Transcript of "Building the business case ROI for SaaS HR "
Building The ROI for SaaS HR Solutions for Your OrganizationPhase #1. Benchmark Your Approach versus the Competition.Benchmarking against the competition is a great way to “Build the Business Case” and demonstratemeaningful ROI, benefits and targeted goals. Accordingly, demonstrating how the competition is usingand benefiting is step one.Step One: Create your benchmark comparison. It is difficult to improve what is not measured. Evaluatingperformance relative to competitors and industry standard benchmarks enables executives and managersto assess performance regardless of the economy and irrespective to industry slumps. ROI benchmarkingto build the business case should be done for your industry vertical and based on your company’s goals. Top Performer Benchmark for serviceMeasure (Desired Outcome) business with 500 full-time W-2 employeesRevenue Per Full-Time Employee $230,858(Scalability of the workforce)Employee Commitment 90%+(Retention and productivity measure)Percent of employees with positive employee reviews 75% have satisfied manager after 1st yearafter 12 months (Quality-of-hire) $500 per hourly and $5,000 per salariedCost-per-hire employee •Employee: 3.1 yearsAverage tenure •Manager: 4.6 years •Employee: 22%Average turnover rate •Manager: 14%Staff utilization and productivity (schedule efficiencies) 85%+Human capital cost per FTE (HR Cost Effectiveness) $753.00Training (Percentage of Employees CompletedDevelopment Program and/or On-Track To Complete 99%the Program)Training (Hours per month per employee) 3.5EEOC Complaints, Litigations (#) 0 per yearSafety Incidents (#) <1 per monthOnboarding to Success (# of days) <30 daysStep two: Discuss and create consensus on the areas to focus on for improvement.Ephor Group | 1-(800) 379-9330 | www.ephorgroup.com | 24 E. Greenway Plaza Suite 440 | Houston, TX 77046
Building The ROI for SaaS HR Solutions for Your OrganizationPhase #2. Create an Assumption-Driven ROI Model Based on Targeted Improvements.Most important when creating an ROI analysis is demonstrating how the solution will impact and alignwith the overall business strategy. The key is to create consensus on how HR fits with the business.While each company’s specific goals will differ, evidence abounds that demonstrates that what getsmeasured gets improved.Step one: Set goals for each HR process and size the P&L impact. Workforce Consequences of Poor or Inadequate Workforce Effectiveness Cost-Benefit Analysis Effectiveness Category Misaligned Compensation and Benefit against the Compensation not aligned with the market causes market results in hiring slugs instead of stars turnover Demotivated workforce manifests morale On average turnover cost is $10k per hourly and Compensation and problem which causes inefficiency, cultural $50 per salaried professional! SHRM Benefits issues, and worsens productivity Benefits are a key differentiator for many worker The right benefits package targeted to the right segments segment can lower total compensation costs i.e. reduce the fully loaded labor cost per employee Fines, litigations, EEOC complaints, and safety Improved staff utilization , resource efficiency, and incidents legal costs. Loss of control EEOC leads employee productivity; a 5% employee to have to hire and pay differently over hiring and productivity gain does not increase costs and goes pay straight to EBITDA When trust issues are present it becomes Average compliance cost is $5,411 per employee Employee management versus the workforce (20-499 employees US NDL) Relations Reactive management leads to adult day-care Business owners spend up to 40 percent of their causes low employee commitment time consumed by employer-related paperwork. SBA A bad reputation as a firm reduces attractiveness Employee Incidents Resolved Satisfactorily % as a place to work, performance of current Improvement (Average settlement is $273k (US employees, and is viewed poorly by the public NDL) Reduced employee satisfaction Revenue-Per-FTE , Profits-Per-FTE and Gross Profit benchmarked against industry averages improves results Gaps in skill sets and organizational capabilities HR Administrative Costs are on average $1,253 for the average organization vs. <$500 per employee for firms with strategic HR Without training and career development Onboarding success rates (80% versus 50% for Organizational productivity does not improve and leaders and many positions) Development managers