HR ROI: data-driven ways to get more budget & buy-in

Over the past year, half of HR teams have faced budget cuts, while over a third have dealt with hiring freezes, layoffs, and team member departures.* While these measures may temporarily boost an organization’s bottom line, research shows they harm long-term profitability.**

Despite that, 60% of HR teams still plan to maintain or reduce their budgets this year.***

The challenge lies in demonstrating HR’s financial and business impact, or HR ROI (return on investment). And communicating HR ROI to executives requires turning initiatives into measurable outcomes — an area where HR has historically struggled.

This article will help you learn to do just that. Let’s get started.

🤝 Learn how to speak your CEO’s language

Jenny Podewils, Leapsome Co-Founder and Co-CEO, and Luck Dookchitra, VP of People & Culture at Leapsome, recently got candid about the challenges of articulating HR’s value to the C-suite.

👉 Watch the session

*Leapsome Workforce Trends Report, 2024

**TIME, 2023

***Gartner, 2024
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Why C-level executives care about ROI

Top executives like CEOs and COOs are responsible for organizational performance. They’re invested in the success of all departments but often lack time to dive into the specifics of individual teams and HR initiatives. That’s why it’s crucial to frame HR’s impact and discuss outcomes in terms of return on investment (ROI).

Executives understand success through metrics like revenue, profit, and efficiency. These indicators are directly tied to a company’s bottom line, which means they’re scrutinized more heavily during challenging economic times.

The problem? Half of HR leaders struggle to showcase ROI, and 60% find it difficult to prepare HR business cases, according to our 2024 Workforce Trends Report. 

The solution? There’s a growing emphasis on strategic HR management and doing more with less. To secure HR budgets and ensure HR programs flourish in 2025, People leaders must frame HR processes as key contributors to strategic, overarching business goals.

💡 “In times of economic uncertainty, businesses may be tempted to reduce their investment in people-centric programs like skills training, coaching, and recognition. However, this short-sighted approach risks lowering engagement and increasing turnover.

Protecting your business during tough times also means retaining top performers and high-potential employees. These programs are vital to maintaining the talent necessary for long-term success.”

— Luck Dookchitra, VP of People & Culture at Leapsome

Key metrics HR leaders should use to demonstrate ROI 

Your HR team probably already collects valuable data for people analytics. The good news is that this data can be repurposed to contextualize and calculate HR ROI.

For example, you can plug HR metrics like number of employees, average annual salary, and turnover rate into an ROI calculator. This exercise can illuminate how prioritizing people enablement in your HR strategy might positively impact your company’s bottom line.

🔮 Quantify your HR ROI with just a few metrics

Leapsome’s ROI calculator shows People leaders how prioritizing people enablement initiatives can pay off.

👉 Calculate your ROI

However, you’ll need to get a little more granular to get executive buy-in. Let’s discuss the metrics you’ll want to pay the most attention to and how you can use them to demonstrate HR ROI.
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Turnover rate

Employee turnover is expensive. Estimates suggest it can range from one to two times a team member’s annual salary — and, in some cases, even higher.

You can calculate the cost of turnover within your organization by using the following formula:

(Separation costs + replacement costs + training costs + productivity costs) / Total number of employees

To dive deeper into your turnover rate, consider adopting a tool like Leapsome to analyze and predict employee turnover before it occurs. It uses past data and historical trends to estimate when team members may be at risk of leaving so you can take preemptive action.

Employee retention rate

If your turnover rate is increasing, your retention rate will decline. However, it’s still important to calculate both to understand the financial implications of replacing a departing team member. You can do so with the following formula:

(Number of individual employees at end of period / Number of employees at start of period) x 100

Once you’ve calculated your employee retention rate, tie it back to business performance. For example, if your retention rate is declining steadily over a six-month period, investigate whether your profits are trending in a similar direction over that same period. That way, you can illustrate your retention rate’s impact on overall financial outcomes and make a solid case for investment in measures to combat the decline.
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eNPS & other employee feedback

Low employee engagement cost organizations US$8.9 trillion in lost productivity every year. To put it in perspective, that’s equal to 9% of the world’s GDP. We all know that creating an engaging, positive work culture is the best way to succeed across the board, but numbers like this clearly communicate why pseveraltizing employee satisfaction is critical.

