Want your organization’s HR function to adopt the right HCM tools, leverage it as a part of the business and ultimately derive tangible ROI?
We warrant a guess that your answer is a resounding ‘yes’.
And because HCM tools can potentially help achieve such returns, over 40% of companies have a major HR systems strategy initiative in place; according to the 2017-2018 Sierra-Cedar HR Systems Survey. This fact is powered by the ability of HCM solutions’ to heighten the efficiency and engagement levels of employees through better talent acquisition, employee experience management, and all-round HR process optimization.
But these technologies also cost money, time and effort. There is no getting away from it.
As a business, everything (including the HCM tools) that you invest in needs to show full cost justification or ROI. At every review meeting, you need to show what extra benefit the HCM tools have delivered, in order to secure a greater slice of the company-budget-pie.
The cause for worry, though, is that not every enterprise is able to regularly justify the purchase of the HCM software in an investment cost versus benefit context.
So, why is ROI from HCM systems so elusive?
Chances are that you already promised your boss, or even yourself, a certain level of improvement in results while making a business case for the purchase of the new HCM solution. This could be in the form of cost savings or freed up employee time to engage in more strategic pursuits. In other words, an ROI forecast.
Unfortunately, such forecasts are rarely met. A Deloitte survey that featured in HR Magazine(May 2014), reported that 92% of organizations have seen the HCM solutions they have implemented underperform time and again.
To understand this situation better, consider the analogy of Arabian thoroughbred horses that are purchased for great sums of money. Owing to their superior build and potential to gallop at phenomenal speeds, these horses are known for their potential to win derbies. But what if such pedigree foals are not given the right training, diet and medical attention or the latest gear? Chances are even a farm animal could outrun the poorly managed horse. And there goes the owner’s chance of securing maximum ROI from his investment.
Photo credit: Unsplash
While it’s safe to assume that most of us don’t own racehorses; some of us are directly responsible for HCM systems. And the challenge of avoiding potentially dismal performances at the racetrack, as well as the workplace, ends up being very much the owner/decision-maker’s responsibility.
The horse’s innate ability is rarely at fault, just as you can’t completely blame HCM tools for not delivering 100% on its promise. You would have spent months evaluating HCM solutions that promise the most benefits, offer the highest security and compliance and fastest time-to-value. However, several environmental and company-specific variables that come into play post-implementation can affect these outcomes.
And the inability to extract maximum ROI from (HCM) solutions usually stems from some (or all) of the following strategic missteps:
- Lack of internal consensus: Majority of the organization’s stakeholders, affected by the decision to adopt a certain HCM tool, are not convinced about the need for it. Hence they end up disregarding its very existence in the company’s system.
A PwC survey points to the fact that 73% of employees strongly supported the implementation of a certain kind of system that would make them productive at work. But top management went ahead and chose different tools.
At the same time, 47% of staff believe their company doesn’t pay attention to their needs when introducing new technology.
Such scenarios lead to a complete clash in expectations.
And you can’t really expect great things from a technology if it is not fully accepted by its users or the decision makers.
- Complete disruption of employee workflow: In the current age of digital overload, employees struggle to master multiple workplace software that contains high-level features, complex interfaces and automatic updates.
The introduction of new technologies may invoke the fear of the unknown amongst HR personnel who were quite comfortable with the old workflow, leading to an exhibition of resistance to change.
In such scenarios, without the right support and training, most employees will never understand how to take complete advantage of the HCM tools.
- Short-term focused HCM strategy: In trying to achieve short-term financial savings, most companies avoid spending add-on functions to existing HCM systems and keeping pace the future tech-needs of the company. Don’t do that.
Such near-sightedness will most probably deliver sub-optimal results, with your company losing its competitive edge.
Also, a lack of awareness about the latest software upgrades amongst the employee base prevents the technology from being milked for all its worth.
According to a KPMG Global Survey, 76% of passive organizations that fail to keep up with the advancements in technologies, processes and skills did not achieve ROI on their cloud HRMS investment. At the same time, 64% of these companies saw little or no value in transitioning into the workforce of the future.
Such mind-boggling stats just goes to show that companies are yet to realize the inherent business value that HCM has to offer. But it’s only a matter of time.
Very soon, these fully integrated and highly automated HCM technologies will make exceptional ROI the norm and not the exception.
Guide for HCM systems to attain full potential
Let’s be honest there are no simple, one-size-fits-all ‘hacks’ or ‘tricks’ to achieve positive ROI, at least none that can be stuffed into a 1500 word article. Each business, with its many unique conditions and environments, will need to choose a different means to tackle the situation.
But here is an attempt to broadly address how to extract maximum value from the HCM systems:
Step #1: Adopt a transparent and inclusive strategy – Before investing in any new HCM app, seek inputs from internal stakeholders (from IT and HR personnel to employees) who will be affected by the technology change. Use tools such as surveys, focus group discussion and interviews to find out what technologies the employees really need to support them in performing their jobs.
