As a business-critical role, HR leaders have a golden opportunity to get buy-in for the people strategies and tech that drive tangible business outcomes. But often, the complex nature of the people function makes it challenging to get the data needed to show definitive results.
“To justify a budget request, CFOs need information on the cost per headcount versus internal measurements against turnover and productivity gaps within the company,” said James Earwicker, CFO of Mindgruve “It’s also hard to quantify the gains that offset the implementation of these platforms, so statistics are helpful.”
As organizations become more data-driven, CFOs rely on not only the hard numbers, but the quantitative results that show whether specific initiatives or investments are performing as expected. To help foster a stronger partnership between HR and Finance, we’ve rounded up three timely data points on the top HR trends, plus advice from HR professionals about how they measure the impact of HR initiatives on business outcomes.
1. HR Teams lose 40 million hours monthly to fragmented tech.
That’s according to a 2020 report by Topia, which uncovered that not only does bad tech negatively impact productivity, but also that the 40 million lost hours each month cost US and UK businesses $8.5 billion each year. Topia also found that 70% of HR employees navigate between three and six different apps on average when trying to achieve a single task. This fragmented approach can make every task take longer than it needs to and as a result, productivity takes a nosedive.
When it comes to the financial side of things, transitioning to an integrated people success platform allows your team to achieve more with less.
Integrating HR solutions for more efficient people management.
Earwicker said it’s often the unintended — and expensive — side effects of fragmented tech that end up initiating change.
“While separate platforms or tools can have greater flexibility and provide cost savings, they do come with a downside because manual processes are required to connect them and fill in the gaps for performance,” Earwicker said. “[In] reality, integrated solutions may cost less than expected when factoring in difficult-to-measure expenses like lost productivity and high employee turnover, compared to the fees of implementing a new system.”
Choosing HR tech that offers seamless integrations with your existing software can also help smooth out the disconnected experience of a fragmented tech stack.
Matt McFarlane, senior director of people experience at Oyster, considers this a key priority to creating more efficient workflows across the organization: “We lean heavily on ensuring point solutions have, or are working quickly toward, integrations that allow these platforms to plug into our central nervous system (in our case, Slack),” he said. Taking an integrated approach enables employees to easily accomplish key tasks, without having to navigate their way through a variety of other platforms.
Once any new tech is embedded into your daily processes, don’t forget to ask your employees how they’re finding it — this is the kind of data needed to persuade a CFO that continued investment is vital.
“We use frequent surveying on our employees’ sense of efficiency in systems and processes, or on access to tools required to deliver in their role,” McFarlane said. “This basis helps us deep dive into occasions where efficiencies can be realized.”
2. High-performing HR teams are 2x as likely to link pay and performance than low-performing teams.
We uncovered this statistic in our State of People Strategy report — showing that an effective pay-for-performance strategy is a key indicator of success. Studies also show that a focus on high-performance can significantly impact employee motivation, attendance, and readiness to adapt to organizational change.
Plus, most employees want their wages to reflect their performance, which means HR leaders must become comfortable investing more heavily in those employees who are leading the company towards their objectives.
Transitioning to pay-for-performance.
Knowing how to implement the pay-for-performance model and planning for the impact it may have on your budget planning can be a barrier to implementation.
HR consultant Diane Gallo recommends developing and driving metrics that accurately assess the contributions of each employee.
“Compensation systems that are mapped to business metrics at the onset of every year — rather than rolling over — provide demonstrable impact,” she said. “You can look at your performance reviews and incentive payouts, and they should have the same trajectory as the business results.”
McFarlane agreed: “At Oyster, we actively monitor our adherence to pay bands across our workforce, and further drive continuous performance appraisal practices that ensure we have an ongoing and consistent snapshot of where performance is relative to pay.”
However your company chooses to implement pay-for-performance, you’ll need to collect actionable data. We found that frequent reviews, using quantitative ratings, and including additional reviewers all help drive success.
Discover how 3 companies boosted employee performance with Lattice.
3. Engaged employees are 23% more profitable and 18% more productive than unengaged employees.
By now, all HR leaders know that engaged employees are more productive — and this employee engagement data from Gallup shows how that contributes directly to the bottom line.
“This data point should serve as a wake-up call for CFOs who might need to consider employee engagement as a crucial factor in corporate performance,” said Chelsea Ashbrook, senior manager of corporate digital experience at Genentech.
However, the post-pandemic world of work is presenting some engagement challenges for organizations globally — making this payoff harder to achieve without a few adjustments. HR technology is a great way to boost the employee engagement and performance needed to support a company’s bottom line, no matter where your team is located. To have the greatest impact, the key is leveraging it even before your employees’ first day.
Fostering engagement — from day one.
To achieve increased engagement, Gallo said that HR needs to drive programs that begin from the very start of the hiring process: “Metrics I’ve found useful to course correct are turnover in the first 90 days, 180 days, and the first year.” According to Gallo, these metrics can also help assess recruiting, onboarding, and assimilating new hires, and if the company is investing in their development and upskilling — all hallmarks of fostering early engagement.
Kristy Henning, director of HR at Mindgruve, uses data collected from surveys and employee feedback to gain insights into how employees feel. “What’s most important is how they are motivated in their work and how they perform,” she said.
At Oyster, McFarlane uses engagement scores as both a key result of business objectives and an indicator of their success. “We focus projects on improving engagement year to year and further benchmark ourselves against similar organizations to ensure we’re remaining competitive within our industry,” he said.
Considering engagement through the lens of well-being and work-life balance is also crucial for fostering a productive, high-performing workforce.
“Health and wellness programs can help increase engagement and over time the impact can be seen in benefits costs, absenteeism, and general energy,” explained Gallo. “And even before the tangible cash value is realized, these programs add to the sense of being cared for and supported by employers. We saw companies that already had a systemic commitment to health and wellness able to navigate the pandemic more positively than their peers who were reactive to sudden physical and mental health issues.”
Building a Stronger Partnership Between HR and Finance
Working in HR management can sometimes feel like spinning plates and putting out fires at the same time. And with budget squeezes continuing to affect the majority of industries, it’s time for HR leaders to get creative and demonstrate the value of investing in a high-performing, engaged workforce.
Thinking about HR processes more strategically, and from the perspective of your CFO makes it easier to tailor your budget requests and provide the data needed for that stamp of approval. But what truly underpins this approach is having the right HR tech to enable your organizational efficiency, and give employees the tools and workflows they need to stay engaged and perform at their best.
Finding the right tech is the first step, but it’s also critical to measure its impact too. This requires a data-driven approach, centering your HR strategy around the information your finance team needs.
Collecting data on how your processes looked before implementation is an essential part of this process. Henning recommended establishing a baseline by identifying key performance indicators (KPIs) relevant to your strategic goals and desired business outcomes, for example, revenue growth, turnover, engagement, and productivity. “Once HR initiatives are implemented, measure the change in KPIs and monitor them to determine if the initiatives are delivering the expected results.”
With the right data, HR and finance can unite in their goals of boosting business outcomes.
Download our ebook, The ROI of HR Tech, to uncover more ways that the right software can combine the best ROI for your biggest business priorities, while also delivering the employee experience that your people deserve.