What ROI does professional HR software have for companies?

Professional HR software can generate a significant return on investment (ROI) for companies. Below, we summarize the main benefits and ROI potential of HR software and highlight the latest studies on profitability:

1. time savings and increased efficiency

• Automation of HR processes: Administrative tasks such as accounting, time management or employee onboarding are accelerated through automation. This saves HR teams many hours of work. The increasing integration of AI in HR software is reinforcing this trend.
• Faster recruitment: With an integrated applicant tracking system (ATS), companies can optimize application processes and hire qualified candidates faster.
• Reduction of administrative errors: Automated processes minimize human errors, which in turn saves time and costs for corrections.

2. cost savings

• Reduction of personnel costs: Less manual effort means that HR employees can work more efficiently and concentrate on more strategic tasks.
• Lower recruitment costs: Recruiting software significantly reduces the effort and costs involved in recruitment.
• Improving personnel planning: Precise planning helps to avoid over- or understaffing and thus reduce unnecessary costs.

3. improved employee retention and satisfaction

• Talentmanagent Software has the central goal of increasing employee satisfaction. This is to be achieved through targeted development measures, regular feedback and the identification of career opportunities.
• Performance management and feedback tools: Employees receive regular feedback, which leads to higher satisfaction and lower staff turnover.
• Accessibility of information: Employee self-service portals provide direct access to payslips, vacation requests and benefits, which increases engagement and satisfaction.

4. better data and decision making

• Analytics and reporting: HR software provides deep insights into data on turnover, performance and satisfaction. This data is crucial for making informed HR decisions and developing long-term strategies.
• Compliance and risk minimization: Automating compliance tasks, such as adhering to working time laws or data protection regulations, reduces the risk of legal problems and penalties.

5. scalability

• Companies can scale the HR software as they grow. This means that the software works for both small and large companies and the costs increase in proportion to growth.

Concrete calculation of the ROI

The ROI can be calculated using the following simple formula:

ROI=profit through HR software costs of HR software costs of HR software×100\text{ROI} = \frac{\text{profit through HR software} - \text{costs of HR software}}{\text{costs of HR software}} \times 100ROI=costsofHRsoftwareprofitthroughHRsoftwarecostsofHRsoftware×100

• Profit from HR software: This can result from cost savings, increased productivity, reduced employee turnover and better decision-making.
• HR software costs: These include license fees, implementation costs, training costs and ongoing maintenance fees.

Sample calculation:

Let's assume that the implementation of HR software costs a company €100,000 per year and that the efficiency gains and cost savings generate an annual benefit of €200,000. Then the ROI would be:

ROI=200,000-100,000100,000×100=100%\text{ROI} = \frac{200,000 - 100,000}{100,000} \times 100 = 100\%ROI=100.000200.000-100.000×100=100%

This means that the company would save twice the investment costs or realize them as profit.

Studies on the ROI for HR software

There are several studies and surveys from the USA that seek to quantify the ROI of HR software. Here are some examples and concrete figures from various sources:

1st Nucleus Research: ROI of $9.13 per dollar invested

A 2020 study by Nucleus Research shows that companies get back an average of $9.13 for every dollar they invest in HR software. This high ROI comes from increased efficiency, automation and the reduction of errors and HR-related costs.

2nd PwC HR Tech Survey

The 2020 PwC HR Technology Survey found that companies that invest in HR technology achieve an average 20% reduction in the cost of HR administration tasks. It also emphasizes that improving talent acquisition through talent management software leads to a 15% increase in employee productivity.

3rd CedarCrestone HR Systems Survey: 50-60% higher profit margins

According to the CedarCrestone 2018-2019 HR Systems Survey, companies that invest heavily in cloud-based HR software achieve 50-60% higher profit margins than those that do not invest in such technologies. In particular, the automation of processes such as payroll, time recording and performance management contributes to significant savings.

4th SHRM: 22% less employee turnover

According to the Society for Human Resource Management (SHRM ), the use of modern HR software solutions has reduced employee turnover by 22%. As the costs of hiring and training new employees are very high, this leads to considerable savings.

5th Sierra-Cedar HR Systems Survey

The annual Sierra-Cedar HR Systems Survey finds that organizations using comprehensive HR technology solutions experience an 18% increase in operational efficiency and a 15% improvement in employee satisfaction. These improvements contribute significantly to reducing labor costs and increasing overall productivity.

6 Aberdeen Group: 60% faster staffing times

A study by the Aberdeen Group shows that companies that use HR software can reduce their staffing times by 60%. This means that companies can find and hire qualified employees more quickly, which leads to a huge competitive advantage, especially in highly competitive industries.

7 Bersin by Deloitte: Increased employee productivity

According to a study by Bersin by Deloitte, the use of HR software leads to an increase in employee productivity of up to 25 %, as they can access information faster and go through processes such as approvals or feedback loops more quickly.

Summary of concrete figures:

• ROI of $9.13 per dollar invested (Nucleus Research).
• 20 % cost reduction in HR administration and 15 % increase in productivity (PwC).
• 50-60 % higher profit margins thanks to HR technology (CedarCrestone).
• 22% less fluctuation thanks to HR software (SHRM).
• 60% faster staffing times (Aberdeen Group).
• 25% increase in productivity through access to information and process acceleration (Bersin by Deloitte).

These studies show that the use of HR software not only increases efficiency, but also offers direct financial benefits. The ROI varies according to company size, industry and specific requirements, but remains consistently positive.

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