Investing in People Financial Impact of Human Resource Initiatives (2nd Edition)

Wayne F. Cascio, John W. Boudreau

A decision-science approach to human resource measurement that shows leaders how to estimate the financial impact of HR initiatives and make better, evidence-based investments in talent.

Investing in People reframes human resource measurement from an exercise in cost accounting into a rigorous decision science on par with finance and marketing. Drawing on decades of research in psychology, economics, accounting, and finance, Cascio and Boudreau provide logical frameworks, analytical tools, and concrete formulas for valuing investments in absenteeism reduction, employee retention, health and wellness, employee attitudes and engagement, work-life programs, staffing and selection, job performance, and training and development. The book's organizing principle is the LAMP framework (Logic, Analytics, Measures, Process) and the talentship decision science of efficiency, effectiveness, and impact. Rather than spreading investments evenly across the workforce in a 'peanut-butter' fashion, the authors show readers how to identify pivotal talent pools where improvements in quality, quantity, and cost create the biggest strategic difference. With worked examples, software references, and guidance on communicating results to skeptical decision makers, the book equips HR and non-HR leaders alike to make smarter, more strategic decisions about people.

The model it argues

A decision-science model in which HR investments and design levers operate through psychological and behavioral states of employees to produce strategic and financial outcomes, with measurement valuable only insofar as it improves vital talent decisions. Encompasses the talentship anchor points (efficiency, effectiveness, impact) and the LAMP framework.

Key ideas

HR Program Investments and Design Levers: The resources expended and design choices made in HR programs and practices intended to improve the quantity, quality, and cost-effectiveness of talent.
Leadership and Supervisory Support: The extent to which managers and supervisors support, communicate, train for, and reward the use and application of HR programs, providing the cultural conditions for program success.
Workforce Quality (Validity-Driven Talent Quality): The level and dispersion of workforce capability produced by staffing, selection, and development, reflected in validity and applicant/employee quality.
Employee Health and Wellness: The physical, emotional, social, spiritual, and intellectual well-being of employees, reflecting balance and the absence/management of risk factors and illness.
Employee Attitudes (Satisfaction, Commitment, Engagement): Internal states comprising job satisfaction, organizational commitment, and engagement (vigor, dedication, absorption) toward work and organization.
Work-Life Fit: The degree to which employees achieve a workable fit between work demands/rewards and nonwork demands/rewards, with reduced stress, burnout, and conflict.
Employee Attendance Behavior: The behavioral pattern of reporting for and remaining at work as scheduled (inverse of unscheduled absence and presenteeism).
Employee Retention / Turnover Behavior: The behavioral pattern of employees staying with versus leaving the organization, including voluntary and involuntary separations.