Once the solution is ready for deployment, communicate ‘why’ and ’what’ of the change to everyone involved, so they feel like they are a part of the process. This is likely to improve acceptance and engagement with the technology, vis-a-vis top-down approach. This way, you could even leverage early adopters as internal champions/advocates for the technology.
The key takeaway here, according to a McKinsey, is that when there is excellent change management; ROI for new technology tends to double.
Also, the management should keep their ear to the ground (through usage pattern analysis and interviews) to stay aware of new requirements by the knowledge workers. If the ask is feasible, the technology will have to be added to the company’s technology bouquet.
Step #2: Training, training, and more training – According to the Brandon Hall Group Survey, employees are largely apathetic to existing HCM systems. They are just as likely to appreciate the existing HCM system, as they are to dislike it. Yet one common complaint stood out – 54% of respondents communicated a lack of the requisite amount of digital skills training.
Therefore, it is imperative to invest fully in training employees to use new tools and upgrades so as to facilitate digital enablement. This, in turn, will deliver a tangible impact on business results.
While traditional Learning Management Systems (LMS) and powerpoint presentations have done the trick for many years, companies are now switching to “micro-learning platforms”; the latest learning software trend. It allows employees to find “just what they need”, within the app, almost intuitively. These bite-sized lessons are perfectly suited to the millennial generation that is curious to learn but struggles to find the time – research states that 5 minutes per week learning slot is all that the average employee can spare. Not only are these mini-courses easier to consume but also simpler to develop, update and maintain than traditional eLearning courses.
Consider the case of staffing firm ManpowerGroup Netherlands that was having a tough time getting its employees to start using the newly implemented talent management and Front Office application – Connexys. The employees were just not ready to start using a new platform, owing to the steep learning curve. This meant that over 500 employees, from different backgrounds, needed to be trained to use the technology through physical sessions by change managers and tech ambassadors. But ManpowerGroup NL’s management soon realized that neither was this solution cost-efficient nor was it scalable.
So, the firm turned to the leading digital adoption platform, Whatfix. By helping create multilingual interactive guides, featuring interactive tooltips, Whatfix helped users get contextual help within the HCM tool in real-time. Thus, employees learnt to use the Connexys platform without encountering any major hiccups.
Thanks to its fast implementation and ease of use, Whatfix helped deliver ROI by :
- Cutting down the manual aspects of ManpowerGroup NS’ change management initiatives
- Accelerating and improving the efficiency of ManpowerGroup
Step #3: Be future-focused
- Assess the future needs of the employees and the organization to make an informed decision on how HCM will play its part in keeping an engaged and high-performing workforce
- Ensure that your HCM solution helps leverage the latest technologies that support the pace of ever-growing businesses. With millennial and Gen Z workforce as your stakeholders, you should be able to count on your HCM to help deliver on their expectations of personalization, agility and embedded learning.
- Finally, the trick is to anticipate technology-usage bottlenecks, so as to create training modules that will accelerate the adoption rates from the start – rather than being reactive in nature.
The sooner you follow these steps, the sooner you will receive the ROI.
Future belongs to the technologically inclined
The additional returns derived from the steps listed above may not always be directly quantifiable but can help present a strong case for why your company needs to continue investing in HCM.
According to KPMG, of the forward-looking organizations that use the latest tech and skilled personnel, 24% achieved ROI for their cloud HRMS initiative. And 36% of HR functions deliver true value in enabling the workforce of the future. Thus, it’s the bold and the ‘technologically enlightened’ enterprises that are able to harness the best of what HCM technologies have to offer.
So, to stay in the game, business leaders should use HCM to create a work environment that promotes:
- Holistic human development: According to Deloitte, 76% of those surveyed believe that in the next one to three years, automation will require new workforce skills. Hence, the workforce of the future will need HCM tools to manage everything from education to skill and career development (social, emotional and higher cognitive skills) to deliver inclusive growth.
- Continuous upskilling: In the age of automation, upskilling and improved agility will be the need of the hour. 67% of workers surveyed by Accenture think that learning new skills is critical to work with AI in the next 3-5 years. Companies can even employ modular learning can help meet an individual’s life-long learning commitments.
- Experiential learning: Using disruptive technologies such as VR and AI, learning can be made more immersive, engaging and personalized.
- Greater ease in managing contractual employees: More than 50% of the workforce is forecasted to be made up of contingent workers by 2020. Hence HCM tools need to help manage the unique challenges involved in the compensation, benefits and acquisition of project-based labor such as shop floor assistants, administrative support, and IT staff.
Thus, armed with a commitment to understanding employee needs and staying up to date with the latest technologies; extracting stunning ROI from the HCM investment will come naturally to businesses.