Dr. Brett Richard, Manager, HR & Organizational Effectiveness, Sasol
Q: Why is ROI important for HR Leaders to Consider?
A: Challenging the HR Community to think in terms of ROI specifically focuses on how Energy HR Leaders are using ROI to show senior executives and other stakeholders the value of human capital in today?s marketplace. If HR Leaders are not considering ROI surrounding their programs during this challenging cost containment environment, then they are at risk for losing key initiatives and programs for a variety of areas.
HR Leaders must be cutting edge to be effective for today?s marketplace, and learning how to establish and prove ROI is an important skillset to stay at the forefront of this industry.
Q: What is the key first step in building the ROI case?
A: There are two primary steps that should be taken for each program that you want to apply a ROI case to improve or save the program.
The first step is setting the stage with management and creating the value proposition.
Preparing/Creating the Value:
? Getting buy-in and persuading senior management
? How to structure an ROI program for maximum effectiveness
? Understanding the value that senior management places on various programs
? How to extract the specific value propositions that will make an ROI analysis effective
Q: How do you isolate the ROI for a specific program?
A: The isolation step involves determining the specific metric that will help the HR Leader to establish ROI. Without this metric the case cannot be calculated and measured.
Placing a Metric that can establish ROI:
? Identifying the primary metric
? Calculating the effect of a measurable program
? Numerous ways you can calculate ROI- not every method works for each program
? Controlling the variables and understanding challenges or flaws in the ROI process
Q: Which types of programs work well with establishing an ROI case?
A: The ROI analysis can be used with almost any program that allows the HR leader to establish a primary metric and then calculate the effect of the measurable program. However, not every method of calculating ROI works for each program. This has been used effectively with training programs, benefit programs such as day care or wellness have also been showcased with an ROI analysis.
How Big Data and Analytics can REALLY be used to establish and grow your HR programs.