Let’s start with what an HRIS (Human Resource Information System) is. An HRIS is the go-to tool for companies to simplify and automate their HR processes, bringing order to the chaos with ease and efficiency.
For larger companies, investing in an HRIS is an obvious choice. However, for small—to medium-sized businesses, the decision often comes with more hesitation. The question always remains, ‘Is it really worth it?’
If you are unsure whether an HRIS will help you save money and deliver a massive Return On Investment (ROI), this discussion is for you!
Why ROI Matters When Considering an HRIS
Think of HRIS ROI as the ultimate proof that it isn’t just another item in your yearly budget. It matters because it shows how your HR tech investment can pay off big time. A significant ROI proves that your HRIS isn’t just another expense; it’s an investment—it’s a brilliant tool that boosts efficiency, saves time, and helps you make better decisions.
In the end, measuring HRIS ROI helps you justify the investment (if it’s a significant one, of course), improve your processes, and make sure you’re getting the most value from your investment.
How HRIS Makes a Difference
Here’s why HRIS is the upgrade your business needs–
- Simplifies HR tasks, saving you time and cutting down on errors
- It makes data easier to access and more accurate, helping you make better decisions
- Frees up your HR team from admin work, letting them focus on more important things
- Cuts down on costs by getting rid of manual processes and paperwork
- Keeps you compliant with labor laws, automatically updating and tracking regulations
Calculating HRIS ROI: A Step-by-Step Guide
Here’s how to calculate HRIS ROI in simple steps:
- Measure HRIS Cost: Determine the total cost of the HRIS (software+implementation+training+maintenance)
- Calculate Time Saved: Assess how much time employees save when the HRIS automates payroll, recruitment, and data entry processes.
- Measure Efficiency Gains: Analyze how much more efficient HR processes have become, such as faster recruitment or payroll.
- Quantify Error Reduction: Evaluate the extent to which the HRIS has minimized errors in HR processes, like payroll or data entry errors, and quantify the cost savings from reduced mistakes.
- Assess Productivity Gains: Evaluate how the HRIS has freed up HR staff to focus on higher-value tasks and how that boosts overall productivity.
- Do the Math:
ROI= (total savings-cost) cost × 100
By following these steps, you’ll understand the value your HRIS brings to your business.
The Case of a Small Business–A Real-life Success Story
Here’s an example of how HRIS was a game-changer for a Californian firm.
Challenge
A marketing agency in the heart of California (we’re not going to name the company for privacy reasons) struggled to get its HR efforts right. Payroll was tricky, performance reviews were inconsistent, and HR operational tasks took almost 10 hours a week. These inefficiencies slowed the company down and cost it over $30,000 yearly in turnover.
They clearly needed a more thoughtful, faster way to handle HR.
Implementation
The company decided to implement an affordable and scalable HRIS designed for businesses of all sizes, which is especially good for small businesses like theirs. With an initial setup cost of $2,000 and a $250 dollar monthly subscription fee, they were able to streamline their payroll, automate performance evaluations, track time and PTOs, and assign shifts.
Outcome
Time Savings
Reduced HR admin time by 7 hours weekly, reclaiming 364 hours annually. At a $50/hour rate for admin tasks, this saved $18,200 annually.
Error Reduction
Payroll mistakes dropped by 90%, preventing costly corrections and saving approximately $5,000 annually.
Employee Retention
The structured performance review process and improved benefits tracking reduced turnover by 20%. For a small team, this meant retaining four employees annually, saving the company $20,000 in rehiring costs.
ROI Calculation
Total Annual Savings: $43,200
Total Annual Cost: $5,000
ROI = ((43,200 – 5,000) ÷ 5,000) × 100 = 764% ROI
Results
In just the first year, the HRIS implementation paid for itself many times over. Beyond the financial benefits, the agency’s leadership could focus more on growing the business, and employees enjoyed a smoother HR experience.
Is HRIS the Right Investment for Your Business?
HRIS isn’t just a tool—it’s your company’s hidden advantage. By connecting data, people, and strategy, it turns HR insights into real business growth that gives you an edge where it matters most.
If you’re still juggling spreadsheets, manual processes, or chasing after compliance updates, it might be time to rethink how you manage HR. Run the numbers, test the waters, and see how the right HRIS could transform your business.
