How Do You Measure ROI for Support Teams Without Clear Targets? Seeking Insights!

Hi, I am working as HR in a Pvt. Ltd. company. Now, my question is: can we calculate the ROI of the support/backend team? What are the factors to evaluate their ROI?

For the sales team, it's easy to evaluate their ROI as they have targets. The same applies when we hire people for the backend. If there are no targets, how do we calculate their ROI?

Dear Richa, we can calculate the Human Capital Return on Investment for the organization or enterprise as a whole, but the 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 to my replies:

https://www.citehr.com/598564-outcom...ml#post2390951

Go through the above link patiently. I have explained the difference between the calculation of HCROI for manufacturing and service industries. Furthermore, I have explained how capacity utilization 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 with any other parameters?

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. A few examples could be:

a) Number of telephone calls handled per person
b) Reduction in the turnaround time of each telephone call
c) In the insurance industry, the turnaround time to settle the insurance claims

You have not provided details of your industry or your company. What is your product or service? What kind of backend work does your backend team do? The correct reply can only be given if you provide the information.

Thanks,

*Dinesh Divekar*
[Phone Number Removed For Privacy-Reasons]

I am working in the Event Industry. My management has asked me to calculate the ROI for the sales and backend team. Can anyone here help me with it?

Thank you,
Anjali

Dear Mr. Dinesh Divekar,

Regarding the calculation posted above, kindly note my following observation which requires further clarification:

Firstly, in the given formula, we are simply dividing the entire operating revenue remaining after deducting all expenditures by the cost of employment. This approach undermines the ROI calculation as it does not account for all other factors contributing to revenue.

Regards, Paritosh Kumar 9263777721

Calculating ROI for the HR Department

From a revenue perspective, it is true that calculating ROI for the HR department is a challenge. 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.

Calculating Non-Value Added Hours

Another approach would be calculating how many non-value-added hours the sales team needs to work on activities if there had never been an HR department. The HR team, after all, saves time for the sales team to focus more on 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. Thus, the more the number of non-value-added hours, the lesser the sales value. Therefore, if the HR team was present, the more the HR team contributes to your sales team's revenue.