WHAT IS THIS CAUSAL MODEL?

It shows the strength of the impact (or "cause") on business outcomes of investment in specific Human Resource programs such as:

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Return on Investment (ROI)

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Employee Engagement

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Attraction and Retention of Employees

HOW CAN YOU USE THIS?

Where HR budgets and resources are limited and the bottom line of the business is paramount, the causal model can help you direct Human Resource efforts and budgets towards those programs that will most likely have the greatest Return on Investment (ROI).

It shows the strength of influence or "cause" of a factor or factors on the another factor.  Often there are several factors that can be identified as influencing the outcome of a factor.  When there is a strong positive or negative influence, research indicates that changes to the "Causal" factor should influence the outcomes of the related factor.  A simple example is shown below (Causal Model Sample link) with the GREEN arrows indicating a positive relationship and the RED arrows a negative relationship.  RED = Stop  GREEN = Go or increased investment / resources in the causal factor is predicted to increase results in the results in the resultant factor.

Interpretation

• In this example, the factors have been identified to have the greatest impact on increasing the productivity of Human Capital (Labour) are:
  • Using specific incentive rewards to encourage increased performance while base pay and benefits do not have a significant impact on productivity nor engagement
  • Decreasing turnover has a direct impact on increasing employee satisfaction and engagement
• This indicates that in this industry or organization there is greater Value for Money in investing in incentive rewards and other retention strategies.
• The investment in the following do not return a significant increase in productivity for each dollar ($) spent:
  • Benefits
  • Base Pay
  • Training and Development