I sometimes get asked about the ROI of the work that I do. Whether I am talking about leadership, emotional intelligence, empathy, communication, trust, developing others, conflict management, or decision-making, it’s all a function of building relationships that build teams that connect with customers and build businesses.
So, let me flip it around a bit and pose the presumed, if underlying, question: what is the ROI on a relationship?
How much is your spouse worth to you? Your kids? Your friends? Your neighbors? What’s the dollar amount you expect to get back from loving them, caring for them, cultivating them? What are they worth? What’s the return on investment for your time, energy, and effort in these people?
Just asking these questions stirs a kind of queasy feeling. It feels almost perverse because we don’t look at these relationships as transactions, as quantifiable. Most of us do, however, look at them as the investments that create the most value in our lives, the most joy, the things that mean the most to us, that motivate us, give us purpose, connection, and belonging – and yet, they have no consistently defined return on investment.
When you convert the potentially transformational into the transactional, the relational into the purely functional, you’re destroying value in the name of capturing it. At some point, we have to remember we are just humans working with other humans in human-created systems trying to serve other humans. We just call it a business.
If you aren’t actively cultivating relationships because you can’t defend the cost, then good luck defending the cost of not cultivating them.
If you still aren’t satisfied, here’s some data to consider from a forthcoming white paper from Shore University:
Return on Investment:
- The estimated ROI on leadership development training is $3-11 for every $1 invested.¹
- Tangible Benefits: revenue and sales, employee retention, internal promotions.
- Less Tangible Benefits: work quality, productivity, engagement, efficiency.
Revenue:
- 42% of executives report an increase in revenue attributed to sales as a direct result of leadership development training.¹
Employee Retention:
- 64% of executives said that their voluntary attrition rates decreased due to participation in leadership development programs.¹
Internal Promotion:
- It’s 18% more expensive to hire an external candidate and they are 21% more likely to leave in the first year, starting the cycle over again.²
Value Creation in PE:
- The path to value creation in Private Equity has shifted from financial engineering to superior operating performance.³ ⁴
- The key to superior operating performance is leadership.
- 70% of survey respondents cite leadership effectiveness as the #1 lever for value creation.
- The key to superior operating performance is leadership.
Sources:
3. https://features.alixpartners.com/private-equity-leadership-survey-2023/
4. https://features.alixpartners.com/private-equity-leadership-survey-2024/