How do you quantify the ROI that HR brings to your organization?

1st person to respond to

Theresa Woods

 

Hello Professors & Classmates,

In your organization, is HR viewed as a cost center or a moneymaker?

In my organization, HR is a moneymaker. HR has implemented new strategic decisions that have driven profit and growth in the organization. We have to keep in mind that an organization needs individuals, no matter what the business is. Human capital is the driving profit within an organization. Without dedicated employees working in the right places in an organization, it often becomes lost. Also, employee development and training are crucial for profits and productivity.

How do you quantify the ROI that HR brings to your organization? 

HR of any organization, not just my organization, needs to properly plan and put into using different strategies and make sure that the strategies bring out the best possible results to the ROI of HR. HR can promote these strategies by setting up concrete goals, motivating employees to perform better within their positions, implementing automated systems that target and track attendance, payroll, evaluations, annual leave, and sick. The concept to keep in mind is to create innovative ways of maximizing ROI in HR.

Are the performance metrics in HR aligned to the metrics of the organization?

The most critical aspect of any organization is to define the goals and objectives and adhere to them as much as possible. Monitoring or having a clear view of performance as a team and employee-centered metrics is essential to the overall success of an organization.

References:

Patrick Proctor. Dec 9, 2020. 17 Important HR Metrics and How to track them.

Bedwell, N. (2019, April 18). Council post: Is human resources your next profit center? Forbes. Retrieved October 27, 2021, from https://www.forbes.com/sites/forbesagencycouncil/2019/03/07/is-human-resources-your-next-profit-center/?

sh=32604c307d90.

Contributor, C. (2021, March 5). What is a return on investment in human resources? Small Business – Chron.com. Retrieved October 27, 2021, from https://smallbusiness.chron.com/return-investment-human-resources-45590.html.

2nd person to respond to

Angela Sickler

 

Hello Professors and fellow students

Return on Investment (ROI) of an HR department.

In your organization, is HR viewed as a cost center or a moneymaker? HR is considered a cost center for the organization referenced in the weekly discussions.

How do you quantify the ROI that HR brings to your organization? Give two specific examples of the positive return.  Current state  HR ‘s ROI is not measured. However, as a sales and staffing organization, HR could undoubtedly change that.  The pandemic presented with the perfect opportunity to turn HR from a cost center to a profit center. Overwhelmed hospital staff would have welcomed additional support in the healthcare staffing sector. Peers often interview physicians and other medical professionals in leadership roles. Medical staffing organizations often have access to or employ former Director of Nurses or Chief Medical officers. Suppose the organization offered to take on the task of interviewing in addition to current client service processes completed as part of the onboarding to a facility. Delivering this service for free during the pandemic as a goodwill effort and test run for the organization could turn into an additional service line post-pandemic. Those conducting the interviews would fall under the leadership of HR for legal and employment reasons.

Adding this service line to HR would give HR value from the sales perspective of the organization, provide HR with data that would represent both corporate and temporary staff. ROI for corporate staff only includes administrative staff and leadership currently. Sales are included but do not hold as much weight as other teams due to their employment contingent on hitting their numbers for the first six months.

Are the performance metrics in HR aligned to the metrics of the organization? If yes, explain how. If not, explain how they could be.

Performance metrics in HR  are not aligned with the metrics of the organization. Organizational performance metrics are centered on increased market share and perdiem, locums, and travel nurse bookings with the least cost to the organization.

According to a former colleague, HR performance metrics are to fill open positions with people that meet minimum qualifications.  I asked the colleague a few questions regarding the relationship between talent management and profitability (1). The questions asked and the summarized responses are below.

• What does the hiring process really cost?  You factor in the salaries, background checks, and onboarding tasks between $5000- $8000, depending on the position.
• How much more are your top performers worth than your average performers? Salaries are non-negotiable for corporate employees new to the staffing industry.
• What are your competitors paying?  Most competitors pay better and consider the prior experience and educational expertise in the salary.
• What is the right relationship between bonuses and performance? Bonuses are only applicable to those the company determines impact revenue. This includes all senior leadership positions, DVP, RVP, managers, directors for the administrative support teams, implementation, sales positions, recruiters, marketers, and account managers.  Bonuses are all or nothing; if they do not meet the team or individual goals, they are not eligible for a bonus.  I asked if a bonus is paid if goals are met, but the overall performance is not up to par.  Per the colleague, performance is tied to numbers and goals, not the quality of work; it is implied that hitting your goals means meeting performance requirements.

Thank you

Angela

Reference

1, Week 4  JWMI Lecture notes