The ROI of business storytelling and the cost of being boring

The Significant Objects Project demonstrated the return on investment when you attach a story to an insignificant project. This Earth paperweight cost the program $1.98, and they sold it for $198. All because it had a story attached to it.

That’s an ROI of 3,000 percent.

Ok, not every story is that bullish. But you cannot afford not to be mining stories in your organization. It’s a double negative if you don’t. Because without good brand and business stories, you miss out on the compounding yields of investing in the authenticity of your brand narrative, the clarity of your vision, the pragmatics of your mission, the inspiration of your people, and the human connection with your customers.

The costs of not focusing on your business storytelling is like deciding that physical exercise isn’t worth the effort for your health. Every muscle, tendon, bone, and synapse that make you vibrant goes to shit.

The cost of not developing your storytelling culture

Let’s focus on your negativity bias for a moment. After all, you’re human. If you won’t do what’s good for you, let’s look at how bad it gets when you lose people.  

Employees are an “appreciating asset,” meaning they produce more and more value for the organization over time. Losing employees is costly. It varies by wage and role of employee. For example, a CAP study outlined the average costs to replace an employee equal:

  • 16 percent of annual salary for high-turnover, low-paying jobs for people earning under $30,000 a year. The cost to replace a $10/hour retail employee is approximately $3,328.
  • 20 percent of annual salary for midrange positions (earning $30,000 to $50,000 a year). The cost to replace a $40k manager is around $8,000.
  • Up to 213 percent of annual salary for highly educated executive positions. The cost to replace a $100k CEO is $213,000.

Josh Bersin of Bersin by Deloitte, in a recent article on employee retention, outlined the following factors a business should consider in calculating the “real” cost of losing an employee:

  • The cost of hiring: a new employee including advertising, interviewing, screening, and hiring
  • Cost of onboarding: training and management time is expensive
  • Lost productivity: it can take a new employee up to 24 months to reach the productivity of an existing person
  • Lost engagement: follow employees who see high turnover often disengage and lose productivity
  • Customer service issues: new employees take longer, are often less adept at solving problems and tend to make more errors
  • Training cost: a business likely invests 10 to 20 percent of an employee’s salary or more in training over their first two to three years
  • Cultural impact: whenever someone leaves, others wonder why, which distracts them from their job at hand
  • Wisdom withdrawal: long-term employees that decide to leave the company take loads of historical knowledge with them creating an insight and expertise void for the new employees

What’s it worth to you?

If, after doing the Storytelling for Leaders training program you could get a 10% increase in productivity or performance improvement because your leaders connected better with your people, what would that be worth to you? Or if you could get a 5% improvement in your employee engagement scores, what would that be worth? Presumably a lot more than the $20,000 it will cost to put your top 16 leaders through our six-month program

If we helped your team sell 10% more  – or helped them retain x% of your annual lost customers – what would that be worth? Presumably a lot more than the $20,000 to put your top 16 salespeople and managers through our 6-month program.

Jack Altman, CEO of Lattice, creators of performance management software, has created this simple formula to understand your cost of turnover. It’s your number of employees times your annual turnover percentage.

While it’s difficult to capture every expense and some of the big intangible costs like impact on employee morale, all you have to do is consider four major buckets:

  • Cost of hiring
  • Cost of onboarding and training
  • Cost of learning and development
  • Cost of time with unfilled role

Here’s what the calculation for your overall annual cost of turnover looks like:

Jack even provides an example in this Huffington Post piece: if you are a 150 person company with 11% annual turnover, and you spend $25k per person on hiring, $10k each on turnover and development, and lose $50k of productivity opportunity cost on average when refilling a role, then your annual cost of turnover would be about $1.57 million.

Reducing this by just 20%, for example, would immediately yield over $300k in value. And that says nothing of the emotional headache and cultural drain felt from losing great people.

You can use this spreadsheet to plug in your own numbers to get a sense of what the costs look like for you.

The post The ROI of business storytelling and the cost of being boring appeared first on Business of Story.

Originally Posted in http://parkhowell.com/.


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