- In addition to ROI measurements, HR should also measure Return on Value (ROV), which includes long -term strategic advantages such as improved employee experience.
- HR leaders need to balance both ROI and ROV, based on clearly defined objectives, as part of building their business case.
- Read Forrester’s Total Economic Impact Report to understand better how Cornerstone Galaxy can drive by ROI and ROV for your organization.
In today's rapidly evolving business landscape, HR technology has become an indispensable tool for organizations seeking to optimize their human capital management. As we approach 2025, HR leaders and executives are increasingly tasked with justifying investments in HR tech solutions. To make informed decisions, it is crucial to understand the nuanced relationship between Return on Investment (ROI) and Return on Value (ROV).
Return on Investment (ROI) is a traditional financial metric that measures the profitability of an investment relative to its cost. In the context of HR technology, ROI typically focuses on quantifiable benefits such as cost savings, time efficiencies, and productivity gains. For instance, a recent Forrester Total Economic Impact (TEI) study on Cornerstone Galaxy, an AI-powered workforce agility platform, revealed a potential 443% ROI over three years for organizations implementing the solution.
Return on Value (ROV), on the other hand, encompasses a broader perspective that includes both tangible and intangible benefits. ROV considers factors such as improved employee experience, enhanced organizational culture, and long-term strategic advantages. While these benefits may be more challenging to quantify, they often play a crucial role in driving sustainable organizational success.
While ROI provides a clear financial justification for HR technology investments, ROV offers insights into the long-term strategic value these solutions can deliver. By considering both metrics, HR leaders can create a comprehensive business case that addresses the concerns of all stakeholders. Putting this into another perspective, HR leaders need to understand and build their initial ROI to justify why they should spend new dollars. Conversely, HR leaders need to pivot to an ROV perspective to justify why they should continue investing in their current solution – from new to renew. As many macroeconomic and geo-political factors will likely shift in 2025 and beyond, this will increase the pressure on HR leaders to increase their focus on ROI and ROV.
ROI calculations typically focus on immediate and measurable benefits. For HR technology, these may include:
- Reduced time-to-hire: The Forrester TEI study found that Cornerstone Galaxy users experienced a 49% reduction in time-to-hire.
- Improved productivity: The same study reported a 40% reduction in employee time-to-productivity.
- Cost savings: Organizations achieved significant savings through content consolidation and improved compliance measures.
These quantifiable benefits provide a foundation for justifying HR technology investments to financial decision-makers. However, these are just some of the many impacts. Those tasked with defining their company’s measurement strategy will want to focus on connecting the connection back to the highest organizational goals, such as Revenue, Costs, and Risks.
ROV considers the broader impact of HR technology on organizational success. Key areas of value include:
- Enhanced employee experience: Improved HR processes can lead to higher employee satisfaction and engagement.
- Better talent management: Advanced HR systems can help identify and develop high-potential employees more effectively.
- Increased agility: HR technology can enable organizations to adapt more quickly to changing market conditions and workforce needs.
- Improved decision-making: Data-driven insights from HR analytics can inform strategic workforce planning and organizational design.
Think of ROV as the continued argument from a holistic perspective for why a talent program should continue. It can also set the foundation for why it should be invested in further. Every organization measures what matters to them—productivity, costs, revenues, etc. Using that same mindset can establish a framework to measure and connect talent initiatives back to the overarching organizational strategy. This changes the discussion from questioning efficacy to an exploration of unlimited possibilities.
To maximize the impact of HR technology investments, leaders should consider the following approach:
- Define clear objectives: Establish both short-term financial goals (ROI) and long-term strategic objectives (ROV) for your HR technology implementation.
- Conduct a comprehensive analysis: Evaluate potential solutions based on their ability to deliver both immediate financial returns and long-term strategic value.
- Develop a balanced business case: Present a holistic view of the expected benefits, including both quantifiable ROI metrics and qualitative ROV factors.
- Implement with intention: Ensure that your implementation strategy aligns with both your ROI and ROV objectives.
- Measure and communicate results: Regularly assess and report on both financial outcomes and strategic value creation to maintain stakeholder buy-in. e
A well-crafted Return on Investment (ROI) projection establishes clear expectations for the talent team, defining priorities and shaping performance measurement. Continuously refining this measurement strategy leads to a demonstrable Return on Value (ROV). This ROV then becomes the crucial link to answering the "So What?" question, effectively closing the loop back to the initial ROI and facilitating a robust value realization discussion. This focus on value realization is paramount for aligning talent programs with strategic business outcomes. It fosters stakeholder consensus on key priorities and deliverables, justifying not only the importance of robust talent practices, but also the need for continued investment in them.
As we move towards 2025, the importance of demonstrating both ROI and ROV for HR technology investments is likely to increase. Organizations that can effectively balance these two perspectives will be better positioned to make strategic investments that drive long-term success. The Forrester TEI study on Cornerstone Galaxy provides a glimpse into this future, highlighting both quantifiable benefits (443% ROI) and unquantified benefits, such as enhanced employee experience and increased administrative efficiency. This dual approach to value measurement is likely to become the norm for HR technology evaluations.
The future of HR technology lies not just in its ability to streamline processes and reduce costs, but in its potential to transform the employee experience, drive organizational agility, and enable data-driven decision-making. By embracing this holistic view of value, organizations can position themselves to thrive in an increasingly competitive and dynamic business landscape. As we look ahead to 2025 and beyond, the most successful organizations will be those that can effectively leverage HR technology to create both immediate financial impact and lasting strategic value.
By balancing ROI and ROV in their decision-making processes, HR leaders can ensure that their technology investments deliver maximum value to their organizations, both now and in the future.
We’ve got a webinar coming up that you won’t want to miss on this topic with Mike Bollinger, Global Vice President of Strategic Initiatives, Cornerstone, and Amy Harrison, Principal Consultant, Forrester, on The Total Economic Impact™ of Cornerstone Galaxy. Register today and secure your spot!
