Investing in People: Financial Impact of Human Resource Initiatives / Edition 2

by Wayne Cascio, John Boudreau

Overview

A Logical, Proven Framework for Understanding the Economic Value of Human Resources Investments

• How to choose Human Resources investments that deliver optimal strategic value–and eliminate those that don’t
• Best-practice metrics and analysis techniques for talent management, performance management, health and wellness programs, and much more

Investing in People introduces a breakthrough approach to Human Resources (HR) measurement that systematically aligns HR investments with organizational goals and helps make HR the true strategic partner it needs to be. Wayne F. Cascio and John W. Boudreau show exactly how to choose, implement, and use metrics to improve decision-making, optimize organizational effectiveness, and maximize the value of HR investments.

You’ll master crucial foundational principles such as risk, return, and economies of scale–and use them to evaluate investments objectively in everything from work/life programs to training. Cascio and Boudreau also introduce powerful ways to integrate HR with enterprise strategy and budgeting and for gaining commitment from business leaders outside the HR function.

If you truly want “a seat at the table”–or if you want to keep the one you have–you’ll find this book utterly indispensable.

Free software available online

You don’t need to be a math wizard to get results from Investing in People! Visit www.shrm.org/publications/books to access software that automates virtually all of this book’s key formulas and calculations.

Foreword xi

Acknowledgments xiii

About the Authors xiv

Preface xv

Plan for the Book xvii

Chapter 1: Making HR Measurement Strategic 1

Chapter 2: Analytical Foundations of HR Measurement 21

Chapter 3: The Hidden Costs of Absenteeism 43

Chapter 4: The High Cost of Employee Separations 67

Chapter 5: Employee Health, Wellness, and Welfare 99

Chapter 6: Employee Attitudes and Engagement 125

Chapter 7: Financial Effects of Work-Life Programs 151

Chapter 8: Staffing Utility: The Concept and Its Measurement 171

Chapter 9: The Economic Value of Job Performance 195

Chapter 10: The Payoff from Enhanced Selection 223

Chapter 11: Costs and Benefits of HR Development Programs 245

Chapter 12: Talent-Investment Analysis: Catalyst for Change 271

Appendix A: The Taylor-Russell Tables 285

Appendix B: The Naylor-Shine Table for Determining the Increase in Mean Criterion Score Obtained by Using a Selection Device 297

Index 309

Product Details

ISBN-13:	9780134431819
Publisher:	FT Press
Publication date:	10/08/2015
Edition description:	New Edition
Pages:	384
Product dimensions:	7.00(w) x 9.00(h) x 0.90(d)

About the Author

Wayne F. Cascio is US Bank Term Professor of Management at the University of Colorado Denver. A Fellow of the National Academy of Human Resources, Academy of Management, and American Psychological Association, he has received the Distinguished Career award from the Human Resources Division of the Academy of Management. He authored the classic Costing Human Resources.

John W. Boudreau is Research Director at the Center for Effective Organizations, and Professor of Management and Organization at the Marshall School of Business, University of Southern California. A Fellow of the National Academy of Human Resources, he has received scholarly contribution awards from the Academy of Management. He is recognized worldwide for breakthrough research on links between human capital and competitive advantage.

Read an Excerpt

Preface

The demand for accountability among all business functions has never been greater. A key responsibility of human resource (HR) leaders and consultants is to articulate the logical connections between progressive HR practices and firm performance, and they need to demonstrate those connections with data. This book provides logic and technology to look inside the "black box" between HR practices and financial/business performance.

We argue that investing in talent should be as systematic as investing in any other vital resource, based on logical frameworks and focused on optimization rather than simply cost reduction or mimicking best practices. This argues against the common "peanutbutter" approach to talent investments that spreads the same investments (for example, in training or staffing programs) over the entire organization, in an effort to be fair by being equal. Such approaches engender justifiable skepticism from leaders and employees who are asked to invest in programs or activities because HR—or even the CEO—says that "everyone must do it." That approach is in stark contrast to other resources, such as customers and technology, where investments are targeted where they have the greatest effect. Why not make greater talent investments where they matter most and smaller investments where they do not make a significant strategic difference? This "decision-science" approach provides the foundation for the techniques we present here. We emphasize that ultimately measurement is valuable when it improves important decisions about talent. That requires not simply more or better measures, but an integrated approach that combines those measures with logic, analytics, and knowledge processes (what we call the LAMP framework). Each chapter begins with a logic diagram that shows the links between particular HR programs, employee behaviors, and operational and financial outcomes. Each chapter includes a discussion about process, describing opportunities and effective ways to communicate results to decision makers.

We draw extensively on our decades of experience assisting senior-level decision makers to better understand and measure the impact of talent decisions, and also on our scholarly research on the connections between talent and organizational outcomes. We have been fortunate to work with both practicing leaders and academic researchers. This combination is essential for talent measurement and decisions that achieve both practical relevance and logical rigor.

Investing in People draws upon research in psychology, economics, accounting, and finance to provide tools that leaders inside and outside the HR profession can use together to describe the financial results of their investments in people. We focus on HR investments with a rich history of data-based research, including staffing, training, workplace health, employee attitudes, and employee turnover, which also represent some of the most important strategic HR functions.

This book provides specific formulas and calculations that you can use to evaluate the impact of your own talent decisions. To make the formulas easier to use, we developed software to accompany the chapters on the following topics: absenteeism, turnover, health and welfare, attitudes and engagement, work-life issues, external employee sourcing, the economic value of job performance, payoffs from selection, and payoffs from training and development.

The Society for Human Resource Management (SHRM) provided generous support for the development of the software, and you can access this software at the SHRM website (http://www.shrm.org), regardless of whether you are a SHRM member or not. The software performs the calculations of measures, so that readers can focus on the logic, analytics, and processes necessary to improve strategic decisions about talent.

Business leaders, inside and outside of the HR profession, need more rigorous, logical, and principles-based frameworks to understand the connections between human capital and organizational success. We hope that this book serves as a "go-to" resource for those frameworks.

© Copyright Pearson Education. All rights reserved.

Table of Contents

Foreword xi

Acknowledgments xiii

About the Authors xiv

Preface xv

Plan for the Book xvii

Chapter 1: Making HR Measurement Strategic 1

Chapter 2: Analytical Foundations of HR Measurement 21

Chapter 3: The Hidden Costs of Absenteeism 43

Chapter 4: The High Cost of Employee Separations 67

Chapter 5: Employee Health, Wellness, and Welfare 99

Chapter 6: Employee Attitudes and Engagement 125

Chapter 7: Financial Effects of Work-Life Programs 151

Chapter 8: Staffing Utility: The Concept and Its Measurement 171

Chapter 9: The Economic Value of Job Performance 195

Chapter 10: The Payoff from Enhanced Selection 223

Chapter 11: Costs and Benefits of HR Development Programs 245

Chapter 12: Talent-Investment Analysis: Catalyst for Change 271

Appendix A: The Taylor-Russell Tables 285

Appendix B: The Naylor-Shine Table for Determining the Increase in Mean Criterion Score Obtained by Using a Selection Device 297

Index 309