The path to value creation, according to many in the private equity sector, is through return on invested capital (ROIC). Indeed, they tell us, the best way to create real value in a businessis by making smart capital investment decisions.
This should interest us, as HR and reward professionals, for a several reasons. First of all, the obvious one: that the biggest category of investment for most organizations is employee compensation. Secondly, because proactively managing that investment to maximize return -- and create real value -- ought to be top of mind for any of us who fancy ourselves true "business partners." Thirdly, because it bears directly on a category of compensation topics that has captured a lot of attention over the last several years and renewed interests more recently as a result of the COVID pandemic. In this topical category I would include the ideas of fair and just wages, living wages, the attention to minimum wage laws and (last but by no means least) the renewed appreciation for essential workers we all gained through the past many months. As organizations and particularly essential service providers struggled to stay open during the early months of the pandemic, the criticality and vulnerability of front-line (often hourly) workers became obvious. This prompted many immediate measures, including hazard and premium pay implementation. It also raised longer term/bigger picture questions about the distribution of reward dollars and greater capital investment in this vital segment of the workforce.
Read more at my recent Compensation Cafe Post Essential Workers, Higher Wages, Value Creation and Work Design.
Image courtesy of oaapn.org
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