HR Contribution Indicator

Have you ever found yourself in the position where you had to justify what you do? In the big picture, can you show how HR benefits the company? Can you point to specific figures and say "I helped the company save "x" amount of dollars?"

If you can't do so now, you may find that you need to at some point in the future. You will want to be ready. So, where do you start? By identifying what you do, measuring what you can, and assigning a dollar value to it.

For example, say you recently read that hiring people who fit into your company culture results in dramatically lower turnover rates and higher profitability for businesses. You want to test out this theory and find out if a change in your hiring procedures to take culture into account will have an impact on your retention rate.

Define the measure
To determine if making such a change would work, you modify your hiring process to include information about your company culture at the outset, and work some questions into candidate interviews designed to help you discover whether a candidate would be a good fit in your organization. After implementing this initiative, look at your retention rate (the flip side of turnover rate) at one year for the employees hired under this system, compared to the one-year retention rate for employees hired prior to this system, and see if there is improvement. If there is, assuming you can rule out other factors, it just might be because you hired the right people for your organizational culture.

Break it down
A higher retention rate gives you a number, but it doesn't break it down into dollars and cents. However, if you estimate that every position you fill costs 1.5 times the salary of the open position, you can multiply that number by the number of positions you didn't have to fill, to give you a quantifiable dollar amount. For example: You filled six fewer positions after the new initiative, each one at a replacement cost of $30,000. This adds up to $180,000 you saved the company in costs not incurred to replace personnel due to the new initiative. You have just justified what you do in bottom line terms.

Keep score
You can keep a "scorecard," which will show how you rate on a number of initiatives, and will identify if these initiatives are working as desired to save the company money. You can update the scorecard quarterly to keep track of your progress throughout the year. The scorecard is something you can present to your superiors that will give them a snapshot view of the value you bring to the organization. It is well worth the effort.