The Business Case for ROI: Measuring the Return on Investment in Human Resources

Abstract

Much debate has occurred on the issue of measuring the return on investment (ROI) in human resources. Rarely does a topic stir up emotions to the degree the ROI issue does. Some individuals characterize ROI as inappropriate. Others passionately characterize ROI as the answer to their accountability concerns. The truth lies somewhere in between these two extreme viewpoints. Understanding the drivers for the ROI process and the inherent weaknesses and advantages of ROI makes it possible to take a rational approach to the issue and implement an appropriate mix of evaluation strategies. One thing is certain--ROI is not a fad. The concept of ROI has been used for centuries. The 75th anniversary issue of Harvard Business Review (HBR) traced the tools used to measure results in organizations.1 During the 1920s, ROI was the emerging tool to place a value on the payoff of investments. In recent years, the application of the concept has been expanded to all types of investments including human resources, training and education, change initiatives, and technology. Today, hundreds of organizations are developing ROI calculations for many of these programs. Three casebooks have been developed to show specific applications.2 3 Another is being developed for the public sector, sponsored in part by the International Personnel Management Association.4 As

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 3 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.