Dive Brief:
- 'Tis the season for annual reports, and Business Management Daily (BMD) advises HR departments to use the opportunity to demonstrate and showcase their financial value to the rest of the organization. BMD says the first step is to survey managers about their priorities, then develop HR initiatives that improve those priorities by either increasing profits or cutting costs. The third step is to develop metrics to measure the financial impact of HR initiatives.
- BMD said HR can use orientation, for example, to show a financial impact on the organization. Suppose HR held 30 orientations in a year, decreased turnover by 10% and reduced new hires’ time attending orientations by 25%. HR might be able to show a $16,000 savings in hiring costs, specifically through less-frequent orientations, and demonstrate an increase in productivity by pointing to new hires starting working sooner.
- Unless HR can back up its achievements with financial data, it risks losing credibility, said BDM.
Dive Insight:
HR deserves and has earned the proverbial "seat at the table." But demonstrating that quantitatively is essential. HR is charged with hiring, developing and training organizations’ greatest asset – their employees.
Every HR function can be assessed financially as a return on investment for the organization served. Achievements without numeric value aren’t prized as much as those that show a direct tie to an organization’s bottom line. HR's capability in this regard will only increase over time, especially considering the growth of people data measuring factors like benefits enrollment, engagement and workplace culture.
