"Cost-Benefit" Analysis Applied to Personnel/Human Resource Management Decisions

Abstract

[Excerpt] Every model for improving quality in manufacturing or service emphasizes the need to understand customer or client needs, measure achievements in terms of those needs, and use measurements to adjust processes so that the needs are better met. For many clients of the personnel functions, such as line managers and shareholders, meeting their needs means demonstrating competitive return on investment. In a very real sense, the resources used to support human resource programs/processes could also be used to buy new equipment, pay stock dividends, or purchase raw materials. Thus, the results of personnel investments must produce enough value to justify shifting the resources from these other purposes. Cost-benefit analysis provides a framework and system for understanding what information best reflects the needs of clients, and how to organize and use that information so that progress toward meeting client needs is clearly evident. Cost-benefit analysis shifts the focus away from simply improving personnel processes and toward improving personnel business outcomes.