NRI Papers
No.51   July 1, 2002
  Human Resource Development Systems Focusing on HR ROI  
Masaki ASANO and Kazuki OHARA
         The importance of having a measure of human resource development with which a company can focus on the employee as an individual is increasingly receiving attention. Meanwhile, the traditional model that provides an across-the-board development program for each qualified working level has become insufficient in terms of corporate HR strategies.
     The results obtained from a recent survey carried out by NRI (Nomura Research Institute, Ltd.) on listed companies also reflect this new trend. As only a few companies actually keep track of human resource development costs on an individual employee basis, a means to establish an effective standard for managing and assessing human resource development is required.
     Spending on human resource development should not be considered simply as costs, but rather as investment. Taking investment efficiency into account and appropriately managing it should improve the effectiveness of human resource development. The concept of an "HR ROI" (human resource return on investment) as defined in the following equation is proposed as a standard for this purpose.
Formula for ROI

     To improve the functional level of an organization over the long term, it is necessary to envision the employee career path based on the thrust of the company's management, and to create a training and development system that combines OJT (on-the-job training) with OffJT (off-the-job training).
     The ultimate benefit of setting an HR ROI comes in the ability to rationally offer training and development opportunities to high-performance employees. For a company to ensure its competitiveness over the long term, it is critical to provide attractive business opportunities to those employees with a high market value so that they will voluntarily commit themselves for the long term. To implement this, it is necessary to take a long-term perspective in approaching human resource development and to focus on target-oriented human resource management systems per se.
I Impetus Human Resource Development Management Based on Corporate Culture
II Issues in Promoting Human Resource Development Management
1 Defining Human Resources Ideal for Implementing Strategies and the Corporate Vision
2 Verification of Cost Effectiveness in Human Resource Development
3 Providing Sufficient Development Opportunities to High-Performance Employees
4 Designing Career Paths by Combining OffJT and OJT
III Cases of Human Resource Development Management That Focus on Individual Staff Members
1 Selecting Content for Human Resource Development Through Consultations
2 Strategic Allocation of Selected and Developed Human Resources
IV Directions in Building Human Resource Development Systems That Focus on HR ROI
1 Development Costs as Investment in Human Resources
2 Calculating the HR ROI
V Developing HR ROI into Target-Oriented Human Resources Management
1 Benefits Achieved by Human Resource ROI
2 Creating a Human Resource Management System Oriented Towards Long-Term Targets


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