Getting a return on people programmes
Can you truly measure the value of HR and Training programmes? Andrew Mayo describes the challenges of assessing the return on investment in people-related programmes and considers how this intangible can be measured.
The return on investment (ROI) made in people-related programmes, such as HR projects and training programmes, is notoriously difficult to assess. Whereas investment in IT or quality can normally be targeted as cost savings or measurable customer benefits, the objectives of many HR programmes are more diverse. Some indeed are undertaken more as an 'act of faith', an intuitive belief that the programme will benefit the business either short or long term but with the knowledge that it cannot be directly proved.
The heart of these acts of faith is a belief in a chain of cause and effect that will eventually lead to a bottom line benefit. If there is only one link in the chain, the task is relatively easy. However in the HR area this is rarely the case. The immediate objectives are often not financial. Each link in a chain brings contaminating factors, ie other influences which dilute the effect of the original intervention. To evaluate any return that is at least credible financially, we not only have to establish realistic links but also to be skilled at assessing the financial impact or otherwise of non-financial benefits along the way.