HR ROI: prove your programs’ worth

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HR professionals need to be able to prove the return on investment of the programs they plan and budget for. Their programs and initiatives should align to the business, setting objectives that link to business outcomes.

“What often happens in HR is that people have ideas and they just run with them,” said HR professional Penny Longworth, who has been in the industry for more than 15 years. “They start implementing them without thinking about whether it’s worthwhile, what difference it will make and how we’re going to measure it.”

After taking a one day workshop with ROI Institute Canada in 2010, Longworth decided to take the five day certification course last year, learning how to apply the Institute’s methodology to assess HR programs on a range of levels. She applied what she learned to a leadership program underway, which was costing the company $100,000 to train eight people.

“What it did for the organization is that first of all it created awareness in the minds of the leaders and managers that when we do something like this there needs to be a benefit,” she said. “I was able to communicate to the participants and managers that if we wanted to continue offering this program to future leaders we need to prove it made a difference.”

Through coaching and feedback, the leaders were able to show how they had implemented the tools they learned in the workshop and how that affected the bottom line, whether through increased revenue or decreased expenses. This fiscal accountability is becoming more necessary for HR professionals to understand and embrace.

“We unfortunately see a lot of HR people who have never been asked this before and don’t know where to start, but now they have to be accountable for their programs,” ROI Institute Canada CEO Suzanne Schell said.

Training ensures HR managers can assess the value of the programs they're planning, decide which need in depth analysis and determine how the programs link to the objectives and results.

For example, if a year into a program to improve retention there is an increase in retention of 8%, how do you know that is directly related to the program?

“There could be a change in economy, a change in management – there are other things that could significantly change retention,” Schell said. “Without isolating the effects of that program we cannot say for certain what difference it made in retention.”

There are five levels of analysis in the ROI institute's methodology:

  1. Reaction
    Are people happy with the program? It's important to ensure any new initiative doesn't lead to adverse reactions.
  2. Learning
    Any learning or change needs to be measured to make sure people understand the program and its objectives. This is often where organizations stop when measuring.
  3. Application and implementation
    Once a program has been implemented it's vital to have a process to collect data and prove changes in behaviour. Identifying barriers and enablers to implementation, allows for elimination of the barriers and repetition of the enablers for future successful programs.
  4. Business Impact
    What was the effect of the program on the organization? It could be monetary, such as an improvement on retention, efficiency, promotions. Other programs are aimed at changing intangibles, but HR still need to show how those factors connect to program
  5. ROI
    What is the payoff of the money spent? As the C-suite increasingly demands specific, results-oriented reports. Once HR can show the financial advantages of its initiatives it earns its place at the executive table.

 

For more information visit www.roiinstitutecanada.com, or contact CEO Suzanne Schell: 613-567-9402, suzanne@roiinstitutecanada.com

  • Steve Madsen on 2013-08-09 10:51:09 AM

    Tough sell on proving ROI that involves human behavior due to the myriad of human elements of any HR program. The best you can produce is savings, which is vitally important. Resources saved will catch more eyes at the table than poorly controlled ROI calculations.

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