You Should Get Off the Payroll

My businesses, like most businesses, have one thing on their spreadsheets that costs me the most. And it’s not payroll. Can you guess what it is? It’s the most important thing we’ve got, but if it’s not payroll, what could it possibly be?

Nope. Not healthcare. Not the facility either. So what is it? 

It’s people.

People, payroll… they’re the same thing, right?  So what’s the difference? The difference is found in how we often think of them. And how we think of them makes all the difference.

Payroll is an expense. It’s something to cut. It’s something to reduce. Payroll is evil. It’s a cost of doing business that eats away at the gross profit like kids on ice cream. Payroll is just plain bad.

But payroll costs the same amount as people, doesn’t it?  Why, yes it does. So why the distinction?  Here’s why: Payroll isn’t an investment; it’s a cost. People aren’t a cost; they’re an investment. We often don’t make the distinction.

Since the cost of “my people” is the greatest expense I have in my businesses, it is also the greatest investment I can make.

Let’s think about this for a moment. When you invest money in something, do you expect to get a return on your investment? Of course you do. At least you hope to. But for some reason, when we think of payroll, that kind of reasoning shuts down. We see the investment as something fairly utilitarian. It’s like paying someone to mow the lawn or wash the car. That’s just a payment to get a job done; it’s not an investment that expects a return. When organizations look at payroll as an expense, they shortchange themselves dramatically.

But by saying that we should expect a return, I’m not saying we can just sit back and expect – or demand – a return. By no means! We have to work for it.

One recent study shows that investment in employee wellness (employee health and well-being) alone gives a return of $3.00 to every $1.00 invested.

But there are other types of wellness also. They include personal development, a lively and positive organizational culture, inclusive communication strategies and opportunities for advancement. These and other attributes are the leading indicators of a substantive investment in people.

Investments in people need not cost anything but a bit of time. To make these types of investments in people, the sincere desire and interest must come from the very top of the organization. The investments – or programs – must be identified. They must be systemic. They must be rehearsed, monitored, measured. But like any worthwhile project implemented to create a real transformation, you should start with just one thing.

What will your one thing be? What is the first action you will take to get a return on your payroll investment? Or asked another way, what investment will you make in your people, so that you can enjoy the benefits of a significant return? Perhaps the first step is to begin thinking of payroll as people.

This entry was posted in 1. The Power of Who You Are, 3. The Power of Capacity, 4. The Power of Relationship and tagged , , . Bookmark the permalink.

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