Building a business case for an HR initiative can be a challenge, especially in a tough economy — whether it’s aligning with corporate strategy, gaining buy-in from the executive team or figuring out the return on investment. Canadian HR Reporter talked to six professionals about building a business case at their organization.
Vice-president of HR
Omicron is a Vancouver-based integrated architectural, engineering, interior design and construction firm with 200 employees at three offices in British Columbia and Alberta.
For Heather Claridge, building a business case starts with the business requirements. “So much around the success of an HR initiative is anchored around the quality of the business case and the demonstration of HR’s understanding and appreciation of the business drivers and what needs to be in place to help the business execute on its particular objectives,” says Claridge, vice-president of human resources at Omicron.
Her team always frames a business case around how it will either support an annual, firm-wide objective or long-term strategic direction identified by the organization.
“I would never go in and say, ‘Oh, I think we should be doing leadership development.’ It would be very much a case of: What are our strategic priorities this year, what do we need to accomplish as a business and what will it take for us to be able to execute on these objectives? And, based on that, what are the implications for our HR plan?”
Fortunately, Omicron’s CEO sees HR as a strategic partner, says Claridge. That’s one of the reasons she joined the 200-employee company 18 months ago — the CEO had a vision for where the organization was going and expectations from a strategic HR point of view.
With any business case, it’s essential to keep it short, targeted and all about the business, she says.
“Business hat first, HR hat second,” says Claridge. “If you lead from the people side versus lead from the business side, sometimes you may encounter biases around HR that people have from previous experiences. They don’t really understand what we’re dealing with or what’s going on in the market so you’ve just got to lead with business.”
But return on investment is the most challenging part, she says.
“I find it very, very challenging to use an ROI metric because, for a lot of HR initiatives, it’s hard to draw a direct cause and effect. They influence, there’s causal relationships, but it’s hard to put in a quantifiable, ROI calculation that requires you to make some pretty accurate numerical assumptions.”
As an alternative, Claridge also looks at behavioural changes, through pre- and post assessments or multi-rater input.
“You sometimes get people who are so fixated on the number you have used that you actually lose the value of it,” she says. “The challenge is finding the few but mighty ways to measure something that really tells a story.”
With some of the operational initiatives, such as the implementation of a human resources information system, Omicron will track key transactional times.
“When you build your business case around a specific business issue or need, you then take a look at the operational metrics and what are you really trying to change, improve, enhance and how can you leverage some of the operational metrics as a way to track improvement as well?” she says.
But the stronger the business case, the less reliance on the metrics, says Claridge. While tracking is necessary, it’s also about demonstrating a clear understanding and appreciation of an organization’s multiple priorities and not recommending something that doesn’t appreciate the realities of a budget.
At her previous employer, Claridge was involved with a values and culture identification process. Real estate development and property management firm Century Group decided to improve the values and culture at its seniors homes to improve the resident and employee experience. The company was also keen to recognize employees acting in alignment with that culture.
Working with the general manager, it took six months to build the business case and achieve CEO approval, says Claridge.
“Whenever you do this kind of cultures and values work, it feels a little nebulous. The way it was positioned was: What would the outcome be from this kind of work?”
The key was to explain to the CEO how the change would give the company a clear understanding of leadership requirements and provide a basis for criteria for hiring, criteria for providing feedback to leaders, setting performance expectations and ensuring Century Group had people acting in alignment with its brand message.
“Once we started to talk to him from that perspective, he was more comfortable with it,” she says. “He just wanted to better understand how this would translate into fixing some of the issues they were encountering in their different properties.”
Senior vice-president of people and engagement
Based in Toronto, Nelson Education publishes educational products for kindergarten to Grade 12, higher education, professions, trades and reference, and has about 400 employees.
When making the business case for new HR programs at Nelson Education, Marlene Nyilassy, the senior vice-president of people and engagement, first makes sure she understands the needs of the business and has all the relevant information and data.
“A lot of it comes down to being in communication and listening to what the business needs,” she says.
Then it’s about making the connection between that need and what HR can offer to meet it, says Nyilassy, who has been the head of Nelson’s HR department for more than 13 years.
Over the years, it has become increasingly important for HR to understand the financials of the organization and how certain actions will affect a company’s profitability, says Nyilassy.
This also means HR has to provide more data and more numbers to show how an HR program will affect the organization.
“I’m always providing numbers, I’m always providing statistics around why people leave, why people come, why people like what they like, why they don’t like what they don’t like,” she says.
Annual employee engagement surveys are a great source of this kind of data. But it can be challenging to show exactly what the impact of any given program will be, she says.
“The most difficult thing to quantify is really the return on investment of whatever program or whatever action we want to deliver. Nothing is immediate and it’s not always tangible, particularly when you’re dealing with a behavioural change.”
