Can You Prove Your HR Programs Add Value? 
Recession once again dominates the business headlines, and in boardrooms across the country executives are meeting to discuss falling revenues and budget cuts. In many of these boardrooms among the first programs sacrificed are, as has been the case for many years, human resource programs. Not programs like compensation or labour relations, but those programs that come under the general heading of “employee and organizational development.”

Many of us in Human Resource Management have come to expect this. I know that when I was Manager of a Training and OD department, I would ensure all big budget items were completed before the fourth quarter, when cuts were most likely.

If this sounds familiar, have you ever stopped and asked why HR programs are among the first to go? Or how you can change the situation? I think the answer to the first question is that many senior managers don’t believe that this type of program adds much, if any, value to the bottom line. When you cut these programs, the sky doesn’t fall. In fact there appears to be little noticeable difference

If programs are cut because of the perception they add little value, then doesn’t it make sense that the second question becomes “Can we modify this management tendency if we prove that these programs do add value?” And the answer is, “Yes we can!” Even though human resource programs are always vulnerable to cuts in time of restraint, when managers have quantitative evidence that the programs add value, they are more hesitant and restrained in their cuts.

Of course, providing this value added evidence is a lot easier said than done, and I’ll spend the remainder of this article discussing how you can make a start, and provide one significant insight that will make your task easier.

Start With a Simple Model

• First of all, think about added value in terms of the well known model used to evaluate training programs, (but applicable to other HR initiatives). Credited to Donald Kirkpatrick, it describes four stages of evaluation.
• The first is a simple subjective measure. You simply ask employees if they liked the program, if they thought it useful and if they have new knowledge or skills that they plan to use on the job.The second stage is to measure improvements in knowledge or skill. This involves a simple pre-test and post-test measure to quantify increases in knowledge or skill.
• Stage three is more complex because it requires a measure of the extent to which the new knowledge and skill are applied on the job.
• Stage four is the one in which the value added component becomes most quantifiable; that is, to what extent does the productivity or effectiveness of the employee increase as a result of participation in the program. In other words, how much extra value is generated by the employee?

Most organizations utilize stage one evaluation, gathering subjective opinion regarding the program’s effectiveness. But many stop there, and don’t proceed to either stage two or three; and it’s extremely rare to see a stage four evaluation. (This is understandable because stage four can be time consuming and expensive.) This tendency to go no further than subjective evaluation can be compared to buying all your managers expensive new computer systems, asking them how they like them, but never checking to see if they are using them.

Over the years I’ve often wondered why there’s a reluctance to evaluate programs more rigorously. Is it because senior management apply no pressure to review the effectiveness of human resource programs? It seems they seldom do. Is it because the HR professionals who develop or administer the programs would rather not know because it may put their credibility at risk? Or is it because some HR professionals believe more complex evaluations are too costly or time consuming? Perhaps it’s a little of all of these.

Some How To’s
Over the years I’ve conducted many stage three evaluations of a wide range of human resource programs, and even had the opportunity to turn my hand to several stage fours. From all my experiences I can distil my learning into a few paragraphs.

The first and most important conclusion came after much research and a good deal of frustration. This was that, other than special cases such as sales training in which you can quantify the link between the program and increased sales, it is virtually impossible to prove quantitatively that human resource programs add value. At some point one must utilize assumptions or subjective estimates of the value of management performance.

Secondly, I realized that the fact that you can’t prove the program adds value doesn’t really matter. This realization came when I remembered from my graduate studies, the work of Sir Karl Popper, a philosopher who focused on scientific method. Popper said that in terms of science and the use of scientific method, we can’t prove anything; but what we can do is accumulate evidence. This is a fairly complex and somewhat debatable point. But it taught me an important lesson about HR programs and adding value. Perhaps you can’t prove they add value, but you can provide evidence; and the stronger the evidence the better. In other words do the best you can.

A third important lesson learned over many years is that, when it comes to defending or justifying human resource programs, stage one evaluation seldom cuts it. It has never convinced any management group that I’ve worked with that the program adds value. They want stronger evidence that management behaviour has improved. If it’s training, they want evidence that employees are more productive because they use the new skills on the job; if it’s performance management, evidence that leaders and their teams are more productive because performance is being managed more effectively; if it’s team building, evidence that the team leader and members are more efficient and effective because they are a more skilled and cohesive team.

A Simple Cost-Effective Process
Generating this evidence doesn’t have to be a complex process. Here’s an example of a simple method that has worked extremely well in convincing managers that human resource programs add value.

• During and at the end of the introduction of a program, tell participants that both they and their managers will be contacted within a few weeks, and asked for specific examples of what the manager has done differently. Simply by telling them this, you reinforce the importance of transferring their new behaviours, skills and knowledge to their jobs.
• Follow-up and gather specific data. Don’t accept generalities, probe for specific examples.
• Tabulate the data by recording how many participants (and bosses) have been able to provide examples of improved performance. Also do a simple trend analysis of the examples given so that you can tie the changes back to the program.
• Ensure that senior management review the results and make sure you talk about the results of your follow-up at every opportunity.