What’s the best way to persuade the powers that be to invest in an HRMS?

I believe every senior executive has already made investments in HRMS at this point. I cannot think of a single company of significant size that has not already implemented some sort of ERP system to management financials and human resources functions, or some comprehensive HRMS / HRIS / HRDS type of system. In fact, many have invested in additional point products around talent management, ATS, benefits management, etc., to bolster their core HR system.

I think the real question is how to persuade senior leadership to actually consider the HR function as something more than a tactically-focused, non-strategic cost center and a necessary evil. In a way, having these systems has actually contributed to HR being marginalized as it has led executives to assume that HR is simply a process to be managed, like financials, rather than a function that ensures the company has, develops, and retains the right people to meet its objectives.

In order to persuade Execs to invest in any major HR expenditure, HRMS or otherwise, it behooves HR to complete a detailed proposal with a detailed business case - working in the metrics of the CFO, VP Finance, etc. For example if the CFO/VP Finance use Internal Rate of Return (IRR) as a metric to determine whether a particular business investment/expense is feasible then HR needs to present a Business Case using IRR as their primary metric/calculation.

The second aspect of persuasion most HR Practitioners omit is a detailed workplan for how the ROI, EBITDA, IRR, etc., will be achieved, the resources it will require (Internal and External), capital investments, etc. If HR wants to be perceived as a player then they have to come to the table with their homework done and be able to persuade by presenting a defensible business case and the detailed roadmap on how the organization will get there - as all of their counterparts regularly do in Finance, Operations, IT, etc. - HR is no different.

I agree that showing a ROI is imperitive to getting executive buy in. It is also important that you position this as an organizational infrastructure tool that the management team can leverage to analyze the human capital of the business. Documenting workflow, communication gaps and bottlenecks that can be solved with a technology implementation is also helpful. Sometimes a picture is worth a thousand words! Flow chart it! If you can help bring efficiency to the organization as well as impact company culture positively, then you will have the executive team's attention. Once you have it, involve them in the process of your evaluation. Their buy in is critical to the overall success of the selection and implementation of your HR technology platform. Make sure everyone has the same expectations of how the technology will be implemented including roles and responsibilities. After the implementation, measure your ROI and other key expectations against the deliverables and include key management in the discussion. Lastly, ensure everyone is adequately trained on the use of the system and when turnover happens, make sure that the new employees understand the system and how/why you are using it strategically.

From the question I assume that this is in a scenario where there is little to no investment in HRMS and that most work is done manually using Excel or a MSAccess database. While there are very few organizations, and most will be in the SME (small and medium enterprise sector), who do not have any HRMS in place, there is a need in every organization, however small, to achieve cost optimization in the HR organization and to become more strategic. The most important rationale for investment in HRMS in such a scenario would be to show what is NOT possible without that investment. HR has to define its value proposition first and be able to convince the powers that be about the value added services that they would be able to create and deliver with an HRMS in place. Most organizations underestimate the cost of HR by 50% (refer the Hewitt's HR Analyzer[TM] (HRA) benchmarking study). The first step would be to unbundle the HR cost equation and reasonably assess the true cost of HR service delivery with all the administrative tasks that HR has to do, and to show in numbers and dollars how the cost will decrease over a period with investment in an HRMS. Also do a value chain analysis of HR services. It is the linkage between the primary activities in a HR value chain (Recruitment process, onboarding, Performance Management and Career Planning, Communication, Training & Management development, Compensation management and Facilities and Administration) that is a source of competitive advantage and linkage requires information flow which is only possible through investing in HRMS.

Join IHRIM (http://www.ihrim.org), the International Human Resource Information Management association. Many opportunities to leverage knowledge from others, take executives to symposiums to get them up to speed on thinking, etc.

Just as with any "sale" there is a requirement for needs analysis (asking questions), developing a plan to provide a solution to meet these needs (presumeably the HRMS - based on this conversation), and completion of cost/benefit analysis to show the potential ROI of moving forward with an HRMS solution.

