Hi, I am working as HR in a Pvt. Ltd. company. Now, my question is: can we calculate the ROI of the support/backend team? What are the factors to evaluate their ROI?
For the sales team, it's easy to evaluate their ROI as they have targets. The same applies when we hire people for the backend. If there are no targets, how do we calculate their ROI?
From India, Kolkata
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2For the sales team, it's easy to evaluate their ROI as they have targets. The same applies when we hire people for the backend. If there are no targets, how do we calculate their ROI?
From India, Kolkata
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Dear Richa,
We can calculate the *Human Capital Return on Investment* for the organization or enterprise as a whole, but the calculation of the ROI of the employees for a specific department is difficult. Last year, a query was raised on the calculation of HCROI. Click the following link to refer to my replies:
[Link to the post](https://www.citehr.com/598564-outcome-hcroi-human-capital-return-investment.html#post2390951)
Go through the above link patiently. I have explained the difference between the calculation of HCROI for manufacturing and service industries. Furthermore, I have explained how capacity utilization improves HCROI in the service industry.
By the way, how did you calculate the ROI of the salespersons? Did you calculate the targets that they met with any other parameters?
Instead of measuring the ROI, you may measure the effectiveness of the human resources employed at the backend. For this, you may calculate the output per person. A few examples could be:
a) Number of telephone calls handled per person
b) Reduction in the turnaround time of each telephone call
c) In the insurance industry, the turnaround time to settle the insurance claims
You have not provided details of your industry or your company. What is your product or service? What kind of backend work does your backend team do? The correct reply can only be given if you provide the information.
Thanks,
*Dinesh Divekar*
+91-9900155394
From India, Bangalore
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We can calculate the *Human Capital Return on Investment* for the organization or enterprise as a whole, but the calculation of the ROI of the employees for a specific department is difficult. Last year, a query was raised on the calculation of HCROI. Click the following link to refer to my replies:
[Link to the post](https://www.citehr.com/598564-outcome-hcroi-human-capital-return-investment.html#post2390951)
Go through the above link patiently. I have explained the difference between the calculation of HCROI for manufacturing and service industries. Furthermore, I have explained how capacity utilization improves HCROI in the service industry.
By the way, how did you calculate the ROI of the salespersons? Did you calculate the targets that they met with any other parameters?
Instead of measuring the ROI, you may measure the effectiveness of the human resources employed at the backend. For this, you may calculate the output per person. A few examples could be:
a) Number of telephone calls handled per person
b) Reduction in the turnaround time of each telephone call
c) In the insurance industry, the turnaround time to settle the insurance claims
You have not provided details of your industry or your company. What is your product or service? What kind of backend work does your backend team do? The correct reply can only be given if you provide the information.
Thanks,
*Dinesh Divekar*
+91-9900155394
From India, Bangalore
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I am working with an Event Industry. My management has asked me to calculate the ROI for sales and backend team. Can anyone here help me with it ? Thank You Anjali
From India, Delhi
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From India, Delhi
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Dear Mr. Dinesh Divekar,
Regarding the calculation posted above, kindly note my following observation which requires further clarification:
Firstly, in the given formula, we are simply dividing the entire operating revenue remaining after deducting all expenditures by the cost of employment. This approach undermines the ROI calculation as it does not account for all other factors contributing to revenue.
Regards, Paritosh Kumar 9263777721
From India, Kolkata
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Regarding the calculation posted above, kindly note my following observation which requires further clarification:
Firstly, in the given formula, we are simply dividing the entire operating revenue remaining after deducting all expenditures by the cost of employment. This approach undermines the ROI calculation as it does not account for all other factors contributing to revenue.
Regards, Paritosh Kumar 9263777721
From India, Kolkata
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From a revenue perspective it is true that calculating ROI for the HR department is a challenge.
So, one approach could be comparing the HR operating costs to the rates of outsourcing the same HR function to an external HR service provider and focusing on the savings margin calculation.
Another approach would be calculating how many non-value added hours the sales team needs to work on, for activities if there never had been an HR department, because the HR team after all saves time for the sales team to focus on more of core sales work. Each non-value added hour that would have been spent by the sales team on HR activities could be equated to the value added hour by the sales team, such that the more the number of non-value added hours, the lesser the sales value and therefore if the HR team was present, the more the HR team contributes to your sales team’s revenue.
From India, Bengaluru
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So, one approach could be comparing the HR operating costs to the rates of outsourcing the same HR function to an external HR service provider and focusing on the savings margin calculation.
Another approach would be calculating how many non-value added hours the sales team needs to work on, for activities if there never had been an HR department, because the HR team after all saves time for the sales team to focus on more of core sales work. Each non-value added hour that would have been spent by the sales team on HR activities could be equated to the value added hour by the sales team, such that the more the number of non-value added hours, the lesser the sales value and therefore if the HR team was present, the more the HR team contributes to your sales team’s revenue.
From India, Bengaluru
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