Proving the Value of HR: How and Why to Measure ROI - Softcover

Phillips, Jack J; Phillips, Patricia Pulliam

Softcover

ISBN 10: 1586442317 ISBN 13: 9781586442316

Verlag: SHRM - Kogan Page, 2012

Inhaltsangabe

Measuring the return on investment (ROI) of human resources programs (HR) is critical for success in today's business world and is an absolute requirement for HR professionals who are part of the senior executive team. Responding to the current accountability demands that continue to challenge human resource professionals, this updated edition illustrates the use of ROI methodology as a communication tool that strengthens the relationship with senior management as well as a process-improvement tool that enhances and improves HR's contributions to the bottom line. With this guide, human resource managers will prove their value to their companies by learning how to measure ROI in a variety of programs, policies, practices, and solutions; develop the ROI of HR with basic, step-by-step instructions; and collect, analyze, and report data with sophistication.

Über diesen Titel

Über die Autorin bzw. den Autor

Jack J. Phillips is a world-renowned expert on measurement and evaluation and the chairman of the ROI Institute. He provides consulting services for Fortune 500 companies and workshops for major conference providers throughout the world. He is the author of more than 30 books, including Beyond Learning Objectives: Develop Measurable Objectives that Link to the Bottom Line, Managing Talent Retention: An ROI Approach, and Show Me the Money: How to Determine ROI in People, Projects, and Programs.

Patricia P. Phillips is President and CEO of the ROI Institute, Inc., the leading source of ROI competency building, implementation support, networking, and research. She assists organizations with the implementation of the ROI Methodology in countries around the world. Phillips' publications include The Bottomline on ROI, 2nd edition, which won the ISPI Award of Excellence; The Green Scorecard: Measuring the Return on Investment in Sustainability Initiatives; The Value of Learning; and Return on Investment in Meetings & Events.

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Proving the Value of HR

How and Why to Measure ROI

By Jack J. Phillips, Patricia Pulliam Phillips

Society For Human Resource Management

Copyright © 2012 Jack J. Phillips and Patricia Pulliam Phillips
All rights reserved.

ISBN: 978-1-58644-231-6

Contents

Preface: ROI as an HR Tool, 
Preface to the Second Edition, 
Chapter 1. The Accountability Crisis, 
Chapter 2. The ROI Methodology, 
Chapter 3. Preparing for ROI, 
Chapter 4. Data Collection Issues, 
Chapter 5. Isolating the Effects of the Program, 
Chapter 6. Converting Data to Money, 
Chapter 7. HR Costs and ROI, 
Chapter 8. Measuring Intangibles, 
Chapter 9. Communicating and Using Evaluation Data, 
Chapter 10. Taking a Sensible Approach to ROI, 
Chapter 11. Case Study: Measuring ROI for a Work-at-Home Program Family Mutual Health and Life Insurance Company (FMI), 
Epilogue, 
Appendix A. Self-Test: How Results-Based Are Your Human, 
Resources Programs?, 
Appendix B. ROI Case Studies, 
Appendix C. Resources, 
Endnotes, 
Index, 
About the Authors, 
Additional SHRM-Published Books, 
Special Offer, 

CHAPTER 1

The Accountability Crisis

John Hamilton, Senior Vice President of the human resources (HR) department at Apex Business Products, was perplexed and a little confused after attending a meeting with the Chief Executive Officer (CEO), Margarita Lopez. She had asked John to develop a plan to show the senior executive team the contributions of the HR function. Although the CEO fully supported the majority of HR programs and services, she questioned the value of a few of them and was concerned about comments from the senior team. As Lopez said, "Our senior execs wonder how much real value is contributed by the human resource function. Some of them think it could be outsourced, or that parts of it could be eliminated altogether. What they want to see," she said, "is a more direct link between your programs and the bottom-line."

As John reflected on the meeting, he was aware of the excellent HR programs at Apex. Some had even won awards from professional associations. He knew that the senior team placed value on the employees' annual feedback, which provided an assessment of job satisfaction, motivation, and commitment of the employees. This process had provided valuable information to help plan HR programs. John was also concerned that Lopez had mentioned making a link between HR programs' and the company's bottom line. In other words, Lopez wanted to know about the return on investment (ROI) for HR programs. John was aware of the ROI concept but had not seen it applied to the HR function and wondered if doing so was even feasible.

