There's Just No Accounting For HR

Posted on 5th October, 2009

If, as an HR professional, you cannot show the genuine, tangible, pounds, shillings and pence value in whatever you are proposing, you have failed.

 

It really is as simple as that.

 

The best HR people I know unashamedly measure themselves - in the way, let us be honest, that everyone else in an organisation is supposed to - against the bottom line.

 

Want to spend £50k on an employee engagement exercise? Fine. Show me how it will translate into a better bottom line.

 

Want to spend £100k on diversity training? Great. And how will it improve productivity or profitability?

 

For as long as HR professionals cannot answer that simple question then they will always, without exception, be seen as cost centres. Because, in the absence of being able to prove their value, that is precisely what they are.

 

It is not enough simply to assert that the latest scheme or idea you have picked up on the HR grapevine will necessarily, by definition be a 'good thing' for your business.

 

You need to show me.

 

I know of one HR director who takes management accounts to each board meeting he attends, and demonstrates the impact that his schemes have (or have not - they are not all successful) had on the P&L and balance sheet.

 

And guess what? He can pretty much name his own salary as a result.

 

Talking about commercial HR, value-add HR or whatever else you want to call it is meaningless if that is not what you are delivering.

 

As Stevie V. said, money talks.

 

 

 

 

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Comments (2)

Hi Nick - I agree with your post, the examples were useful in highlighting where HR can add more value. HR needs to be close to the numbers, making a business case for change initiatives. The business case needs to refer to current organisational goals and specifically demonstrate how this initiative will help achieve those goals. Increasingly HR leaders need to understand the cost drivers of HR itself as every department needs to demonstrate its value and justify its funding....Andy
I agree wholeheartedly that metrics are essential for HR to justify itself, but disagree that financial metrics are the only answer. There are other ways of tracking HR's impact: for instance, I recently heard about one professional services firm that tracks a direct link between engagement of employees working on a client team, and that client's sense of engagement to the firm. The more engaged the employees, the more engaged the client -- a good rationale for employee engagement initiatives, then. Ultimately that's going to lead to deeper partnership and increased revenues, however it's not necessarily expressed in financial terms.