What is a Virtuous Cycle (or Positive Feedback Cycle) in business, and how can Human Resources benefit from a this phenomenon? It is an extremely powerful concept that is perhaps most easily explained using a successful company such as Amazon as an example.
In this example, We’ll begin with the Low Prices offered by Amazon. People are drawn to the value offered and become Customers, and obtaining more customers allows Amazon to have a much higher Volume of product sold. Selling a high volume of product makes Amazon valuable to Suppliers, allowing Amazon to renegotiate their cost of goods and increase their profit margins, which helps Amazon move prices lower.
The cycle continues this way, low prices attract customers who create high-volume sales on the site, allowing Amazon to re-negotiate with suppliers and lower their prices to capture even more customers. It isn’t difficult to see how quickly this can be beneficial to a company and promote rapid success and growth. The same can be applied to HR using slightly different pivot points throughout the cycle.
A Virtuous Circle in HR would begin with Outcomes. These outcomes could come from any initiative within a company’s HR department that results in a positive result.
When these outcomes are translated into a positive effect on revenue, cost, turnover rates, etc., they lead to Recognition for a job well done. When HR is being recognized for its impact on a company, they are given access to more Resources in the form of money, headcount, and general flexibility within the organization. Resources allows HR to pursue Initiatives they are passionate about.
These initiatives could be sourcing tech designed to help attract candidates for a company, platforms that offer better access and information to employee benefits, or tools to encourage and maintain good company culture. Great tech leads to great outcomes, recognition, resources, and the ability to pursue more initiatives. Thus, the Positive Feedback cycle begins again.
A Virtuous Circle really is quite a simple and interesting concept when related to HR. Do you have any examples of the Virtuous Cycle in action where you work? Tell us about them in the comments.
If you buy HR Tech, you’re going to want to subscribe to our newsletter and get early access to new tech, reviews, pricing data and more, sign up here
Stay up on the latest in HR Tech
Thanks for signing up, we'll be sending weekly HR Tech Updates your way!
Oops! Something went wrong while submitting the form, please email us
Here are the stories we were following this month!
September 30, 2020
Here are our favorite HR tech articles and thought pieces from this month!
We spend hundreds of hours researching the best hr and recruiting software so you don't have to. Our buyer guides are in depth and unbiased. They are meant to supplement the research you are doing to find the best vendor for your team's goals.