We can calculate the Human Capital Return on Investment for the organisation or enterprise as a whole but calculation of the ROI of the employees for a specific department is difficult. Last year, a query was raised on the calculation of HCROI. Click the following link to refer my replies:
Go through the above link patiently. I have explained the difference between the calculation of HCROI for manufacturing and service industry. Going further, I also have explained how capacity utilisation improves HCROI in the service industry.
By the way, how did you calculate the ROI of the salespersons? Did you calculate the targets that they met are with any other parameter?
Instead of measuring the ROI, you may measure the effectiveness of the human resources employed at the backend. For this, you may calculate the output per person. Few examples could be:
a) Number of telephone calls handled per person
b) Reduction in the turnaround of each telephone call
c) In the insurance industry the turnaround time to settle the insurance claims
You have not given details of your industry or your company. What is your product or service? What kind of backend work your backend team does? The correct reply can only be given if you provide the information.
27th February 2019 From India, Bangalore
8th March 2019 From India, Delhi
Wrt the calculation posted above, kindly note my following observation which require further clarification:
Basic in the given formula, we are simply dividing the entire operating revenue remaining after deducting all expenditure, by the cost of employment. By this way, the ROI is undermined for all other factor contributing to revenue.
27th April 2019 From India, Kolkata
So, one approach could be comparing the HR operating costs to the rates of outsourcing the same HR function to an external HR service provider and focusing on the savings margin calculation.
Another approach would be calculating how many non-value added hours the sales team needs to work on, for activities if there never had been an HR department, because the HR team after all saves time for the sales team to focus on more of core sales work. Each non-value added hour that would have been spent by the sales team on HR activities could be equated to the value added hour by the sales team, such that the more the number of non-value added hours, the lesser the sales value and therefore if the HR team was present, the more the HR team contributes to your sales team’s revenue.
31st May 2019 From India, Bengaluru