Return on Value (RoV) over Return on Investment (RoI)

In today’s recessionary market, cash is in short supply. Therefore projects that have good ROI take presidence over project that are long term and build a stronger company that is resistant to future turmoil. Projects that don’t get approval are: perhaps HR initiatives that ensure employee engagement or green initiatives to ensure sustainability or social responsibility, disaster management or something that attracts cash with long cycle and limited direct correlation.

How do you explain importance of such projects to the management and get their support?

If you run into such projects that improves your company but does not attract ROI Strong Foundationdirectly in short term, then find how the project could help your company live its core values better. It may happen that the project may not stand well on ROI criteria but may stand very well on ROV, Return On Value.

How Does Return On Value RoV work?

Say your company has one of the core values as “Accountability“. And you are trying to implement a software change that improves accountability. Say a mobile device that tracks certain activities and feeds into the ERP. Now if you try showing your solution is going to improve ROI because it improves accountability, that may not be true in short term! Even if it does bring in money, it may not return much considering the costs involved.

If you present to management that in long run, the initiative would bring ROI and so the costs are justified, you may not get an immediate support. You may explain that this platform would encourage continues improvement and provide a platform for further efficiency improvement. Would management hear to that? Perhaps no.

So I recommend that for such projects, pick the core value the solution most enriches and show the richness of its ROV (Return on Value). Companies often take their values very seriously and even have budgets for projects that enhance display of company values.

Moreover sometimes cost of measuring impact and infrastructure for measuring goes beyond the scope of an individual department or project team. So if you show measurement till the values, then from thereon, the company may have methods to see impact on ROI. Example: Suppose we are trying to improve candidate experience once a candidate gets an offer letter. Since employee happiness is a core value, we choose to show ROV of happier candidate. Now to do so you create a questionnaire to measure happiness today on old systems and continue to show improvement over time with investments. Then that should be sufficient. Company may support you is showing how happier offered candidates become happier employees, which in turn leads to more competitive company and better profits.

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