Using an HRMS ROI forecast to sell a new system to your C-suite

It’s time for the bottom line. If you want to persuade the C-suite that a new HRMS is the way to go – that they should make an investment of time, money and effort – then you have to treat them like any other investor and tell them what their return could be.

To be blunt, what’s in it for the organization? Is it a reduction in overheads or other costs, staffing gains (either a reduction in headcount or the freeing up of HR staff to deal with more complex issues, or both), maybe better handling and use of management information? Whatever benefits you expect to realize, they must be quantified and spelled out in an HRMS ROI forecast, giving executive management a reason to agree with you.

Comparing costs

In essence, any HRMS ROI forecast exercise is the comparison of pre- and post-HRMS costs of some kind. The key at this stage is to provide enough data to form a solid benchmark of current performance/cost and then show how a new HRMS can improve on that, and by how much.

Recommended Reading: HRMS Software Pricing Guide - Use this pricing guide to help produce your HRMS ROI forecast

A template HRMS ROI forecast exercise might be:

  • Deciding on the metrics (performance improvements, measurable processes, etc.)
  • Data collection to create the benchmark
  • Estimation of a new system’s likely impact (this may well involve consultation with stakeholders and vendor research)
  • Formulating a set of ROI targets which an HRMS project could realistically hit

One restriction is the historical data available. The likelihood is that the only hard data to hand comes from the people metrics and data already being measured, such as workforce as a percentage of total operating costs, vacancy to post filled recruitment times, employee engagement surveys, or records showing the types of work/inquiries that are received by the HR team.

Negatives dressed up as positives

Beware of an over-reliance on cost reduction in HRMS ROI forecasts as these are negatives dressed up as positives (for example, the HR function may cost less as a result of the new system but it’s still a cost – you haven’t changed anybody’s opinion about HR’s value). Instead, focus on added benefits and value: increases in service quality, additional services that can now be offered, ways in which the business’s KPIs might be achieved more easily… that kind of forecast.

Remember two key points:

1) By nature of their roles and responsibilities, C-suite executives are focused on the hard facts and figures of business performance – don’t perpetuate the stereotype of HR as being overly woolly when it comes to the ‘real world’.

2) You will be held accountable to whatever ROI forecasts you put in your HRMS business case so… be realistic, promise plenty but never what you can’t deliver.

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Dave Foxall

About the author…

Dave has worked as HR Manager for the Ministry of Justice for a number of years, he now writes on a broad range of topics including jazz music, and, of course, the HRMS software market.

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Dave Foxall