Financial Portfolio Vs. Human Portfolio: Increased ROI Through Relationships

In a recent interview I was asked by a Financial Advisor who helps train other Financial Advisors how they can prepare for their own retirement yet keep the financial portfolios working to continue to get the same return on investment without the “books” drying up. The first thing I asked is what do the advisors do to build a succession plan and develop the relationships with their portfolio managers. We discussed these concepts for a little while , but the more we talked the more I realized that investing money in developing a financial portfolio is extremely similar to investing in the relationship development between leaders and followers.

In the world of finance, smart investors know that returns don't just happen by accident. They result from carefully planned allocations, diversified strategies, and continual monitoring. When you invest money in a portfolio, you expect it to grow over time through compounded gains, balanced risk, and informed choices.

Leadership is remarkably similar—except the capital at stake isn't dollars, it's people. Leaders who want to maximize their Return on Investment (ROI) in human capital must approach their teams the way investors approach their portfolios: by intentionally investing time, effort, knowledge, skills, and shared experience to generate sustainable, increasing value.

Just as no savvy investor would simply toss money into a single stock and hope for the best, no effective leader can afford to neglect the development of their people. Investing in human capital means deliberately building the skills, confidence, and capacity of your team so they can deliver results now and adapt to future challenges. It requires understanding each individual’s unique strengths and potential, allocating resources wisely, and balancing immediate needs with long-term growth.

Ultimately, leadership is about recognizing that people are the engine of organizational success. By treating their development as an intentional, strategic investment—rather than an afterthought—leaders can cultivate a high-performing, resilient team that delivers exceptional returns for the entire organization.

What does your investment include?

The Analogy: Financial ROI vs. People ROI

A financial investor asks:

• Where should I allocate resources to maximize return?

• What level of risk is acceptable?

• How do I rebalance when conditions change?

These questions guide smart investors to make informed, dynamic choices that align with their goals while managing risk. Investors study the market, analyze performance, and shift resources to ensure long-term, sustainable gains. They know that success depends on continually evaluating where their money will have the greatest impact, understanding risk tolerance, and being willing to adjust strategies as circumstances evolve.

Similarly, a leader should ask:

• Where should I allocate my time and attention among team members?

• How much stretch or challenge can each person handle?

• How do I adapt my approach when individual or team needs change?

Leaders must be deliberate about where they focus their energy and how they support their people. This means recognizing who needs more coaching, who’s ready for bigger challenges, and who might need help overcoming obstacles. It requires ongoing assessment, flexibility, and a commitment to matching leadership effort to each person’s development stage and potential.

Just as a portfolio is made up of diverse assets—stocks, bonds, real estate, and more importantly a team is made up of diverse people with diverse backgrounds, skills, motivations, and growth trajectories. Each person has unique strengths, potential, and development needs. Ignoring this diversity is like investing everything in a single stock—it’s risky and shortsighted. The most successful leaders, like the most successful investors, know that thoughtful diversification, careful planning, and regular rebalancing are essential to maximizing returns and building a strong, resilient foundation for future success.

Diversification: Developing the Whole Team

In investing, diversification is a fundamental strategy for spreading risk and increasing the likelihood of consistent, stable returns over time. Rather than putting all their money into a single asset that could fail, wise investors spread resources across distinct types of investments—stocks, bonds, real estate, or other vehicles—so that the strengths of one can offset the weaknesses of another. This approach not only guards against catastrophic loss but also captures opportunities for growth in multiple areas.

For leaders, the same principle applies to people’s development. Investing in the entire team—not just the obvious star performers—is essential for building an organization that is strong, resilient, and adaptable. Over-focusing on a few high achievers while neglecting others is like betting everything on one stock: it may work for a while, but it creates vulnerability and limits overall potential.

Leaders should ensure:

• Everyone has access to learning and growth opportunities. Providing training, mentoring, and stretch assignments to all employees—not just top performers—fosters an environment where everyone feels valued and motivated to improve.

• Underutilized talent is identified and activated. Many teams have hidden strengths waiting to be unlocked. Leaders who take time to recognize and develop these overlooked capabilities can dramatically expand the team's collective capacity.

• Roles and responsibilities are designed to align with people’s strengths and interests. Just as an investor selects the right assets for the right purpose, leaders should align work to what people do best, increasing engagement, satisfaction, and effectiveness.

When leaders "diversify" their investment of time, attention, and mentorship across the whole team, they reduce risk by avoiding overdependence on any single person. They build a workforce that is more engaged, better prepared to handle challenges, and capable of sustaining high performance even when circumstances change. Ultimately, diversification in people development isn't simply good leadership—it's essential risk management and a strategy for long-term organizational success.

