How to Prove Your Investments in HR Technology Are Paying Off

​Technology advances rapidly and, when it does, it's tempting to invest in new—or replacement—technology. The next best thing is always on the horizon. But company budgets are tight, and leaders want to be certain they are making the right investments in new technology. How are HR professionals taking steps to prove that their investments in technology are paying off?  

"The current climate has heightened the need for HR leaders to make strategic investments in their quest to attract and retain talent," said Carrie Rasmussen, chief information officer at Ceridian, a human capital management software company based in Minneapolis. "Companies must have the ability to engage talent with speed and scale, otherwise they may miss out on top prospects and fail to retain high-value employees."

Technology can help. But HR leaders need to be able to build the business case for investments in technology, convincing senior leaders and others that these investments make sense and will pay off in measurable ways.

What Can Be Measured

There are a wide range of metrics that might be measured, alone or in combination, to support investments in HR technology.

Chris Lewandowski is president of Princess Dental Staffing in Scottsdale, Ariz. Investments in technology, Lewandowski said, help organizations improve their overall performance and bottom line. That's as true for HR functions as it is for other business applications. "HR tech investments help automate HR processes, improve communication and collaboration within organizations, and provide better data for informed decision-making," he said. He offered a number of examples:

• Increased productivity. "One of the most obvious ways to tell that your HR technology is working is by looking at how productive your team has become," he said. "If tasks are being completed more quickly and with fewer errors, it is likely because of the new tools and systems you have in place."
• Improved employee engagement. "If employees use the new system to access information and resources, it shows that they find it valuable and helpful," he said. "It's also a sign that your HR technology is working well if you find that employees are collaborating more on projects."
• Increased employee retention. "If you see a decrease in the turnover rate, it could be because your HR technology is making things easier for employees," Lewandowski said. "Staff members who can easily access the information they need and feel that their voices are being heard are more likely to stick around."
• Greater efficiency in recruiting. "For example, an applicant tracking system will allow you to fill open positions more quickly and with less effort," he said. "Additionally, you will be able to attract higher-quality candidates because of the increased visibility of your job postings."
• Reduced costs. "If you're spending less on paper and postage, it's a good sign that your new system is working well," he said. "Automating some of your HR processes also saves time, which can lead to reduced labor costs."

There are likely a wide range of other specific measures that could be used to indicate that technology has resulted in greater efficiencies or reduced costs. Importantly, though, in order to arrive at these numbers, HR leaders must first have established a baseline.

Establishing a Baseline: Where Are You Coming From?

You've likely heard the old saying: "If you don't know where you're going, any road will get you there." It's a sentiment that is apt when it comes to demonstrating the value of any investment. Without the ability to compare where you were to where you go, it's impossible to demonstrate real progress.

Jenna Squires is president of World Payroll & HR, an outsourced HR services company in Georgetown, S.C. Squires is often involved with advising HR professionals on tech and software investments. Unfortunately, Squires said, it's more the exception than the rule for HR professionals to do this when embarking on a technology implementation. In fact, she added, it's the biggest challenge she sees. "In order to have a really good grasp on ROI [return on investment], let's say two years in, you have to know what it was costing you beforehand," she said.

She uses Family and Medical Leave Act requests as an example. "How many hours is it taking to manage a single claim?" How much resources does that equate to with expertise and team members?" Before HR leaders reach out to any company to talk about any technology solution, she said, it's important to do some process mapping around current processes.

Ryan Prindiville, head of consulting at Armanino, a consulting and accounting firm in San Ramon, Calif., agrees that establishing baselines is critical to later demonstrating impact. In addition, he recommends benchmarking against competitors or others in their industry. It's also important, he said, to have a plan or roadmap. "What does that roadmap look like for the next one to three years?" Building a strong ROI model, he said, needs to be based on a clear roadmap.

Involve Senior Leaders Every Step of the Way

Unless senior leaders have delegated technology decisions to their HR leaders, it's critical that they be involved in the process from the beginning, Squires said.

"If the leadership is insistent on being the decision-maker, they have to be part of the entire process," she noted. "Otherwise, they'll make a decision based on price and that's rarely the right decision for an HR department."

If HR leaders tasked with bringing new technology on board don't have the kind of relationship with and trust from their leadership that will allow them to make the decision, then they need to set the expectation that the leader or leaders making the decision should be part of the process. "Otherwise, it's going to be an exercise in futility," she said.

It's also important for HR leaders to nurture other key internal relationships, Rasmussen said—most notably with IT leaders.

"Most IT organizations have a data enablement practice that can look at new ways to aggregate cross-platform data and bring actionable insights to your team," Rasmussen said. "Make sure you are asking the questions that bring the most value to your HR organization." Questions like:

• Am I recruiting the best talent?
• What is the pulse of our employee engagement?
• Do we have a diverse workforce with the right skills?

These are just some of the critical questions that today's technology solutions can readily answer.

"Creating a business case for HR technology may seem challenging," Rasmussen said. "However, there is a business case to be made around the cost of attracting and retaining talent, as well as increases in productivity, transparency and end-user enablement."

In today's environment of the Great Resignation, those data points can be particularly compelling.

Lin Grensing-Pophal is a freelance writer in Chippewa Falls, Wis.