James HolincheckJon Ingham had an interesting post on the “Return on Human Capital”. I agree that value chain analysis can be useful to create a linkage model that connects individual attributes (manager and employees) to business outcomes. I am also a believer in a testing that linkage model against the actual data from your company to determine if the linkage is truly there. I do not have as much of a problem as Jon does with the notion of calculating ROI. I agree that ROI can obscure some of the qualitative value of HCM investments (as in the example of Learning metrics discussed). However, my bigger issue is that HCM investments, as they are typically presented to C-level executives, have a much worse business case than proposed investments from other parts of the organization. It does not need to be that way. Too many HCM investment business cases rely on “soft” savings such as effort reduction (e.g., a manager will spend 50% less time creating a performance review) or “hard” savings such as reducing paper, printing, and distribution costs (which are not typically large savings). There is not enough focus on the impact on business outcomes as associated metrics. The business case, especially for talent management, should be on how talent management can be used to increase customer satisfaction, grow revenues, support growth into new markets, and more. With the right linkage models, supported by the right data, the ROI for HCM investments can be quite compelling.
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Category: Human Capital Management Talent Management Application Suites Workforce Analytics Tags: HCM, talentmanagement
