If I Was Running A Company…ROI (and ROE)

If you’ve been reading this blog for a few years (probably two of you), you realize I have never discuss the main business buzzword: Return on Investment (ROI).  I’ll be honest, I never fully captivate what ROI did for business.  It’s simple math (in my opinion): if you hire the person, brings in revenue, and stays with the organization for 3-5+ years, the ROI is great.  If the person stays for less than a year, then ROI takes a hit for your organization.  It is a simple formula, yet very complex.  I always thought ROI is an overrated statistic for business.  After attending RecruitDC, I think ROI is useful, but I think business professionals (including recruiters) are looking at this backwards (and overusing the term to death).

I understand ROI is a statistic to tell businesses where they stand, but I feel people are using ROI like their life depends on it.  If there is one thing ROI relies on, it’s the something that people never think to apply on business: the Return on Emotion (ROE).

ROE should start in the networking circuit when a recruiter (or hiring manager) meets a candidate for the first time and the representative and candidate are engaged with each other.  If the representative of that organization has a job opening , the both will likely get a phone screen and/or interview and this is where you have to use your business emotion.  While the interview is going on, the hiring manager must answer these questions internally:

  1. Do I believe in his/her word?
  2. Do I trust he/she will do it?
  3. Is my business emotion to this candidate high, low, or in the middle?
  4. What is my threshold dealing with candidate?

If the hiring manager’s emotion is positive in all of the questions, the ROE is very good and likely the candidate will get hired.  If any question has a negative tone, don’t consider the candidate (but do help him/her on their job search since they are  a connection).  The point for ROE is for the hiring manager to be comfortable with the candidate from day one and continue into the workplace.  ROE is about chemistry and expectations.

Business relationships carry most of your business. If your ROE is high, it is very likely the business ROI will be high as well. ROI tells businesses results, but at times, outside forces skew the results since ROI is measured at that moment.  A high ROE would help organizations to handle what comes at them.  However, if your business emotion is either high or low during troubled times, your ROE is skewered as well.  This is why people always say in the business, “Keep your emotions in check.”

It’s a simple equation: ROE measures the quality of the business relationship in that department and gives you the outcome, while ROI measures the quantity of your department and backs it up with statistics.  If you want an easy tip on how to measure ROE, look into your hiring manager’s eyes, body language, and tone.  That’s your answer.

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