As organizations adopt new HR technology, understanding the ROI of workforce investments is essential. In an uncertain economic environment, CHROs face increasing pressure to demonstrate the financial returns on investments in AI, upskilling and other workplace improvements.
Gabriela Mauch, chief customer officer at workforce analytics firm ActivTrak, brings valuable insights on how CHROs can measure the impact of HR tech investments. Mauch, head of ActivTrak’s Productivity Lab—a program offering data-driven tools to boost productivity—says HR must effectively link workforce investments to measurable business outcomes. She emphasizes that success relies on assessing how well the technology addresses business challenges and optimizes employee time.
According to Mauch, the adoption of analytics tools has energized HR experts by offering deeper visibility into workforce productivity. “You can’t run a digital business without visibility,” Mauch notes, underscoring the importance of reliable, data-driven insights.
Questions to ask about ROI of workforce investments
She says that workforce analytics allow HR leaders to assess key metrics, such as time spent on productive activities, the effectiveness of HR tech tools and improvements in work quality due to enhanced efficiency. She says there are several key questions HR leaders should address as they consider tech investments, including:
- Did the composition of time change? Track shifts in how employees spend time before and after new investments.
- Are employees engaging in value-added activities? Measure whether tools free up time for tasks that contribute meaningfully to the organization.
- Is the investment solving targeted problems? Evaluate whether the goals behind an investment, such as improved productivity, are met.
Mauch emphasizes establishing a data-based baseline before investing, cautioning against relying solely on survey feedback. Objective data provides a more accurate foundation for measuring improvements and sustaining digital transformation.
A twist on the ROI of AI
Of course, one area of concern this year is the use of artificial intelligence at work. A 2023 IBM report shows that few AI projects meet the financial expectations of shareholders, with enterprise-wide initiatives averaging ROI of just 5.9%—well below the typical 10% cost of capital.
However, as organizations advance along the AI maturity continuum, returns improve significantly, according to IBM, with top-performing companies achieving an impressive 13% ROI.
Mauch says that CHROs can foster successful AI integration by collaborating with leaders across the organization. Working closely with CIOs, COOs and other executives enables CHROs to align workforce strategies with the technological and operational changes that AI brings.
She also advises that holistic change management and clear communication are essential to preparing employees for these shifts and mitigating workforce disruptions.
However, as AI adoption grows, HR leaders face a range of perspectives; in 2023, excitement ruled, but Mauch observed a level of trepidation moving in this year. While many employees welcome the efficiencies AI promises, others are cautious about its impact on roles, responsibilities and job security.
But trepidation has moved beyond the original fears of being replaced by AI. Roles are changing, and Mauch reports a persistent concern among HR leaders that their workforces may lack the skills required for effective organizational redesign. This is not to be overlooked. Mauch warns, “If you’re investing in AI and not investing in organization design, you have a looming problem.”
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