ROI for Human Resources: Measuring HR Results

How is staff engagement cost-effective? How can a Human Resources Manager measure it?

Efficient management is always supported by good financial planning. Therefore, decisions relative to business investments must be base on detailed analysis which confirms the level of advantage from actions taken.

It is crucial to take preventive measures and health programmes (such as work-related stress) into account. These are closely connected to turnover rates, absenteeism and presenteeism among workers.

ROI (Return on Investment) measures the results generated through each investment with the application of indexes.

Using these indexes, the HR sector can position itself more strategically, ensuring a high level of performance, engaging and motivating the team. ROI can be utilised by the HR office to measure its main processes. A good example would be worker engagement through an “Ideas Contest”.

Investment in this kind of action will be substantiated through a reduction of costs related to waste and medical assistance, an increase in the efficiency and effectiveness of existing processes and innovation brought about by new ideas and positive, ethical developments.

The productivity of professionals or teams in any business areas is always connected to other factors, for example, training, motivation, engagement, satisfaction, and wellbeing. Thus, some indicators must be constantly monitored as they can help to identify problems and trends.

Some important productivity indicators to be monitored:

Absenteeism

it is important to understand the reasons behind this kind of behaviour. Using analysis of medical cases, you can verify whether or not the current health programme is reaching expected targets.

Presenteeism

This occurs when an employee has no interest in their work. As an indicator, this is usually linked to dissatisfaction with the company or the managers and can highlight a lack of career prospects. In that case, programmes for engaging talent must be revised.

Turnover Rate

If this remains high, it can show a company’s lack of appeal in relation to the market, to growth processes and to programmes for compensation and salary as well as benefit packages and suboptimal recruitment.

Working Environment

Surveying the working environment covers various aspects of staff management, such as growth and training possibilities, as well as stimulating the relationships between managers. The responses give an estimate of employee satisfaction, to understand which actions should be improved.

Productivity

Productivity indicators are based on objectives. Thus, each area has specific evaluation criteria. It is worth remembering that targets should be ambitious, but realistic. In this way, it is vital to recognise the limits of performance, positions, and professional experience.

Per Capita Income

This indicator represents the individual financial return of any employee. It addresses the direct relationship between a business’ profits and its employees. It is also a way to evidence high productivity.

Company Health and Wellbeing                

Actions aimed at company health and wellbeing are incredibly important as they have a direct influence on team performance and satisfaction. With this is mind, many companies have started to construct new staff engagement programmes.

In the literature, and in experience even more so, you can find many examples of profitability obtained through actions aimed at listening to and sharing the ideas of everyone in the organisation, even simply for giving them the tools to express themselves.

Businesses such as Shell, KP and Xerox boast millions in savings and it is noted that, on average, every euro invested in an ideas contest, generates a saving of 13.*

Conclusion

Executives and managers already understand that overall results for companies have a direct correlation to the motivation and level of engagement of their teams. Furthermore, to obtain this, it is necessary to have up to date tools.

*Research carried out by Christiaan van Dijk and Jan van den Ende, Management of Technology and Innovation Unit, Rotterdam School of Management, The Netherlands.

Do you want to create a process of continuous innovation? Read Innovation Processes.

When is staff wellbeing transformed into value for the organisation? Read Staff Wellbeing.