Investing in People: Financial Impact of Human Resource Initiatives

A Logical, Proven Framework for Understanding the Economic Value of Human Resources Investments *How to choose Human Resources investments that deliver optimal strategic value--and eliminate those that don't *Best-practice metrics and analysis techniques for talent management, performance management, health and wellness programs, and much more Investing in People introduces a breakthrough approach to Human Resources (HR) measurement that systematically aligns HR investments with organizational goals and helps make HR the true strategic partner it needs to be. Wayne F. Cascio and John W. Boudreau show exactly how to choose, implement, and use metrics to improve decision-making, optimize organizational effectiveness, and maximize the value of HR investments. You'll master crucial foundational principles such as risk, return, and economies of scale--and use them to evaluate investments objectively in everything from work/life programs to training. Cascio and Boudreau also introduce powerful ways to integrate HR with enterprise strategy and budgeting and for gaining commitment from business leaders outside the HR function.If you truly want "a seat at the table"--or if you want to keep the one you have--you'll find this book utterly indispensable. Free software available online You don't need to be a math wizard to get results from Investing in People! Visit www.shrm.org/publications/books to access software that automates virtually all of this book's key formulas and calculations.Foreword xi Acknowledgments xiii About the Authors xiv Preface xv Plan for the Book xvii Chapter 1: Making HR Measurement Strategic 1 Chapter 2: Analytical Foundations of HR Measurement 21 Chapter 3: The Hidden Costs of Absenteeism 43 Chapter 4: The High Cost of Employee Separations 67 Chapter 5: Employee Health, Wellness, and Welfare 99 Chapter 6: Employee Attitudes and Engagement 125 Chapter 7: Financial Effects of Work-Life Programs 151 Chapter 8: Staffing Utility: The Concept and Its Measurement 171 Chapter 9: The Economic Value of Job Performance 195 Chapter 10: The Payoff from Enhanced Selection 223 Chapter 11: Costs and Benefits of HR Development Programs 245 Chapter 12: Talent-Investment Analysis: Catalyst for Change 271 Appendix A: The Taylor-Russell Tables 285 Appendix B: The Naylor-Shine Table for Determining the Increase in Mean Criterion Score Obtained by Using a Selection Device 297 Index 309

Susan R. Meisinger on Investing in People: Financial Impact of Human Resource Initiatives

"If you can't measure it, you can't manage it."

It's a lesson I learned more than twenty-five years ago, as a young manager, from one of the most effective executives I've ever worked with. More importantly, I also learned that "measuring it" wasn't enough. What's measured, why it's measured, and how the measurement is used to drive outcomes are what really matters.

As the human resource (HR) profession has continued to evolve beyond transactional responsibilities, many HR professionals have embraced the fact that technology enables them to collect and analyze data efficiently and in ways never before possible. They've discovered that the ability to analyze, measure and articulate HR's contributions to organizational success allow them to make even greater contributions within their organizations. They're using measurement to invest in people.

But many HR professionals aren't agile in the use of measurements to move their businesses forward. Some simply don't know where to begin or are still looking for the "one true way" to measure—or are asking, "just tell me what to measure and what the number should be." They are thirsty for an analytic framework that underlies the whole issue of measurement.

The mission of the Society for Human Resource Management (SHRM) is to serve the HR professional and to advance the HR profession. As you read this book, I think you'll find that Investing in People shares this mission. The profession will be well-served by the tools and analytic frameworks for the use of measurement provided by Wayne Cascio and John Boudreau. The observations offered by the authors on how best to "get started" in using measurements to inform and motivate strategic partners to think more clearly about the implications of decisions about talent will also serve the HR profession well. By basing their work on a foundation of solid scholarship and practice gained through their academic and consulting experiences, Wayne and John help to advance HR as a profession that is recognized as a decision science requiring special knowledge and expertise.

—Susan R.Meisinger, SPHR
President and Chief Executive Officer of the Society for Human Resource Management