Proving ROI (return on investment) in Human Resources is a lot harder than it is in other professional sectors. The metrics for HR aren’t always cut and dry, especially when you look outside of the recruiting realm. You want to prove that employer branding is worth the cost and time it takes. You also want to show higher-ups that the work your HR department does is making a valuable contribution to the company overall, or maybe that the cost of hiring a new employee to help with all of the duties your boss probably isn’t even aware of is justified.
Proving ROI in HR is determined by a number of factors, including the number of complaints and conflicts, the type of teamwork displayed, your employees’ overall commitment levels, and the levels of stress, job satisfaction, and engagement they evidence. There are no clear metrics on some of these items, but your HR department needs to make sure that all of them are at a level that benefits not only the company but also the employees who work there.
Simple ROI metrics can be calculated using the following formulas:
All of these metrics can show that the programs your HR department is implementing are working to constantly improve the bigger metrics that are needed to run a successful company. Your cost-per-hire, engagement, and turnover rates are the important figures that prove that you’re not throwing away money when hiring new employees.
There is no direct strategy for implementing these metrics into your Human Resources department. Instead, you should work on lowering the above statistics by training your employees better, engaging them on a daily basis, and working to make your company culture positive and productive. All of these actions will improve these critical measures of what makes a company successful.
What is your company doing to improve these critical metrics?
Jessica Miller-Merrell, SPHR, is an author, speaker, Human Resources professional, and workplace social media expert who has a passion for recruiting, training, and all things social media. She is the president and CEO of Xceptional HR, and a leader in the HR community with more than 12 years of industry experience. The author of Tweet This! Twitter for Business, Jessica was named by HR Examiner as the second most influential recruiter on the Internet and the seventh most powerful woman on Twitter. She is a columnist for both SmartBrief and The Huffington Post, in addition to Blogging4Jobs and Human Resources One on One. Jessica has been interviewed for professional articles in CIO Magazine, Entrepreneur Magazine, SHRM’s HR Magazine, and on CBS. Jessica earned a Senior Professional in Human Resources designation in 2008, and holds a bachelor’s degree in Anthropology and Business from Kansas State University. Originally from a small town in Kansas, Jessica currently lives near Oklahoma City with her husband, Greg and daughter, Ryleigh.