Performance measurement and evaluation: applying return on investment (ROI) to human capital investments

Deneise Dadd, Matthew Hinton

Research output: Contribution to journalArticlepeer-review

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Abstract

Purpose: This study aims to investigate the growing use of financial metrics (such as return on investment [ROI]) to measure performance and evaluate human capital (HC) investments. Design/methodology/approach: The research employed an embedded case study approach, examining how one ROI approach was applied to evaluating HC investments, across three sectors (corporate, public health and international development). Findings: Three major findings emerged in this study: First, interpretations of ROI can lead to ambiguity during implementation. ROI is interpreted trichotomously – metaphorically, as a desire for value; literally, as a metric; and procedurally, as a method for planning and evaluating HC investments. Second, understanding, measuring and tracking the domains of people performance (cognitive, affective and psychomotor) is vital to evaluating the impact of HC investments because this is where the change in behavior occurs. Third, although the logic model measures the change in process following an intervention (input-activity-output-outcome-impact), other approaches measure the change in behavior of people in the intervention (people performance). Practical implications: These findings provide clarity for practitioners about challenges when applying ROI. Originality/value: This is the first study to explore how the ROI financial metric is applied in a new domain by first examining its interpretation. It elucidates the use of ROI in practice, as well as the different purposes of key ROI approaches.

Original languageEnglish
Pages (from-to)2736-2764
Number of pages29
JournalInternational Journal of Productivity and Performance Management
Volume72
Issue number9
Early online date28 Jun 2022
DOIs
Publication statusPublished - 10 Nov 2023

Bibliographical note

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This document is the author’s post-print version, incorporating any revisions agreed during the peer-review process. Some differences between the published version and this version may remain and you are advised to consult the published version if you wish to cite from it.

Keywords

  • Evaluation
  • Human capital investments
  • Performance measurement
  • Public health
  • Return on investment (ROI)

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Strategy and Management

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