Compounding: The Power of Continuous Development

In finance, compounding interest is often called the eighth wonder of the world because of its extraordinary ability to grow wealth over time. Rather than delivering linear gains, compounding accelerates growth as returns are reinvested, generating even more returns in the future. Investors understand that consistent, disciplined reinvestment is what transforms small, steady inputs into large, sustainable outcomes.

Leadership works in much the same way when it comes to developing people. Skills, knowledge, and confidence don’t improve in one giant leap—they grow through repeated, layered investment over time. When leaders continually invest in their people’s development, they set in motion a process where growth builds on growth, leading to significant, lasting gains in individual and team capability.

This requires:

• Regular coaching and feedback sessions. Just as financial reinvestment is deliberate and consistent, so must leadership investment be in people. Frequent, meaningful conversations about goals, progress, and challenges ensure employees know where they stand and how to improve.

• Opportunities for practice and application. Learning must be translated into behavior and action. Leaders should create safe environments where team members can test new skills, experiment with solutions, and refine their abilities without fear of failure.

• Recognition and reinforcement of desired behaviors. Positive feedback, rewards, and public acknowledgment reinforce what’s working, motivating employees to continue growing and sharing their learning with others.

By reinvesting knowledge, skills, and support into team members over time, leaders enable the “compound interest” of human growth. Employees don’t just get a little better—they evolve into highly skilled, confident contributors who can teach and mentor others, creating a multiplier effect across the organization. This compounding process turns individual development into collective strength, delivering returns that far exceed the original investment.

Risk Management: Balancing Challenge and Support

Investors know that no return is guaranteed without accepting some level of risk. But they also understand that reckless, unmanaged risk can lead to devastating losses. That’s why effective investors carefully assess their risk tolerance, diversify their portfolios, and rebalance their strategies as markets shift. They stay alert to changing conditions and make adjustments to protect gains while pursuing new opportunities.

Leaders must adopt the same disciplined mindset when developing their people. Growing skills, confidence, and capacity always involve some risk: giving people new challenges means they might fail, struggle, or feel overwhelmed. But avoiding all risk—by keeping people in safe, familiar roles—guarantees stagnation. The key is balancing challenge and support so that team members can stretch and grow without burning out or disengaging.

Good leadership investment strategies include:

• Assign stretch tasks with safety nets. Leaders should push employees beyond their comfort zones by giving them challenging assignments, but also ensure they have access to resources, mentoring, and guidance to succeed. This balance encourages growth while reducing the fear of failure.

• Balance autonomy with guidance. Employees need room to make decisions, solve problems, and innovate, but also benefit from regular check-ins, feedback, and alignment with organizational goals. Striking the right balance empowers people without leaving them adrift.

• Provide psychological safety for innovation and learning from failure. The best learning happens when people feel safe to take risks, share ideas, and make mistakes without fear of punishment or ridicule. Leaders must create an environment where experimentation is encouraged, and failures are treated as valuable learning opportunities.

By actively managing this “risk,” leaders help employees build resilience, adaptability, and confidence. They prevent burnout by ensuring challenges are meaningful but achievable, and they reduce disengagement by showing genuine support for their team’s success. Eventually, this careful risk management produces a stronger, more capable workforce that is prepared to manage whatever the future brings.

Monitoring and Rebalancing: Ongoing Relationship Management

In finance, even the best investment strategy isn’t “set it and forget it.” Investors regularly review their portfolio’s performance, checking for underperforming assets, market shifts, and new opportunities. They rebalance their holdings to ensure alignment with their goals, risk tolerance, and changing conditions. This ongoing vigilance is essential for protecting gains and ensuring long-term success.

Strong Relationship are the Investment Capital in Your Leader-Follower Succession Planning

Leadership requires the same level of ongoing attention and adaptability from both leader and follower. Teams are not static—they evolve as people grow, business demands shift, and new challenges emerge. Leaders who fail to monitor and adjust their approach risk falling behind, creating disengaged employees, or missing critical opportunities for development.

To effectively “rebalance” their investment in people, leaders must continually monitor:

• Employee engagement and satisfaction. Understanding how people feel about their work, their team, and their organization is essential for retaining talent and sustaining motivation. This includes paying attention to morale, workload balance, and the overall employee experience.

• Performance metrics and developmental progress. Leaders need to assess how individuals and teams are meeting goals, applying new skills, and advancing toward their potential. Regular evaluations help identify strengths to leverage and gaps to address.

