Program Cost Data
Program cost data reveal the actual cost of the HR solution or program and actually represent a fully loaded cost profile. This data reflect all the direct costs (for example, the cost of photocopying materials for that program) and indirect costs (for example, the support needed from the accounting department to support the program) of the specific HR function, project, solution, or program.
Reaction Data
The first category of outcome data from an HR program is basic reaction data (level 1 evaluation). These data represent an immediate reaction to the program from a variety of key stakeholders, particularly those who are charged with the responsibility to make it work. At this level a variety of basic satisfaction and reaction measures are taken, often representing 5 to 15 separate measures to gain insight into the reception and enthusiasm or disappointment with the HR initiative.
Learning Data
As employees become involved in an HR initiative, they must acquire information, absorb new knowledge, or learn new skills. In some cases as they attempt new skills, employees must gain confidence in using those skills in the workplace setting. This level of measurement (level 2) focuses on the changes in knowledge and skill acquisition and details what employees have learned to make the HR program successful.
Some HR solutions have a high learning component, such as those involved in competencies, skill development, compliance, education, and learning. Others may have a low learning component, such as policy changes, reward systems, compensation, and new benefits. In these situations, the learning involves understanding how processes work and what tasks or steps must be taken to make the program successful.
Application and Implementation Data
Application and implementation are key measures that show the extent to which employees have changed their behavior or implemented the HR program (level 3). These data reflect how employees take actions, make adjustments, apply new skills, change habits, implement specific steps, and initiate processes as a result of the HR program.
This is one of the most powerful categories of data because it not only uncovers the extent to which the HR program is implemented but also details the reasons for lack of implementation in some cases.
At this level, barriers and enablers to application and implementation are detailed, and a complete profile of success at the various steps of implementation is provided.
Business Impact Data
Every behavior change achieved or action taken in application and implementation has a consequence. This consequence can be described in one or more measures representing an impact on the employee’s own work environment, as an impact directly on his or her team or as an impact in other parts of the organization.
This level of data (level 4) reflects the specific business impact and may include measures such as output, quality, costs, time, job satisfaction, and customer satisfaction that have been influenced by the application and implementation of the program. A direct link between business impact and the program must be established for the HR program to drive business value. At this level of analysis, a technique must be used to isolate the effects of the HR program from other influences that may be driving the same measure. Answering the following question is imperative for the HR department: how do you know your HR program caused the improvement and not something else?
Return-on-Investment Data
This level of measure compares the monetary value of the business impact measures to the actual cost of the HR program. Return on investment is the ultimate level of accountability and represents the financial impact directly linked with the program, expressed as a benefit/cost ratio or return-on-investment percentage. HR practitioners often refer to this measure as the “fifth level of evaluation.”
Intangible Data
The intangible benefits consist of measures that are intentionally not converted to monetary value. To develop the ROI, you must convert business impact measures to monetary value. In some cases, however, converting certain measures to monetary values simply is not credible. In these situations, the data are listed as an intangible only if linked to the HR program.
Excerpted from Jack J. Phillips and Patricia Pulliam Phillips, Proving the Value of HR: How and Why to Measure ROI, second edition (SHRM, 2012).
7 Types and Levels of HR Program Evaluation Data
Program Cost Data
Program cost data reveal the actual cost of the HR solution or program and actually represent a fully loaded cost profile. This data reflect all the direct costs (for example, the cost of photocopying materials for that program) and indirect costs (for example, the support needed from the accounting department to support the program) of the specific HR function, project, solution, or program.
Reaction Data
The first category of outcome data from an HR program is basic reaction data (level 1 evaluation). These data represent an immediate reaction to the program from a variety of key stakeholders, particularly those who are charged with the responsibility to make it work. At this level a variety of basic satisfaction and reaction measures are taken, often representing 5 to 15 separate measures to gain insight into the reception and enthusiasm or disappointment with the HR initiative.
Learning Data
As employees become involved in an HR initiative, they must acquire information, absorb new knowledge, or learn new skills. In some cases as they attempt new skills, employees must gain confidence in using those skills in the workplace setting. This level of measurement (level 2) focuses on the changes in knowledge and skill acquisition and details what employees have learned to make the HR program successful.
Some HR solutions have a high learning component, such as those involved in competencies, skill development, compliance, education, and learning. Others may have a low learning component, such as policy changes, reward systems, compensation, and new benefits. In these situations, the learning involves understanding how processes work and what tasks or steps must be taken to make the program successful.
Application and Implementation Data
Application and implementation are key measures that show the extent to which employees have changed their behavior or implemented the HR program (level 3). These data reflect how employees take actions, make adjustments, apply new skills, change habits, implement specific steps, and initiate processes as a result of the HR program.
This is one of the most powerful categories of data because it not only uncovers the extent to which the HR program is implemented but also details the reasons for lack of implementation in some cases.
At this level, barriers and enablers to application and implementation are detailed, and a complete profile of success at the various steps of implementation is provided.
Business Impact Data
Every behavior change achieved or action taken in application and implementation has a consequence. This consequence can be described in one or more measures representing an impact on the employee’s own work environment, as an impact directly on his or her team or as an impact in other parts of the organization.
This level of data (level 4) reflects the specific business impact and may include measures such as output, quality, costs, time, job satisfaction, and customer satisfaction that have been influenced by the application and implementation of the program. A direct link between business impact and the program must be established for the HR program to drive business value. At this level of analysis, a technique must be used to isolate the effects of the HR program from other influences that may be driving the same measure. Answering the following question is imperative for the HR department: how do you know your HR program caused the improvement and not something else?
Return-on-Investment Data
This level of measure compares the monetary value of the business impact measures to the actual cost of the HR program. Return on investment is the ultimate level of accountability and represents the financial impact directly linked with the program, expressed as a benefit/cost ratio or return-on-investment percentage. HR practitioners often refer to this measure as the “fifth level of evaluation.”
Intangible Data
The intangible benefits consist of measures that are intentionally not converted to monetary value. To develop the ROI, you must convert business impact measures to monetary value. In some cases, however, converting certain measures to monetary values simply is not credible. In these situations, the data are listed as an intangible only if linked to the HR program.
Excerpted from Jack J. Phillips and Patricia Pulliam Phillips, Proving the Value of HR: How and Why to Measure ROI, second edition (SHRM, 2012).
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