To address this challenge, Nyilassy has developed close working relationships with various business heads to develop a level of trust, so even if there’s not an immediate business impact, they know the outcome will be worthwhile.
“One of the things I try and do is really help people manage inside of the unknown and trust that whatever happens will be the right thing, even if it’s the learning that something has to be done differently,” she says.
Because of the increased need for HR to better understand the financial impact of programs on the organization, Nyilassy always works very closely with the head of finance when developing a business case.
She also works closely with the head of whatever business unit will be affected by the program.
“It’s really about the relationship. The success of doing any transformation depends, really, on the relationships that are created with the people inside that division,” she says.
Recently, Nyilassy has been working to reorganize and re-engineer Nelson Education’s departments to reflect the transition from print to digital in the publishing world.
“We’re in a business that is faced with a lot of transformation,” she says. Currently, about 80 per cent of Nelson’s products are print-based.
“Going digital is one of our visions but we’re not there yet.”
To be able to support that vision, Nyilassy made the business case for upgrading the skills of employees in the school division (the kindergarten to Grade 12 learning solutions) and ensuring the department has the right people in place to be successful.
“Things can’t be the same-old-same-old. I created a process and got buy-in from the senior leadership for one division to be able to look at all of their positions and be able to rethink and rewrite positions.”
Some of the new skills include project management, driving for results, adaptability, flexibility and proficiency with new technology.
“There used to be a time when people would read things and mark them up on paper — those skills are no longer needed because of the technology,” says Nyilassy.
“While content is still very important, and always will be, the way content is delivered, the way content is created, is new for us and we’re really looking for innovation.”
While creating new people programs that help an organization better meet its business needs is an important part of HR’s work, HR at Nelson is truly the driver of organizational culture, says Nyilassy.
HR does that by owning internal communications. Whenever a department or a manager wants to communicate with employees, it goes through HR first to ensure the message is consistent with the corporate culture, she says.
Also, HR ensures the culture is embedded in all of the company’s policies and practices.
“Everything that we do, every program that we create, not only does it connect to the results of the business but it really connects to building that culture we want in the organization,” she says.
Vice-president, human resources
Kohl & Frisch
Kohl & Frisch is a Concord, Ont.-based wholesale distributor of drugs and over-the-counter medication with five distribution centres and about 850 employees.
Harvey Foote, vice-president of HR at Kohl & Frisch in Concord, Ont., is one of five executives who sits at the company’s executive table, reporting to the CEO. And with that seat comes plenty of responsibility.
“We have a pretty rigorous annual business planning process where we collectively look at the strengths, weaknesses, opportunities and threats across the organization, so that’s where it’s incumbent upon me to show up at the table having done my homework and understanding both the business and my areas of responsibility.”
That means knowing the business well, having conversations with key stakeholders in the organization, looking at the metrics and understanding the CEO’s overall vision and priorities.
“The starting point is not just about putting together a hard-numbers business case. That’s important, but it’s really about professional credibility,” says Foote, who has been at the company since 2004. “I constantly stress this with my team: ‘You’ve got to execute on the small things flawlessly, day to day, before you can even consider a larger program.’”
The expectations around business cases have changed, with a greater expectation for HR to translate the programs into hard returns, he says, particularly when businesses are going through difficult times.
“There’s definitely limited resources, so you’re competing for time and resources, so you’d better be able to show the return. It’s not always easy.”
However, executives are now better-educated about key HR best practices such as engagement, so they tend to understand the impact, says Foote.
“There’s also an intuitive appreciation for these things, what they bring to the business, versus 20 years ago when I think there was a lot of ignorance,” he says. “When you’ve got progressive leaders, that makes it easier when you’ve got those nebulous returns.”
But measurement can still be difficult.
“Aside from benefits program and financial HR pieces, I know there’s a lot of neat co-efficients and tools out there, but it’s still tough to measure things like culture change,” says Foote.
“All too often, what we don’t do in HR to the extent that we should is to go back to those programs and really show the return on investment. We often implement and move onto something else.”
At the very least, HR should try to analyze behavioural changes, even if they’re anecdotal, that lead to positive changes in areas such as safety, service and productivity. It should then take that feedback to the CEO and key decision-makers, says Foote. It’s also about being creative when showing how a program has added value by mitigating a risk to the business or addressing a threat, for example.
It is also imperative to have an ongoing dialogue with other departments to know what’s going on and then to work with those areas in building a business case, he says. As an example, a talent management program at Kohl & Frisch came about after one particular area was having challenges with turnover of key managers.
Three other executives were also interested, so Foote partnered with them to build an overall project plan.
“I pointed to a couple of pain points we were living through at the time that were real,” he says.
