Perhaps it is history or perhaps because their services are not converted to dollar values. As one looks at the history of Human Resources, one can understand. For many years HR was the record keeper; as benefits became critical HR became the employee caretaker; then the risk advisor and finally the system developer as competencies and pay for performance developed. There was a transformation from Personnel, the record keeper to Human Resources, the human capital investment specialist. This transformation and role change never really lost functions but as the role changed and the functions developed and increased in criticality, no one ever corresponded these functions and their impact to a dollar.

Employees are a business investment? As they grow and excel within companies, their knowledge, productivity and goal achievement become more valuable. Human capital, to most companies, is their largest investment.

HR holds the key to understanding this manpower ROI. Manpower is the largest part of our budgets and increasing productivity and maintaining our human capital investment dramatically affects profitability. In fact highly trained, motivated and productive employees are critical not only to goal achievement but sustained profit.

HR professionals understand how to talk profit and loss from a manpower standpoint. Measurement is step one and is the key to ROI performance. HR measures that correlate to ROI can vary and should be aligned with company objectives. Here are samples of measurement areas:

These are just a sample and there are others that can be developed and monitored.

Measurement parallels a goal-oriented culture. Who better to create culture than HR. But what is goal oriented and how can HR help to develop this culture. HR insures that job descriptions include statements related to goal orientation, that managers are trained to set up measurements and understand pay for performance and that HR measures are in place to insure investment effectiveness. All of these functions are only examples and, as one can see, are part of a total process.

Overall, skill and competency of the work force have a tremendous impact on bottom line. Experts say that to replace one person who leaves with knowledge and experience costs form ½ to ¾ of that positions pay in recruiting costs and lost productivity. HR determines what is an excelling employee, works to retain the excelling employee, and to understand and measure the costs to keep those employees.

HR is well positioned to determine what is needed and to measure what type of work force is needed for the business plan, the associated costs and then the cost of poor hires, poor performance, lost performance etc.

Call us to help you not only setup HR programs but also the ROI metrics that can help understand the correlation between manpower and profit.