Show me the value!

Inside a company, all investments should be justified and evaluated based on the value they return.  Coaching, education, facilitation, and other “soft” investments are no different.

The problem is that many times it’s difficult to translate these into hard dollar amounts.  But think about it this way:  There’s many decisions you make which don’t immediately turn into dollars of revenue or profit.

For example, let’s say that you want to start up a new major advertising campaign.  You should have some goals for how much additional revenue should result, but you don’t really know.  Plus, good advertising isn’t just about revenue.  It also heightens your brand image with current and potential customers, it helps to focus your employees on the value they’re delivering, and so on.

With improvement of soft skills, it’s similar, but the chain of thinking might be just a little longer:

• If my leaders are stronger and more effective, then their teams will become productive more quickly.
• Employees will also tend to be drawn to more effective leaders, thus reducing turnover of top talent.
• If my employee base is more productive, then I’ll deliver more customer value for every dollar of capital and expense.
• Thus, I should be able to increase market share, increase customer satisfaction, and ultimately show greater profit.

The key to this way of evaluating investment is not to just measure profit.  I’m not ignoring the fact that profit is ultimately the most important key criteria – the problem is that it might be a long time before you see the results.  And, more importantly, profit is dependent upon a great number of variables inside and outside your company.  You’ll never get a clear reading on the degree to which a particular initiative resulted in profit improvements.

Here’s how to get out of the bind:  Look at key measurement points along our chain of thinking, as demonstrated above.

• Do employees, peers, and customers tell me my leaders are more effective?
• Have I improved the retention of my top talent?
• Can I measure productivity, revenue and expense improvements on a smaller scale, not just overall numbers from the P&L?
• Likewise, can I measure market share improvements at a smaller scale which relate more closely to the size of my improvement initiative?

Leaders should feel comfortable making decisions based upon criteria such as these – and it makes the task of committing to a particular initiative much easier.  Soon enough, you’ll be able to translate it into hard dollars.

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