Return on Investment vs. Value on Investment Essay

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Even though the question of evaluating ROI is rather important, the concept of returns on investments is relatively subtle, and other factors may impact the organizational success in a much more vivid manner (Mayo, 2013). Some of these aspects are documented as reduced absenteeism and increased working morale. The latter majorly contributes to the overall productivity as well. To measure ROI and VOI, one can focus on the use of healthy employees that are motivated to develop and help the company grow. The benefits of VOI can also be seen as a result of the implementation of different wellness programs (Jenner, 2014).

As long as the employees understand their value, the concept of VOI becomes much more important than ROI because it helps to cut down the costs and generate even more value – both monetary and organizational. Despite the visual prevalence of ROI, a comprehensive strategy based on VOI is advised. The biggest problem that has to be addressed by the managers is the lack of engagement among employees (Allman & Nogales, 2015).

The value of investments can be demonstrated by the driving force of participation in the wellness programs developed by the organization. The question of whether VOI is better than ROI is still a problem within the existing business environment because the latter is commonly seen as a way to justify the expenses through lowered costs. The key strength of VOI is that it can be documented right away (ROI, for example, is a continuing measurement) (Gotze, Northcott, & Schuster, 2015). Employee morale can be seen as one of the core aspects of VOI that should be maintained by the organization. Regardless of the strengths and weaknesses of both concepts, VOI and ROI cannot exist without each other.

References

Allman, K. A., & Nogales, X. E. (2015). Impact investment: A practical guide to investment process and social impact analysis. Hoboken, NJ: Wiley.

Gotze, U., Northcott, D., & Schuster, P. (2015). Investment appraisal: Methods and models. Berlin, Germany: Springer.

Jenner, S. (2014). Managing benefits: Optimizing the return from investments. London, UK: TSO.

Mayo, H. B. (2013). Investments: An introduction. Mason, OH: Cengage.

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IvyPanda. "Return on Investment vs. Value on Investment." July 29, 2020. https://ivypanda.com/essays/return-on-investment-vs-value-on-investment/.

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