Forbes, July 24, 2023, By Dinesh Sheth
Human resources departments play a key role in facilitating several aspects of business: planning, hiring, training, career development, retention, compensation, benefits administration and compliance. Despite all these responsibilities factoring into a business's bottom line, quantitative measures of the returns on HR investment can be challenging to capture.
During economic uncertainties, and the resulting increased attention on the bottom line, some executives see HR departments as a cost center. But these teams significantly impact profitability in qualitative ways, such as their effect on employee happiness, engagement and satisfaction. HR leaders must proactively access, analyze and report on both qualitative and quantitative metrics to ensure they remain sufficiently staffed to improve employee engagement and demonstrate their resource allocation is where it needs to be. In particular, gathering and sharing data on benefits package utilization, efficient resource allocation and employee engagement will help HR better serve both employees and employers.
So how do you define, measure, analyze and share your ROI as an HR leader? Here are some key areas and strategies.
Support Better Decision-Making Around Benefits
HR leaders in the executive suite bring enormous value to their organizations when they can support their decision-making with data. Not only can they provide better evaluation for the effectiveness of existing total compensation, including benefits offerings, but they can also incorporate measurements to determine how various parts of organizations are performing and how they compare in a competitive marketplace.
To provide a better understanding of large benefit package costs, for example, you can share engagement analysis from usage rates of benefits like medical plans, physical and emotional wellness programming, surveys or health outcomes. You can also report on how existing wellness initiatives are impacting employees.
For example, at the start of the pandemic, there were notable increases in mental health resources, childcare benefits and/or investment in remote workplaces. While well-received and popular among staff at the time, there's a chance that some of your expanded options are no longer desired or needed. Therefore, you can determine whether your offerings are producing the necessary ROI to justify the investment.
By analyzing usage data, your HR team can help leadership better understand the benefits employees seek, which will improve decision-making while keeping costs in mind. You'll be able to right-size the benefits package and focus on what drives productivity and success within your organization.
Identify Key Opportunities For Improvement
Through analysis and reporting, you can identify areas for improvement in company-provided services, benefits and policies. Being able to assess the ROI of programs and analyze usage data will help tailor and customize your company's unique services and benefits. Conducting one or more anonymous surveys through a digital platform enables you and other executives to learn what's important to employees, what services and benefits they want, which ones are most effective and which ones generate the least interest.
HR leaders can also use data to take a temperature check of the workforce, inquiring about work-life balance, trust, team-building and other areas that need to be monitored. By assessing survey results, you can identify new opportunities to better engage with employees and add touchpoints throughout the organization. Surveys improve leader transparency, increase employee trust and demonstrate the impact and active role your team plays in employee engagement. Remember to follow up and report back on lessons learned and changes based on past surveys that have allowed you to be more effective.
Improve Employee Engagement And Satisfaction
Employee engagement, hiring and turnover reduction are some of the primary goals for HR leaders. Unfortunately, workplace engagement has been difficult to develop given the events of the last few years. A recent Society for Human Resource Management workplace report found that employees feel disengaged and will continue to feel disconnected well into late 2023. This will likely be due to the aftershocks of the Covid-19 pandemic, turbulent economic and geopolitical conflict and burnout.
Considering these shifts, your HR team should use specific tactics—such as gathering employee engagement data by age group, work group or work location or evaluating the effectiveness of their communications-to self-assess how their communications tactics are working. You can also encourage employees to use company-provided services, benefits and communication channels to the fullest.
Let's say that engagement with preventive screening is low. You could consider adding new communications and user touchpoints via a mobile app to remind employees to access personalized tools that will improve their happiness and health outcomes. By supporting and prompting people who haven't seen a primary care provider in the past few years, you'll help employees and help the organization lower costs related to sick days and other health-related consequences.
Additionally, as an HR executive, you can better communicate the importance of and access to benefits, reminding and encouraging employees to take the time they need to focus on their health so they can come to the workplace recharged and ready. Tracking engagement data enables you to understand employee preferences, tailor benefits packages to meet employee needs and expectations and enhance employee satisfaction by addressing gaps in benefits coverage. When you can share workforce engagement rates with other leadership, they can see the firsthand value of the HR department.
HR Data Reporting Is Vital
Seeing is believing, and reporting demonstrates the importance of your work and the difference it makes to your organization. One of HR's key roles is helping to improve employees' physical, mental and emotional well-being, and when a workforce is happier and healthier, productivity and retention increase. From a leadership standpoint, clear and accurate ROI emphasizes the importance of your work. So you need to share this impact with other executives to highlight the importance of long-term investments in people. By establishing regular reporting practices to fine-tune and identify new opportunities to engage employees, you can show-not tell-the value of HR.