How can you measure the ROI of a positive workplace culture?

Just in case we haven’t mentioned it enough already, inclusive cultures that support ALL staff, prioritise wellbeing and enable everyone to thrive are not just “nice to haves” – they make a very real impact on the success of a business.

But many organisations still treat them as vague, intangible elements.

It’s time to get serious.

If you truly believe in building positive working environments, and you genuinely want to see the changes you’re making improving your overall results, then you need to be measuring this work and tracking the impact.

You need a measurement framework that shows you what work is delivering value, and what isn’t, so you know where to put your time and resources.

Not only that, but being able to demonstrate tangible benefits to the organisation will help you to persuade more people (particularly senior leaders) to get behind the work, and help secure future investment to increase your efforts.

Isn’t it impossible to measure culture?

Absolutely not.

Culture is subjective and changeable, but it has a major impact on some very concrete and measurable factors in your organisaiton, all of which have important financial implications for your business.

These include:

Productivity

Low productivity is costing UK businesses an average of £4,467 per employee every year (Totaljobs), but an inclusive culture increases productivity by 35%.

Retention

The average cost of replacing one employee is £30,000 (not including their salary), and inclusive cultures reduce staff turnover by 50%.

Engagement

Low staff engagement costs the UK economy £340 billion annually (Perkbox), but inclusion increases staff engagement by up to 83%.

Performance

Poor performance impacts projects and outputs, leads to negative outcomes for customers, damages the business’ reputation, puts additional stress on managers, reduces team morale, and, ultimately impacts revenue. Yet, staff in an inclusive and happy environment will perform around 37% better.

Staff absence

There are costs in lost work time, project delays and customer outcomes if a team has a high rate of absences, and the average business loses £702 per employee per year. But just a 10% increase in perception of inclusion adds one working day per year per employee.

Efficiency

The average business could save £28,000 per year by improving efficiencies, and inclusion boosts company efficiency by up to £1,330 per year per employee.

Revenue

There is, of course, no stronger indicator of how well your business is doing than revenue. Inclusive organisations produce 36% higher revenue than their competitors. So you can’t say that this stuff isn’t measurable!

How do you calculate the ROI of inclusion, wellbeing and culture work?

ROI stands for return on investment – it is the calculation of how much gain you receive in return for what you put in.

To calculate ROI when it comes to workplace culture, you need to follow these steps:

  • Understand your current situation with regards to relevant metrics
  • Identify what areas you want to work on and in what order
  • Align your goals on workplace culture with your overall organisational objectives (our Business Benefits Mapping Tool can help you with that)
  • Track all the relevant metrics
  • Work out the financials gains and cost savings from the different areas
  • Calculate what percentage of these gains / savings are likely down to the work you have done on culture (e.g. if staff retention is up by 20% and this has saved you £180,000, and you believe that 60% of this is down to your work on culture, then you can attribute £108,000 of savings to your culture work)
  • Work out the total return on investment using the formula below

ROI formula

(Total financial gains / savings attributable to culture work – Total financial investment in culture work) ÷ Total financial investment in culture work

Multiply that number by 100 in order to express the ROI as a percentage.

E.g. if a company invested £50,000 in culture work and saw combined gains and savings of £200,000, then:

(200,000 – 50,000) ÷ 50,000 = 3

This gives an ROI of 3:1.

3 x 100 = an ROI of 300%.

This means that, for every £1 invested in culture work, the company received a return of £3.

Want to calculate your own organisational culture ROI?

Download the free guide below, and we’ll walk you through the process step by step.