It’s so annoying: Hannah uses Excel and some other tools she’s put together herself for her everyday tasks. She has to chase down her colleagues for even the most minor of details and must check through tons of data in several different places. The result: Frustration. The thought of going to the CEO and making an argument for HR software? Even more frustrating. Too many times, she’s been told that it isn’t necessary, at least not now, and it isn’t a current priority.
Are you like Hannah? You know that using HR software would help both you and the company to simplify processes. But for the CEO, HR is not a priority. Unfortunately, we often hear this from our customers. That’s why we have put together a guide to help you persuade your CEO of the benefits of HR software.
Here’s How Your CEO Thinks
Knowing what you’re up against is half the battle and lays the groundwork for making your case. The first step, therefore, is to understand what bosses really want: They do not want to be bothered with HR details or administrative challenges. They want to ensure that the company’s future is secure, which means cutting costs, increasing efficiency, and avoiding any legal risks. They want more revenue and, to achieve this, need the ‘right’ (in other words, efficient, productive, and loyal) employees, who will commit themselves to the company on a long-term basis.
In your opinion, do you think the existing processes are jeopardizing this? If so, then be open about this and tell them – because, this is the only way you will get them to listen. What they do not want are: additional costs, legal risks, and erroneous reporting that can lead to bad decisions.
What Information Do You Need Before Speaking with Your CEO?
What you always need to emphasize in your discussions is: Without the proper processes and the right software to support them, it will not be possible to attain the corporate goals. Use this argument as the basis of your discussion. Where do the problems lie? What are the goals that you want to achieve, and what do you need in order to succeed?
HR Problem: Administrative tasks cost me too much time. – CEO Problem: Don’t bother me.
In other words: Your problems are not your CEO’s problems. Problems have to be presented as being relevant to the entire company, and it must be made clear that when HR is ineffective, the entire company suffers. How does the failure to introduce software now impact on the company?
The following statements will help you to identify and formulate your own problems. In order to make the seriousness of the situation as clear as possible for your CEO, you need to provide specific figures and examples for each argument:
Presenting it like this can help you convince your CEO to invest in HR software.
Your Problems Become the Arguments You Present to Management
You derive your goals, and therefore also your arguments, from the challenges you face. Ask yourself this question: “How would using HR software lead to improvements?”
Important: When arguing for change, you should always quantify the benefits of that change using concrete figures, i.e., laying out the numbers.
Here’s how to formulate your arguments/goals:
Don’t go down a laundry list of the program’s functions – focus instead on results: How can software solve your business problems? Make it clear that this software will not only benefit HR, but will also have a positive impact on corporate goals by, for instance, boosting sales (if employees can be recruited faster, work more productively, and are able to develop professionally).
Maybe your problem is something like this:
Growth is being stymied because we can’t recruit fast enough. We’ve only filled ‘x’ positions in ‘y’ time.
Don’t approach the solution with a statement like: “With Personio, we can create and publish our job ads on a centralized platform”.
Instead, make the following argument: “According to our hiring plan, we will need to hire 25 new employees this year. If we calculate the current workload per recruit, we are going to need 0.5 FTE more. By using a software program, we could design our processes so efficiently that we could meet the recruiting goal with our current staff and wouldn’t need to hire an additional person”.
More examples can be found here:
A number of different people need to be involved in the software implementation process. This should be communicated to management right from the start in order to avoid surprises down the road. For a four-week implementation, all of the staff involved will need to work a combined total of 40 hours per week on the project.
- HR (ideally, two people):
- A project manager, who will coordinate processes with the software provider and serve as the resource person for the program.
- Possibly also some additional assistance, e.g. a student trainee, to gather the required data.
- IT: to provide implementation support
- Legal: to verify the contractual terms
- Data Protection Officer: to ensure data protection compliance
- Contact persons in the individual departments: to provide internal communications support
- If applicable: Works Council, who will approve the implementation
How much is it going to cost? This question is guaranteed to come up. Remember: For your CEO, cost reduction is the goal. So, be prepared to do more than simply lay out the software costs: Present the long-term savings that will be achieved by using the software as well.
Bottom Line: What Can Personio Do For You?
Note: The following calculation is based on experience we’ve gained in working with over 1,000 clients. Your results may be different, since we cannot guarantee that the numbers will apply 1:1 to your situation.
Example: Personio for 200 Employees
That’s too expensive! This is the first thing most CEOs say to HR when a request for HR software is submitted. But, HR software can actually help save costs. That’s why it’s important to be able to show your CEO what the long-term savings for the company would be.
