Measuring return on investment in HR

Abstract

Purpose

During difficult times in the economy, nothing is more important to top executives than knowing the true value of a particular project or program. “Show me the money” has become a battle cry for many executives demanding that any new HR project or program shows its value even before it is implemented and, certainly, the impact and return on investment (ROI) after it has been implemented. This article describes the ROI methodology, a measurement process developed almost 30 years ago and refined over the years to the point that it is now becoming a staple for many HR functions.

Design/methodology/approach

Around the globe, HR executives are taking a look at the ROI methodology process as a way to show credible values, including financial ROI. The process is executive friendly, user friendly and almost always passes the test of very critical researchers and professors. This article describes why and how it is being used to show the contribution of HR programs, improve programs so that they add more value, build support for HR, enhance commitments and solidify important business relationships.

Findings

This method can be used to show the value of major programs and projects and establish HR a business partner.

Originality/value

With the ROI process, the HR staff and the client will know the specific contribution of an HR program. Measuring ROI is one of the most convincing ways to earn the respect and support of the senior management team – not only for a particular HR program, but also for other HR projects.

Citation

Phillips, J. and Phillips, P. (2009), "Measuring return on investment in HR", Strategic HR Review, Vol. 8 No. 6, pp. 12-19. https://doi.org/10.1108/14754390910990946