John felt confused as he began the assignment. At the next senior staff meeting he would have to present his recommended plan for showing the value of the HR function to the senior management team. He knew he must have specific approaches to show the team to obtain buy-in. Otherwise he would have a tough challenge ahead as he entered the budgeting cycle.

John's story raises several questions:

• What possibilities are available for John to show the HR contribution?

• What specific types of measures are appropriate for an overall measurement process?

• Is ROI feasible in this context?

• How does ROI fit into the measurement mix?

• Can ROI become a routine measure?

• How can John win the support of the senior team?

• How can a measurement system be implemented?

Most executives and HR professionals intuitively agree that investing in people and providing appropriate HR solutions and initiatives can pay off significantly for an organization. The problem is that this intuitive knowledge serves only as evidence, not proof, of payoff. Deciding which programs to invest in, how much to invest, and whether a particular HR program provides value is a haphazard process at many organizations.

This cloud of mystery around HR's impact leaves some executives undecided about how much of a commitment to make in terms of time and resources to HR programs. Instead of making a continuous investment in the HR function, executives faced with a lack of tangible bottom-line results tend to resort to sporadic, inconsistent support of certain HR activities that seem to hold some promise in terms of helping the bottom line.

Defining ROI

The ROI Methodology presented in this book can be used to show HR staff and other executives the monetary benefits directly connected to HR programs, particularly major programs that are highly visible, strategic, and expensive. This systematic, comprehensive measurement and evaluation process generates seven types of measures:

• reaction and satisfaction with the HR program

• acquisition of knowledge and skills needed to implement the HR program

• application and implementation of the HR program

• business impact related to the HR program

• costs of the HR program

• return on investment in the HR program

• intangible measures not converted to monetary values

This balanced approach to measurement includes a technique to isolate the effect of the HR program. ROI is measured with the same formula that the finance and accounting staff use to measure the return on investing in building equipment, for example.

About Terminology

Developing a book for the HR field always involves the difficult task of managing the vocabulary used in the field. Table 1.1 defines some key terms found in this book.

Major Influences on HR Accountability

Several developments — positive and negative — in recent years have influenced the need for additional HR accountability. All point toward a need to know more about the connection between investing in human resources and the payoff of the investment.

The Triple Bottom Line

Much attention has focused recently on the concept of the triple bottom line. Not only must an organization be successful financially, as demonstrated by traditional bottom-line measures, but it must also be successful with its employees and the external environment.

The employee "bottom line" is not readily defined, but it typically translates into the organization having favorable work conditions, treating employees fairly and equitably, and compensating them adequately, while fully recognizing the potential and capabilities of employees in a diverse environment. This measure has stimulated many organizations to search for ways in which to monitor, measure, and even value the employee contribution. Consequently, HR practitioners sometimes feel pressured to address this bottom line, yet they have no clear understanding of what it means. The "external environment" refers to the impact on and interaction with the community, the country, and the environment. Being a good corporate citizen and protecting the environment are two key issues.

Employer-of-Choice Phenomenon

Several publications and organizations recognize employers of choice every year or so. One of the most popular recognitions is Fortune magazine's annual list of the "100 Best Companies to Work For." The Great Place to Work Institute has its list of the "Best Small and Medium Companies to Work for in America." Many organizations strive to be included in the rankings. This status enables them to attract new applicants and to retain valuable employees. Pursuing...

Details zur Ausgabe

• Verlag: SHRM - Kogan Page
• Erscheinungsdatum: 2012
• Sprache: Englisch
• ISBN 10: 1586442317
• ISBN 13: 9781586442316
• Einband: Taschenbuch
• Auflage: 2
• Anzahl der Seiten: 324
• Kontakt zum Hersteller: SHRM; https://www.shrm.org/; ; 1800 Duke Street; Alexandria; VA; 22314; USA
• Verantwortliche Person: gpsr@libri.de; gpsr@libri.de; ; Friedensallee 273; Hamburg; 22763; Deutschland