5 great tips for calculating ROI

Introduction

You know that having integrated Payroll and HR Software would make life a lot easier, but in order to secure the budget you will need to put together a very clear argument for how the investment will benefit the business.  Here we look at the things that you should consider when constructing your business case.

Do you, your team and the wider organisation have the stomach for change?

Successfully implementing a new Human Resource or Payroll system requires not only money but a great deal of planning, time and commitment. Before undertaking this process it is important that you are very clear about your objectives. Software can drive efficiencies and also provide some very valuable analytical data. However you need to be realistic about what you are going to do with the information once you have it. If your company has policies in place and you discover that they are not being adhered to, who will be responsible for ensuring that they are actively enforced?  It is very likely that not just the people within your team, but across the wider organisation, will have to make changes to the way in which they work. Therefore this process is about cultural change not just about purchasing software.

Are you ready? If so, then let’s take a closer look at the areas to examine when building your business case.

Reducing costs

Whether your motivations for new HR software are driven by a desire to improve service, reduce risks or drive efficiencies, calculating how it could impact the bottom line is fundamental to your argument. The frustrating thing is that if you had decent Human Resources software this process would be rather simple, if you do not then it will require some investigation and possibly extrapolation to get the figures together.

Firstly you will need to calculate the current financial impact of employees not adhering to policies or managers not enforcing them. It is quite possible that you already have some inkling as to where the profit leaks are in your business. Use this knowledge as a starting point. We would suggest including things like:

• Expenses
• Absence
• Lateness
• Overtime
• Breaks

Secondly you will need to calculate the man-hours that could be saved across the business entering, reconciling and searching for data. Ask key people to keep records and extrapolate. You could include things like:

• Entering timesheet data
• Reconciling timesheet data for payroll
• Entering expenses
• Duplicating data entry across HR, Payroll, H&S and Finance
• Chasing authorisations
• Putting together reports

Increasing productivity… or reducing headcount

Once you have a clearer picture of where time could be saved, you will then need to consider what value-added activities employees could be completing in the time they would have spent entering, reconciling and searching for data. Depending on their role this could be, for example:

• Strategic HR activities
• Team management activities
• Role-specific activities

It is highly possible that you will be quite shocked by exactly how much time is spent each pay period collating timesheet data and reconciling it. Payroll software with an integrated Time and Attendance system will simplify this process to such an extent that, in an enterprise sized business at least, a reduction in headcount is almost inevitable.

Here are two examples from existing HR users:

“With our previous Time and Attendance and Payroll systems it was taking us an average of 10 days a month to complete a timesheet and shift pattern register. With Carval this process has been slashed to around 2 days as there is a direct transfer of data and no need for manual calculation of shift allowances.” (R-TEK)

“The introduction and use of the system has meant a reduction in staff employed in payroll and given the facility to produce much more meaningful management information…. we now only need one part time employee to do the payroll, whereas we used to have a staff of eight….” (Charles Letts & Co Ltd)

Again, have you got the stomach for change?

Improving data accuracy and availability

Informed decision making in all areas of the business requires accurate data. How reliable is the data that you hold on your employees?

• Is it up-to-date?
• Has it been entered multiple times increasing the chances of error?
• Is it auditable?

How accessible is the information that you hold to key stakeholders? That is not just to the HR and Payroll teams, but to employees, to managers and crucially to directors? HR technology can deliver insightful reporting opportunities and automate the sharing of this with the individuals that it is of value to.

Reducing risk

The fields of Human Resources and Payroll are a minefield of constantly changing legislation. Non-compliance can lead you to fall foul of the law, risking fines and even imprisonment. Mistakes can also endanger employees’ and clients’ well-being and damage an organisation’s reputation. Consider the potential impact of overlooking things like:

• CRB checks
• Right-to-work checks
• Pensions auto-enrolment responsibilities
• Risk assessments
• Health checks & vaccinations
• Disciplinary and grievance
• Working Time Directive laws
• Minimum wage laws

An integrated HR, Payroll and T&A system will provide you with the tools to ensure these things do not get overlooked and will significantly reduce the risks to which your company, your employees and the wider public are exposed.