When you put time and effort into something, you want to see results. And, ideally, you want tangible ways to measure outcomes to know whether your investment was worth it.
In the latest installment of the #TorontoHR Meetup series, we offered a tactical, practical argument for why HR professionals should have the same appetite for data as their colleagues in marketing, the vanity metrics to eschew and what’s actually worth measuring whether you are new to your role, budgeting for next year, struggling to retain talent or enjoying a growth spurt.
Where are you pouring your dough?
Why is it so important to have data-driven insights into the ROI of your employee programs? For starters:
- For most organizations two thirds of your annual operating budget is spent on people
- 80% of what makes your company valuable in the first place lies intangibly in the people you already have
- It’s 3 times as expensive to replace an existing employee as it is to hire a brand new one
Consider also a recent Gartner study that revealed that companies spend up to 2% of their salary budgets on reward and recognition programs. Even for small businesses, that's a lot of cash over time. Workers are certainly worth investing in - they are the heart and soul of your organization, after all - but if your initiatives aren't actually motivating and inspiring team members, you're not investing in employees. You're just spending your budget on gadgets and other prizes.
In fact, the same Gartner study found that very few of these reward program investments actually achieve results. Perhaps if HR professionals had access to some meaningful data, they'd realize that they've been throwing their money away.
Benefits of an invested workforce
There are a lot of studies that point to the benefits of an invested workforce. The Gartner report referred to data from Gallup demonstrating that companies with engaged workers enjoy:
- 21% higher productivity
- 22% higher profitability
- 41% higher quality
- 48% fewer safety incidents
- 37% reduced absenteeism
The market numbers are compelling, but as a one of our attendees shared, when it comes to measuring things - and there’s a ton to measure - context is critical.
This really means a couple of things:
- First - while we all have appetite for how we compare, the benchmarks that matter most are your own. So whether you are measuring engagement, turnover, performance, or sick days, it’s important to establish a baseline, do something and then measure again!
- Second - you need to connect the things you measure to a KPI that drives performance for your business. As an example, if you monitor engagement, do increases in engagement drive revenue attainment? Reduce turnover? If you rely more frequently on a measure like eNPS, are the promoters of your brand your high performers or those that are likely to be ushered out of the business?
As the perception of HR evolves from one that is process driven to one that is more strategic, it’s essential for leaders to be empowered with the right data and information to ensure they have a role to play in driving performance for their business.
Don't miss the next #TorontoHR Meetup on September 20th to learn tips for bulletproofing your HR budget. We're doing it Dragon's Den style where you'll have the chance to pitch your HR project ideas to Doxim's Founder and CEO, Chris Rasmussen. Save your seat below!