In building the business case, it was about stating: “If we had more rigorous talent program, where we’re reviewing talent like financial health on a regular, consistent basis, these pain points might be mitigated,” says Foote.
The timing on the project was also right as it was in sync with where the CEO wanted to take the company.
“He gets it and he’s supportive of the program,” says Foote.
Director of human resources
The grocery store chain has 23 locations in the Greater Toronto Area, with headquarters in Vaughan, Ont. It has 4,200 full-time, part-time and student employees.
Employee surveys conducted by grocery chain Longo’s found employees wanted the company to better support them and their families in health and wellness and the company’s traditional benefits program didn’t measure up, says Liz Volk, director of human resources.
The company’s old benefits package was a one-size-fits-all program that didn’t address different lifestyles and employees didn’t see it as competitive or innovative, says Volk.
Armed with that information, as well as the fact the number of workers at the organization had nearly doubled in the past four years and needed to attract and retain talent going forward, Volk made the case for redesigning the benefits program.
A steering committee, that included Volk, the CEO, CFO and COO, met on a monthly basis to design the new program. The committee determined the benefits should have a proactive, wellness focus and examined current offerings to identify what was lacking when measured against that philosophy.
While cost-containment was a consideration, it wasn’t the most important part of the plan redesign, says Volk.
“We wanted to rework the existing dollars that we used on benefits to stay as steady as we could but come out with a more enhanced offering and have more team member engagement in the program. We’re really looking for people to actively participate in this benefit program,” she says.
The new flexible benefits program includes a wellness account that allows employees to track certain healthy lifestyle activities and receive reward points that can be cashed in for groceries.
Employees first complete a confidential health-risk assessment to establish a baseline of their health and identify where improvements can be made, such as smoking cessation, nutrition or physical activity. Employees can then track these activities online.
The program, which covers about 2,000 employees (student workers aren’t covered), also includes an employee assistance program and a medically managed short-term disability program to help employees return to work, says Volk.
It has taken nearly 12 months to create the program, which takes effect March 1, and recently Longo’s began communicating it to all part-time and full-time staff in the stores, head office and distribution centres. Communication included two-hour education sessions as well as a call centre.
“We’re very confident that people will sign up because there’s so much more to offer them and their families,” says Volk.
In making the business case for HR programs, many of which have the ultimate goal of increasing employee engagement, the most difficult element to quantify is the connection between engagement and business outcomes such as productivity, customer service and margin improvements, says Volk.
“It’s difficult to extrapolate what elements of that team member engagement you can really apply and say, ‘That’s why our sales went up,’ because there’s lots of things that went into it.”
For example, while it’s easy to show the correlation between high employee engagement and lower turnover, it’s harder to show the connection between low turnover and increased customer satisfaction, says Volk.
“Taking it to that next level, that’s what’s challenging.”
Given the tough economic times, it’s increasingly important for all functional areas to show how new programs, products or services will help the organization achieve its business goals.
“It is important, more so now than ever, to show measurable results,” says Volk.
HR has to be just as diligent as other departments in putting together the business case for new programs, she says.
The business case also needs to include measurements before and after the program is implemented, as well as timelines, required resources and any potential challenges, she says.
And Volk always works closely with other areas of the business, especially operations, which is HR’s biggest customer, to ensure programs truly support the business strategy.
“Anytime I would put together a business case, I’m going to be outlining fit with culture, fit with the business strategy. I will always want to be talking about the benefits to our team members, customers and any of our supplier customers,” she says.
Anthony Longo, the company’s CEO, says HR is key to supporting the long-term strategy of the business, says Volk.
“You can do all the programs, products, those types of things but, ultimately, at the end of the day, it’s delivered through our team members. It’s the team member experience that the customer is most impacted by,” she says.
Associate vice-president of human resources
University of Saskatchewan
The University of Saskatchewan in Saskatoon has about 7,500 employees and five bargaining units among its 17 colleges, serving 20,000 students.
There are more than a few layers to contend with when it comes to HR strategies at the University of Saskatchewan. The employee count is about 7,500 and there are five bargaining units among the 17 colleges or schools, which each have a dean who is essentially a CEO, along with 11 administrative units. The 20,000-student university based in Saskatoon also uses a tri-cameral governance model, with a senate, a board and a council.
“When you talk about making the business case at a university, it’s making the business case for the board of governors, making the academic case for council and then making the professional and community interests argument for senate,” says Barb Daigle, associate vice-president of HR at the University of Saskatchewan. “It’s a fairly complex environment to be able to show the value-add.”
The business case needs to fit with the directions of the institution you’re working for, she says. “And in the case of a university, of course, there’s an academic agenda and it’s about reverse allocations more than it’s about the bottom-line profit margins.”
