Building your business case for a new core HR system – a risk-based approach

So you’ve finally found the perfect HCM system for your company. Now how do you convince your key stakeholders it’s a good investment?

One of the questions that HR and HRIS specialists often ask consultants is how they can help to build or strengthen a business case to justify investing in a new core HR system. Whilst HR themselves are often quickly convinced of the non-financial benefits, and enlightened IT departments can see the advantages of a cloud-based solution with no hardware/platform upgrades to worry about, the investment nearly always has to be approved by a hard-nosed CFO who expects concrete financial RoI numbers before signing that cheque.

That can sometimes be hard to produce, either because there is no direct financial return or it is difficult to articulate in a clear and definitive way. But there is another approach that can often be just as effective in building support for such a project. This involves taking a risk management oriented approach to the initiative.

As with all risk management, it starts by identifying, listing and qualifying the current risk landscape. And here, we are focussing on people risk, which in my view would include (deliberately in no particular order):

  • staff retention/attrition;
  • staff malpractice (fraud, absenteeism, contravention of regulations etc.);
  • payroll risk (overpayments which cannot be recovered, underpayments that cause discontent and can lead to legal action);
  • staff performance issues including grievances, constructive dismissal claims etc;
  • health & safety incidents and employee well-being (including working hours);
  • conscious or unconscious discrimination in all its forms;
  • talent acquisition;
  • staff right-to-work status and/or residency issues;
  • relations with unions, works councils or other similar bodies;
  • government/regulatory reporting; and
  • corporate reputational risk due to any of the above.

Compiling some form of risk register focussing on these areas with a heat map helps senior executives understand the key people risks in your organisation. The next step is to come up with remediation/mitigation actions that address those risks and illustrate the (hopefully much “colder”) heat map that would result if the actions are taken.

I’d like to think that it’s pretty clear how a well-implemented core HR system in daily use throughout the organisation can help to address or mitigate risks in these areas. In my experience, this approach can be just as effective in convincing senior executives of the merits of moving to a modern HR system – it even seems to work with most CFOs!

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