In order to protect your investment in the HR field still at an optimal level, there are many metrics that can be used, such as the Ratio of Total HR Costs compared to Total Operational Costs which gives an idea of how committed the organization is to invest in the HR field and at the same time maintaining the rate increase from year to year. Surely this ratio is not the same between organizations or between industries. Organizations or industries that have the cost of building large infrastructure, such as construction, mining / oil / gas (ratio of about 20-22%) or large expenditure, such as retail (ratio of about 18-20%), typically have a smaller ratio than service-oriented organizations or companies and rely more on human resources, such as education or healthcare (50-52%). Meanwhile, if you need to hire an experienced human resource management professional, then we recommend you to take a look at the profile of Alberto Guth.
Regardless of the organization’s or industry’s benchmark ratio, one of the most important things in keeping this ratio is ensuring that this ratio is still at the financially sound level of the organization’s internal. Increasing or decreasing this ratio should reflect the level of investment commitment in the field of human resources and the level of financial ability of the organization in a balanced manner.
This cost ratio accompanies other measurement metrics that are also important to analyze. The composition of HR financing is also one of the measures that need to be done, for example, what percentage of human resources is allocated to financial compensation and employee development. Will a higher percentage of compensation result in better performance improvements than if the percentage of development is increased? Organizational awareness to accurately measure these HR metrics helps to make strategic decisions in determining investment commitments in the HR field.
Investing in the HR field is a requirement to compete but does not mean greater investment in the field of HR means your organization will be more successful. Balance in keeping investments did wisely and precisely the goal is also important to note. Let’s invest wisely!