The budget for automating HR processes depends on many factors: company size, number of employees, number of HR specialists, the level of existing automation and how many processes need to be covered.

Interest in HR automation grows year after year. Most often companies start by automating recruitment, onboarding and performance review — pursuing several goals at once: getting more out of existing human resources, higher engagement, transparent processes and fair evaluation.

Who benefits from HR automation

  • Shareholders — reduce the cost of managing workforce performance and their day-to-day involvement in operations.
  • Top management — gets a clear picture of one of the company's strategic assets, its people, and a management structure that responds quickly to change.
  • The HR team — gets rid of pointless operations, endless copy-paste and a “zoo” of disconnected systems, and focuses on strategic people development.
  • Line managers — get tools and skills to manage the main resource of their work — people.
  • Employees — get the chance for an honest dialogue with the employer, to be heard and to build a career based on their real results.

According to the German consulting firm Kienbaum, HR automation can save up to 40% of the HR department's time. HR can redirect this time to management processes: sourcing and recruitment, onboarding programs, goal setting and performance review, competency assessment and development, career progression and surveys.

7 steps to an HR automation budget

  1. Assess current spending on HR processes. Before setting an automation budget, it is important to understand how much the company already spends on people — recruitment, selection, evaluation, learning and development, performance management, compensation.
  2. Define the goals of automation. Which HR processes exactly need to be automated, and why? The goals depend on the company's maturity: reducing time spent on tasks, cutting errors, improving data accuracy or boosting engagement.
  3. Define the functionality you need. After the goals come the features: sourcing and recruitment, onboarding, assessment of potential and performance, surveys, HR requests. These processes involve many routine steps that are easy to automate.
  4. Research the market and prices. Study the available solutions — cloud and on-premise, their functionality and integration options. Do not forget regulatory requirements — above all the personal data law — when considering foreign solutions.
  5. Estimate the cost of the project. Take into account not only the license but also integration with existing systems, implementation, key-user training, configuration and support — as well as a budget for further development: requirements will change as your processes mature.
  6. Estimate the ROI. For example, an employee who fails probation can cost the company 4–5 times their salary. According to LinkedIn, companies that have automated HR processes earn 15% more than their competitors. ROI can include lower HR process costs, higher productivity and less time spent on tasks.
  7. Create an implementation plan. Based on the company's goals and needs — with deadlines, tasks and owners. Be sure to involve department leaders in the project: without their support, the transformation will not take root.

Who you need as allies

It is hard for an HR specialist to do this work alone — their expertise lies elsewhere. A good idea is to bring in the CFO and the head of IT. You prepare the initial information and conclusions yourself; they only need to verify and approve — as a rule, colleagues do not like to dig deep into someone else's problem.

Before you start budgeting, it is worth talking to them to understand what “hurts” for them. The CFO can usually be won over by transparent processes, timely reporting and the prospect of lower personnel costs. The CIO — by the fact that you will stop distracting their team with tasks it would never get round to anyway: for a CIO, business, finance and customer issues always take priority.

How we do it

At TopHR we look at every request in detail to give the client the most accurate budget estimate possible. After a demo of the solution, if the business owner is interested, we agree on a pre-project assessment — it is free, and all the risk is on our side. It is better to understand honestly at the start how well we fit each other than to begin a project with our eyes closed.

Want to estimate the budget for automating HR processes in your company? Book a TopHR demo — we'll run the pre-project assessment free of charge.