Making the business case for any Human Resources activity or investment can be challenge. Often, HR comes under cost pressure, even though for many organisations its entire costs are just a few percent of the entire business overhead.
The extent to which you come under cost pressure is often directly linked to the value placed on the activity itself. Where HR is not valued, it will be starved of resources, financial and otherwise.
Here’s the problem: some of the people stuff is very hard, if not almost impossible, to show a neat Return on Investment. Much of the people stuff doesn’t appear to be business critical in the short term – which can make it so easy to cut. When businesses find themselves in difficult times, the first thing to disappear is usually the learning and development budget. Usually, if you stop developing people, the impact in any given financial year is negligible. It only shows itself over the longer term, when people start to leave or when skills start to become out of date, but this can be three or four years down the line.
Equally, when you do make investments in these areas, the return on investment is long term too. If you send a manager on a leadership development course, and as a result they become better at managing their people, how do you evidence this? It may only show up over a lengthy period.
If you are struggling to make the case for HR at your place, here are some thoughts from us.
However you choose to present it, by written document, verbal presentation or even some PowerPoint, there is standard stuff you need in a business case every time. We’d always include:
• An overview of your proposal with an executive summary (newsflash: most people will just look at the executive summary before deciding whether or not to read the whole thing).
• A statement of the current problem that you are proposing to address.
• An analysis of the costs and the potential benefits – both financial and non-financial.
• Consideration of the options and the risks, including the risk of doing nothing at all.
• The decision that needs to be taken.
• Evidence where appropriate.
As we’ve said, evidence can be tricky for some areas of HR. But that doesn’t mean that there isn’t any. First of all, let’s take productivity. The UK has something of a productivity problem; it is stagnating. We lag behind other EU countries and the US and Canada. The prevailing wisdom, certainly in the HR circles that we move in, is that happier people produce more; a view that has also been supported by academic research. However while this argument is seemingly happily accepted amongst most HR practitioners, it may be less attractive to some of our colleagues and managers. So you can make some assumptions about how you might increase engagement, productivity or even people’s attitude to their work. Just be careful to keep them reasonable or risk reducing your credibility.
When it comes to benefits, it might be that your proposal is about saving cold hard cash. Excellent if it is; that is sure to make the eyes of any Finance Director light up. But savings might also mean time too. If you automate something, how much time in total is it giving back your employees or your line managers to focus on their day job instead? As well as savings, what can you increase or improve?
Recommendations for making the HR business case:
• Don’t over promise and under deliver.
• Identify early on who your key stakeholders are – who do you need to influence, who do you need to help understand why? Understand the audience. What is in it for them? You need to tell/sell them the story and the solution.
• Give some consideration to who is likely to disagree, be cynical or resist your suggestion. Work out what your responses will be to their objections and have them ready.
• If you get a yes, get on with it, but measure your outcomes, results and changes, and update those who made the decision.
• Try to include a mixture of hard measures including data, but include some softer ones too around feelings, engagement, attitude and culture. If you can’t measure them accurately, say so.
• If you have useful sources of external data, use them.
• Use internal sources of data too – time spent on activities, turnover, absence data, employee referral rates, recruitment agency costs – you might have more than you think.
• Keep your formal document or presentation free of HR jargon.
• Include a timeline for both the project and the realisation of benefits.
• Always, always, link your proposed HR investment back to the overall business objectives and goals.
Role of Human Resource In Organization. Human Resource Management.Practical guide to Human Resource. Human Resource Definition.Human Resource certification.Human Resource employment
Role of Human Resource In Organization. Human Resource Management.Practical guide to Human Resource. Human Resource Definition.Human Resource certification.Human Resource employment
Role of Human Resource In Organization. Human Resource Management.Practical guide to Human Resource. Human Resource Definition.Human Resource certification.Human Resource employment
Role of Human Resource In Organization. Human Resource Management.Practical guide to Human Resource. Human Resource Definition.Human Resource certification.Human Resource employment
Role of Human Resource In Organization. Human Resource Management.Practical guide to Human Resource. Human Resource Definition.Human Resource certification.Human Resource employment
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