How to Make the Business Case for HR Automation

Tina Eaton
September 25, 2018
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How to Make the Business Case for HR Automation
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Isn’t it ironic?

No, we’re not talking about rain on your wedding day. We’re talking about the fact that the very department managing what’s poised to become a business’ most important asset can’t get the support it needs to complete its current to do list—much less prepare for what’s to come.

Digital transformation will make short work of technology saturation. When that day comes, tech will no longer be the differentiating factor between you and your competition.

So what will set you apart?

Your people.

People who understand how to incorporate technology into a productive workflow. People who are always looking for opportunities to take on new tech, develop new business models, dive into new markets, and otherwise embrace the pivoting that will become a part of the everyday. And, of course, the people who are responsible for developing and maintaining the sourcing, training, and retaining of all these valuable human assets.

That’s right, we’re talking HR.

In fact, HR columnist and former CHRO Eva Sage-Gavin predicts that as artificial intelligence, automation, and other hallmarks of the fourth Industrial Revolution take hold, HR leadership may become one of the most important roles in an organization.

The importance of your role isn’t the only thing growing day by day—so is the list of workflows and skills HR must develop.

One such workflow is onboarding, during which HR teams might process as many as 60 different documents per employee. It almost hurts thinking of all the hours wasted mailing, waiting, entering data, remediating errors, and otherwise managing the repetitive, low-skill tasks that make up manual onboarding.

Illustration showing the documents required for employee onboarding in the conventional method and the Dropbox Forms method

So now you’re caught in a dilemma: You’re responsible for practically future-proofing your company with a highly skilled, passionate, and committed team... but there’s no way you have the time or tools to do so effectively.

What you need is to make the business case for onboarding automation to can get the funding you need to build a workflow that sets up new hires for success and eliminates mundane, time-wasting tasks.

Claim HR’s rightful seat at the table with these business cases that prove onboarding automation can save your organization thousands on turnover, drastically shrink the cost of onboarding, and help your company grow.  

How to Save Your Company Over $100,000 on Turnover

According to MIT Sloan School of Management lecturer Joe Hadzima, a salary and benefits package usually totals 1.25 to 1.4 times the base salary. So a base salary package of $50,000 plus benefits could actually cost anywhere from $62,500 to $70,000 a year.

Why the math? So you’ll be able to better understand and convey just how costly it is to have a half-baked onboarding workflow that doesn’t inspire employee loyalty. Or worse, one that’s so disorganized it actually drives workers away sooner.  

“Replacing talent runs as high as two times annual salary,” says Ben Peterson, CEO of BambooHR. “And it’s not just about dollars. Culture and job satisfaction is hugely impacted, as well as morale, productivity, lost insider knowledge. It’s painful to lose people.”

Remember those numbers from earlier?

Each instance of turnover could be costing as much as $140,000.

Painful, indeed.

For another angle on the cost of turnover, we can look at The Society for Human Resource Management’s estimate that employers will spend the equivalent of six to nine months of an employee’s salary just finding and bringing their replacement up to speed.

Using the same base cost of $70K for Mr. Average Employee, we can deduce that replacing him will cost between $35,000 and $52,500. That means it could actually cost more than an employee’s annual salary to replace them.

Wouldn’t it make a whole lot of sense—and a whole lot of savings—to properly train and retain them through good onboarding practices in the first place?

When replacing highly-trained individuals, the Center for American Progress found you can expect these numbers to increase dramatically and disproportionately compared to their salary.

It can cost as much as 213 percent of a senior or executive’s salary to replace them. For a person making $100,000 per year (remember that the true cost is 125,000 to $140,000), turning them over could cost between $260,000 and nearly $300,000.

At this point, I doubt anyone can deny that the cost of turnover can definitely be painful. But how does that help you make the case for automating onboarding?

Time and time again, retention has been tied to effective onboarding. And automated onboarding is the most effective of all.

Talent acquisition firm iCIMS found turnover is three times higher for new employees who are onboarded manually than for those who are onboarded using automated HR practices.

Ineffective onboarding has been tied directly to the decision to quit in at least 15 percent of employees. If you have 100 employees, that’s 15 employees—or nearly a sixth of your entire workforce. For an enterprise of 1,000 that’s 150 people.

Depending on their pay grade, the cost of these turnovers could make or break your profit margin for the year.

On the flip side, Human Resources Today found effective onboarding can increase retention by as much as 25 percent.

Graph showing statistics on ineffective versus effective employee onboarding

Onboarding is the second-most impactful HR practice after recruiting. Every single friction point that can be removed from the process helps you build a smooth, complete onboarding experience that mitigates the staggering costs of turnover.

Over 80 percent of employees decide in their first six months if they’re interested in sticking around for the long haul. And nearly 70 percent of them do decide to stick around for more than 3 yearsif they participated in a structured onboarding workflow.

