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Focus on Bottom Line Means Vendors Must Provide Metrics

June 20, 2005
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In the wake of a three-year bear market, CEOs—looking to tighten margins—are more involved than ever in the human resources initiatives of their companies.

Five years ago, employers could team up with HR vendors with the vague notion that someday the service would contribute to their companies' bottom lines. These days, however, the CEO and other top executives usually will sit in on vendor meetings and want to know what results they will see—and when.

"CEOs and CFOs are putting more pressure on the human resources executives to really align efforts with the bottom line," Don Payne, senior vice president of leadership solutions at Aon Consulting, said in an interview before the start of the SHRM conference. "They are tired of carrying HR as a cost center. They want to understand how their efforts measure up."

For vendors, this means they need to provide specific metrics and benchmarking tools so that human resources executives can show their CEOs how their recruiting, training, retention and other efforts are paying off.

"The ultimate goal for vendors is to be able to track the employee from cradle to deathbed," said Rick Fletcher, president of HRchitect, a Frisco, Texas-based human capital management systems consulting firm.

It's no longer enough for a recruiting program to bring in lots of people. The employer now wants to know what kinds of people are recruited and how they contribute to the bottom line. CEOs want to know how rewards programs and training affected an employee's productivity. "For every HR process, the CEO wants to know, 'What is our return on investment?' " Payne said.

Read the rest of this story and learn about more trends coming from the annual SHRM conference in the Daily Conference News microsite.

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