The Benefits of HR Technology

Businesses are continuing to learn more about the benefits of HR technology for their organizations. Technological innovation and increased labor productivity have gone together for many years now, but significant advances in recent years are enabling organizations to better manage their teams, as well as achieve maximum productivity while also decreasing expenses and administrative errors.

In this article, we explore the role of technology in human resource management (HRM), types of human resources technology, the benefits of using this technology, and ways to measure the impact of technology on human resources operations.

What Is the Role of Technology in Human Resource Management?

Advances in technology have changed how we employ digital and other resources to improve business operations. However, one-third of business leaders said they struggle with keeping technology current.¹ When it comes to technology, there may be no business function more dramatically impacted than human resources. Today, companies leverage state-of-the-art HR technology to attract and hire new job candidates, work toward enhanced retention of top-performing employees, and provide support in workplace management and administration.

Technology can generate measurable results by increasing the pace and efficiency of both managers and the teams they lead. These individuals and teams are supported in turn by HR and IT professionals, helping them determine where technology works best and implementing it to achieve maximum success.

Types of human resources technology

As in most areas of business operations, human resources technology comes with its own set of key acronyms. Here's what you need to know about the most important terms:

Human capital management (HCM)

Human capital management describes the comprehensive approach a company takes to manage its most valuable asset -- its people. HCM refers to both the strategic and technological elements needed to address a wide range of HR-related activities. Overall, proper HCM plans can help companies strategically manage their workforce productivity.

Human resource information systems (HRIS) and human resource management systems (HRMS)

At the highest levels of human resource management, the terms HRIS and HRMS are often used interchangeably to represent the technological systems used in HR functions. Some examples might include organizational and employee data management, payroll administration, and benefits administration.

HRIS and HRMS describe technological solutions, but don't necessarily tie into broader strategic planning or management philosophies.

For companies that want to leverage their human capital assets for maximum impact, an HCM strategy is essential. Choosing an integrated HCM system over a single-function HRIS software platform can give companies access to high-quality information, while potentially reducing workloads and the risk of propagating inaccurate data.

HR systems also play a critical role in streamlining management and hiring processes. Types of human resources technology include:

• Artificial intelligence to analyze the labor market, match job candidate skills and identify competencies, and detect potential bias in posted job descriptions
• Employee self-service technology that incorporates communications about changes in health plan coverage, company holidays, and other time-sensitive information. It also enables workers to retain control of certain basic HR- related tasks, such as accessing online pay slips, viewing and printing W-2 forms, and updating personal information.
• Learning management systems inclusive of e-learning to help employees remain engaged, focused, and continually improve their skills

These and other forms of human resources technology are helping HR professionals to take on a more strategic role within their organization.

What are the benefits of HR technology?

Several key benefits of human resources technology have already been noted, including recruitment and retention, support in workplace administration, employee self-service, and employee learning. Here's a brief look at other advantages of human resource management systems.

Integrated applicant tracking for faster times to hire

Businesses suffer when critical staff positions go unfilled. Other workers need to pick up the slack, which can impact morale and overall productivity. Important customer work is delayed or may not get done at all. Each day that a position is unfilled can cost companies in terms of productivity and profits. An applicant tracking system can help reduce the time to fill critical positions by getting jobs posted, sourcing qualified candidates, managing the interview process, and making offers. Onboarding, training, and benefits administration can be handled with just a few clicks to get your new employee working as quickly as possible.

Scheduling and staff time management for productivity

Scheduling and managing staff time are essential functions of any business and the cornerstones of effective productivity management. It's important to make sure that every position is adequately staffed, while minimizing issues like downtime and duplicate coverage. The right scheduling applications allow managers to define their staffing needs and then rapidly manage group and individual employee's schedules. Easy-to-navigate, integrated time and attendance solutions help managers deal with scheduling efficiently with both employee and company needs in mind.

