How do you measure the impact of human resources initiatives? In an age of data and analytics, HR professionals are under as much pressure as any other part of a business to demonstrate measurable results and quantify the return on investment for every dollar they spend. When asked about how a new initiative is performing, it’s no longer enough to say “morale is really improving.”

Fortunately, as the science of HR develops, we have more tools than ever before to capture human capital data– and demonstrating the value of your initiatives has never been more achievable. Here are three ways to backup your anecdotes with concrete numbers:

Training and development

Why it matters: I’ve witnessed a similar training program transformation at numerous organizations over the years. Unfortunately, the training and development budget can also be first on the chopping block during tough times, so it’s important to make a business case for every dollar you spend.

What to do: You can’t demonstrate improvement if you don’t have a baseline. Start tracking key performance indicators (KPIs) before you begin your program, so you can compare post-program performance to this starting point. If you need to defend these programs later – or ask for more money to expand them – you can quantify the difference your training has made on employee performance and business outcomes.

Retention

Why it matters: Investing in initiatives that support employee retention are critical to keeping the competition from poaching your best performers, especially in today’s tight talent market. But how can you prove that your efforts are worth the investment?

What to do: To show the ROI of improving your retention rate, you simply need to understand the costs of various processes in the business. How much does it cost you to onboard new employees? How much does a search process cost, including fees for recruiters, background checks and sign on bonuses? What about the loss of productivity when a role sits unfilled? Once you have a firm grasp of these costs, you can start to show the dollar savings for each percentage point your retention rate increases.

Employee engagement

Why it matters: Employee engagement is a popular buzzword these days, and deservedly so. Studies have shown that companies with higher employee engagement have higher earnings per share. Higher engagement leads to higher employee commitment, higher productivity, and higher retention rates.

What to do: Engagement may seem like a hazy concept, but it’s actually quite measurable. Your company can measure engagement by surveying your employees regularly rather than waiting to an exit interview. You can do this through any mechanism, from a short webform to an in-depth one-on-one interview.

Measuring the cost of disengaged employees, or the gains from re-engaging your employees, is more challenging since engagement impacts so many different parts of the business and the returns can take a long time to manifest. This is where I would say don’t be afraid to point to the academic research to bolster your case. Organizations like the Harvard Business Review and Gallup have been studying the effects of employee engagement since the 1990s, and this kind of research can be incredibly useful when you’re making your case to the leadership team for an engagement initiative.

Bottom line: In today’s data-driven environment, a manager who can show a return for every dollar spent or point to the science behind a new initiative is far more likely to get the funding she needs. Get comfortable with HR performance metrics and ROI measurement, and you’ll be rewarded.

Questions about HR program ROI or just want to chat about the current talent market? Let us know below and we can get you in contact with someone who can answer your questions.


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