I would start by asking the "powers at be" what they felt were the greatest challenges they were experiencing in regards to managing their employee base and in working with HR. This not only shows your interest in becoming a business partner, it allows you to identify a specific set of wants and needs that can be used to paint a picture of what life will be like once you have an HRMS in place.

For example: if there is no HRMS in place, there are most likely challenges tracking the cost/benefit of managing the company's employee base. From direct and indirect cost, ROI of training, the expense of new hires vs. turn over, etc.

Also, how are reports being delivered? Does HR have to run all reports for the management team or does the management team have access to data at their fingertips? Do employees have to come to HR to fill out a form to make changes to their own data (address changes, name changes, benefit enrollments, etc.) or do they have direct access to control and verify the accuracy of their own data?

One of the biggest challenges I hear from senior managers in regards to working with HR is that HR isn't seen as a business partner. If you approach the "powers at be" with a proposal for a new HRMS that only resolves HR issues and does not address the needs of the company in meeting its objectives, it will most likely be declined. With every department competing for scarce resources (dollars), you need to be able to show how you are planning to resolve specific issues the powers at be are either currently facing or may face because of future plans/changes in the company. You need to understand that you are competiting with every other request for these same resources. It is very important to provide specific examples of how the HRMS system will allow you to deliver on the needs described in the intitial analysis and then some. By painting a picture of what life will be like once you have an HRMS in place, you are more likely to succeed in "making the sale" for a new HRMS.

This problem has a solution. HR can and should compete on par with other cost/profit centers based on return on investment. Quantitative Organization Culture Assessments or QUOCA, objectively identify HR oppotunities that impact the financial performance of the organization in financial terms such as Cost of Sales, Return on Investment, Profitabilty and Operational Efficiency. Thus, HR can argue for budget resources on equal footing with operations, IT, and marketing. For more information, please visit www.cultureclout.com

Having worked closely with executives for the past 10 years, I find all of these statements to be true - but emphasize that first and foremost, rather than answer the questions of "what's in it for me/what's in it for them?"... focus on addressing the question "what's in it for BUSINESS GROWTH?".

Every other department needs to, so as they say, if you want to play with the big dogs...

If you can't prove how the system will result in ROI, you can't prove value. To provide justification at the C level, you'll need to clearly demonstrate a significant correlation between purchase of your HRMS and improved performance, increased productivity, decreased downtime, etc. ....that's MONEY, and that's what your CEO/CFO are looking for.

Hi Alex,

I fully agree with Al. In the end it is all a matter of "what's in it for me".

This means that in an HR management role you might see the advantages, but executive management needs to understand "what's in it for them". What are the advantages (both strategic and tactical) to automate certain HR processes. How can such an event contribute to the organizational strategy and performance? That's what senior executives want to understand.

Why another system? We already have so many systems.... In a lerger organization, recruitement for example is a day job. This also means thta the data involved is large. 1K employees mean you need to hire prob some 100 new people every year. The next thing is that likely another 50 or so will change jobs inside the company as well. To get your 100 people onboard means you need to go out into the market and secure enough potential candidates. If you do not hire people in time, your sales might go down, your production might fall into a vacume.....

If you automate employee performance management, you do get a good inside in the available skills and how people perform against their targets and competencies. This means you can provide better, more focussed training. Typically companies who use these systems pay less for training but end up with better results because you can understand the trend and need. What is you can show great efficiëncy gains? HR, Managers and Employees spending their time much more effective.....

The following link proved a sample solution providing inside in the benefits of an automated employee performance management system.

http://www.officeapplications.eu/pages/products.php?&pid=32

There is much more, however this should give some idea how to think.....

Johan Pellicaan
Director and Strategic Business Advisor
johanp@stratbus.com | www.stratbus.com

I'm on the phone all day selling the exact scenario in 90% of my calls. If I said IRR to these companies they would think I was slurring my speech. Mona and Nancy's points, for me, were spot on as it relates to the question.

Along with needs case development, ROI, and value proposition - there is another factor that has major influence. Urgency. I've dealt with companies for months and months....and months that simply cannot make up their mind. They have to have valid reasons why it would be important to act now. Even after agreeing on benefits, ROI, etc...they still can't pull the trigger if they don't feel it's a priority.