Customized alerts and pay rules improve oversight and compliance

Businesses need to watch specific employees' hours for a wide variety of reasons, from managing overtime for budgetary reasons to staying in compliance with collective bargaining agreements. Manually tracking this information can be time-consuming and leave companies open to errors. The right technological solution allows your company to set up customized alerts for specific needs and automate the monitoring process. It's also possible to set up customized pay scale rules, in connection with your company's unique policies for vacation, breaks, lunch, rounding, and more. The more customizable your HR technology, the more you can effectively monitor your team's activities.

Simplified administration frees up managers' time

Overseeing scheduling, time approvals, and requests for paid time off (PTO) is now possible through a single interface. Your managers can see the big picture and make important decisions quickly and efficiently. Valuable management time is taken away from administration and instead can be spent improving employee oversight and customer service. Requests for PTO and regularly submitted hours can be viewed and approved with just a click.

Data access helps improve decisions

HR technology gives management and HR teams access to critical data. From financial forecasting to developing a company's succession planning, staff performance information plays a major role in business decision-making. The right human resources technology solutions for improving productivity integrate across a number of dimensions, from time and attendance to HR benefits utilization. The ability to access this information for specific employees or in aggregate gives managers the insights they need to make the decisions that help grow the business.

How can HR technology support your business?

A business case can help demonstrate the needs, benefits, costs, and solutions that underlie the justification for specific investments in HR technology. In many cases, companies have limited budgets and IT bandwidth. HR may be competing with sales or other departments for technology resources. Bringing a strong business case to the table helps demonstrate to key decision makers that you've thought through your proposed approach and solution – and it shows that you're ready to help them understand the potential return on investment (ROI). Some elements of a strong business case include:

• The need: What is the specific problem we're trying to solve?
• The impact: How is the problem negatively impacting the business? For example, a slow recruitment process could lead to multiple problems such as leaving critical positions unfilled for an extended period.
• The benefit: What could the business look like if this issue was solved? For example, how would filling those critical positions speed up production or provide better sales support?
• Potential solutions: Often, business problems have many different potential solutions. Create scenarios with the pros and cons of different options.
• Recommendations: Lay out optimal recommendations and explore how technology plays a key role in effectively addressing the challenge.

Measuring the impact of technology in human resource management

An important component of advancing conversations around human resources technology purchases is exploring ROI. For example, consider the justification for investing in an applicant tracking system. A breakdown of current and potential future costs might look like this:

• If a company hires 30 new employees per year and each search takes an average of 50 hours, that's 1,500 hours, or over 37 weeks of staff time creating job descriptions, publishing them on various platforms, vetting resumes, conducting interviews, and beyond.
• If the process is handled entirely by one person who makes $30 per hour, the basic recruiting function is costing your company $45,000 per year, plus any benefits. However, that one person may be overburdened by such work and could make mistakes or certain tasks may fall through the cracks.
• An applicant tracking system might cost $5,000 per year and could cut recruiting time in half.

At a basic level, this represents significant savings to the bottom line. However, there are other factors to consider when it comes to ROI. For example, the HR resource might be able to spend half their time developing retention programs that can further save the company money. Having an applicant tracking system might offer additional benefits, such as reporting for compliance reasons and a better candidate experience. Think broadly as you quantify ROI to make a compelling business case but ensure that there's a clear impact on the bottom line for cost savings or revenue generation.

Paychex HR technology solutions for your business

Technology and HR management go hand-in-hand today to meet the increasing workload on human resources departments. But to secure the investments you need for world-class technology, you may find that you first need to create a thorough business case that clarifies the potential return on investment and positive impacts it can have on the company.

Paychex HR is a total HR solution that makes it easier to recruit, train, and retain productive employees. It's a comprehensive — and flexible — solution for managing HR and benefits. That means you'll get the right amount of help for your specific HR demands, scale, and budget, with the ability to add more support when you need it most. Want to learn more? Check out Paychex HR Services.

¹2023 Priorities for Business Leaders, Paychex