1. Considering the laissez-faire origins of modern capitalism, it makes sense that Milton Friedman, a prominent economist during the latter half of the 20th century, claimed the only social responsibility of a business was to increase its profits.
2. His view favored the Return on Investment (ROI) which is still a popular way to measure the profitability of an asset.
3. However, ROI only looks at financial benefits of a business decision and ignores things like:
a. Customer satisfaction
b. Employee retention
c. Regulatory compliance
d. Environmental sustainability
4. However, the return on value (ROV) considers a venture’s monetary and non-monetary benefits.
5. Like how an increase in the production of goods to meet a quarterly financial goal, will affect employee productivity in the following months.
6. Let us look deeper at ROV and how businesses can use it to make investment decisions that grow customer and employee loyalty – without exploiting humans or the environment.