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Build a strong business case for HR investment

09 April 2009 8:52am

Meeting today’s HR challenges requires innovative thinking and spending some cash, says Onetest CEO Steven Dahl, and “how you ask for it will make all the difference”.

According to Dahl, the ability to build a business case for HR investment is critical as economic conditions worsen and businesses become more selective in their spending.

A business case is not just about numbers, he says. “It’s about a strong case and how to build it.”

The first step is to clarify your objective – why are you asking for money? This might be, for example, because you want to reduce the time it takes to hire new staff in your Brisbane call centre, or because you want to improve the retention rate in your sales team in Melbourne.

“Whatever your objectives are, have demonstrable proof of the issue and that it needs to be solved.”

The next step is to “gather your allies”, he says. “Get the people who feel the pain of the problem most to assist you.”

Keep asking them why it is an issue, and what it will mean for the organisation if the problem is solved. “There must be consequences in order for the CEO to act. This is the difference between a strong and a poor business case.”

Answering questions as to who is feeling the pain, and why it is an issue for your business, forces you to think analytically, “the way decision makers will”.

HR people, Dahl says, often use “I feel” and “I believe” statements, such as “I think we’re taking too long to fill roles in Parramatta”.

A stronger business case looks deeper into the issue. For example: “Our time to fill is 35 days … we have 10 shifts vacant … costs us $14,000 … stress levels would decline … stress led to 35 per cent of our staff leaving … reduce our time to hire by 50 per cent … increase our production by $28,000 per month … would cost us $2,500 per month … ROI of 11 times … it could be done within eight weeks … benefits would be seen within the first four weeks.”

When building a business case, Dahl says, HR managers should:
conduct further quantitative investigations to support “initial qualitative rumblings”;

use historical data;

apply a dollar cost to the problem;

identify additional flow-on benefits;

address the issue with a known solution;

use a case study or reference site for peace of mind – what are your peers doing?

compare the cost of the initiative to the return on investment; and

determine a timeframe to see some results.

Choose your battles
There are myriad things HR could spend money on, so you must “choose your battles”, Dahl says.

Consider what will deliver the biggest positive return for the business, he advises. To determine this, talk to a wide range of staff and consider conducting surveys, which add rigour to your case.

Write a list of their challenges and rank them according to how important and/or urgent they are. “Issues that will impact the CEO will get more priority.”

If you’re inexperienced at presenting business cases Dahl advises you to “get some smaller wins on the board first”.

“Choose smaller things, shorter timeframes; pick easier targets to build your confidence.”

Presentation is key
How you present and deliver the business case will have a significant impact on whether it wins approval, Dahl notes.

“Bad business cases have been approved because of an ability to sell, while good business cases may not be approved due to poor communication, poor structure, lack of evidence, or a lack of confidence.”

Before you get too far down the track in formulating the case, Dahl says, think about your target audience. “Who is the decision maker? What are their motivators? What is their style? Who will influence the decision, and what are their drivers and behavioural style? These will influence how you structure your business case and how you deliver it.

“You can’t present the same way to different people – for example a CFO and a head of marketing. ‘Your way’ won’t work for everyone you’re presenting to. You need to get into the hearts and minds of decision makers. Do this early, while you’re constructing your business case.”

You should consider:
whether to use statistics and data or case studies and analogies;

using images, graphs and pictures versus text and numbers;

the length of your presentation. The higher up the ‘food chain’, the more time-poor people are – they’ll prefer a simple analysis ;

the level of detail required – remember all decision makers dislike superficial analysis;

whether to send an agenda beforehand;

whether to send a “thank you” and summary afterwards;

where to hold the meeting – off-site or in the boardroom.
Essential elements
Ultimately, Dahl says, a strong business case must either:
save time, or give someone important some time back to do other things;

save money or make money; or

increase comfort or make life easier/better – for example, reducing stress levels by automating a process (but remember to tie “comfort” back to facts and figures).
“The more you can demonstrate time, money or comfort, the stronger your business case will be.”

http://www.hrdaily.com.au/nl06_news_selected.php?act=2&nav=1&selkey=1125

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