You can measure the effectiveness of your engagement initiatives with a few metrics, employee net promoter score (eNPS); eNPS is a great way to map HR ROI because the metric is both qualitative and quantitative in nature.

But it’s also important to consider other metrics, like responses to employee engagement surveys. To uncover valuable insights from these questionnaires, consider a tool like Leapsome Surveys, which enables you to send our surveys, leverage AI to analyze responses, and access tailored potential next steps. 

😊 / 😔 Calculating eNPS is a great way to dig into team member enthusiasm, engagement, and overall satisfaction.

eNPS reveals how many employees would suggest your organization as a place of work (promoters) versus how many have a negative opinion of you as an employer (detractors). For more on this critical metric, check our eNPS calculation playbook.

Using data to build a C-level business case for your HR initiatives

We’ve provided several of the most important metrics to track when determining HR ROI. However, no two HR teams are the same — so the best method for advocating for HR budget will differ from company to company.

That being said, here are some best practices for using HR ROI to build a business case, with direct examples of how to address leadership:

• Identify the business problem your HR initiative solves — Review your HR data to identify the most pressing challenges or opportunity. Then, create a roadmap detailing how each initiative addresses these issues.
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  Addressing leadership (example): “Our team logged 3,000 overtime hours in 2024, which is leading to increased employee burnout and higher turnover rates. Addressing this issue is crucial for maintaining productivity and employee satisfaction.”

• Collect baseline data to establish where you’re starting from — Gather and review relevant HR metrics to understand your current business performance. This baseline helps you measure the impact of your initiatives over time.
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  ‍Addressing leadership (example): “In 2024, our team logged 3,000 overtime hours with a current headcount of 500 employees.”

• Project outcomes with realistic, data-backed assumptions — Draft KPIs, including goals and timelines for achieving them. KPIs are best if they’re numerical (e.g., achieve headcount growth of 10% in the next calendar year) as it makes measuring progress more straightforward. Communicate these projected outcomes with stakeholders to ensure shared understanding.
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  Addressing leadership (example): “Increase headcount by 5% within the next year to help reduce overtime hours.”

• Quantify the financial impact — Use the data you’ve collected thus far to predict how achieving your goals will impact your company’s bottom line.
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  ‍Addressing leadership (example): “We expect the proposed headcount increase to result in an estimated savings of $120,000 annually.”

• Contextualize your HR initiatives with organizational goals — What is your C-suite’s top goal in 2025? For most CEOs, the priority is growth, with technology adoption coming in at a close second. Understanding your leadership’s priorities helps position HR efforts as essential to achieving these goals.
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  Addressing leadership (example): “Increasing our headcount not only reduces overtime but also supports our growth objectives by enhancing our capacity to handle more projects and foster innovation.”

• Use HR technologies to supposepedite the process — Although HR budgets are generally shrinking, 48% of. In that case,People leaders plan to increase their HR software budget in 2025. By adopting automation-based tools that expedite data collection and analysis, HR leaders can streamline the process of calculating and communicating HR ROI.
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  Addressing leadership (example): “By adopting an HR analytics platform, we can streamline data collection and analysis, making it easier to track our progress and demonstrate ROI.”

💬 “The past year has demonstrated the rapid advancement of HR technology, with many of my preferred people enablement platforms introducing AI-powered features. These innovations significantly reduce the time spent developing resources or analyzing data, allowing for more data-informed actions.”

— Monica Sarkar, Co-Founder at Purple Umbrella

Crafting presentations to win C-level buy-in for HR

Regular check-ins with C-level executives and other stakeholders are essential for reporting on the HR team’s progress. That said, there will come a time when you need to present a formal pitch to advocate for a sustained or increased HR budget. This presentation should encompass all the information you’ve used to calculate your HR ROI, along with a compelling appeal for additional resources.

