In SHRM’s recently published the book, “Investing in What Matters,” Scott Mondore, Ph.D. and Shane Douthitt, Ph.D. offer a process to understand the links between HR strategy and business outcomes. Below is Dr. Mondore’s overview of the book.
Organizations collect vast amounts of data from operations to people, but rarely do organizations bring this data together to discover how these data relate to each other. In addition, current economic conditions are demanding deep budget cuts—leaving HR departments with few tools to figure out where to cut and where to invest. “Investing in What Matters” provides HR leaders with a straightforward process of six steps, that they can immediately implement, to allow them to create an HR strategy that is business-focused and based on expected ROI. With these steps, HR leaders will learn how to discover key business outcomes, show the link between HR data (training, surveys, competencies etc) to those business outcomes, execute programs that have an expected ROI and create a culture of measurement, analysis and adjustment going forward.
The six steps in the Business Partner RoadMap process are:
1. Determine Critical Outcomes (conduct stakeholder interviews with senior/functional leaders, examine the organization’s scorecards)
2. Create a Cross-Functional Data Team (bring together data owners from across the
organization to set up the analyses)
3. Assess Outcomes Measures (make sure the data being looked at is measured at the
same frequency and level within the organization)
4. Analyze Data (use advanced statistical to show cause-and-effect relationships between
HR data and business outcomes)
5. Build Programs & Execute (create initiatives around the drivers of business outcomes—
based on expected ROI calculations)
6. Measure and Adjust (re-analyze data on a regular basis to discover new drivers of
business outcomes or tweak current programs)
In addition, the book provides ten key principles for HR leaders to adopt during this process as it is not always easy and it needs to stay completely focused on business outcomes:
1. Organizations already spend significant amounts of money on their people….they just
don’t spend it on the right things.
2. Organizations make investments in people without any data or with the wrong data.
3. Employee engagement in itself is not a business outcome.
4. People and organizations are complex. The linkages between attitudes and outcomes
have to be understood within your organization using your data.
5. The people data and outcome data do exist—you just have to go and get it.
6. The organization’s data exist in silos.
7. There will be obstacles and barriers to obtaining the data (e.g. politics, turf battles).
8. Once a connection/linkage is made with the data—accountability is unavoidable (and
that’s a good thing).
9. Don’t assume a link between employee data and business outcomes—define it and
understand why or why not.
10. Perceptions alone do not show up on the profit and loss statement.
Mondore, S.P. & Douthitt, S.S. (2009). Investing in what matters: Linking employees to business outcomes. Society for Human Resource Management, Alexandria, Virginia.
Click to learn more: http://shrm.org/Publications/Books/Pages/InvestinginWhatMatters.aspx