How do You Measure Return on Investment for Human Resources?

Shelley SmithExecutive Coaching, Leadership Development, Predictive Index

Thud.

Hear that? It’s the sound of yet another employee leaving your organization, the door slamming shut behind them. If you’re in the C-suite, you hear that sound all the way from your corner office. But instead of hearing the slam of a door, you hear the sound of a piggy bank breaking. Just because your employee left doesn’t mean you don’t still have customers who demand service, clients who expect results, and stockholders who are going to wonder why revenue is down at the end of the year.

The folks in HR hear that sound, too. In fact, it’s the third time this quarter they’ve heard that sound. Turnover is high, but they don’t know why. Everyone in the department is at the end of their ropes, stressed out from trying to place yet another candidate in the same position, over and over. They can never seem to address the root causes of employee turnover because they’re too busy putting out fires, reviewing résumés, and on-boarding yet another new employee. And even if they did have the time, how would they even know where to start?

How do you measure return on investment for human resources? The sales team has their metrics down to a science. They enter a few quick formulas into a database, and bingo! They have what amounts to a six-course meal of data. The company’s marketers are pretty savvy, too. After all, everyone has seen their figures and tabulations covering the white board after their weekly department meeting in the main conference room.

Yet human resources doesn’t work that way. Isn’t that the traditional way of thinking? HR doesn’t produce income, it consumes it.

wrong-pano_13178Wrong!

Employees are what drive companies. Without employees, there would be no need for sales or marketing. Well-trained, passionate, knowledgeable employees are a company’s greatest asset, and often its most overlooked feature.

Companies that focus on filling open positions over and over and over again, instead of getting to the root causes of employee turnover, are going to struggle. Companies that come up with a specific game plan and find ways to measure what is working and what isn’t are going to become stronger and, ultimately, more profitable.

The I.M.P.A.C.T.™ model is shaking up human resources by replacing the old paradigms. I.M.P.A.C.T.™ is easier to use and create, and it helps companies and HR departments get right to the heart of their high rates of employee turnover.

Intention & Inclusion: Whether you want to win the three-legged race at the company picnic or have $1 billion dollars in sales this year, you must have crystal-clear intentions. On the surface, your HR goal may be to decrease turnover rates, but in that case you’re just treating a symptom, not the disease. Your goal is to boost employee engagement and inclusion, which will in turn drive the company’s profitability and reputation.

Measurement: HR may not consider themselves data-driven or even revenue-driven, but they are. Figure out every single metric you can track, how you can track them most efficiently, and how you will keep focused on the data that impacts results. Go ahead, put the accounting department to shame!

Process & Performance: What processes do you currently have in place? What other platforms are out there? Do you have an IT department that could create a custom system just for you?

Accountability: Just because you’re on step four doesn’t mean you should forget about the first step. ALWAYS come back to intentions. Hold people accountable, but first make sure you tell them exactly what you want. And check back. Don’t have one huddle, and then expect everyone to stay on track. Priorities shift, and it’s easy to get pulled off task. Repeat after me: Track performance, establish check points, and reward accomplishments.

Collaboration: Who needs to know what, and when? How will you share your processes and results with the team? How will you address obstacles and fumbles? After all, they’re part of the process, too.

Tactics: Put all of the above steps together to create a game plan that works for your company, and then live it. Place reminders in high-traffic areas around the office and talk about key aspects of the plan during weekly or daily department meetings. Remember your intentions, and make sure to track every action toward the ultimate goal of engaged, happy employees.

If you liked this article, and you’re a CHRO, business owner or executive who wants to find out more about how to see results with this in your organization, check out the free resource below.