HR is a cost centre in most companies, meaning that it does not provide any direct revenue for the company and instead, adds to the costs of running the company. This is why most HR teams and budgets are kept as small and tight as possible – to ensure costs are kept low by a team that doesn’t generate any revenue to offset their spending.
This is likely why your training initiative didn’t get funded, or your new HRIS didn’t get implemented, or your request for more recruiters didn’t get approved.
When you see human resources ONLY as an expense, you’ve missed the point – or – you don’t have the correct leaders at the helm of your HR function.
What if you looked at and treated HR as an investment instead of as an expense?
An expense is simply the cost required for something – it’s the money spent. Buh-bye!
An investment, however, is the action or process of investing money with the expectation of profit or a worthwhile result.
Let’s take ‘implementing a new training program,’ for example, as the initiative you want to get senior leader approval (and budget) for.
So often training programs are evaluated – or measured – by exit surveys. Did the program meet the intended learning objectives? Did the participants experience a shift in perspective or create a new skill? Would they recommend the program to another person in the company?
Those are great, yet they don’t show how the training program drives business results. They show that the training program did what it said it was going to do – train people in a way that resonated with attendees.
But is that generating more profit or creating a worthwhile result?
Instead of measuring learning objectives and participant feedback – consider what business metrics your program or initiative is advancing.
(Psst: if it’s not driving a key metric, why are you doing it!?)
Here are some results you could measure over the 6 months following a training:
- Revenue generated by trained participants
- Error rate or system errors done by trained participants
- Customer satisfaction related to trained participants
- Retention rate of trained participants
- Remember: open roles are usually open for 8-12 weeks, adding a burden on existing team members, plus the average recruiting expense for a manager is $20,000. So retention is actually a cost-saving result!
Being able to measure the results you achieve from a training is key to shifting the perception from an expense to an investment in the growth and success of the business.
And, if you really wanted to evaluate the trained participants learning, consider evaluating people other than the trained participant. Ask their boss, their colleagues, or their direct reports to complete a feedback survey to see whether or not any of the learnings they gained through the training program actually translated into practice.
When you treat your training and HR initiatives as an expense, the business will treat you only as a cost centre and minimize your budget and efforts. But if you can’t get the support to invest in your employees, you risk losing them to someone who will.
When you treat – and pitch – your training and HR initiatives as an investment, you change the conversation.
You change what you measure, and you change how integral the good work you do is for the business. And that will change your bottom line.
Meet Matt. He is bold. He is always up for the adventure. He is your biggest fan.