Better returns needed from personnel touch

By ASHLEY CAMPBELL

New Zealand firms may be throwing money away on human resources initiatives for little benefit.

Dr Jack Phillips, of the Jack Phillips Center for Research, says our businesses lag behind the rest of the world in measuring the effect of HR programmes and expecting accountability from HR professionals. He is in New Zealand to lead workshops on the returns of HR investment.

At the beginning of the month Deloitte Human Capital and The Learning Curve surveyed 108 New Zealand organisations of varying sizes about their HR programmes.

Only 27.3 per cent routinely measure their programmes, says Phillips, compared with an average of around 80 per cent in 37 countries he has surveyed.

And only 18.2 per cent ever measure the tangible business impact of an HR programme, compared with an international average of 50 to 60 per cent.

Phillips suggests there are five levels of measuring HR effectiveness, and every programme should be measured to at least the first level - evaluating participants' satisfaction with the programme. Then, depending on cost and importance, programmes should be evaluated for participant learning, application of that learning, its business impact and the return on investment.

"The HR manager used to say 'We've got to invest in people - we can't measure this, we just have to take it on faith'," says Phillips. "There's a growing body of knowledge saying you can show the value."

A programme's return on investment should be calculated in the same way as if the company was investing in new equipment, he says, as the ratio of the programme's projected benefits to its costs.

Deloitte Human Capital partner Brenda Sayers says the skills shortage is driving an increase in the amount of training firms are investing in. "But what we are not doing is determining which training makes the difference."

Another mistake businesses make is simply to measure the amount of money spent on HR, says Phillips.

"The dollars spent on training itself are not a measure. All you are doing is counting something. What you want to measure is the return on what you spend."

Sayers says that only by being accountable can HR professionals justify their businesses investing in their work.

"The human resource function has to be as accountable as the marketing and sales functions," she says, "because people now know the value they can contribute."