The theoretical benefits of HR software, such as greater automation, centralised reporting and significantly reduced administration, are widely known. But, any investment you make into HR software should come with a commitment to measuring real, tangible outcomes – that is, if you want to ensure your HR software project is seen as a success.
When thinking about measurement, you also need to think beyond the HR department. For example, how will the benefits translate specifically to your business? How will the software impact, not just the efficiency of your HR department, but also contribute to the performance of the organisation as a whole?
Before even looking at potential solutions, the first step of your project should be to clearly define what you want to achieve, with as much granularity as possible. Then you need to think about how to put the measures in place to track your progress in line with these goals.
Without setting definitive measures in advance, you’ll never truly know if your HR investment was money well spent. And indeed, without a clear picture of what success looks like, there’s an increased likelihood that it won’t be realised.
Goal setting to help build the business case
When asked to sign off on any significant business expenditure, your management team will inevitably focus on the expected return on investment (ROI). Demonstrating ROI can be a daunting prospect, but once you start to think about very specific outcomes, targets and KPIs, the picture will start to come together.
It won’t be too hard to explain how new HR software can alleviate the admin burden on your team, but to gain internal investment approval, the key is to also show how your team would then use that extra time to support the business in more impactful ways. When these claims are backed-up by estimated percentage gains, your story starts to gain real credibility.
Experts suggest that HR software can help reduce administration effort by as much as 40%. By evaluating your current processes, as well as the time it takes to perform repeated tasks, you should be able to determine where the software can reduce your effort. This will help you formulate your own potential percentage gains.
Similarly, it’s easy to say how employee productivity could be increased through HR software – but you need to show how you’d measure that improvement. Again, evaluate common tasks currently performed by employees, such as expenses, and estimate the time savings – then aggregate the results across all the areas where software can impact, to formulate your expected productivity gains.
The more tangible outcomes and measures you can provide, the more solid your business case.
Note that when you’re calculating ROI, it’s important to consider all aspects of the investment – not just the price on the ‘label’ of your new software. There could be fees incurred for ongoing consultancy, support and upgrades.
Factoring in all these elements will allow you to put together a clear and accurate picture of the investment, and help you understand the true value you need to get back in order for the project to be deemed a hit.
The two key areas in which to measure HR software success…
Successful implementation of HR software doesn’t just manifest itself in HR service improvements, it brings a myriad of benefits to employees, managers and the organisation as a whole.
So, before you even consider approaching vendors and selecting your software, you should be identifying what ‘success’ would mean to you across these two key areas:
Increased efficiency of the HR department
While all HR software is different, most bring the proposed benefits of admin reduction, improved reporting and greater compliance, predominantly driven by the consolidation and centralisation of data.
This centralisation of data works as a catalyst for self-service, which in turn reduces the admin burden on the HR department. However, this goal can only be realised if the self-service functionality is adopted in high numbers across your organisation.
Self-service take-up (and indeed user adoption of the system as a whole) therefore becomes a key measure for success, inextricably linked to the increased efficiency of the HR department.
When eventually speaking to vendors, you’ll need to evaluate their approach to adoption every bit as thoroughly as you assess the technology they provide.
Depending on the current pain points in your HR department, you may well want to set other key targets too. For instance, if your department has been riddled with costly errors of late, the greatest benefit of automated workflows may be less time-based and more risk related.
If you can establish how much HR errors are costing you each year, reducing or eradicating these losses would be a tangible measure of improvement, which is relatively easy to track.
Measuring impact across the wider business
From improved employee engagement to increased productivity, a successful HR software project can have a huge impact across your organisation.
The right solution can streamline the hiring and onboarding process, reduce recruiting costs and win back time for managers – all worthy goals for a business looking to boost its bottom line.
Yet the benefits are so wide-ranging that the impact can be challenging to measure. The key here is to hone in on widely-recognised problem areas within your organisation and focus on the potential uplift in those specific areas.
For example, if poor productivity levels are the most pressing concern to your business right now, a surge in output would be the measure most likely to deem the HR project a success.
If it’s employee churn that’s worryingly high, then train your goals on a reduction in staff turnover. Succeeding here can generate big savings, with significant costs incurred every time you have to replace an employee – nevermind one of your star performers.
The first step in any HR software project should be to carefully consider the end goals – and what success would look like for your business.
Your own unique concept of success, and how it will be measured, will form a fundamental part of your discussions with potential vendors – who should be able to demonstrate their approach to achieving your ultimate aims.
Knowing how you’ll judge success from the start also means you’ll be able to establish a more robust business case that is more likely to gain internal buy-in.
After all, when the prospect of buying HR software is raised, it won’t take long before ROI comes up in conversation. “How will we measure whether this has been a good investment?” will be one of the first questions your management team will ask.