For forward-thinking HR leaders, implementing new HR technologies can seem like an urgent necessity. For other stakeholders, it may seem costly, unproven, or a distraction from other initiatives. When considering new technologies like automation and artificial intelligence (AI), it’s important to get buy-in from skeptics and enthusiasts alike.
Here’s how HR professionals can make the business case for HR technology, calculate your return on investment, and demonstrate its alignment with other business goals.
Demand for human resources specialists is forecast to grow by 6% between 2024 and 2034.That’s because new HR systems, while reducing reliance on manual HR processes, unlock opportunities for higher-level thinking and decision-making. You can leave behind legacy tools in favor of cloud-based HR software solutions that allow your team to handle more complex HR functions.
As HR professionals and business leaders navigate this new landscape, they want to know their HR technology investment will have a positive impact on their bottom line. Here are three ways that HR technologies can support business outcomes.
The clearest rationale for an HR tech investment is that it will save you time and money. Sometimes, the difference is straightforward: switching from clunky spreadsheets to an automated leave management system can reduce the time it takes to review, approve, and track an employee’s leave of absence request.
By streamlining your workflows with HR automation or using AI-powered data analytics to support decision-making, you can remove inefficiencies and reduce human error. You may also save money by consolidating your HR tech stack and reducing the overhead expenses associated with legacy systems.
One of the best business cases for HR technology is the human one: your employees deserve it! No one wants to spend hours on the phone with your HR team to make a time-off request or access their employee benefits. And a convoluted recruiting and onboarding process can make it hard to attract and retain top talent.
HR automation platforms like Pulpstream transform performance management and increase employee engagement, so you don’t have to hire as often.
As your business grows or your compliance obligations become more complex, it can become too much for your existing HR team to handle. HR technology allows you to scale your operations without your HR team becoming too large or unwieldy. Your HR specialists can focus on what they do best without being distracted by administrative bottlenecks.
From benefits administration to payroll automation, HR tools standardize and optimize workflows so they require less human input. Plus, you can use workforce analytics to maintain healthy staffing levels and support employee well-being.
Some investments have a clear link to your business strategy or roadmap; the case for HR technology isn’t always so clear-cut. Decision-makers need to factor in less obvious benefits, like an improved employee experience or compliance savings, and consider the opportunity cost of doing business as usual.
Follow these steps to determine the business value of HR tech and make data-driven, strategic HR decisions that support business performance.
Stakeholders who aren’t immersed in day-to-day HR operations may struggle to see the benefits of HR tech investment. Use workflow charts and other visual representations to demonstrate the difference between your current situation and your desired state.
For example, the claims management process often involves coordinating with multiple parties, including insurance providers and medical professionals. A cloud-based claims management platform can resolve workers’ comp claims faster by using a centralized communications channel with real-time notifications.
When you can point to the problem that HR tech is solving — and a clear roadmap from here to there — it’s easier to justify the cost to other stakeholders.
The standard formula for calculating ROI is:
ROI = (Net benefit or return ÷ cost of investment) x 100
For example, a talent management platform that costs $2,000 to deploy and brings in $4,500 in benefits would have an ROI of 225%:
($4,500 ÷ $2,000) x 100 = 225%
But some of the benefits of HR tech can be hard to quantify. How do you calculate the ROI of a tool that increases employee satisfaction or results in compliance savings — especially if they only become clear after several years of use?
Use key performance indicators (KPIs) and other metrics to track your ROI over time. You can calculate the ROI of HR tech by tracking metrics like:
Only by considering all the benefits of HR technologies — even the qualitative ones like employee well-being — can you determine the true return on your investment.
When it comes to justifying the business case of HR technology, it’s easy to focus on persuading high-level decision-makers: the executives and business leaders who will determine whether or not your desired solution aligns with their business goals.
But it’s just as important to consult with the people who will be using the new software, regardless of their job title, such as:
Some employees may be resistant to changing their workflow, or may need more time and training to adapt to new technologies. Your expected ROI may not align with your predictions if your employees don’t use the new technology as intended.
Getting buy-in from all parties is a key part of change management and allows you to respond to objections upfront instead of having to do damage control later.
The best HR software will depend on your budget, business goals, and the size of your workforce. When comparing your options, look for the tools with all of the features you need — not just the one with the largest market share or brand recognition.
For example, if your business has employees in several jurisdictions, you’ll need a leave management system that can help you keep up with leave laws in multiple states. If you have remote employees, you’ll need a web- or mobile-based attendance tracker.
One of the best things about cloud-based HR tools — in contrast to legacy systems — is that you can integrate multiple platforms to build your own HR tech stack.
This means that it isn’t a binary choice between overhauling everything or sticking with the status quo. You can embark on your digital transformation while retaining some of the existing tools or manual processes that your employees are used to.
Making the business case for HR technology requires you to estimate your return on investment and justify the cost compared to other business goals. The benefits of HR tech may include immediate cost savings due to lower expenses as well as long-term benefits like increased employee retention, which also improves your bottom line.
Pulpstream helps you keep costs low by centralizing multiple HR functions in a single cloud-based platform. From HR automation to data analytics, Pulpstream empowers businesses to streamline their workflows and make better, data-driven decisions.
Plus, our integrations allow you to connect Pulpstream directly to your HRIS, payroll software, and other HR software.
Request a demo today to see Pulpstream in action!