Effectivley managing human capital: A new outlook on ROI and 
cost-benefit analysis

By on January 29, 2014

The constant chat of economic troubles foreseeable in South Africa’s future may just hinder your stride into the New Year.

As we are constantly reminded times are tough and many economists continue to predict challenging economic times for South Africa for the foreseeable future.  It is during these times that business leaders are placed under even more pressure to show the value of initiatives and projects, says Jay Owens, partner and consultant at The Human Edge and accredited ROI Institute member and trainer.

The concepts of cost-benefit analysis and Return-On-Investment (ROI) are nothing new.  Both have been used time after time to show the value of programmes, processes and initiatives.  Cost-benefit analysis is grounded in welfare economics and public finance with ROI in business accounting and finance.  Together the two are the ultimate measures of profitability, but alone, they are insufficient when dealing with the complexities of human capital.

While cost-benefit analysis and ROI report the financial success of programmes, the concern is that they omit critical evidence as to why the financial impact is what it is.  By balancing financial impact with measures that address individuals’ perspectives and the systems and processes that support the transfer of learning, a complete story of programme success or failure can be reported.

There is an ongoing call for business, government and public institutions alike to be accountable for their actions.  ROI analytics enables this accountability, providing descriptive data and hard financial measures.  On a global scale, the methodology is rated as a leading approach to programme evaluation because it reports a balanced set of measures, follows a methodical step-by-step process and adheres to standards of maintaining a conservative approach with credible outcomes.

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