Consider the following example slides as you begin drafting your presentation:

• Slide 1: The challenge — Outline the issues you currently face in the HR department. If possible, align these challenges with broader organizational trends and explain how the problem may hinder your company's financial progress.

• Side 2: Key metrics and current trends — Provide insight into your current challenges using engaging visuals like bar charts and graphs. For example, instead of saying that employee retention is declining in your organization, you can provide a chart showing year-over-year headcount loss in the last five years.  
  
  It’s also important to tie in industry-wide trends during this section. Consider including statistics about broader HR trends when relevant. This may take more than just one slide to cover. That’s OK.
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• Slide 3: The solution — Present your proposed solution or campaign. Include a brief overview of the resources needed and explain how each resource is vital to the initiative’s success.

• Slide 4: Projected ROI and benefits — Here’s where your HR ROI calculations will be useful. Describe the benefits you expect from the proposed initiative (i.e., outline your goals and KPIs). Use financial metrics and business-focused language to drive your point home. You’ve done your research, and you’ve got this!
  
  
• Slide 5: Call to action — End strong with a compelling call to action (CTA). Clearly outline your requested resources (like additional budget or software), emphasizing the positive impact these resources will have on both HR and the company’s bottom line.

🎨 Want to prepare a presentation that persuades? Consider highlighting key metrics in larger font sizes, and remember: less is more.

Keep your slides brief to ensure stakeholders focus on the essence of your verbal pitch.

Re-focus on your HR ROI with Leapsome

Some People leaders may view HR ROI calculation as contrary to their core mission. After all, it’s human resources, isn’t it? Why move focus away from your #1 asset: your people?

This perspective is understandable — but it’s no longer realistic. HR success relies heavily on executive alignment and buy-in, which requires People leaders to demonstrate their success in financial terms. But emphasizing HR ROI doesn't have to conflict with a people-first HR culture.

“You can care about the people and about the numbers. Don’t let insecurities about financial models or business acronyms prevent you from learning what business metrics matter in building a successful company.”

— Luck Dookchitra, VP of People & Culture at Leapsome

The key to balancing a focus on your people with HR ROI is a tech stack that combines data-driven analysis with employee-centric workflows. Leaders can accomplish this tricky balance with Leapsome’s holistic HR platform.

Our user-friendly interface streamlines the employee experience while enhancing your data collection abilities — that’s the best of both worlds.

🔑 Unlock a deeper understanding of HR ROI with Leapsome

Leapsome’s comprehensive platform enables data collection and analysis at scale, helping you build a better case for HR initiatives.

👉 Book a demo

Frequently asked questions about HR ROI

What is HR ROI?

HR return on investment (ROI) evaluates the success of human resources initiatives by quantifying their impact on a company’s financial objectives. In other words, HR ROI gauges whether specific HR tasks are “worth it” by comparing the required budget against the economic return.

Although HR ROI is just one of many HR metrics, it’s nevertheless critical to track, especially in our current economic climate. Now more than ever, People leaders are expected to demonstrate spectacular efficiency and cost savings. HR ROI does just that.

How can I maximize the ROI of HR?

HR leaders can maximize the ROI of HR by:

• Building a data-driven HR culture — Determine your initiative’s goals or key performance indicators (KPIs) early on, then decide on a metric to track that demonstrates success toward said goal. Track, report, rinse, repeat.

• Increasing transparency with stakeholders — Discussions about HR ROI shouldn’t happen just once a year or even once a quarter. By regularly reporting on your department’s findings, you can improve communication with key stakeholders like the CEO.

• Relying on emerging HR technologies — You don’t have to go it alone. By adopting comprehensive HR technologies, such as an HRIS with people enablement features, you can track data more easily and gain clearer insights thanks to AI-driven analysis.