of them.

Recruit the best hands available

Vision is key and critical. Without a vision, a company cannot have a direction. But the vision is just the starting point. It is just the identification of an end. It is the personnel that give the vision a lift. It is the people in an organization that determine whether the vision will crawl, walk, run or fly. It is the people that transform and translate a vision into substance. So, without a workforce, a vision is nothing but a burden because a company’s journey to greatness does not take off with a vision; it is with the personnel. A company is only as good as its personnel. The height to which an organization can soar is dependent on the competence and capability of its personnel.

However, as critical as the workforce is to the actualization of a vision, the personnel could also constitute the greatest hindrance to the realization of a vision if the employees are not fit to run with the vision. So, it is critical to get the right personnel and ensure that they are put where they will contribute the greatest value to the company. Leaders are supposed to know their people well enough to know how to appropriately deploy their competence for the best value. Unless an employee is properly positioned, he will not deliver optimal value to the organization. Without every employee delivering optimal value, the ROEI will be negatively affected.

One of the secrets of the huge success recorded by the Virgin Group owned by Ricahrd Brandson is that no critical appointment is made in the business without Brandson having an interaction with the new recruit. The reason is not to micromanage; it is to ensure the quality of everyone coming into the organization. Apart from qualification and competence, having a wrong person in a system can turn the whole place toxic. Virgin is a global business whose ROEI keeps on rising year after year because the major driver goes for the best hands available anywhere in the world. As far as Brandson is concerned, when it comes to the issue of employing personnel, cost is the least of the considerations. He goes for the best hands, no wonder the company keeps turning out cheering reports, year after year.

Leaders have to ensure that they make minimal mistakes with respect to recruitment because it is much easier to bring employees on board than to exit them.

Train them

Great companies never joke with employee training. They also never consider cost of training as an expense but as an investment. This is because of their conviction that every naira or dollar spent on training employees is an investment in the future of the organization. They take this position because they know that a company cannot get better than the knowledge base of its employees. If the employees are knowledgeable, it will reflect in their output. If employees know new things, they will do new things. So, to increase the productivity level of employees and their ability to contribute to the bottom line requires exposing them to continuous training programmes.

One of the factors responsible for the dearth of world class organizations in Nigeria is the attitude of leaders of the business community in the country to training. Many of them consider training as a drain on their resources. So, training is the first casualty whenever the company runs into any financial hitch. But they pay for this through a slide in staff productivity or a reduction in ROEI.

Some organizations are also averse to investing in employee training because of the fear that training their employees make them attractive to poachers who will offer better remuneration. While that may be true, the fact is that employees that are well treated hardly leave their organizations. There is a school of thought that is of the opinion that the last consideration for many employees when it comes to considering job change is remuneration.

So, employee training is so critical to scaling up ROEI that it should not be sacrificed on the altar of cost consideration.

Inspire and challenge them

Leaders have the responsibility of inspiring and challenging employees with a view to increasing their productivity and by extension hiking the company’s ROEI.

Leaders inspire by encouraging and motivating their employees. Every leader is a mentor to those who work with him. As a mentor, he should encourage them to aspire for the top and optimize their capacity. Everyone can do with a push to realize their full potential; everyone needs an enabler to get better. Leaders help their people to get to this point by letting them see the intrinsic values and abilities which the employees may even be blind to.

Leaders challenge their people by giving them opportunities to express their abilities. Leaders open doors for others by giving them tasks. The more opportunities they have to try new things, the more competent they get and the more confident they become. When employees gain competence and confidence, the value they generate skyrockets.

Care for them

If all a leader knows about his employee is the task assigned to the employee, the leaders are not leading right. A workplace is a formal place but it is also a social place; it is a place of interaction, it is a place of bonding. As much as possible, the leader should be close enough to his team members to know their concern and should be distant enough to keep his dignity and respect. If a leader shows that he cares about his employees, they will support him with the whole of their hearts. If a leader has the back of his teammates, not only will he win their hands, he will also win their hearts. The relationship between a leader and his team members should transcend the workplace. A leader should be a confidant to those who work with him.

Professor Ola Rotimi in his book, If: A Tragedy of the Ruled, propounds a theory known as chosification. This theory speaks of treating a human being as an inanimate object. It is reducing the worth of an individual by holding them in disdain and treating them as though they do not matter. Nothing destroys motivation and whittles down creativity faster than disrespecting the person of an individual.

According to Abraham Maslow’s hierarchy of needs, the most fundamental need of an individual is physiological, the need to be accepted and respected. Therefore, to put an employee in a mode that will make him stop at nothing to get result, the leader has to learn to accept and respect him.

If an employee is motivated enough to want to get result by all means possible, the impact will be positive on both the ROEI and the bottom line.

Differentiation

Jack Welch, former Chairman of General Electric, propounded and popularized the theory of differentiation. With this theory, he was able to transform General Electric into a global business with enviable results over a period of 20 years.

Differentiation is about having in place a reward system that will keep the top performer gung ho and the average ones challenged to aim higher. Welch did not lump all employees together despite GE in his time having some of the best hands and minds. He categorized staff into three; the first group consisted of the Top 20 per cent staff. These were employees who were regarded as the best. He treated them differently. They were well remunerated and were given great opportunities with the organization.

The second group was the Middle 70. These were average employees. Even in this group there were categories of those who were at the top and those in the middle as well as those who were laggards. Each of these categories in the Middle 70 was treated differently.

Then there was the Bottom 10. These were poor performers. Those who found themselves in this group knew that their days in the organization were numbered.

Explaining the rationale behind differentiation, Welch says whatever is encouraged in an organization will multiply. According to him, if the workforce finds out that excellence is recognized and encouraged, many people will strive to achieve excellence. But if they find out that excellence is not treated any different from mediocrity, many of the employees will be content with mediocre performance.

The fact is that most of the people on earth are satisfied with doing just enough, that is their comfort zone. This same mentality is displayed at the workplace. Most employees do just enough to retain their job. So, if they know that there is neither a special reward for excellence nor a special sanction for mediocrity, they will pitch their tent with mediocrity and this will impact negatively on ROEI and profitability of the organization.

So, to hike ROEI, leaders should make it clear to all employees that those who excel will be amply rewarded.

Last line

Organisations that invest in staff development never fail to reap the reward.