Daigle was hired by the university eight years ago to support transformative change, in terms of strategic directions. At that time, HR was very much a transactional body, says Daigle, so the first effort was not to pick a particular program but position HR as something more than a cost centre.
“The business case, if you will, or the case that needed to be made for new programs in the organization, was, first and foremost, to align ourselves to the strategic directions of the institution,” she says.
As part of the transformation, HR looked at problems that had been set aside or ignored and were barriers to the university’s success. It was then a matter of working in partnership with the senior executive team to reduce those barriers and change the culture and the people.
“HR leaders should focus on measurement for sure to make the business case but the best business case is to help shift the culture to support the directions and, that way, the whole institution starts to move forward,” says Daigle.
One of the university’s strategic priorities has been to attract and retain outstanding faculty. As a result, Daigle was heavily involved in an enterprise risk management strategy to identify the risk factors from a people perspective for the institution. Three of the top 10 risks at the university are people-related so it’s not just about cost, she says.
“When you can position things that are harder to measure as risks if they’re not properly resourced, in the public sector environment, it becomes more around resource allocation than it does around return on investment because some of those metrics are harder to come up with,” says Daigle. “The board pays attention to the organization’s top risks.”
If HR needs to make a case for more resources and garner the attention of the people it needs to partner with in the organization, then having numbers to make the business case is great but not necessary, says Daigle.
“You can have all the ROI numbers in the world but if you can’t make the case as to how your profession can add value to the strategic directions of your organization, the numbers aren’t going to matter.”
Daigle led the development and implementation of an employee opinion survey at the university. The engagement index is now used in the school’s overall achievement record.
“Employee engagement is an indicator of success,” says Daigle. “That’s a very clear link of how human resources programs can support the overall strategic initiatives and, if they don’t, then you’re not going to be able to make your business case.”
It isn’t a business case HR is building so much as a strategic case, she says.
“I don’t even think in terms of ‘business case’ anymore, I think in terms of ‘How will this initiative support strategic directions?’ Or, if I see a gap in terms of the university’s success, ‘Is that a people issue? How can human resources add value in ways that, if we don’t do it, the university’s success will be at risk?’”
Chief human resources officer
Bethesda provides residential group home living and outreach services to more than 1,100 people with developmental disabilities in the Niagara, Hamilton, Brant and Haldiman/Norfolk regions in Ontario. The organization has about 500 employees, with 250 belonging to one of three unions.
Four years ago, Bethesda’s employee appreciation program was a disaster. Instead of engaging employees, the annual Christmas dinner employees had to pay to attend was creating negative morale, says Paul McGowan, chief human resources officer at Bethesda.
“They weren’t attending. It was actually disengaging,” he says.
Along with the dinner, employees with five years of service received pins, which most employees didn’t like, he says.
Employee feedback about the event was pretty negative so one of McGowan’s HR generalists held a focus group with employees to find out what they wanted from a recognition program. Based on staff input, McGowan met with the finance department to develop a budget and approached operations to ensure the new program would meet employees’ needs.
In developing any new HR program, McGowan, who has been at Bethesda since 2001 and the chief HR officer for the past three years, usually works with the finance and communications departments. But the most important business partner is operations because the goal of any HR program is to support the operations of the organization, he says.
“If we noticed there was a need, we would meet with operations, identify that need and come up with an HR case on how to fix that and work with operations to implement it.”
Once he had operational support for the new employee appreciation program, McGowan brought it up with the senior management team to get the go-ahead.
Under the new program, which took about one year to implement, Bethesda hosts a summer barbecue at amusement park Marineland and a Christmas event at an indoor water park for employees and their families, as well as an employee-only dinner for service awards. And instead of pins, employees can choose their own awards online, says McGowan.
“The program has been in place for three years and we continue to revamp it every year, little bit by little bit,” he says.
Attendance at the events is up 160 per cent compared to the old appreciation dinner, and employee surveys have shown an increase in engagement and in the likelihood of employees recommending Bethesda as an employer, says McGowan.
The organization has also seen a decrease in turnover and grievances, he says.
Being able to show these kinds of effects is part of the reason Bethesda’s CEO sees HR as a strategic partner.
“About 80 to 90 per cent of (Bethesda’s) budget is spent on staffing, so there’s always an HR component to every business decision we make,” says McGowan.
This is a trend he has noticed in the business world.
“HR is more of a strategic partner now than 10 years ago when it was someone you would talk to after you’ve made the strategic decision,” he says.
But this also means HR programs have to support operations in achieving corporate strategic goals and HR has to show the programs’ return on investment to gain executive support, instead of just relying on the fact the programs will be a “feel-good” for employees, says McGowan.
“There needs to be true planning of budget, marketing, target audience — everything,” he says. “We have to show what the return on investment is going to be, how we’re going to obtain those goals, measure those goals.”