HR Tech as an Infrastructure & the Elusive ROI

Originally published on Nuest Consulting .

If I say, ‘Physical Infrastructure & HR Tech are similar in many ways,’ will you agree?

At first glance, of course, HR technology and physical infrastructure are worlds apart. That was my initial belief too. Until I encountered a report on ‘Infrastructure Projects’ by The Project Management Institute (PMI) and KPMG.

Poring over this document, I noticed the pronounced similarities between the two fields.

Just as physical infrastructure is the bedrock of a nation’s progress, HR technology is the backbone of the HR department and even the whole of an organization (we’ll get to that soon!).

It has emerged as a crucial element in securing regulatory compliance, boosting operational efficiency, and garnering insightful data in HR—components that I like to collectively term as the ‘ROI’.

This revelation opened my eyes to the vast learning potential HR technology holds, inspired by the challenges, opportunities, and strategies outlined in the report.

It’s a rich vein of insights I’m eager to explore in my forthcoming series of posts.?

Let’s start today’s post by understanding the analogy between HR Tech and Physical Infrastructure.?

Why does HR Tech Need the Same Level of Seriousness As Physical Infrastructure?

Physical infrastructure drives a country’s economy.?

You can have big goals and dreams for the country but without the right infrastructure – transportation to support trade, buildings to run businesses, and more – achieving these dreams is next to impossible.

It might be comparatively easier to correlate the above concept with business infrastructure.

For any organization to grow sustainably, you need a foundational set of systems, tools, people, and processes that form your business infrastructure – the backbone of your business. Creating this infrastructure enables businesses:

• To achieve economies of scale
• Have repetitive and reliable processes for sustained delivery of products or services
• A model that makes each time you do something easier than the time before

Your service delivery processes, workspace plan, organizational design, and cybersecurity systems are all business infrastructures that make running a profitable business possible.

And so is HR tech. I want you to take a pause of a second here and read that again.

HR technology is a business infrastructure.

I’m going beyond saying it is an HR infrastructure because HR tech as an infrastructure aligns not just with your HR objectives but with the business objectives.

Treating HR technology as an infrastructure is what will drive the elusive ROI – regulatory compliance, operational efficiency, and insights from data.

1. Regulatory Compliance

HR technology can become the backbone of regulatory compliance.

Incorporating HR tech into your business strategy significantly simplifies compliance, document management, and data security.?

With laws, payroll, and tax regulations constantly changing, HR systems can keep you up-to-date effortlessly. These tools are invaluable for organizing employee records, crucial during audits or legal queries while prioritizing the protection of your team’s private information.?

2. Operational Efficiency

We’re seeing this in different capacities already!

HR tech boosts operational efficiency by automating tasks like payroll, time tracking, and benefits management, cutting down on manual work and errors.

It integrates with other business software for smooth data sharing, enhancing teamwork across departments. Also, self-service portals let employees handle their personal details, lightening HR’s workload and freeing up time for strategic initiatives.

3. Insights from Data

Insights open up new doors for HR by supporting data-driven decision-making and also demonstrating the impact of HR processes on the business.?

You can analyze recruitment, performance and engagement data, guiding strategic decisions with solid evidence.?

You can forecast future trends, like skill shortages or turnover risks, for better planning.?

And comprehensive reporting features provide instant access to HR metrics, assisting in strategic planning and pinpointing areas for improvement.?

HR Tech and ROI – What Works?

There is no dearth of HR technology.

Yet if ROI has been elusive to many, it is important to question “why”.?

This question led me to the realization that the problem lies in the fact that we aren’t yet treating HR tech as a much-needed business infrastructure.

When we start doing that, a lot is going to change.?

In the next post, I’m going to specifically talk about why HR tech projects have been failing and what we can do about it by adopting the ‘HR Tech as an Infrastructure’ mindset.

Until then, feel free to share your thoughts in the comments below.