In a recent white paper release by Pilat-Nai on “ROI for HR systems and Processes” has some insight on how to justify the cost on HR tools.
Just like manufacturing, sales or distribution, HR should develop a business case for each of its initiatives. These business case should lead with the overall strategic purpose of the initiative but be supported by a thorough and objective assessment of:
Costs - direct, indirect, start-up, Running
Benefits
Risks/certainties - factors that could Impact costs and/or benefits, with some Assessment of their probability and how any risks can be managed
As HR shifts from being 60% administrative and 40% strategic to 60+% strategic and 40-% administrative, it will need to focus on initiatives that add value; the focus will shift from assessing cost reduction to the more complex task of assessing increased effectiveness and impact.
Just like manufacturing, sales or distribution, HR should develop a business case for each of its initiatives. These business case should lead with the overall strategic purpose of the initiative but be supported by a thorough and objective assessment of:
Costs - direct, indirect, start-up, Running
Benefits
Risks/certainties - factors that could Impact costs and/or benefits, with some Assessment of their probability and how any risks can be managed
As HR shifts from being 60% administrative and 40% strategic to 60+% strategic and 40-% administrative, it will need to focus on initiatives that add value; the focus will shift from assessing cost reduction to the more complex task of assessing increased effectiveness and impact.
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