using npv, irr and payback framework to determine financial impact of human capital investments
DESCRIPTION
HR people requesting funds form senior management encounter much tougher roadblocks than their peers in manufacturing, operations and marketing. Those other disciplines have a long tradition of quantifying the potential costs and benefits of their proposed programs and presenting these estimates in language that all can understand-money. Since Human Capital investments are always in financial terms, the business leaders expect HR to demonstrate payback also in financial terms. Unless HR does not learn the language of business, its success remains at stake.TRANSCRIPT
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Using NPV, IRR and Payback Frameworks to Determine
Financial Impact of Human Capital Investments
06-07 Jan 2014, Marriott Karachi
09-10 Jan 2014, Marriott Islamabad
we Assist companies in evaluating the Efficiency, Effectiveness
and Outcome of HR practices; and also facilitate in measurable benchmarking and action
planning in Human Capital Management to Improve workforce productivity for visible impact on
organization bottom line
Situation A
Organizations normally use logical frameworks including Net Present Value, Internal Rate of Return and Payback
framework to determine financial impact of
investment in plant, inventory, building, raw
material or any other service support structure.
Situation B
When it comes to evaluating the economic viability of human capital investment
decisions, traditionally organizations do not use
same logic, which is used for other capital investment and
most of human capital investment decisions are based on emotions, and subjective gut Like "Best
practice, matching market or mimicking competitor.”
Intangibles does not mean immeasurable.
A true business case is 75% data and 25% emotions.
HR has difficulty in making line believe that HR had direct
influence on business performance and therefore
Business Leaders do not find the HR investment case very
persuasive
CEOs and CFOs all measure results in financial terms.
When human capital investments are in
hard financial term; consequently the employer expects accountability and
quantifiable framework to measure the
outcome in hard financial terms.
HR’s traditional model of using
subjective opinions, emotions and gut
feelings for workforce decision making is woefully inadequate. A key
responsibility of HR is to articulate the logical connections
between progressive HR practices and
firm performance, and demonstrate those connections
with data and ratios.
Analytics quantify HR department's
contribution to the overall bottom line in financial terms,
through solid, factual, and
verifiable data and justify toughest
managerial decisions with easy-to-use mathematical
formulas.
Global research on 400 companies indicates that
companies use NPV, IRR and Payback to
determine impact of human capital
investment have productivity rate
double than industry average
Developing a logical business case to management for
approving or evaluating a specific
project
Goals, opportunities, action plans, anticipated
financial results, and inherent risks
A roadmap for funds utilization and its return on
the firm’s investment
Board HR Members
HR Heads
CFOs, Auditors and Actuaries
Cost
Rs 40,000 per person
Click Here to Register
Voice: 051-8437201
Cell: +92 342 5579160