The Real Value of an HRMS System and the Concept of ROEI

Why are some companies thriving while others struggle to stay in business? What is the distinctive difference between a good company and a truly great company? The answers to these questions can only be found when looking at what defines the company: its people. The people that make up a company are that organization's unique and biggest asset. For most businesses, the workforce is also its largest expense, or better put, its largest investment.

 

Companies are accustomed to paying competitive wages and good benefits to attract talented managers and professionals. Yet often, relatively little attention is paid to creating the best circumstances for each individual in the organization to perform at his or her best potential.

 

The effectiveness of HR technology and programs is regularly assessed in an isolated manner. A Human Resource Management System (HRMS) is often judged by how much more efficient the HR worker becomes and how the software helps the HR department accomplishes daily tasks. The Return on Investment (ROI) is measured as a result of the total costs saved or efficiency gained, divided by the Total Cost of Ownership (TCO).

 

But this approach is old fashioned and doesn't do justice to the real value modern human resource management brings to finding and retaining talented employees. From recruiting to on-boarding, from motivating and developing talent to supporting people managers and creating an engaged workforce, the effectiveness of employee management has a direct impact on business results and competitiveness.

 

Sage believes that employees are the most important component in the quest to improve business results. It makes sense to treat employee related expenses, as an investment in the workforce. Like any other investment, this critical company investment must yield a healthy return. They call this the Return on Employee Investment™ or ROEI™.

 

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