Creating business valueAsk any business leader and they will tell you that HR is a cost center, not a revenue generator. It’s a challenge to be in a role that manages internal versus external clients because every investment and action is going to be scrutinized in a way that reflects this general view of HR. This should be a red flag for HR leaders; for the most part, we simply do not have the experience (yet) to create a solid business case, explain the value and influence decisions.

In this blog, we’re going to look at the necessary steps for building a business case and we will explore how one organization is trying to generate a $6 million revenue increase by changing its HR practices.

Building a Business Case for HR Initiatives

Let’s just say it: building a business case for your idea – whether it’s to invest in new HR technology or to offer new training courses for your managers – can be hard. But it’s also necessary. It’s critical for HR leaders to understand the importance of influence and how it is leveraged.

According to the a ZaneBenefits blog post, 76% of CEOs say that HR is their most trusted advisor, but we also must back up our assertions with a solid methodology or risk losing that valuable position. With a good business case HR leaders can validate their efforts and any proposed solutions for the problem they are trying to solve.

The steps in building a business case are:

  • Understand the problem – frame the issue in the context of the business impact
  • Gather the right stakeholders – it’s important to have a diverse set of viewpoints and insights
  • Communicate value in each stakeholder’s language – for example, talk about system security for IT leaders or financial impact with your CFO
  • Determine KPIs to measure success – every initiative should have unique indicators designed to prove value or demonstrate success

By ensuring that the conversation includes these key elements, talent leaders can create a true business case for implementing their idea. The next step requires a translation of HR activities to business outcomes.

Connecting HR Strategies to Business Value 

During a recent podcast, PeopleStrategy President and COO, Dave Fiacco, talked about the mindset necessary for approaching HR technology investments.

“HR technology can help you grow the business… Some companies see it as just another cost of doing business and as a way to make the administrative burden better, not about the deeper business results it can impact.”

His comments are highly relevant, especially the concept of focusing on deeper business results. Despite the common thoughts about the talent side of the business as a cost center, HR and recruiting professionals can create value.

In a recently published case study about Virgin Media, the company details the journey as it strives to turn a $5 million loss in revenue to $6 million in new revenue. Virgin Media hopes to achieve this not through a new marketing plan, sales initiative or operations change, but by becoming famous for its candidate experience.

In 2014, Virgin Media lost 7,500 customers because of direct candidate rejection or a poor candidate experience. [This was identified by Virgin Media’s insights team who looked at who was a customer before or at the start of the recruitment process and cross referenced this list with who canceled their service within 4 weeks of the end of that process.] This prompted Virgin Media to engage an outside agency to help them adjust its hiring and feedback processes to be more candidate-friendly.

The turnaround has been amazing. Today, even if a candidate isn’t selected for the job, he or she has such a good experience that the person is still interested in using and recommending Virgin Media’s products and services. The next step is for Virgin Media to turn the applicants who aren’t customers when they apply into customers, even if they aren’t hired. An ambitious goal and one they are on track to achieve. And it all started by looking at the deeper business results.

This is a prime example of how you can create value from an HR service, and it doesn’t stop there. HR leaders who can connect the dots between talent initiatives and business goals have a higher chance of meeting the needs of the organization and achieving enduring success.

Where will you begin?

Written by: Ben Eubanks, Principal Analyst, Lighthouse Research & Advisory