In an era of heightened scrutiny, organizations must make smarter, more evidence-based decisions about investing in people. Investing in People equips HR professionals and leaders with a proven framework for aligning human capital initiatives with strategic business outcomes. Drawing on cutting-edge research from psychology, economics, finance and accounting, the book shows how to evaluate HR programs - such as talent acquisition, engagement and learning - using foundational principles like risk, return and scale. It also offers tools to connect HR initiatives to metrics that matter to senior leadership, including financial performance and customer satisfaction. With practical guidance for integrating HR into enterprise budgeting and strategy, this is an essential resource for building credibility and making HR decisions that drive results. John W. Boudreau, PhD, is Research Director at the Center for Effective Organizations and Professor of Management and Organization in the Marshall School of Business at the University of Southern California. Wayne F. Cascio, PhD, is a Distinguished University Professor at the University of Colorado, and he holds the Robert H. Reynolds Chair in Global Leadership at the University of Colorado Denver. Alexis A. Fink , PhD, has spent two decades leading talent analytics, talent management, and large-scale organizational change teams at leading global organizations, most recently Intel and Microsoft. Investing in People Financial Impact of Human Resource Initiatives By Wayne F. Cascio, John W. Boudreau, Alexis A. Fink Society for Human Resource Management Copyright © 2019 Wayne F. Cascio, John W. Boudreau, and Alexis A. Fink All rights reserved. ISBN: 978-1-58644-609-3 Contents Preface, Acknowledgments, Plan for the Book, About the Authors, Chapter 1. HR Measurement Makes Investing in People More Strategic, Chapter 2. Analytical Foundations of HR Measurement, Chapter 3. Talent Management as a Source of Competitive Advantage, Chapter 4. The Hidden Costs of Absenteeism, Chapter 5. The High Cost of Employee Separations, Chapter 6. Employee Health, Wellness, and Welfare, Chapter 7. Employee Attitudes and Engagement, Chapter 8. Financial Effects of Workplace Flexibility Programs, Chapter 9. Staffing Utility: The Concept and Its Measurement, Chapter 10. The Payoff from Improving Employee Selection, Chapter 11. Costs and Benefits of HR Development Programs, Chapter 12. Talent-Investment Analysis: Catalyst for Change, CHAPTER 1 HR Measurement Makes Investing in People More Strategic This book will help you better understand how to analyze, measure, and account for investments in people. However, although data and analysis are important to investing in people, they are really just a means to an end. The ultimate purpose of an investment framework is to improve decisions about those investments. Decisions about talent, human capital, and organizational effectiveness are increasingly central to the strategic success of virtually all organizations. According to research from the Hay Group, businesses listed in Fortune magazine as the world's most admired companies invest in people and see them as assets to be developed, not simply as costs to be cut. Consider how the three most admired companies — firms comparable to UPS, Disney, McDonald's, and Marriott International — managed their people during the Great Recession, compared to their less-admired peers. Those companies were less likely to have laid off any employees (10 percent versus 23 percent, respectively). By even greater margins, they were less likely to have frozen hiring or pay, and by a giant margin (21 points), they were more likely to have invested the money and the effort to brand themselves as employers, not just as marketers to customers. They treated their people as assets, not expenses. Perhaps the most important lesson from these companies is that they did not launch their enlightened human capital philosophies when the recession hit; they'd been following them for years. Once a recession starts, it's too late. "Champions know what their most valuable asset is, and they give it the investment it deserves — through good times and bad." It is surprising how often companies address vital decisions about talent and how it is organized with limited measures or faulty logic. How would your organization measure the return on investments that retain vital talent? Would the future returns be as clear as the tangible short-term costs to be saved by layoffs? Does your organization have a logical and numbers-based approach to understanding the payoff from improved employee health, improvements in how employees are recruited and selected, reductions in turnover and absenteeism, or improvements in how employees are trained and developed? In most organizations, leaders who encounter such questions approach them with far less rigor and analysis than questions about other re