Calculating HC ROI Productivity Using Employers Own Financial
- Slides: 7
Calculating HC ROI & Productivity Using Employer’s Own Financial Statement Information HR Specialty Products & Services Catalogue Executive Summary A No Frills Distillation of Vendor’s Marketing Collateral Thomas A Ference President & CEO Human Resources Mining & Distribution Co Locating, Validating and Accelerating HR Innovation Office: 219 -662 -0201 Cell: 630 -240 -2583 Fax: 219 -661 -0236 e-mail: tference@hrmdco. com Website: www. hrmdco. com
Calculating HC ROI & Productivity Using Employer’s Own Financial Statement Information • Other HR metrics are only tactical in that they measure HR “efficiency” which lacks true C-Suite credibility • These 5 years-in-the-development, Wharton School-based strategic level metrics measure HR’s “effectiveness” in contributing to bottom line • Metrics include HR ROI, Productivity and Liquidity • Can be developed for any Business Unit that is supported by segmented financials • Can overlay tactical HR metrics in the areas of Talent, Rewards, Culture and HR Services to determine where HR should focus efforts to improve HR ROI and thereby stakeholder value • ROI for this service will depend on each employer’s facts and circumstances
Human Capital Investment vs. Financial Capital Investment Source: Boston Consulting Group
Patented Formulae • HC ROI = EBITDA – Financial Capital Costs Human Capital Investment • HC Productivity = Revenue – Material Costs HC Costs + FC Costs
HC Productivity vs. ROI by Business Unit
Turning HR Tactics into HR Strategy Human Capital Strategic Priorities High HIGH/LOW HIGH/HIGH § Appoint an EB NPL & RPLs Strategic Significance with accountability and authority Low • Revise HC investment allocation strategy § Revise & align incentive compensation § Develop a new performance management program § Develop a comprehensive professional development program § Create & staff regional “Centers of Excellence” § Restructure base compensation system LOW/LOW LOW/HIGH § Create uniform job descriptions Resource Commitment (People, Time and Money)
Next Steps • This product/service is contained in the HR Specialty Products & Services Catalogue™ • Operational level details about this particular service provider can be obtained in conference with the vendor • The HR Mining &Distribution Co. is an independent and contracted representative of the vendor • Upon your request, we will arrange for an introduction that can range from a simple, quick conference call to a services overview / system demo • Tom Ference 219 -662 -0201 (Chicagoland area) or tference@hrmdco. com • Thank you for your potential interest in this fresh thinking
