THE ROI OF HR: HR Has Shifted from Overhead to Investment

by Tina Hamilton

Over the past ten years, there has been a monumental shift in workforce management away from the traditional idea of staffing a “personnel department” to push papers in tucked-away cubicles, far removed from the hub of the workplace. Today’s modern human resources operations play a big role in optimizing the workforce, and they must have a legitimate voice in the executive suite and boardroom.

Increasingly, HR is rightly viewed as an investment, not an expense or overhead. Modern employers realize that cultivating their people is as important as maintaining their technology, brand, quality systems, and other business functions. Without a strong, productive workforce, there is no guarantee anywhere in the company.

Organizations of all sizes have been enhancing their HR programs and processes for good reasons. If you listen to politicians, it would seem that the movement centers on the need to meet ever-changing (and sometimes onerous) regulations and rules. This is a valid concern for any workplace. However, while avoiding the pain and expense of non-compliance is important, it is not the most compelling reason for improving HR operations. The biggest reason most organizations have been modernizing and expanding their HR services is really quite simple: It improves their bottom line.

Four vital ways HR improves your workforce ROI

There are several major ways in which HR operations can contribute significantly to increasing the value of your workforce investments.

  1. HR helps limit the amount of time, energy and money invested in recruiting. Organizations cannot afford to waste resources on poor hiring and applicant attraction practices. Focused and faster processes are a must, and they must be executed without sacrificing the quality of candidates. Even one bad hire can take a tremendous toll on your workplace climate and overall employee satisfaction.
  2. HR helps enhance workforce productivity. Good HR practices can find inefficiencies within a workforce and remedy them in a way that both employers and employees can appreciate and value. HR can also teach, encourage and reward productive behaviors.
  3. HR helps reduce turnover. When employees feel that their company nurtures them, supports them and respects them, they are far more likely to stay. What’s more, they are going to work harder, be more loyal and be more likely to tell others about how much they enjoy where they work. This all helps to boost an organization’s employer brand authentically.
  4. HR helps you keep up with the competition. Whether you realize it or not, you compete every day to attract and retain talent. If great people don’t enjoy working for you, they’ll find a paycheck elsewhere. What’s more, if you aren’t employing the top talent in your field, you will also find it harder to compete for clients, because they will gravitate towards other organizations that have a more robust workforce. Clients today demand a high-quality customer experience that comes naturally from businesses that employ great people and retain them long-term. This is thanks in no small part to quality HR practices and support.

Tracking ROI of HR programs

It can be difficult for organizations to measure how some of their HR functions contribute to revenue or decrease expenses in hard numbers. This may help to explain why the benefits of modern HR operations are not top of mind for some business owners. However, valuable investment-related metrics can still be collected to assess the effectiveness of many HR programs, provided employers know what to look at, and how. Training investments are a perfect example of this.

According to Fortune magazine, most training programs can be assessed for ROI when companies zero in on one or two goals they want to achieve in advance, and then measure those areas before and after the programming takes place.  This information can then be compared to the cost of training. Other ways to track the benefits of training programs include using ongoing surveys/questionnaires, pre-training exercises that make clear what the quantifiable expectations are for after the instructional sessions are completed. This data can be compared to the long-term, resulting revenue or cost savings. In some cases, cost savings may come from reduced time spent on compliance paperwork or money spent on regulatory fines or legal fees.

Businesses that take the extra step of measuring the returns of training investments can also use this information to then improve their overall development programming, as the connection to the organization’s improved bottom-line becomes clearer.

Besides training, the same tracking principles can be applied to many other HR functions once goals, desired outcomes, and methods are pinpointed. Because HR is an investment, it is imperative to establish objectives and metrics at the outset of a new initiative so objective measurement can occur.


The environment and tools your employees need today to be successful, fulfilled and invested in your organization are also what they need to help make you successful. Creating a productive, positive workplace with the help of modern HR functions results in a win-win situation and a tangible return on investment.

BY: Tina Hamilton is president and CEO of myHR Partner, Inc., a Lehigh Valley company that offers human resources outsourcing for mid-market companies in 24 states. She can be reached at

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