Understanding HR is crucial for profitability and operational success in the ever-evolving retail business landscape. However, the ROI of HRMS in retail and its overall benefit for a retail business is crucial before you consider investing.
Implementing a human resource management system (HRMS) improves and enhances the overall productivity of the workforce. These softwares are designed to handle the various tasks, automations, and more for a retail business.
This streamlines the payroll and improves employee satisfaction, especially if you are looking for a cost-effective yet practical solution.
However, before you invest, it’s crucial to know how ROI of HRMS in retail contributes to business growth and cost savings.
What To Know About HRMS In Retail?
A human resource management system (HRMS) is software that provides complete solutions designed to streamline and automate the HR process.
Also, 20% of companies want to increase their HR Software in 2024, which requires investing in HRMS.
In the retail sector, businesses face challenges, including high employee turnover of more than 60%. This is where features of HRMS impact on retail profitability
, including :
- HRMS centralized employee data includes the consolidated employee and the information to make the HR teams record the management and ensure compliance with labor laws.
- The software comes with automated workflows to handle routine tasks, including payroll processing, leave management, and further administration, freeing the professionals to focus on retail strategies.
- HRone offers real-time analysis in their HR software for retail, providing detailed insight related to employee performance and staffing requirements and more based on customer footfall data.
Why To Consider Using HRMS in Retail Industry?
Implementing HRMS in retail ensures a wide range of benefits that impact operational efficiency and satisfaction.
As per the study, employee satisfaction is 40.63% under HRM. Beside this, you can consider HRMS for :
Improving Your Employee Retention
When it comes to the retail industry, high turnover is a persistent issue. With the help of HRMS, you can identify the issues and reasons behind the numbers.
Also, it provides analytics showing where the strategies might be working or where the improvement is needed for better retention.
Streamlining The Recruitment Process
With applicant tracking, HRMS offers an ideal solution to keep recruitment easy and hassle-free. This reduces the hiring time while ensuring the best candidates are provided.
It also allows for an effective onboarding process and mentorship, which is crucial as 90% of employees who get mentors during the initial process report having higher job satisfaction.
It’s Cost Effective Solution
Investing in HRMS benefits in retail business despite requiring an initial investment. It provides a long-term solution that makes it cost-effective.
This also includes reducing errors and improving employee satisfaction and productivity, outweighing the investment cost.
How To Calculate ROI of HRMS?
To understand how to calculate the ROI of HRMS in retail, however, before you jump to calculate, here is what you should know.
Know About The Costs
Start by identifying the costs and whether they are used for implementing and maintaining the software to understand the ROI of HRMS in retail. This includes :
- The Initial Setup Costs: These include the licensing and software fees.
- Training Costs: Resources spent on training your staff should be considered.
- Ongoing maintenance fees: These include subscription and technical support costs.
- Operational Costs: Additionally, costs include the translation from switching from old to new systems in retail.
Setting The Objectives
The next step is to define the HRMS and its objectives clearly.
To set the goal, consider using SMART or Specific, Measurable, Achievable, Relevant, Time Bound to help measure success. This might include:
- Reducing employee turnover
- Streamlining the payroll processing
- Enhancing employee engagement
- Improving the recruitment and its efficiency
Using The ROI Formula
Calculating the ROI of HRMS in Retail includes steps such as :
To calculate the ROI, it is crucial to understand the formula first.
ROI=Total Costs / Net Benefits−Total Costs×100
Where :
- Net Benefit = total Benefit – total costs
- Total Costs = ongoing expenses + initial costs in setup
- Total Benefits = intangible benefits + tangible benefits
Here is an example to help you understand the calculation.
Identifying The Benefits
Calculate the savings and improvements that the software brings.
For example, automating the payroll process can help in saving annually, which can be ₹2,00,000, by reducing overall manual errors and saving time.
This helps lower employee turnover or improve productivity to add benefits.
Adding Up The Total Cost
HRMS costs include the software license, staff training, implementing fees, and more.
Let’s say the annual investment, including the maintenance, is ₹1,50,000.
Using The Formula
Now, calculate the formula with your total net benefits and total costs. Here is how you can do it.
ROI = 2,00,000 – 1, 50, 000 / 1, 50, 000 X 100 = 33.3%
A 33.3 % indicates the return on investment or ROI, highlighting the value of its costs.
Conclusion
To stand out in the competitive market in the retail industry, leveraging HRMS is essential for retail.
Understanding the ROI of HRMS in retail streamlines their operations increases profitability, and provides a cost-effective solution for the long term.
While handling a diverse workforce across different locations is complex, investing in HRMS helps mitigate challenges and transfers into an opportunity to grow.
HRone offers an all-in-one solution in their HRMS retail to manage work schedules, develop a high-performing workforce regardless of geographical location, and track performance.
From automating employee journeys to providing streamlined processes, HROne ensures all employees are covered with their unified system. Book your free trial right now.