How To Build an HR Business Case

In lean economic times, budgets are reduced, and many senior leaders will push back on budget requests that lack a clearly defined business case. Unfortunately, not all HR professionals know where to begin or how to build a business case. Here’s some help.

A business case is a form of gap analysis. It describes the business problem, the current status, the desired status and an action plan stating how the organization can achieve its goals. A well-formulated business case is a tool that supports planning and decision-making regarding purchases, vendor selection and implementation strategies.

A well-written business case provides a clear statement of the business problem and a potential solution, outlines consequences resulting from specific actions, and recommends metrics for the proposed solution. More important, a business case provides an opportunity to propose options that are based on objective data and that offer an increased sense of understanding and ownership of the solution.

Before you start building a business case, it’s important to be aware of a primary limitation: Each organization requires and uses different financial metrics. For example, senior management at your organization may want to see a return on investment (ROI), total cost of ownership or cost-benefit analysis. If you’re undertaking a business case and aren’t familiar with these concepts, you should consult someone in your finance department.

Similar to most projects, the typical requirements for business case development are time, people and money. Expect to spend at least eight hours writing a comprehensive business case. However, the time spent writing and the number of people involved can expand based on the problem. A more complex or costly problem can extend the time frame significantly. The roles needed to pull the information together include a basic project manager (you), a financial expert with organizational knowledge and good spreadsheet skills, researcher(s) to gather data and perform competitive analysis, and an editor to put the information into an organized format.

The 10 elements of an HR business case include:

1. Problem statement. In one paragraph or less, clearly state the specific business problem.
2. Background. Be sure to include significant information regarding skills, budgeting and performance that contribute to the business problem. Indicate, in general terms, what’s required to resolve or reduce the problem.
3. Project objectives. Use a maximum of seven bullet points to state what the proposed solution is trying to accomplish. Some examples may include purchasing hardware and software or selecting a new vendor.
4. Current process. Identify the current organizational processes that the proposed solution will affect, including the training department, other departments within the organization and relationships with clients, external partners and the competition.
5. Requirements. List resources needed to complete the project, such as staff, hardware, software, print materials, time and budget.
6. Alternatives. Outline at least four other options to implementing the proposed solution. Be sure to include basic requirements for each and estimate project risks, ramp-up time, training costs and project delays.
7. Compare alternatives. Compare and contrast each of the alternatives with the proposed solution and the other alternatives. State similarities and differences, benefits and detriments, and costs associated with each option.
8. Additional considerations. List critical success factors other than ROI metrics; for example, effects on partnership agreements with specific vendors or the potential need for help desk or customer support.
9. Action plan. Propose specific action steps. State your short-term (first three months) and long-term (three months to conclusion) action plans, including major milestones. This section should also include proposed metrics to measure success.
10. Executive summary. Write a clear, one-page summary of the proposed solution. Tailor it to your audience and offer a high-level overview of research that leads you to the proposal.

The 10 elements above provide a basic framework. However, you may still encounter challenges when formulating your specific business case.

The information below outlines some common problems and solutions.

• Problem: Poorly identified business problem - Solution:Ask others, do the math and present your case informally to test the opinions of management
• Problem: Wrong business metrics - Solution:Work with your finance department to get accurate figures and determine proper metrics
• Problem: Wrong presentation format - Solution:Talk to other departments to learn whether there is an existing business case framework
• Problem: Poor estimation of qualitative data - Solution:Be sure to apply a consistent unit of measurement related to a specific unit of cost
• Problem: Poor estimation of project costs - Solution: Work with internal experts to re-evaluate estimated project costs, risks, ramp-up time and training costs as well as foreseeable project delays.

Now you’re ready to get started. But because each organization is different, consider the following suggestions:

1. Make friends with a knowledgeable person in your finance department.
2. Know your audience’s expectations and awareness of the problem.
3. Keep it simple, and get your facts straight.

If you’ve done your homework, you’ll be on your way to eliminating a performance gap within your organization.

Ed Mayberry, Ed.D., is a senior leadership consultant with Kaiser Permanente who wrote this article