HR Delivering ROI Through Employee Engagement

Employee Engagement and the Employee Experience are disciplines spearheading many a firm's strategic Human Resource agendas for 2019. In this article, we will explore what a Return On Investment looks like for HR and why mastering employee engagement is so critical to an organisation's financial success.

1. How does HR add value?
2. How can HR's value be measured?
3. How do more HR departments receive invitations to the Executive Management Team?

HR professionals face these questions often but sometimes, as William of Ockham, the English philosopher born in 1287, said:

"With all things being equal, the simplest explanation tends to be the right one"

In the simplest possible terms, the answer we’re going to explore is: Profit. Profit for HR's perspective is contributed to by improving retention and reducing attrition.

Where a HR department successfully demonstrates their contributions to a firm's balance sheet and improves profit, not loss, they are more likely to be recognised through an appointment to the executive table. Historically, Human Resources was professionally known as the ‘Welfare Department’ in the late 1800s. The help. Administrators. Little more than pen pushers. They held little strategic influence and were seen as facilitators. Fast forward 100 years and today, the role of HR has grown to be so strategic in matters of policy, compliance and legislation that the HR function, rightly so, has now executive level representation through the introduction of the Chief Human Resource Officer role [Chief People Officer].

As part of the Executive Management Team, the CHRO has a fiduciary responsibility to the Board of Directors and a company's shareholders. Each function [example CTO, CIO, COO, CCO] represented in that Exec Team must demonstrate lean efficiency, creativity and profitability.

In order to understand the best way for the Human Resource business to demonstrate value, we must first agree that a positive employee experience enables superior employee engagement and that positive engagement results in employee retention.

The cost of labour can account for 60%-70% of an organisation's annual budget

Understanding this cost of labour is important because it emphasises HR's ability to influence a company's bottom line. The first thing to go under a budget freeze or even during acquisition to bloat inflation, is the redundancy of existing employees, the hiring of new employees followed closely by cuts to the Travel & Entertainment budget. As Human Resource are accountable for people strategy, this is their opportunity as a function of the business to influence an organisation's financial success.

Through a successful employee engagement programme, an organisation's approach resulting in the right conditions for all members of a company to give their best each day, and be committed to the firm’s goals and values, HR has the ability, through their mandate, to reduce the cost of hire by influencing employee retention, which is the conduit to increased productivity because their staff's well-being is positive. Happy employees do more, go above and beyond the call of duty and stay employed for longer at the employer.

Deliver Superior Employee Engagement to Drive ROI

It is up for discussion on what mechanics are involved in building a sustainable employee engagement programme. Considerations must be made for the company size, industry and a firm's culture but developing trust between the employee and HR is paramount to an engagement programme that delivers retention.

When firms build a successful Employee Engagement strategy they experience:

• Improved retention of staff.
• An increase in staff morale and individual performance.
• And subsequently growth in revenue performance as a result of employee commitments.

It is important to note that a successful Employee Engagement strategy is not a “one size fits all”. A HR department with a successful Employee Engagement strategy will have a repertoire of tools in their engagement toolbox. These companies hire less and retain more. They retain proprietary knowledge and experience greater transfer of skills internally.

The True Measure of the ROI for HR is an Employee Engagement Programme Resulting in the Retention of Staff Which Drives Revenue

Successful Employee Engagement resulting in the retention of employees is critical to the preservation and growth of revenues and profits. To achieve approval of your Employee Engagement strategy by executive sponsors:

1. Ask an executive champion of change for their support of your engagement programme.
2. Educate the Executive Team on how employee retention influences revenues.
3. In addition to Employee Satisfaction Surveys, work with a 'third-party partner' to capture substantive, qualitative research on why employees leave and why others stay.
4. Listen to the genuine voice of the employee anonymously and in confidence to learn factors that influence their holistic employee experience.
5. Action employee feedback using the Agile methodology ensuring trust is built through delivery.

Human Capital Consultancy is a qualitative employee experience research partner. We know that transformation of your employee experience starts with capturing genuine, qualitative employee engagement data. To discuss your Employee Engagement programme or to focus on employee retention click HERE to schedule a free consultation or visit our website: www.humancapcon.co.uk