How To Measure Your HCM’s ROI For Your Company




While it’s clear that an integrated approach to human capital management (HCM) helps organizations optimize productivity, identifying the actual return on investment (ROI) often proves to be more of a challenge. Many factors go into the calculation of the ROI of HCM, from the time to implementation, to user adoption, and the unique factors that go into your businesses profits, all of which beg the question: – where should you start when considering the value of the investment?


Here are three questions you must answer in order to measure the ROI of HCM technology for your company:  


Question No. 1: What is the typical cost of an HCM? 

The overall cost of an HCM factors heavily into how long it will take you to see a strong ROI. On the surface, the lower the cost, the faster you should be able to recoup the expense. But it’s not always so simple. After all, one HCM technology might be more expensive than another, but deliver more value over the life of the product, ultimately resulting in a higher ROI. That’s why the information-gathering stage is so critical to the process of calculating the ROI of HCM technology.


As for pricing, it will depend on the vendor you choose. HCM platforms are often priced on a per-employee per month basis. Because the costs can range anywhere from $6 - $25 per employee per month, a company with 500 employees can expect an annual expense between $36,000 - $150,000, depending on the features and services included.


It's also important to note that there can be additional costs associated with implementing and maintaining the platform, from implementation, training, and ongoing support, all of which need to go into the calculation of the ROI of HCM technology.



Question No. 2: What do we need from our HCM? 

The majority of HCM platforms share core features that allow an organization to hire and manage its workforce. But some platforms offer more features than others, and you’ll want to make sure you select a platform that specializes in the outcomes you need. 


Are you looking to improve workforce productivity and cut costs by automating time-intensive administrative tasks, avoiding errors, and reducing paper handling? Or are you more focused on streamlining recruiting, hiring, engagement and employee retention? The ROI of your HCM will depend on how many of these features you deploy and the benefits you get from them. 


For example, the core SyncHR product focuses on HR administrative functions such as payroll, time and attendance, benefits and retirement. But SyncHR also offers a suite of products that include functionality to support recruitment, onboarding, talent management, and training.  


Click here to learn more about how SyncHR helped Huffmaster deliver a powerful ROI


Question No. 3: How many people will benefit from the HCM directly?

Next, consider the people and processes that will benefit from the HCM system being in place. Theoretically, the more people the HCM impacts in an organization, the greater the potential ROI of HCM technology. For example, every employee in a company is affected by a HCM’s payroll service, so the ROI for this function is high. And if the HCM platform offers support for employee engagement and company culture, there can be wide-reaching cost savings when you avoid the high cost of turnover, which one HR Dive study shows can be as high as $15,000 per employee. All of these factors need to be considered to maximize the ROI.  


HCMs will also deliver a higher ROI when they have a high repeatability factor, which is the frequency at which a system will be used for a specific task. In the payroll service example, breadth and repeatability go hand in hand, as every employee will come into contact with the software every pay period.


There are direct benefits to repeatability, as according to the American Payroll Association, organizations with integrated timekeeping and payroll reportedly overachieved their revenue targets by as much as 7%. Data from Nucleus Research also shows that cloud-based HCM technology is projected to deliver 3.2 times the ROI of a system hosted on site. 


Measuring – and Maximizing – the ROI of Your HCM 

For large or growing organizations with complex payroll and benefits requirements, HCM systems deliver incredible administrative efficiencies. As the workforce continues to become more virtual, cloud-based HCM tools can help manage the unique challenges that come with hiring, onboarding, and managing the entire remote employee lifecycle, adding value and driving ROI for the life of the system. To see how much an HCM can drive your organization's ROI, contact one of our experts today


This ultimately saves you time, frustration and money, and helps you get the right person in the right position faster. To see this in action, click here to schedule a demo


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Sarah Greesonbach

Sarah Greesonbach

Sarah Greesonbach turns cutting-edge research and data into captivating HR technology marketing content. She loves to consider the possibilities of humanizing, organizing, and minimalizing all things HR, and her writing helps HR executives and professionals develop their instincts and arrive at actionable insights for employee engagement and business performance.

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