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

The Purpose:

Data was submitted from over 40 organizations from a variety of industries.

The purpose was to show the strength of the impact (or "cause") on business outcomes of investment in specific Human Resource Programs such as:

• Return on Investment (ROI)

• Employee Engagement

• Attraction and Retention of Employees

The strength of these "causal" relationships can be used to prioritize and validate HR efforts and investment in particular HR Programs by identifying those programs that will have the greatest Return on Investment.  In other words the Causal Model demonstrates how HR impacts the organization business performance.

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.

This study provides an introduction to critical Human Capital metrics and will enable you to:

• Identify Drivers for Human Capital productivity, to apply to your organization  

• Demonstrate linkage between Human Capital investment and the bottom line of the organization  

• Demonstrate the value of Human Resources programs at the Executive table using hard metrics data

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