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Value engineering in human resources


“Today there’s a very strong desire for CFOs and CHROs to see measurable, incremental value from HR investments, and one way to do that successfully is to utilize value engineering (VE) methodology.

Organizations that have successfully used the VE methodology of measuring and tracking value have witnessed higher productivity, lower turnover rates and decreased costs for employers.”

Jas Madan, Senior Vice President, Value Engineering

Q: We know that this has been a tough time for employers and employees alike. Tell us about some of the trends we’ve been seeing across the board.

A: When we look at employee wellbeing, it’s down in every category — social, physical, career and financial. Further, we’ve never seen employee engagement rates as low as they are now.

People seem to be struggling when we see stats such as only 50% people with mental health issues get help, 60% of employees are unable to retire when they want to and over 64% of employees are looking to leave their current company. One clear conclusion is that despite organizations spending significant amounts on HR and benefit programs and technology, it’s not creating happier and more engaged employees, and it’s time to re-think the strategy. 


Q: The data you mentioned is clear — employees are not engaged at work and are struggling to remain healthy and financially secure. What do employers need to do to approach these challenges and how do they go about it?

A: This is where it can get tricky for employers that may not see the most accurate picture. Sure, employers want to offer the best benefits to help their employees thrive in the workplace and at home, but simply having access to a plethora of options and adding new ones doesn’t solve the problem.

Employers have to take this opportunity to redefine the entire employee experience and revaluate what great looks and feels like in their workplace. That includes things like taking stock of how supported their employees feel when it comes to improving their health and wellbeing and how they are utilizing various programs and tools that are being offered to them.

When employers enable a more optimal and modern employee engagement throughout the entire employment lifecycle, they can truly drive higher value on their HR investments.  


Q: HR leaders naturally play a large role in finding a balance between keeping employees happy and maintaining budget costs. How has the role of HR leaders shifted and what does that mean for their budget?

A: The role of HR leaders has evolved over the last few years as their seat at the table has become increasingly critical to a company’s brand, stability and growth. There is unspoken pressure to balance the needs of all stakeholders, especially employees and communities, and HR leaders have a strategic role as a counselor to the CEO, C-suite and executive board members. As a result, HR leaders are thinking differently about how to gain competitive advantage in this tough talent market and show up differently with their employees every day.

Regarding their budgets, they’re naturally being scrutinized even more closely, and leaders are being asked to prove the value of their existing investments with hard metrics and dashboards. That can be difficult to do as many organizations have a large portfolio of HR-related investments — showing value at the individual level is a laborious task and, in some cases, a nearly impossible one. 


Q: So how can organizations highlight the value of their HR investments to get buy-in?                             

A: Today there’s a very strong desire for CFOs and CHROs to see measurable, incremental value from HR investments, and one way to do that successfully is to utilize value engineering (VE) methodology. As part of the VE process, organizations baseline, benchmark and track key performance indicators (including HR spend and program utilization rates) to identify opportunities of improvement. This process also includes actively listening to employees to understand their needs.

Organizations that have successfully used the VE methodology of measuring and tracking value have witnessed higher productivity, lower turnover rates and decreased costs for employers.


Q: It’s obvious that utilizing value engineering can be extremely valuable for employers to highlight the ROI of their HR investments. What’s the next step to get this implemented?

A: Measuring the organization’s current maturity and performance levels is a good place to start. This sets the foundation for developing executive level and value-based business cases that are backed by data and aligned to the organization’s broader goals, like attracting and retaining talent, increasing employee engagement and improving employees’ health and financial wellbeing.

These business cases must go beyond the traditional cost-to-transact model and focus more on outcome-based KPIs such as payroll leakage reduction, talent retention, improvements in employee engagement and beyond.


Q: Walk me through the journey of developing a robust business case.

A: It’s not enough to simply compare costs — executives want to understand and measure business outcomes that HR initiatives will drive. They can start with aligning on KPIs and business objectives and identifying what is most important. From there, they can take a look at where they are today to be able to baseline performance before looking at improvement and solution options. Using a partner that has access to benchmarking data and insights can really help when it comes to accessing cross-client, cross-industry experience to compare against.

Once you have addressed these components, you’re set up to explore solutions,  identify improvement opportunities and define both qualitative and quantitative value.  


Q: What other tips would you share with those looking to develop a business case and explore value engineering?

A: I can’t emphasize enough the value of a trusted partner. Leveraging the power of data available through your vendors can unlock unrealized potential and help you excel when it comes to staying ahead of the curve.

For example, at Alight we have data from across 30+ million people and 200 million interactions. As we go through a value engineering engagement, we compare a client’s performance to this extensive dataset, thereby providing a head start to the business case process.

I also want to mention that the business case process is truly just the beginning. Defining what the potential value is and implementing the right solutions will put you on the right path, but tracking KPIs in the business case will really allow you to highlight success and maximize return over time. It will also hold your strategic partners and vendors accountable for helping you deliver the desired outcomes.

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