FROM HR BUDGET TO HR INVESTMENTS…
While cooling my heels and having a cup of coffee, on the chilled morning of January 01, 2017; I was thinking hard, what should I do differently this year and I started thinking on those lines. Would it be just a thought or just an action or mix of both?
Entrepreneurial employees always acknowledge the benefits associated with attraction of good human resources; retaining them through training and development and employee engagement; and managing the key resources.
I completely agree that developing talent internally is more cost effective and overall core values of the organisation improves with it, but sometimes we definitely need to get in fresh experience into the picture.
I realised that in the next few days, I would be required to present the next year’s human resource budget. That is when the thought struck me…
I have always believed that investing in human resources builds culture, competency and commitment at organisation level. Why not call this budget as an investment, this year? I have firmly decided to present it like a human resource investment, to the leaders for the next financial year and traditionally not call it a budget anymore. I believe in it, so I am penning it down black and white.
If we look at it as an investment, what changes then, for each one of us? To begin with ‘the thought’ and ‘the name’ yes has changed. In action also, we need to look at the return of investment as part of the exercise, rather than just present a mere budget.
I feel it will be fun, even for leaders to hear a human resources team, presenting an investment, with return of investment, instead of budget?
Say for example, you are presenting the training section. Apart from the cost; you will also take into account your training needs, who will be trained, set the goals for training teams, identify methods and measure team’s success. See, we have already started thinking like a business man…
The most important way to ensure better return of investment for your training rupees is then to plan ahead of time. You will be able to determine the impact, be knowledgeable, and make an educated decision.
Why I have taken training as an example to begin with? The answer is very simple. Our budgets of training last year rose by 15% and our investments in the next year would increase further. Companies see tremendous skills gaps as we recover from recession. Training investment is also a very good indicator of your organisations overall economic activity.
I firmly believe that businesses in these testing times would reap the full benefits if they invest in training, organisational change and development; and ensure new technologies are used efficiently.
India has couple of unique challenges ahead. First one being, the overall engagement score of 9 per cent fully engaged. Then, nearly 65 per cent of the companies having no human resource plan. More than 50 per cent of companies having no talent management and retention plans. To top it up, we also have a challenge, in terms of having one of the youngest work force in few years. We need to pass the baton to these young ones, the generation with rocket high expectations.
People leaders, need to therefore invest time, money and energy into talent management, retention and engagement. We need to bridge the gap between schools and work, through concerted effort, so that the young team members, aspirations are better matched.
Together if we list down return of investment on talent management and engagement, we need to simply look at matrix that moves. It can be in form of employee engagement scores, customer engagement scores, quality index, production index, reduction of attrition, etc. Definitely more than one thing would be impacted through this investment. Also, it is proved time and over again, that these two directly impact the business lines and balance sheets.
Return of investment for right resourcing can also be easily calculated through saving from wrong recruitment or reference schemes, etc. Right and innovative induction can also have loads of benefits. Very important point which we miss out, would be to engage a candidate between, offers to join time.
I am confident that, if we change our thoughts and think on-lines of measuring all interventions as investments; therefore our return of investment, can easily be measured section wise. I have presented the same in past to the leadership team for a 7000 cr turn over organisation. I am sure you can also do that!
I would continue to press the case of calling it an investment rather than budget from here on…For me it goes hand in hand with a new focus on workplace, future and how skills are utilised.