Ben Peterson
www.bamboohr.com
ben@bamboohr.com

The question Ben, is how do you make it a priority then? I have exactly the same issue in my business. I can show ROI, I can show value proposition. A lot of deals still fall a part at some point. It seems to me that there still seems to be a disregard for employees and a disregard for legal compliance, even if they have been burnt before. So, in short these things get eliminated from the ROI, when they are reviewing the proposal, as they never considered them to be a risk in the first place.
What are your thoughts on that?

Kylie Dutton
kdutton@paycentre.co.za
www.paycentre.co.za

Lots of thoughts...in sales it's funny how we always know what is best for the customer. I have to kick that thought out of my head first, and try and focus 100% on what really is best for them. Learning their needs as mentioned above helps know where the emphasis needs to be placed. Urgency/Priority is a balance and it depends on the customers needs. For me, each company's HR seems to have multiple buttons that need pushing to make it important. And the HRIS may never be at the top. First steps are figuring out the buttons. It's challenging. Those are some thoughts FWIW.

Ben Peterson
www.bamboohr.com
ben@bamboohr.com

Unfortunately In most of the organizations the senior management still treats HR as recruitment & pay roll department. The quality of employee is the biggest factor in making a organization a successful one. HR has the responsibility of Recruiting, Training & development, Payroll, Employee Appraisal system etc. Just take one Responsibility of HR, Appraisal System. If the Appraisal System is faulty, this will create dissension among the employees. This will effect in selecting the right candidate for the right position. Ultimately it would prove to be a loss of monetary loss to the organization if employees start leaving the organization.
I feel more than putting the system the first thing is to change the mindset of senior management. They have to realize in current scenario a good & competent employee is the most precious commodity & lot of efforts are required to change a employee from good to best.
I would give one Example from Indian context. Software Indian giant Satyam Computers faced the biggest corporate fraud committed by its own owner & some of the board members. It was the employee of Satyam Computers who run the company meeting all the requirements of the customers even when they were not sure whether the company will survive or not.
Senior management first should realize the importance of HR & give them free hand in establishing a fool proof system for recruiting, evaluating, training of the employees.
Last but not the least even the primary responsibility of putting the best system for employee benefits rests with HR it is the responsibility of each & every supervisor of the organization to implement best HR practices.

I think the key is always cost vs. benefit, right? What results is their organization getting now, are they satisfied. Most will say there is room for improvement, and this usually can be achieved by increasing efficiency ( http://blog.radix-technologies.com/?p=198 ), hence HRMS. Getting decision makers to let go of the money is always a tricky business but our responsibility is to provide the data, the 'others' that have done it and management takes it from there ( http://blog.radix-technologies.com/?p=228 ).

www.blog.radix-technologies.com
www.radix-technologies.com

Agree with Pamela. In addition, no one in today's business environment is going to get credit for taking a risk and spending money . The risk of change far outweighs any benefit. We always hear that technology leads business out of recession and I believe unemployment will be very lagging this time around but an organization will only spend today if enough people are demanding a solution.

It's more than demonstrating ROI, after all if that's all there was to every buying decision everyone in the country would have the same savings account (or small group thereof) as there are clear winners and losers in this market place.

You need to understand the business priorities first and foremost and demonstrate how the HRMS implementation will enable these, or prevent problems that will inhibit these. Before moving onto any kind of cost/benefit analysis.

You can have all the data in the world but if the company doesn't view your solution as a priority then it's a waste of time.

You have to remember that companies do not have an unlimited amount of resources, neither people nor money. And that there are many solutions presented to a company at one time, each of which requires an allocation of these finite resources. And each of these will have some sort of percieved beneft.

So it's not ROI that will drive this forward, you can demonstrate ROI by just asking management to hold onto their cash in uncertain times (and many are doing just that). It's moving HRMS onto a list of priorities, to the point where fixing the HR issues outweighs fixing the logistics issues or the customer relations problems at this moment in time.

It may be old, but it's still relevant today, the SPIN selling model is best applied to these situations. If you can't get things moving by demonstrating real need, then forget the ROI it's uninteresting icing on a cake that no-one wants to eat.