Q. How does HR create value for the business in economic terms?
A. Creating economic value is known as the value proposition. HR creates economic value by developing and implementing HR practices that create organizational capabilities. These increased capabilities create increased value to the customer which in turn creates economic and strategic value for the organization.
To identify the HR value proposition in your own organization, identify and connect your HR practices to your key economic indicators of success (return on equity, return on net assets, earnings per share, etc.). The HR value proposition fills the gaps between the two, ensuring that HR practices are aligned with, and contribute to, strategic business outcomes.