How to identify the ROI of human resources

Author: Robert Jeffery | Date: 18 May 2016

HR Summit Hong Kong hears ideas for helping leaders understand their investment in people

HR professionals understand that investing in people brings both long-term financial reward and a more productive culture. But explaining and quantifying this, particularly to senior leaders, can be more of a challenge.
At the inaugural HR Summit Hong Kong at the Hong Kong Conference and Exhibition Centre, a panel of HR practitioners and experts wrestled with the issue – and came up with some original, practical suggestions.
“When I present business results, I look for correlations. I can show a business area that has invested in people and has got financial results [from that],” said Bianca Wong, group HR director of manufacturing and logistics business Jebsen.
For Ivy Lau, head of talent engagement and co-owner of Hong Kong Broadband Network, productivity per person was a key measure: “I can’t put a [definitive] equals sign there, but there is a correlation. It’s important to plan carefully what you are able to measure.”
Both agreed it was important to identify what mattered to leaders, and put HR interventions in place to support their aspirations – and ensure HR is credited for the results. “Find the things business leaders want to do, and help them do them,” advised Wong. “If they can say ‘HR helped me build a talent management platform and now I have my successor in place’ they will spread the word. Credibility in business is based on solving problems for other people.”
She added that using the language of risk management was a more effective way to present people issues to leaders than trying to frame it in numbers. Discussing the risk of not hiring fast enough, or not hiring the right employees, would quickly focus attention.
HR also needs to demonstrate it is targeting investment sensibly, and Lau suggested it was far more powerful to target L&D initiatives at those who proactively wanted them. “I cancelled our entire corporate learning curriculum this year,” added Wong. “[When I did that) all of a sudden I got emails from people telling me they would benefit from training, and of course we do train those people. But I also have a lot of money left in the budget to spend on highly customised training such as leadership development.”
While the panel generated plenty of intriguing ideas, Australian coach and trainer Michelle Loch sounded a note of caution, pointing out that HR investment could only help those who wanted to learn and develop. “I’m prepared to invest in myself, but a lot of people won’t do anything for themselves,” she said. “If individuals don’t value themselves enough to invest in their wellbeing, we have a problem.
“I often go into companies as a trainer and half the people who are there shouldn’t be because they don’t want to be there. The ROI there is very low.”