• Changing needs of the business environment. As markets, technologies, and customer demands evolve, so do the skills and capabilities needed for success. Leaders must ensure their team is prepared to meet these new challenges through timely training, redeployment, or realignment of priorities.

This monitoring and rebalancing aren’t a bureaucratic exercise—it’s about relationship management at its core. It requires honest, frequent one-on-one conversations to understand employee needs and aspirations. It means being responsive to feedback, showing that leadership is a two-way street. And it involves adapting leadership style to suit evolving team dynamics, recognizing that what worked last year may not work today.

By staying engaged and flexible, leaders ensure that their investment in people continues to deliver strong returns over time, creating a resilient, high-performing team ready to tackle the future. Imagine the growth possible if both leader and follower are making investments into the relationship.

Measuring ROI: Beyond the Balance Sheet

In the financial world, ROI is typically measured in clear, quantifiable terms: profit, loss, percentages, and dollars gained or lost relative to dollars invested. Investors can easily track the growth of their assets on a balance sheet or in a performance report. These straightforward metrics make it easy to know whether an investment strategy is working.

When it comes to leadership, however, measuring return on investment is more nuanced. The “capital” isn’t money—it’s people. And while the benefits of investing in human capital are just as real, they often show up in ways that are less tangible immediately but no less critical to an organization’s success.

People ROI is measured in:

• Employee retention. High turnover is costly, draining knowledge, experience, and resources. Leaders who invest in development, recognition, and meaningful work create loyalty and reduce the expenses and disruptions associated with frequent hiring.

• Productivity gains. Well-developed employees work more efficiently, solve problems faster, and deliver higher-quality results. They understand their roles, have the skills they need, and are motivated to perform at their best.

• Innovation and problem-solving capacity. When leaders invest in continuous learning and create environments that encourage curiosity and risk-taking, teams become engines of innovation. Employees feel empowered to challenge assumptions, propose innovative ideas, and find creative solutions to complex challenges.

• Organizational culture and morale. A workplace that prioritizes development, respect, and psychological safety fosters higher morale, better teamwork, and stronger collaboration. A positive culture attracts talent and becomes a competitive advantage that is hard to replicate.

Leaders who make these investments consistently see powerful returns. They build teams that are not only capable but committed—people who want to stay, contribute, and help the organization thrive. The impact of this investment ripples throughout the business in the form of stronger collaboration, improved customer satisfaction, reduced costs, and enhanced adaptability.

In public service organizations where we don’t measure profit, loss, growth, etc., we have to look at the increase or decrease in our followers Motivation, Satisfaction, and Performance (MSP). Just as the stock market rises and lowers in prices over time, so does the MSP in public service organizations.

In the end, while you can’t always capture people ROI on a traditional balance sheet, its value is unmistakable in how leadership impacts the MSP of the people: organizations that invest well in their people achieve better business outcomes, greater resilience, and long-term success.

Conclusion: Leadership as an Investment Strategy

Smart investors understand that success in the financial world doesn’t happen by accident. They don’t leave returns to chance; instead, they craft thoughtful strategies that include careful planning, diversification, compounding growth, risk management, and regular rebalancing. This disciplined, intentional approach is what transforms modest investments into substantial, sustainable wealth over time.

Similarly, effective leaders recognize that their people are not just resources to be managed but their most valuable and irreplaceable assets. Realizing exceptional returns on human capital requires more than simply assigning tasks and tracking output. It demands a deliberate, sustained investment of time, effort, knowledge, skills, and abilities. Leaders must commit to coaching and mentoring, creating meaningful opportunities for learning, fostering psychological safety, and adapting their approach to meet the evolving needs of individuals and the organization.

This investment doesn’t just benefit the organization—it deeply benefits the followers themselves. By learning the business in depth, team members become more capable, confident, and ready to take on greater responsibilities. This creates a natural succession plan, ensuring that future leaders are already prepared and aligned with the organization’s mission and values. Moreover, the process of investing in people strengthens relationships, builds trust, and encourages open communication, creating a collaborative and supportive culture where everyone feels valued and empowered.

Ultimately, just as the best investors grow wealth by nurturing their portfolios, the best leaders grow people by developing their potential. In doing so, they don’t just achieve short-term results—they build resilient, adaptable organizations capable of thriving in any environment. Investing in people is not an optional extra; it is a strategic imperative that pays lasting dividends in the form of innovation, loyalty, performance, leadership continuity, and a healthy, vibrant organizational culture. Leaders who embrace this mindset create enduring value for themselves, their teams, and the entire organization.