Common Ground: Machinery Investments and Leadership Programs—It’s All About ROI

I often ponder why HR experts avoid quantifying ROI for leadership programs or workplace care initiatives. Is it a lack of familiarity with financial tools in their Hogwarts education? Perhaps. Or is it a philosophical inconsistency, judging it demeaning to compare humans’ well-being to car maintenance? Ultimately, a car is a car and reducing work-related pressure preserves human mental and physical health. How does one compare a car with a life?

Nevertheless, nowadays it is difficult to obtain approval of leadership programs without some type of ROI calculation. Leaving aside philosophical differences, the good news is that the same methodology used in deciding to fix a car is used to decide to invest in a leadership program. If I think like an economist, it is quite possible to compare both. The human (mind and body) is far more complex than a car and has many more moving parts.

Whereas a mechanic can maintain or fix a car, it takes highly “specialized mechanics”, with many years of education to maintain or fix a human (mind and body). Furthermore, the parts of the human are interrelated and sometimes not even understood. That explains why there are literally hundreds of types of leadership and workplace care programs compared to taking your car to a single dealer to get it repaired. Each program impacts one or more mind and body parts, leaving other parts to survive on their own.

Implementing a leadership program is like looking after a machine

Let´s continue with the analogy. If an important car part malfunctions, the car stops. Its productivity goes to zero. However, with human beings, if an important component breaks down (say with anxiety or back pain), other parts continue to function (the mind functions) but with less productivity. With a car, either it works or does not, whereas someone with anxiety or depression gives the appearance of productivity (after all, they are at their desk), but the mind does not work on all “cylinders”. Not to mention the impact on in the team functioning.

So, if we can admit that humans have productivity (few would doubt that), it become a question of how to measure the impact of physical and psychological conditions on productivity, and how a specific leadership program impacts the reduction of productivity. Also, if one admits that productivity exists, can I push my luck and claim that productivity varies by occupation and industry. So, if I had a data bases of productivity contributions by country, occupation and industry, I can be quite specific about the cost of conditions and how much they can be reduced by this program.

Read more: 2024 Budget Battles and Employee Wellbeing Programs: Showing the ROI to CFOs

What should you do considerer in a leadership program?

Another consideration is that leadership programs (increasing emotional intelligence mindfulness and leadership skills) impact multiple conditions of the entire employee population (common mental illness, stress, anxiety, depression – associated to those burnout/exhaustion, and physical conditions closely related CHD risk, prediabetes, musculoskeletal conditions).

So, one must look at how the program (in this case, leadership) impacts the productivity costs of each of these conditions among the employees.

• Obviously, there are other cost reductions associated with leadership programs (e.g., medical costs, turnover, disability, accident costs, and recruitment and onboarding external hires on leadership positions) but I have just focused on productivity for now.

• Of course, there is also a team productivity increase outcome from driving higher collective intelligence of the group of individuals lead, efficient problem solving, innovation, cost savings. But I have just focused on initial productivity for now. (note: The leadership program positive impact on the team collective intelligence would happen if the group social sensitivity increases, the distribution of conversational turn-taking becomes better, and the proportion of female group members is significant as a result of this program).

If you can calculate reduced costs, it is possible to calculate ROI. Our website wellcastroi.com contains the specific financial calculations. Obviously, there are other non-quantifiable benefits from having healthier employees (minds and bodies), such as happiness and fulfilment, but luckily the ROI´s generated from just increased productivity are more than sufficient to obtain approval of your leadership program. The rest is gravy.