Article: Scrooge’s epiphany – Low HR investment equals low ROI

HR can sometimes be forgotten when CEOs and executives talk about revenue growth, profitability and better performance management. Yet, people are central components of many organisational KPIs.

The question that directors and CEOs should be asking is how they can align staff members with their overall organisational objectives. To accomplish this, CEOs could start by defining HR practices that will benefit the long- and short-term business strategy you have put in place. 

Top down still the way to start

There has been a recent trend in recruitment to build the company’s ’employer brand’ in the same way marketer’s traditionally approach corporate branding. While this is great for your public relations, it can also translate into better business performance.

A study from the Centre for American Progress found that the cost of replacing a worker is over 20 per cent of their annual  salary. The cost of turnover includes productivity losses, expense of hiring, training and the time lost to onboarding.

To achieve a strong employer brand, a CEO needs to achieve several requisites. The first, and most important, is clearly defining achievable goals. Objectives create a sense of purpose in employees that can help drive them forward.

Yet, goals need to be measurable and thus easily communicated or else they risk failing to achieve their intended purpose. 

How to measure your return on investment?

As all CEOs know, measuring return on investment depends largely on the goals and objectives that form an organisation’s strategic plan. 

“Measurement is one thing, what you measure is another,” says Jim Harter, Gallup’s chief scientist of employee engagement and wellbeing. “You can measure a lot of things that have nothing to do with performance and that don’t help a company implement a system that allows managers to create change.”

However, if you can clarify you business objectives and couple these with HR processes, a company can enhance its ability to hit its internal KPIs.

For instance, if growth is desirable, your recruitment specialists can identify and aggressively recruit personnel with the skills and experience required to fill future roles. However, if your organisational goals include market share consolidation, employment retention will be an important metric. 

Yet, for this to be a success, it relies on a CEO to invest the time and capital into their HR department – CEOs must be supportive of their organisation.

If you would like to know more about the ways you can help ensure your HR processes are properly aligned, talk to Strategic Pay today

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