The intent of this project is to help you to begin to understand the process of conducting a cost benefit analysis of a particular HR management policy or practice of your choosing. I don't expect you to actually carry out such a project; rather, the assignment requires that you outline in detail the data that you would require and the steps that you would follow should you be asked to perform such an analysis within your own organization.
Examples of potential projects:
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Outsourcing of benefits administration, recruiting, etc.
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Costs and benefits of an executive development (training) program.
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Determining the economic benefit of high vs. low performing employees.
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Determining the economic costs of turnover of high and low performing employees.
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Determining the costs of absenteeism.
Some of the questions that you should address include the following:
1. Why have you chosen the particular HR policy or practice for analysis? In general, would you expect that economic gains in this particular area would primarily be associated with lower costs, enhanced value (however you define it), or both?
2. Describe the potentialcostcategories that you have identified. How will you collect data on each element? Can you distinguish betweenfixedandvariablecosts in your analyses? How will you ensure the integrity of these data (i.e., how can you be sure that the data you have collected are reliable and valid)?
3. Describe the potentialbenefitcategories that you have identified. How will you collect data on each element? How will you ensure the integrity of these data (i.e., how can you be sure that the data you have collected are reliable and valid)?
4. Describe the procedure that you would use to calculate the ROI of your particular practice. Does this procedure consider multiple time periods and the time value of money?
5. Finally, describe how you would present your findings to a senior executive team.