From the course: AI and Data-Driven Decision-Making for HR
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Using ROI to explain and convince
From the course: AI and Data-Driven Decision-Making for HR
Using ROI to explain and convince
In this chapter, we'll describe how to combine financial information with data analysis to calculate the ROI of different HR-related decisions. For example, when I was preparing this course, I spoke to the talent leader at a mid-sized company who was planning on hiring 100 staff-level professionals in the next 12 months. He estimated the average salary and benefits for these hires at about $150,000 each. He was somewhat surprised when I said this was an additional annual spend of $15 million. That's 100 times 150,000, equals 15 million. What happened next surprised me even more when I told him this group of people were expected to bring in $60 million in additional sales. This was just the company's current revenue per employee of $600,000 times 100. When I asked him if the company was expected to remain just as profitable with these new hires, he said of course. Given that, I said that each person on average had to generate at least $240,000 each in pretax profit. I then pointed out…
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