82 per cent of HR practitioners don’t measure their return on investment

The HR community should be doing much more to prove its own worth, according to a survey of practitioners in public and private sector organisations, according to resaerch from people assessment firm, Talent Q.

Talent Q, suggests that 82 per cent of respondents do not assess return on investment and as a result, struggle to be seen to provide value to the organisations they serve.

In response, Talent Q has launched an online return on investment estimator and in depth guide to the subject. The new materials will help organisations to understand the true cost of training and development and measure the retention and productivity benefits that result.

The ROI estimator draws on an enormous body of academic research, along with in depth analysis of the costs associated with recruitment and talent management. 

For example, data collected over many years indicates that the benefit of having objective people assessment methods in place is typically 1.7 per cent of overall turnover.

Thomas Franks, an independent contract catering company, is one of a minority of firms that does measure return on its HR activities. 

The company has around 250 people and operates restaurants in independent schools and for employers including Tate & Lyle and Codemasters. 

Emma Bothwell, HR director for Thomas Franks, said: “It’s a tough environment, and in a sector where margins are rarely more than single digit, human resources needs to add value – and then be able to prove it.

“Many companies talk about people being their most valuable asset, but we’d argue that if that’s really the case, they should really be measuring it. We’ve successfully incorporated a number of metrics into our recruitment and ongoing talent management activity and it’s been very useful in addressing issues that are prevalent in the industry, especially workforce attrition.”

Dr Alan Bourne, director of Talent Q, said: “Organisations should have a much clearer understanding of the return gained through their investments in people. This must include accurately assessing external and internal talent to select and promote the best people.

“A wealth of empirical data shows that progressive human resources practice achieves higher retention, productivity and business performance. With all costs coming under a high level of scrutiny, it’s incumbent on HR practitioners to demonstrate their worth.”

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