Scenario: Your team’s workload has increased and your
team has implemented innovative systems. Your department is running like a well-oiled machine with increased
productivity despite the occasional (ok – incessant) curveball. You’re putting
in the long hours and delivering results. Leadership trusts you.
And you want to be compensated and
rewarded for what you are bringing to your company.
You aren’t the first person to feel
this way and certainly won’t be the last, but let’s throw a new variable into
an already complex equation: you represent
Human Resources doesn’t bring in
revenue. We are not income
generating. We don’t close deals on
software, bring in major contracts or even build the product. Human Resources weighs down the budget
without bringing anything tangible in return… or does it? We are responsible for the compensation and
evaluation of often the entire organization, recruiting the next wave of talent
(that will bring in the big bucks) and are often champions for merit increases on
behalf of other employees.
Organizational leaders might not
realize the complexities or value of the company’s own human resources team. Chances are, as technology has rapidly changed, so have the roles and
responsibilities of those within the HR department. Compare the day-to-day tasks of HR just four years
ago against today and there are terms and networks that employees are actively
engaged in on a daily basis that were non-existent then. HR reaches every department, every employee
and every potential employee. From IT to
OD, it can boost the effectiveness of other departments and indirectly impact
the bottom line.
So how exactly does HR ask for a raise?
The key is knowing your numbers and
providing analytics. Strong HR reporting and a scorecard are critical to
demonstrate HR’s impact throughout the entire organization. Even when your company has put a hold on raises, you should
still ask. A solid report showcasing your impact provides leaders a new view at
their ROI within your department positioning you for increased compensation
directly tied to your efforts and results. Justify an increase for your HR team and build your reports from these
concepts to build your case and drive the conversation:
- Economic Value-Added: financial numbers expected of the executive.
- Customer Value-Added: (CVA) defined as meeting customer-service goals.
- People Value-Added:
defined as meeting employee
These concepts are the foundation for
scorecard which should ultimately focus on
multiple stakeholders. The most critical
component is to prioritize what your HR department should report, and because
each company’s needs vary, your HR team’s mission and analytics should be
customized to reflect organizational goals and culture. The question an HR leader must ask either
directly or indirectly of their senior leaders is, “What keeps your executive team up at
night?” and use the responses to drive the conversation and help
them answer why your team deserves a raise before you even ask it.
Next, consider your current
programs, which they affect, and how they impact your organization. Using
this balanced scorecard approach, you may consider including some of the
following analytics when making the case for HR.
- Monthly Turnover Rate = (number of separations during month / average number
of employees during month) x 100).
- Revenue per Employee =
total revenue / total number of employees.
- Cost per Hire = sum of external costs + sum of internal costs / total number of hires over a certain time period.
- Yield Ratio =
percentage of applicants for a recruitment source that make it to a determined stage of the application
- Human Capital Cost =
Pay + Benefits + Contingent Labor Cost / Full Time Equivalents.
- Human Capital ROI =
(Gross Revenue) (Non-employee Related Expenses) / Total Compensation for
Full Time Equivalents and Contingent Workforce.
Don’t make the case for the
individual person, but give the numbers and consider how each formula impacts
and correlates with another. If you can, demonstrate a direct relation
between the HR team’s new employee benefits package and increased employee
satisfaction and employee retention. Is this trend verifiable over a
specific and defined period of time — what’s the value of this for your
company? Find the answer and you’ve made
a case for “The Compensation Quandary and How HR Asks for a Raise.”
What is HR Worth:
What If” search conducted using PayScale.com in three different US cities to
find the median income for Human Resources (HR) Director with 8 years of
experience, managing 3 employees, holding a BA in business and HR Management
and working in the Software Development Industry
Location: New York, New York
Location: San Francisco, California
Location: St. Louis,