Cascio Wayne F. - Investing in People

Copyright 2019 Wayne F. Cascio, John W. Boudreau, and Alexis A. Fink All rights reserved.

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Library of Congress Cataloging-in-Publication Data

Names: Cascio, Wayne F., author. | Boudreau, John W., author. | Fink, Alexis A., author.

Title: Investing in people : financial impact of human resource initiatives / Wayne F. Cascio, John W. Boudreau, Alexis A. Fink.

Description: 3rd edition. | Alexandria, VA : Society for Human Resource Management, [2019]

Identifiers: LCCN 2019012961 (print) | LCCN 2019015784 (ebook) | ISBN 9781586446109 (pdf) | ISBN 9781586446116 (ePub) | ISBN 9781586446123 (Mobi) | ISBN 9781586446093 (pbk. : alk. paper)

Subjects: LCSH: Human capital--Accounting. | Labor costs--Accounting. | Employees--Training of. | Personnel management.

Classification: LCC HF5681.H8 (ebook) | LCC HF5681.H8 C37 2019 (print) | DDC 658.3--dc23

Printed in the United States of America, THIRD EDITION

PB Printing 10 9 8 7 6 5 4 3 2 1

61.19305

From Wayne F. Cascio:

To my late parents, Frank and Joan Cascio, whose love and devotion to their family were the best investments they ever made.

From John W. Boudreau:

To my family, who continually inspire me to see the wonderful potential in people.

From Alexis A. Fink:

To my parents and my children, for their infinite support in ways large and small.

T he demand for organizational accountability has never been greater. This is true for all business processes, but perhaps even more so for decisions about people. The future of work, talent, and employment is changing at an unprecedented pace, and organizational decisions about how to invest in people are under increasing scrutiny. Leaders increasingly realize that their decisions about human resources are vital, in an increasingly uncertain and interconnected world. Yet organizational decisions about people remain some of the least systematic and evidence based, compared to decisions about resources such as money and technology. Therefore, a key responsibility of organization leaders, HR professionals, consultants, regulators, and policy-makers is to articulate and improve those decisions. That requires understanding and relying both on logical connections between progressive HR practices and organization performance, and on the data that articulate those connections. This book provides the logical frameworks, analytics, measures, and process elements to illuminate whats inside the metaphorical black box between HR practices and financial/business performance.

Investing in people can and should be as systematic as investing in any vital resourceusing evidence-based, logical frameworks that optimize cost, risk, and returnbut too often such people investments focus only on reducing costs or mimicking best practices. Too often, organizations adopt a peanut-butter approach to talent investments that spreads the same investments (for example, in training or staffing programs) over the entire organization, in an effort to be fair by being equal. It should come as no surprise when such policies are met with skepticism from leaders and employees who are asked to invest in programs or activities because HRor even the CEOsays that everyone must do it. That approach is in stark contrast to approaches taken with other resources, such as customers and technology, where investments are targeted where they have the greatest effect. Why not make greater talent investments where they matter most? Optimizing investments in people, by investing more where the payoff is highest, is what we call a decision-science approach and provides the foundation for the techniques we present here.

Another fundamental principle is that the value of measurement is the extent to which it improves important decisions; that is particularly true for investments in people. It is not enough to build a larger number of or more precise measures. An optimal approach to measuring investments in people will integrate and balance people measures with logic, analytics, and knowledge processes (what we call the LAMP framework). So this book focuses on vital decisions and provides logical decision guides that show the links between HR programs, employee behaviors, and organizational outcomes. Each chapter includes recommendations about process, describing effective ways to communicate results to decision-makers.

In writing this book we drew extensively on our decades of experience assisting senior-level decision-makers to better understand and measure the impact of talent decisions, and also on the best available research that describes the connections between talent and organizational outcomes. We have been fortunate to work with both practicing leaders and academic researchers. This combination is essential for talent measurement and investment decisions to be truly evidence based and to achieve both practical relevance and logical rigor.

Investing in People draws on state-of-the art practice and research in disciplines including psychology, economics, accounting, and finance. Our aim is to provide tools that serve leaders inside and outside the HR profession. The tools help them work together to understand and describe the economic and other outcomes of their investments in people. We focus on HR investments with a rich history of data-based research, including staffing, training, workplace health, employee attitudes, and employee turnover, which also represent some of the most important strategic HR functions.