Productivity Requires Accuracy: Why Your HR Tech Isn’t Delivering ROI as Promised

This started as a passing conversation with Beth White💡 a few weeks ago. I don't remember the details of what we spoke about exactly. Still, I do remember having a "You're right, and why aren't more people thinking about it this way?" moment when she said to me:

“Everyone implements tech because they think it will make HR more productive. However, actual productivity can only be achieved with accuracy today.”

My first dabble in HR tech started when I was staffed on the change management team of an HRIS transformation and implementation project. Since then, the one constant that has stuck with me throughout my career was the ROI question that every HR tech person inevitably gets asked. In the mid-2010s, I was all about the business case for HR tech and calculating possible hard and soft savings from process efficiencies and automation that can be achieved. The desire to prove the business case for HR drove me into the world of People Analytics. After all, what better way to demonstrate ROI on HR investments than to slice, dice, and predict data patterns across entire organizations?

Over the past year or so, I've become disenchanted with the whole ROI for HR topic. I have calculated, finessed, and recalculated the ROI case for HR for over a decade. Yet, very little has changed in the conversation about allocating a sufficient budget to invest in the HR tech stack. For the life of me, I couldn't figure out how to get myself out of this rut until this conversation made me realize something: While HR’s role in the organization has matured and its functions and processes have become more complex over the past decade, how we view HR productivity hasn’t changed.

There is a fundamental disconnect between what the HR function does and how tech supports it. That disconnect starts with how we view productivity in HR and shows its symptoms through HR's supposed inability to connect its initiatives with financial ROIs.

So, if you are struggling with things like proving HR's ROI, justifying your team's headcount, or trying to hold on to what little is left of your HR tech budget, hear me out because this is where I believe the disconnect is in the industry:

We have already automated 95%+ of HR activities.

It's been 20+ years since we started taking HR systems into the cloud and automating HR processes. At this point, we have identified ways to consolidate and automate every core HR activity and have started designing new activities with technology and automation in mind. What used to be a good business case of removing redundancies and freeing up capacity no longer exists. Benchmarks of HR headcount to FTE ratio have been increasing across all industries for the past ten years.

We have optimized HR processes and noted areas of inefficiencies.

Conversations over the past decade have gone from "How do we do this better?" to "Should we do this at all?". More and more HR tasks are being passed onto employees in the name of Employee Self Service (ESS), and managers are expected to become part-time talent and HR experts in the name of Manager Self Service (MSS). In my experience, conversations have dramatically increased around whether an activity belongs to HR or people managers. The statement "It's the manager's job to do [insert people management activity here]" became a daily occurrence at one point.

We are close to losing the human touch.

As an industry, we have gone a long way down the path of making HR more efficient, and we are on the edge of losing what it means to be human in the workplace. As we make the point for automating processes so HR resources will have more time to focus on the human connection, we are simultaneously trying to justify the cost of tech investments through headcount optimizations and reductions. Somewhere along the journey, we forgot that the productivity of the HR function cannot be solely measured by its labor costs. The benefits of having an effective HR organization must also be quantified and understood.

We have yet to intentionally architect HR tech landscapes based on automation and process optimization.

One of the challenges we have in creating business cases for HR is that the function doesn't always have the best data that can be correlated to financials to generate an ROI case widely understood by the business. Another one is that sometimes the HR technical and operational landscape is so complex that not every HR leader understands the intricacies of how one part of the ecosystem (e.g., Talent Acquisition team changing a relocation policy) affects another part of the ecosystem (e.g., FAQs for HR Operations to share with the workforce and new hires).

After a decade of pursuing the low-hanging fruit and quick wins through technology and automation, it's time to seek the more significant wins and become more intentional about designing an HR technology and process ecosystem that showcases HR's value. The intentionality of design will allow HR to reevaluate and consolidate the 20% of our business processes that we initially thought could never be changed.

We have barely scratched the surface of the accuracy and replicability of the human side of HR.

Productivity through automation is old news. The next wave of productivity has to be achieved through accurate and replicable processes and responses. Every time an HR person has to verify where an employee got their information from and whenever an employee feels the need to ask a question twice to confirm the answer is accurate, it is a wasted effort. The future of HR Tech is not in further automating; it is in ensuring that most interactions and processes with HR can be resolved consistently and accurately at the point of first contact.

So, the next time you get grilled on the ROI of an HR tech project, think about the time and productivity that can be gained from system adoption instead of going directly to labor cost savings or budget reductions. Also, think about how you might want to build a system to capture and redirect that productivity.