are not developed No internal career development opportunities 20% reduction in insurance rates increases turnover Inability to react to environment. The average U.S. employer spends more than 32 hours and $900 per employee on employee training. ASTD Inability to meet marketplace demands Improve employee to manager ratio (varies by industry) One-third of all bad hiring decisions are a direct result of pressure to fill a position, with hiring Hire more ‘A Players’ , less turnover managers often relying on gut decisions when Workforce they are in a hurry. Planning Costs and opportunities not aligned: The war for Reduce overtime costs ‘A Player’ talent Customer satisfaction declines Decrease key hiring metrics: Time-to-Fill and Skill trade acts as a determinant to growth Cost-Per-Hire, Number of Positions OpenEphor Group | 1-(800) 379-9330 | www.ephorgroup.com | 24 E. Greenway Plaza Suite 440 | Houston, TX 77046
SaaS HR Buyer’s GuideHistorically, the cost to implement, manage, and utilize a Criteria Feature/FactHR system based on a licensed software model has 1. Vendor Credibilityinhibited the routine use of these systems. These # of Customers Added Per Year with SaaSlicensed software rollouts (non-SaaS systems) have Notable Clientsadditionally required mass customization and coding to fit Notable Partnersworkflow processes and end-user adoption has been Financial Stabilitylimited due to expense. Today, there are a significant 2. Client Fitnumber of organizations that, due to performance Verticalsmandates and/or regulations, are now required toautomate, standardize, document, and streamline Local Officesprocesses and add support functions. 3. Technology Solution Fit SaaS multitenant scalable platform with Workflow, Real-time Reporting, CRM.To date, the technology capabilities of these products Configurabilityhave outpaced the adoption and use. In fact, the majority Scalabilityof implementations deployed have failed to fully utilize Ease of Interoperability (Integration)the entire suite of possibilities due to the complexity of What vendors are integrated?both deployment and ongoing, routine use of these Performance Management (see PM Feature Comparison)systems. Business Management Reporting Global CapabilitiesToday’s SaaS market leaders are known for: “The Best Talent Management ERP (Enterprise Resource Planning)Deployment and Service”, adoption by employees and 4. Sizzle Features - What are the sizzle features? Compensation Planning, Baseball Cardconstituents versus top-down roll-out; i.e. the need for a WOW Sizzle Feature #1solution that works on-demand, and provides a series ofadd-on products and services to meet organizationalworkforce needs. WOW Sizzle Feature #2 5. Cost and Implementation Time/Resource Estimates - What is the ROI? What are theContact a professional to put together a specific ROI Pricing Model Results? How many projects do they start but not complete? Do they publishassessment for your organization. S (S )? Methodology - What is the philosophy of the company? Does the process align ? Analytics and Reporting - What daily, weekly and monthly reports and metrics ? Cost-Benefit Analysis C ? Setup Time Implementation Time to Implement Core Training Time and Costs Monthly Average Cost Total Cost Average Per Client for 3 Years ROI Expectations SaaS Performance Management Provider A Provider B Provider C Application Providers HR Consulting Services Y - Enteprise Y - E & SMB Nothing beyond implementation support. Performance Management Y - Enteprise Y - E & SMB Y - Enteprise Goals Management Y - Enteprise Y - E & SMB Y - Enteprise Collaboration Y - Enteprise Y - E & SMB Y - Enteprise Automated Workflow Y - Enteprise Y - E & SMB Y - Enteprise Employee Self Service Y - Enteprise Y - E & SMB Y - Enteprise Manager Self Service Y - Enteprise Y - E & SMB Y - Enteprise Best Practices Templates, Competencies Y - Enteprise Y - E & SMB N Templates for Metrics/Dashboard Y - Enteprise Y - E & SMB Y - Enteprise Y - Via Partners Y - E & SMB Y - Enteprise Learning Management System Y - Via Partners Y - E & SMB N Training Content Y - Enteprise Y - E & SMB Y - Enteprise Succession Y - Enteprise Add-On Y - E & SMB Y - Enteprise Surveys Y - Enteprise Y - E & SMB Y - Enteprise Communications Y - Enteprise Y - E & SMB Y - Enteprise Org. Chart Career Management N Y - E & SMB Y - Enteprise Talent Management Y - Enteprise N Y - EntepriseEphor Group | 1-(800) 379-9330 | www.ephorgroup.com | 24 E. Greenway Plaza Suite 440 | Houston, TX 77046