It's a Great Day!

It is a great day! On a comfortable Sunday afternoon in sunny southern California (70F/22C), I am enjoying a quiet moment to review a book I haven’t read in some time - Strategic Selling by Miller Heiman Group. Doing so has made me reflect on the organizations I’ve worked with over the years who invested in their employees, and in this case near and dear to me - sales teams. Seeing the effects of this investment personally and professionally (formal sales and management training), I wonder why executive management doesn't, hasn't, or wouldn’t, consider investing any or a reasonable portion of their budget to do so. These are your employees and are today considered “human capital”, am I wrong?

Companies focus on ROE (return on equity), ROI (return on investment) - how about ROHC - Return On Human Capital?

I've had personal experience of such investments in my sales career (Miller Heiman, Carew International, CEB Challenger Sales, etc), and I sincerely appreciate all of them in their own unique ways, respective of sales cycles and product lines. All have benefited me financially, the companies I have worked for, and ultimately their bottom lines by improving win rates thereby improving top line revenue. What would a sales organization's impact have on top line revenue if it's win rates went from 15% to 25%? That is a 67% increase. Multiply that times your top line revenue, or projected revenue, for a unique perspective and impact on your division or overall company's revenue.

When I requested to bring in formal sales training to a prior employer, by way of a visionary leader who trusted my budget request, the results were remarkable (He was quite skeptical though...). After five consecutive years of declining revenue, in less than 18 months, revenue increased - 18% year over year. We also secured a nice multi-million dollar order with a very well known automotive OEM, and the sales person who closed it had the best year financially he ever had in his life. Additionally, overall moral improved, and it resulted in a structured sales approach and enhanced the internal sales culture.

Investing in your employees is, as is often said, a "no-brainer". Many surveys indicate such investments are shown to keep your human capital from leaving and going to other (competitive?) firms which reduces substantial turnover costs. My daughter is a fine example - in her short six months of employment out of college, her boss has invested in her career well over $6,000 USD in her functional role (data analytics). Over $6,000 in SIX months!! She has no plans to leave. (And why would she?). I wish I had that visionary leader when I graduated from university.

It is also more cost effective in the longer term when an employer invests in its employees well being as compared to raises. This is not to say that raises aren't earned, for many they are. Investments in human capital can justify keeping salary escalation "in check" by offering training thereby reducing other associated costs such as additional taxes corporations pay on hourly or salary wages. Employees gain by remaining with their companies longer, are much more engaged and happier, and better positioned to elevate themselves within their organizations through promotion.

It truly matters how organizations invest in their human capital. Such budgetary expenditures should be focused on those which drive specific alignment from executive goals down to teams who execute them (thank you 3M for that lesson - you are all masters of goal alignment!). Investment should also focus on what an individual's goals are and how they help executive management achieve theirs - a top-down, bottom-up approach. Furthermore, it shouldn't be just a one year investment. It must be part of the annual budget cycle to obtain long term results.

Finally, I will close with one final concern about ROHC - one of the greatest missed opportunities for human capital investment is that of middle management. Don't forget your team in the middle.

From my perspective, Return On Human Capital benefits both the organization's and the individuals who lead, manage and execute on all levels. I am living proof, and quite grateful for those who have invested in my career, and to those who did, thank you!

I've had a great day and I welcome your thoughts...