Justifying the ROI of a Human Resource Management System

Wednesday, October 19, 2022 TimeTec 0 Comments

Companies look for substantial Returns on Investment (ROI) from every decision made. That begs the question: Is a Human Resource Management System (HRMS) worth the investment? Is it a cost burden, something good to have or rather a need to have? To demonstrate its true value, here is the breakdown to paint a bigger picture.

We first need to look at the cost of implementing the HRMS. Typically, solutions like these would have monthly subscription costs instead of a lump sum payment. On top of that, if there is specific customisation or hardware needed, there will be additional charges. Depending on the system providers, some may require payment like training, migration and set-up.

There is no way to define the exact ROI, as there isn’t a realistic formula to calculate it. Rather, what’s practical is to look at the aspects that the system will have the most impact on and how these would bring direct/ indirect financial savings.

Extended Processing Time
Let’s be frank, most of the push factors to get the automated system is due to the lengthy processing time that is never-ending. Labour hours are considered as spending, by cutting down the time spent on processing your HR, you are also reducing the cost of staffing. You could save yourself from getting an admin, or free up your HR hands, allowing them to focus on what truly matters, the people.

Avoid Human Errors
Imagine if you are already late for your payroll payment and there is an error due to some input mistakes, we bet you would recoil from the scenario. Mistakes like this not only affect your employees' morale but also consumes unnecessary time to identify and rectify the errors. In the end, all these add up to more labour hours on the payroll processing that could have been avoided by getting an automated system.

Reduce HR Head Count
Due to the nature of the HRMS, you are pretty much running in automation on your HR, letting the system do its job. Instead of getting an HR admin, you could adopt the system at a much more affordable price to run your HR department. We are talking about most aspects that can be automated like Time & Attendance, Leave Management, Payroll & Claim Processing, and more.

Employee Self Service (ESS)
One of the greatest hassles faced by HR is having to answer all questions and requests that could have been done by employees themselves. Such matters alone wouldn’t mean much, but if they were to add up, it could eat up hours each week. By deploying ESS from Human Resource Management System, employees could look for answers on their own and manage their personal information without involving HR in the picture. 
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