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The ROI of HR Automation

Automation is one of the most important trends fueling growth and efficiency gains in the workplace that are significant enough to impact the bottom-line. For example, according to an Accenture report, companies that use automation will likely see revenues rise by 32% by 2022.

This is true in HR as well. The Hackett Group says that world-class HR organizations use automation as much as 80% more than HR organizations as a whole. That means taking tasks that human workers used to handle by hand – aspects of payroll and benefits administration, for example – and using software to automate them.

How exactly does automation fuel efficiency and revenue gains to generate positive ROI?

First, automated systems often work faster than humans.
They can generate more productive output in the same time period as a human worker. Advisory firm PwC estimates that automation software works as much as 110% faster as human workers, more than doubling potential production capacity.

Second, these systems do not require breaks or other downtime.
That means they can continue producing at times when humans would go off the clock, compounding productivity gains.

Third, automated systems are much better than humans at generating consistent output.
That reduces the error rate while potentially improving output quality. For example, when a human manually moves data from time and labor management systems into payroll systems, the opportunity for error is high. Automating the data transfer significantly reduces the error rates – by nearly 30%, according to Aberdeen Group.

In turn, automation can open new revenue options.
TechRepublic cites the example of a steel wire manufacturer, Marlin Steel Wire Products, whose use of automation enabled them to enter new markets. They started out making goods like steel baskets for bagels (making $800,000 in 1998 with 18 workers) and eventually grew into sectors like aerospace (earning $8 million in sales in 2014 and employing more people).

Automation also offers indirect benefits as well.
For example, it can foster improved customer relationships thanks to the more consistent and reliable output. It can also help with risk management by reducing risks of regulatory non-compliance, or even physical safety risks if the system can take over potentially dangerous tasks (e.g., using robots in a warehouse environment). It can also potentially reduce recruitment, onboarding and training costs associated with the tasks.

 

CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with HR administration, benefits, payroll, and compliance. To learn more about our ability to create a strategic HR function in your business that drives business growth potential, contact us today.

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