As we discussed in our last Human Capital ROI (HCROI) post, human capital is arguably the most important investment you make when it comes to your business. For this reason, employers use a baseline metric like HCROI to easily consolidate and measure workforce productivity. In many ways, it evaluates the success of your hiring, training, and workforce management efforts.
In part one of this series, we discussed the benefits and formula for calculating Human Capital ROI. If you need a refresher, check out “Why and How to Measure Human Capital ROI: Part 1” to compare how your return on investment measures up to your competitors, as well as the benefits of using HCROI to support your business planning initiatives. Once you’ve calculated your Human Capital ROI, the real work begins.
Turning HCROI into Consistent, Leverageable Data
At this point, you’re probably wondering how to turn this metric into tangible, beneficial action. In order to capitalize on HCROI data, you need to determine how you are going to regularly monitor and record this data, how you are going to cross-reference it with other workforce metrics, and how to best visualize and communicate this information to your workforce’s advantage.
It probably goes without saying: manual data records are becoming a thing of the past. If you are still depending on manual data records and calculations, transitioning to some sort of cloud-based software platform will not only increase the accuracy of your data, but the analytics around that data. Without the ability to measure and track your HCROI’s progress accurately, you’ll be left guessing just how well your operation’s results truly are from a human capital standpoint.
When upgrading to HR software, choose a workforce management platform that cannot only record and distribute workforce data with optimal accuracy and speed, but which can work directly with WPID or your analytics tools to optimize, combine, and compare your results to better identify weaknesses and strengths within your workforce and operational procedures.
Turning HCROI into Action
Once data-driven reports are in place, how can you better focus your HCROI efforts to improve your return on investment? Use. The. Data.
HCROI can be run on an individual employee and company-wide level. Once you run the numbers and can identify employees or teams with high levels of productivity and positive returns on investment, consider:
- Acknowledging and rewarding individuals or teams with the highest productivity achievements
- Modeling your training off the habits of top performing workers or turning top performers into managers/trainers
- Providing incentives tied to gross profit amounts on a company-wide level
- Communicating profits or improved production on a company-wide basis: the more aware of the individual or group value they add to the company, the more your employees will be conscious and invested in their contribution to improving those numbers
Taking your HCROI efforts a step further, specifically by examining less productive areas, will allow you to shift the balance towards productivity with speed and accuracy. Once you’re able to compare your return on investment regularly throughout various levels within your business, you’ll have more power to promote top performers and more efficient practices than ever before.
Some additional tips for improving HCROI include:
- Remaining consistent in executing changes
- Telling people what’s expected of them
- Providing employees with the resources necessary to do their job
- Fitting people into the right jobs
- Recognizing the contributions of all individuals
- Caring about employees as people
- Mentoring the development of your workers
- Listening to employees and showing them the importance of their work
- Pairing committed workers with committed coworkers
- Providing opportunities for advancement
The basic idea behind using HCROI is to always be able to trace linkages between the process of improvement and your enterprise goals. If there is a connection, then there is potential, measurable value to reap.
Analytics with EPAY Systems
EPAY’s Workforce and HR Analytics are equipped to give you complete visibility into your labor force. Our latest workforce platform offers detailed reporting and analysis capabilities regarding your workforce, your recruiting efforts, turnover rates, time labor management, and productivity data. Plus, with our advanced dashboard and customization features, you’ll be able to pull reports simply by keying a question into your browser.
Using HR Analytics, for example, you could quickly acquire data like ‘terminations and hires by hiring source’, ‘voluntary reasons for departure’, ‘turnover rate’, or ‘total new hire salaries by supervisor’ to better identify strengths and weaknesses in your business operation.
Check out our on-demand webinar, “Workforce Reporting & Dashboards” to see how much of an impact investing in analytics software could make on your bottom line. Ready to see these powerful analytics in action? Contact us for a live demo or check out our 2-minute tour today.