HR Tech Update: Metrics to prove a new system's ROI

HR TECHNOLOGY: Investing into a digital solution to improve workflow efficiency is one of the most pressing concerns for today’s leaders.

However, careless implementation of HR tech can lead to the adoption of multiple digital platforms, that may end up taking more time and induce more frustration than they save. This ultimately defeats the whole purpose of adopting HR automation tools.

Intelligent and thoughtful integration of any platform is crucial to defeat this potentially destructive issue, but how are HR teams able to tell if they have made the right tech choices?

The first step is to establish a baseline.HR leaders should conduct some process mapping of their current systems and determine which areas can be improved upon before reaching out to tech vendors. Without the ability to compare the new world to where the organisation has been, it’s impossible to know whether it is on the right path.

For example, if adopting a recruitment and hiring solution, how many hours does it take to go from putting out a job listing to onboarding? How many resources is that taking up today with the existing expertise and team?

Establishing a baseline also helps leaders determine whether there is an overall reduction in costs after a designated testing period, despite the added expense of the new system.

One of the most obvious ways to tell if a new HR technology is working is by looking at whether employees are using it to access information and resources. This adaptation rate provides a good indicator that the new system is adding value to staff workflows.

The third metric is another obvious one: has the team become more productive? If tasks are being completed more quickly with fewer errors, it’s likely because the newly introduced tool and systems are helpful.

Increased employee retention is yet another tangential metric that should be improved if the new systems are pulling their weight. If there is a decrease in turnover rate, it’s a good sign that the new HR system is making things easier. Staff members who feel heard and are given the resources they need when they need them are more likely to have higher overall job satisfaction. However, HR leaders should take the full picture into consideration as improvements in turnover rate might also be result from an improved culture or a new charismatic leader.

Another important measurement is the concept of added value. It may be easier to zoom in on improvement in resources and efficiency and leave it at that, but there can be other sources of unexpected returns of investment. Does the new solution improve how existing teams work together, especially in an increasingly hybrid workforce? Does the implementation of a company-wide HR system come with features that help break down internal barriers — creating a less hierarchical organisation?

At the end of the day, each HR team must come up with their own tailored return-on-investment measurement based on their specific organisation and industry, but these tips may be a good starting point in determining a HR solution’s impact on a company.

HR Tech Update, by Chief of Staff Asia's Technology Editor Ellia Pikri, appears every Thursday from 6:00am.

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