An Economic Analysis of Being a Strengths-Based Organization

During the last CEO Law Review we looked at the rationale for becoming a strengths-based organization primarily through the lens of recruiting, developing a great culture and retention of talent. Today, we are going to focus on the ROI of being a strengths based organization.

As mentioned during the previous article, data from Gallup indicates people that are using their strengths every day have 7.8% greater productivity.

There are lots of ways to measure productivity, but a good general definition is the ability to do more with the same resources.  Time is a resource that spans all functions and occupations and so for the purpose of this analysis, we will use time as our measure of productivity.

If we assume a 40-hour work week, a simple way to look at this would be to calculate how much time is 7.8% of 40 hours.

• 40 x .078 = 3.12 hours per week.

So, assuming an increase in productivity because you are doing things faster and more efficiently, should leave you with 3.12 extra hours per week to do either more of the same productive work of focus on other things.

Converting that to hours per day you get:

• 12 / 5 = .624 hours per day, (which equals out to around 38 minutes a day)

So, every day that you get to use your strengths to do what you do best, should leave you nearly 40 minutes per day to focus on other things, or more time to do more and help with productivity.

If you’re a manager, now that you have this increase in productivity, it would be nice to know when you can achieve an FTE (Full-time Equivalent) based on a strengths focus.  To determine this, you perform the following calculation:

40 hours per week divided by the increased productive hours per current FTE, or:

• 40 / 3.12 = 12.82

For arguments sake, if you have a team of 25 people, and if they all have a productivity gain of 38 minutes per day, you get an extra 2 FTE’s of productivity without hiring anyone and adding to your expenses.

Taking this further, how much revenue to you have to add to justify hiring another FTE?  Let’s assume a median wage of around $50,000.  It is generally accepted that to add a new employee it is going to cost you at least 2X the salary when you factor in hiring costs, training, salary and benefits.  Conservatively a new employee is going to cost you $100K.  To justify a new employee you have to add something more than $100K in revenue or you’re losing money by hiring.

Helping people use their strengths every day will allow you to add that new business revenue and it goes almost 100% to the bottom line (profit).  Only the cost of a strengths based consultation and implementation, (which should include a qualified coach) will impact the almost pure profit.

In closing, your employee engagement will go up because people will start loving what they do.   Likewise, your employee retention will rise, and clearly your profitability will increase. For most posts like this one, check out our blog and contact your Sioux City Law Firm, Sioux Falls Law Firm, or Omaha Law Firm today!