While HR has traditionally been viewed as an expense, taking a more strategic perspective requires viewing HR as an investment, which it rightfully is. Strategic HR – meaning that HR activities are tied to business strategy – can definitely have an impact on the bottom line. They key to demonstrating impact lies with quantifying results.

Quantifying Bottom Line Results

In Strategic Business Partner: A Critical Role for Human Resource Professionals, Robinson and Robinson state, “HR departments must be accountable not for what they do but for the results they are providing—from providing perceived value to demonstrating actual value to the business.”

Examples of ways to quantify HR’s contributions include measurements of things like:

•Real cost of turnover

•Actual cost of recruitment

•Costs associated with having supervisors who are poorly trained or untrained

•Cost associated with defending the company against EEOC complaints or legal actions

•Savings associated with improvements to the company’s time-keeping systems

•Expense reduction associated with using direct deposit or pay cards instead of printing payroll checks

Demonstrating Bottom Line Results

When looking to demonstrate bottom line results associated with HR activities, focus on identifying specifically how HR can contribute to revenue, growth and profitability as well as playing a role in cost control.

There are a number of ways HR can contribute to revenue, growth and profitability in strategic ways. For example, flexibility can be a source of competitive advantage that impacts all three of these factors. HR can assist with flexibility in numerous ways, such as by making wise hires, facilitating appropriate cross-training for the workforce and being poised and ready to quickly mobilize contingent workers to meet the company’s production needs.

HR can also have a powerful impact on cost control for the company. For example, HR plays an important role in risk management related to regulatory compliance and employee relations. HR can also play a role in streamlining administrative functions through implementing appropriate technology, as well as through other means.