By Joel Shapiro, Ph.D

The field of HR metrics is booming: there is now a glut of ideas, experiments, approaches, paradigms…and solid research. Several issues of BC HRMA’s own magazine People Talk have been dedicated to HR metrics. At the bottom of most of these discussions is the question of value: What value does HR create for organizations, and how do we measure that value?

This is a business issue and not merely an HR issue. All leaders today must be HR managers in the sense of proactively managing the human resources on their teams. Leaders in all functions and at all levels are responsible—whether they like to admit it or not—for employee attitudes, behaviour, and performance; for ensuring they have the talent they need to get the job done; and for ensuring that their talent is appropriately deployed, engaged, developed, and retained. And of course, conversely, HR professionals need to be business people with a passion for HR, rather than HR people with knowledge of business.

Clichés like “People are our most important asset” have been around for decades. The challenge is not that we don’t know how or what to measure—because we do; or that sufficient data demonstrating the value of HR does not yet exist—because it does.

We already know from both experience and research that solid HR management practices and programs—depending on how they are designed and deployed—positively impact:

» Employee engagement, focus, and effort

» Employee productivity and work quality

» Safety (fewer accidents)

» Employee attendance and loyalty/retention

» Customer service, satisfaction, and loyalty/retention

» Organizational alignment (teamwork versus turf wars), efficiency, and effectiveness

» Profitability, margins, and growth

» Stock price, P/E multiples, and market capitalization

In addition to the many “generic” benefits listed above, HR programs often also have a list of primary or targeted objectives that reflect the unique challenge or opportunity being addressed. (See Metrics: The Language of Business for a list of many possible “primary” benefits of leadership development—merely one practice area of HR.)

Solid HR programs usually generate multiple benefits simultaneously, and astonishingly, a few mere secondary benefits can often more than justify the value of the entire investment, i.e., establish sufficient and impressive ROI data.

The value and benefits of HR are so well documented now that one must ask why we are still talking about “making the case.” Given all of the evidence and general consensus amongst business leaders that employees are strategically important assets (if not the most important asset), why is it so difficult to free up funds for investing in human capital?

Here are a few useful questions that HR professionals can use when building a case for investment in Human Resource Management:

1. To what extent do I really understand the value of my HR work (my value-added) in both quantitative and qualitative terms, and capture that value in a “balanced HR scorecard”?

2. Do I maintain—and communicate—a clear line of sight from HR programs to concrete business objectives?

3. Am I monitoring and measuring the impact of my work, and building a track record of internal cases I can refer to?

4. Am I educating our leaders on the value of HR, best practices, and advances in the field?

5. Am I engaging leaders in identifying and assessing the financial impact of their biggest people challenges and opportunities (current and imminent)?

6. What are the potential benefits of each particular intervention and what are the risks of doing nothing or of under-investing in these areas?

7. Strategic alignment & results: Is my HR work helping my organization achieve its vision, implement its strategy, become a more efficient, effective, and competitive organization, and prepare for coming challenges?

8. How sophisticated are the decision makers with respect to human capital management; how do they make their decisions and what kind of information (type, format, detail) do they find most helpful for decision making?

9. Am I finding common ground with the business leaders; tapping into their issues, needs, and concerns; addressing and leveraging their beliefs and values about what makes organizations successful; and using their language to build and communicate my cases?

10. Are business leaders engaged in and held accountable for managing talent? And am I holding myself accountable for results by reporting back to business leaders on my progress to plan?

This short list of questions already helps us see that “making the case” is not a one-off event, a one-time sales pitch, or a singular act of persuasion. Making good cases occurs in the context of a longer term strategy of helping the organization achieve its strategic objectives, educating the organization’s leaders, and building solid, functional, collaborative working relationships with those leaders—our valued business partners.

Joel Shapiro, Ph.D., is the President of Adventure Consulting and has 14 years experience as an HR executive, consultant, leadership educator, and executive coach. Joel helped save his family business (www.newswest.ca) in a six-year “do or die” competitive battle against a giant multinational firm, and subsequently designed and facilitated 30+ leadership and organizational development programs for more than 40 client firms.

Shapiro presented Building a Business Case: Making the Case for HR in Surrey on January 21, 2010. For more information on this and other professional development opportunities, please refer to BC HRMA’s online calendar.