Congratulations—you received approval on your HR business case and budget. Now what? What if I told you that you have less than a 50% chance of achieving what you got approved? Would you feel good about going back to your executive team in one, two or three years and asking for the same budget again? In my humble opinion, I would say "No," but then again, I’m not much of a gambler with delivering on a commitment.
According to a recent PwC HR Tech Survey, less than half of all respondents said they achieved 76% or more of what went into their HR Cloud business case. This is not an encouraging result when you are competing for budget or trying to expand it.
With our problem in front of us, I offer these ideas as a starting point for overcoming the odds and achieving the goals you set in your business case:
1) Baseline, Baseline, Baseline
As anyone who has bought or sold a home knows: "Location, location, location." The same logic applies to baselining—sometimes it matters more than the business case itself. Often, however, we pay so much attention to what goes into a business case, that there’s not enough focus on establishing and documenting a pre-change starting point.
Instead, you should leverage the critical thinking you put into your business case and baseline the data that supported your pre-change estimates before any change occurs. I would suggest making whether or not you can baseline a criterion for determining if a calculation goes into your business case at all. If you cannot defend your estimated improvements, savings and revenue, you are setting yourself up for an uphill battle when it comes time to maintain or expand your budget.
Further, by baselining and measuring against your baseline, you speed up responsiveness to lagging indicators that are important to your talent processes, and to the business. For those interested in learning more about the role of lagging (and leading) indicators on value measures in HR, there is a great piece written by Dr. Tom Tonkin, principal, thought leadership & advisory services at Cornerstone OnDemand, that goes deeper on that point.
Why is speeding up responsiveness important? It is better to know early in the process that you are behind where you thought you would be. It provides you with time to reflect and gauge what may be the cause. Often, for example, the problem is that there hasn’t been enough time allotted for change management or user adoption.
2) Crawl, Walk, Run
HR and talent teams struggle to leap immediately to effectiveness measures such as "Productivity or Revenue by Employee" or "CSAT/NPS Improvement." (There is a difference between efficiency and effectiveness measures that I cover in this post for those who are interested in learning more). My quick and simple recommendation is to start small (efficiency) and build to strategic actions (effectiveness). Turnover is an excellent example and a measure that is frequently scrutinized. Turnover, by itself, is something most companies measure, but what about turnover of your highest performing employees?
To begin baselining the effectiveness of improving high performer turnover, start by identifying turnover data in critical areas of the business where this might be a problem. Then drill down and ask if you can segment that by low/medium/high performers. (The cost to replace a high performing employee can be 90-200% of their annual salary according to SHRM’s "A Guide to Analyzing and Managing Employee Turnover.") With that information baselined, you can begin working to track and measure uplift in other more strategic measures.
3) Don’t Wait to Align With the Business—Start Early
There is plenty of research out there that supports the importance of HR/Talent being aligned to the business, but I point you to this blog post if this is an area of particular interest.
But simply put, illustrating the connectedness between Business and HR/Talent Priorities requires a) an understanding of business priorities and b) insight into how HR initiatives support them.
When you think about turnover, for example, there’s rarely just one initiative that can improve it. Rather, it is typically a combination of efforts. The point is to work early to think about what measures and data are required to build your HR/Talent value story so that when it comes time to present what you’ve done, you have both a strong qualitative story and a very authoritative quantitative impact story to tell. For a visual on how to consider structuring your HR/Talent Value Story, see the third part of my three-part blog series on the topic.
With these points in mind, I offer two closing questions to reflect on:
Do you know the impact your HR/Talent practices are delivering for your business?
Are you prepared to defend your investment when asked?
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