Automating HR Processes – is it Worth it?

This is a recurring question we come across …automating HR processes – is it worth it? Do the benefits outweigh the costs of automating HR processes, or similarly is it worth it? For us it is all about context, when answering this question.

Information relating to the impact of HR automation and self-service on small and medium-sized businesses is scarce and primarily vendor driven. Unsurprisingly, they suggest that in general, HR automation results in significant time efficiencies and cost reductions.

Based on our experience as HRIS consultants and implementation experts, we have repeatedly seen the transformational effect HRIS can have on businesses. However, there is a ‘but’. We have found that sometimes, for the reasons discussed below, automating HR processes isn’t the best option yet for a minority of SMEs.

You can lead a horse to water…

HRIS cloud based technologies are a major step change in how things are done. We know that this can be a bridge too far for some MDs or CEOs who are wary of the internet and new-fangled technology that they don’t understand. Unfortunately, we find without the boss embracing HRIS automation fully, it can be difficult to realise the benefits and ensure they outweigh the costs.

We have seen instances where progressive HR managers have managed to get the go ahead to purchase a HR automation system but fail to implement it because of internal roadblocks and lack of support from top management. Implementing an HRIS is a considerable project and needs top level support to be effective.

Tactical versus strategic importance of HR in a business…

HR can be divided into three broad areas: transactional work (can take up to 65 percent of HR’s time), employee services, (which may consume 30 percent more) and HR strategy (the remainder). The first two on the list have to be done, and done properly, but unlike HR strategy they offer no return to the business.

SMEs that don’t value the strategic potential of HR and its ability to impact on the bottom line rarely want to capitalise on the benefit that automation affords of allowing HR more time to focus on higher-value, higher ROI tasks.

When automating HR processes size does matter…

Having worked with numerous SMEs over the years we realise that there is a threshold above which the implementation and management costs of an automated system can’t be justified. This even applies to cloud-based systems like Sage People which have been specifically designed to be cost effective for smaller and midsize businesses, and do not require a large capital outlay or an IT team to install and update the software.  We find that these tend to be either start-ups where resources are tight or on the other end of the spectrum established local businesses that are not in a growth mode, and have fewer than 25 employees with a very low staff turnover.

In conclusion automating HR processes…

So when determining whether HR automation is worth it. It is important to first check the appetite for change and the importance given to strategic HR thinking, before looking at the numbers (budget, size of the business, number of employees, how many new recruits, or how much spent on HR/payroll/benefits admin).

To assess whether automating HR processes is worth it for your business call the HRIS experts, Tugela People, on +44(0) 1327 317701 or contact  them via the website.