The cost for the first year of Personio, including software and implementation, is €18,909. Your company’s personnel costs will be around € 9,000, making the total investment for that year € 27,909.
This must be weighed against the return on investment, which consists of the savings that will be achieved in the administrative area, in the optimization of employee recruitment, and opportunity gains.
Savings in Administrative Costs
There is enormous potential for savings in the administrative area. For many clients, we see that they can reduce the administrative workload by 30-35%. In the example above, we assume that HR will be able to reduce costs by 25% annually. Other employees, calculated in the example at an average hourly wage of € 25, would save 30 minutes of worktime per month, resulting in a total savings of € 30,000.
Optimization of Employee Recruitment
Modern recruiting solutions can help you to attract an increased number of applications or to invest more quality time on applications you receive. For instance, clients have reported that the number of applications received has risen by 100-200%, but still without necessitating additional staff. Note: In the example above, empirical values were used for the amount given (€ 32,995).
A software program allows you to optimize standard processes, such as onboarding or employee development. This increases employee satisfaction, which has a positive effect on turnover. Experience has shown that when a software program is used, the turnover rate drops by 25%.
Here’s an example: If a company that doesn’t use a software program normally loses twelve employees per year, by implementing HR software, that number would be reduced to nine. Studies have shown that each time an employee leaves, the cost to the company is € 43,069. For every three employees the company is able to retain, there is therefore a savings of € 129,207.
However: You invest the time (and therefore also the money) that you’ve saved in staff development. And, your team also does this proportionately. Subtract this financial investment from the total profit. In the example above, this is € 40,600 (€ 25,000 for HR, € 15,600 pro rata for the team).
Assume that the repayment of costs will be exponential. Mathematically, this will have already happened after 1.6 months. However, since there are some processes that must first be implemented, and these will then have to become routine for the company, recouping the costs that have been invested will take between three to four months.
What Is the CEO Going to Ask You?
At this point in the conversation, you will have already given the CEO a lot of information, which will then give rise to some questions. Naturally, they will want to probe some of the information in more depth.
Why Introduce a Software Program Now?
It’s very simple: Because, using HR software will actually result in cost savings. In the example above, you would have invested € 27,909 in software, but the return would be six times as much: € 176,602. Looking at it from the opposite perspective, if you do not implement software now, you will lose out on the annual savings on administration costs and those that would result from optimized employee recruitment, as well as on lost opportunity gains, totaling € 217,202 per year.
Always remember: Software not only saves you and your colleagues time spent on administrative processes, which, in and of itself, will cut costs, but it also gives you the resources you need to handle such issues as employee retention and development.
You can learn more about the impact of these aspects on HR costs in the article “The Biggest HR Cost Drivers and How to Reduce Them”.
What a CEO Wants to Know Before Deciding on a Provider
In a best case scenario, you will have already scored points for your knowledge about providers. That’s because in the next step, the CEO will want to know which provider you already have in mind and why you’ve settled on this specific provider.
Of course, we would be delighted to hear that you are flirting with the idea of selecting Personio as your software partner. The following statements reflect our strengths and reveal what sets us apart from other providers:
- Our focus at Personio: We are working at top speed to develop our system further and are constantly striving to both develop new functions and to expand existing functions. The proof of this can be seen in our more than 1,000 clients. More information about Personio can be found on this page.
- Costs: You determine the price depending on the number of your employees and the package you choose. For more information on pricing, please visit this page.
- Data Protection: Personio meets all the requirements of the EU General Data Protection Regulation and both our organization and our software comply with the data protection requirements established by the EU-GDPR.
Service & Support: You can reach us during normal German business hours via e-mail, telephone, or at our Help Center. We will respond to inquiries within four hours.
- A centralized tool, in which all data is stored and edited. This avoids having to switch between different tools and prevents the mistakes that can happen when using solutions you’ve put together yourself. Personio can be coupled with other HR solutions to further streamline your HR tasks.
The initial conversation is not going to be enough to convince your CEO to invest in HR software. But, you can at least get the conversation started and steer it in the right direction. What’s important is that you don’t allow the conversation to end without getting a result. You want your CEO to continue to think about implementing this type of software.
So, pin them down to definitive next steps: When can you get together again for a follow-up meeting? What information do they need, and by when? What are the other obstacles to software implementation – and how can you help to remove these stumbling blocks?
We will be happy to help you refine your battle plan. Just email us with your questions.