It’s become obvious that detailed, proactive onboarding—especially that which starts as soon as possible—is a major retention booster. Especially in a strong market where top talent has their pick of employers, you have to do everything you can to avoid the astronomical cost of turnover.

Is your organization ready  to provide that level of onboarding? They could just commit to paying several full-time HR employees to sit on repetitive, mundane, manual onboarding tasks day in and day out until they burn out (don’t forget how pricey they’ll be to replace!).

Or, they could rely on the top HR talent they already have (that’s you!) to implement handy onboarding automation tools to create killer workflows that automatically instill company culture, encouraging productivity, and otherwise boost retention from before day one.

Shrink Onboarding Costs by 80% with HR Automation

For a company with 200 employees, industry-standard turnover rates, and an average salary of $50,000 with benefits; onboarding new employees manually can cost over $102,000 every year.

By eliminating redundant tasks for HR and improving retention rates for new hires, HR automation can shrink the cost of onboarding by over 80 percent to just over $22,000 per year.

That’s an ROI of nearly $80,000—or nearly two entire salaries—in just a single year of using automating onboarding.

Surely it would take a costly and time-consuming overhaul of your entire HR department to cut onboarding costs so dramatically, right? You’ll never get your boss to sign on for disrupting your HR process like that!

The good news is that with the right tools, you won’t have to.

All it takes is the thoughtful implementation of a smart, customizable HR automation tool.

That’s right, you could be cutting your current onboarding costs by as much as 80 percent just by automating the repetitive, mindless tasks you don’t love doing anyway.

In the above example, digital workflows eliminated nearly every cost associated with preparing, mailing, and processing W-4s, I-9s, and the myriad of paperwork that accompanies a new hire.

This streamlined process isn’t only great for cutting time costs and increasing HR productivity. HR automation eliminates costs associated with human error and uses digital reminders to bridge the disconnect that can occur when other departments or individuals need to sign off on something or complete a task.

Digital reporting also proactively increases productivity and retention by identifying bottlenecks and watching for overlooked training sessions that could keep new hires from being productive and happy in their roles later on.

In addition, using HR automation to handle logistics—think placing supply orders, managing technology requests, and getting permissions set up—cut onboarding costs in half per new hire.

Chart showing differences between manual and automated onboarding based on specific factors

The time, money, and turnover that manually onboarding employees is costing you is reason enough to invest in HR automation.

At Dropbox Sign, we build customizable software that helps you turn your paperwork problem into HR automation that gets onboarding done right and on time.

Dropbox Forms stitches together even the most complex series of documents to create a single, intelligent workflow. Human error and repetitive data entry are eliminated with conditional logic, data validation, and a mapping feature that makes sure data goes right where the HR team needs it.  

No more hours of manually entering data. No more days spent coordinating the logistics of sending and receiving applications that work seamlessly across a wide variety of operating systems and devices. No more waiting when misentered information stops your entire process in its tracks until you’re able to get it corrected.

Can You Scale 300% Faster with Automated Onboarding?

Automated onboarding doesn’t only have to keep up with fast-paced business, it can actually be the fuel that empowers businesses to scale up at all.

On-demand grocery delivery service Instacart was growing rapidly when they hit a wall: Fewer than half of interested contractors were able to complete their onboarding paperwork accurately and within a reasonable timeframe. Attrition was becoming too high to keep up with demand. And as a business that relies on contractors to, well, do business—manual onboarding was the one thing keeping them from being able to scale up and grab more of the on-demand food market.

Instacart enlisted Dropbox Forms’ holistic, mobile-first onboarding automation workflow to accelerate onboarding paperwork completion by nearly 300 percent.

Chart showing process differences before and after Instacart onboarded Dropbox Forms

Implementing automated onboarding didn’t only accelerate growth, it drastically increased productivity for the internal Instacart team—giving them back over 50 hours every week.

How can your HR team use an extra 50 hours to weigh in on important business strategies this week?

Automate Onboarding to Claim Your Seat at the Table

Fewer than 20 percent of HR practitioners are considered strategic partners in their organizations. However, HR may become one of the most vital elements of an organization as digital technology transforms the business landscape.

The irony would be humorous if it wasn’t so dang detrimental to the bottom line and eventual success of businesses everywhere.

HR isn’t empowered to implement the automation it deserves because it’s very hard to prove the ROI on the big efforts that get HR pros out of the paper-pushing zone.

Until now.

If your HR department existed in a vacuum, choosing not to invest in automation would simply mean HR professionals would keep whiling away the hours performing manual processes.

But in the age of digital transformation, no department can operate in a vacuum and the company still be successful.

Step out of the vacuum, make the case for automating time-consuming onboarding tasks, and finally claim the seat at the table you deserve as you help to guide your company through an unprecedented time of change and growth.

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