A Guide to Calculating Your HR Software ROI

When US Lab Partners switched to Justworks and saved $8,000 annually on healthcare coverage, they achieved the kind of return on investment (ROI) small business owners strive for. Every investment matters, and Human Resources (HR) software can help small businesses streamline payroll, benefits, employee records, and compliance more efficiently. 

But how do you determine if your HR software delivers an ROI similar to US Lab Partners’? In this guide, we’ll break down how to measure your HR software ROI, which metrics are worth tracking, and tips for maximizing your HR platforms. 

What is HR Software ROI?

HR software ROI measures how much value the tool delivers compared to how much you invest in it. When evaluating HR software for a small business, ROI means comparing the value it brings to your company against the cost of the tool. However, the ROI isn’t just about dollars and cents. It's also about:

• Time saved on repetitive administrative work

• Fewer compliance mistakes

• Better employee experiences that lead to stronger retention

In other words, the HR software or Human Resources Information Systems (HRIS) platform can make your life easier, but how do you know if it's worth it?

Key Metrics to Track HR Software ROI

To figure out if your software is paying off, start by tracking a few key performance indicators (KPIs). These will help you paint a clearer picture of both the quantitative and qualitative impact of the software.

• Time Savings: Consider how long HR tasks like processing payroll, onboarding new hires, or managing time-off requests used to take. Now, compare that to how long those tasks take with HRIS systems in place. 

• Cost Savings: Fewer payroll errors and better compliance tracking mean you’re less likely to face costly penalties. Efficient processes can also reduce the need for additional administrative hires.

• Hiring Efficiency: If your HR software includes applicant tracking or onboarding features, review your time-to-fill and time-to-hire metrics. Is your hiring process moving faster with HR software?

• Employee Retention: HR tools that give employees direct control over managing their benefits, time off, and pay information can increase satisfaction. And satisfied employees tend to stick around. 

How to Calculate Quantitative ROI (Step-by-Step)

Understanding quantitative ROI starts with a simple formula. Here’s a quick way to break it down:

• ROI = (Net Profit/Cost of Investment) × 100

  • Where: Net Profit = Total Benefit – Total Cost

Let’s understand this formula using a small business example:

Step 1: Add Up Your Costs

Factor in all expenses tied to the software, including:

• Subscription or licensing fees

• Setup and training costs

• Time spent by internal staff learning and managing the system

Example: 

• Software subscription: $3,000/year

• Setup and training: $1,000

• Total cost: $4,000

Step 2: Estimate the Benefits

Now, consider the value the software provides. This can include:

• Time saved (multiply hours saved by the hourly wage of HR/admin staff)

• Fewer payroll errors or compliance penalties (use past fees as examples)

• Improved hiring speed or retention

Example:

• 150 hours saved/year × $30/hour = $4,500

• Fewer errors and penalties: $1,000

• Total benefit: $5,500

Step 3: Plug in the Formula

Example:

• ROI = (5,500 – 4,000)/4,000 × 100

• Result: 37.5% ROI

How to Track Qualitative Benefits

An ROI isn’t just about numbers. In a people-focused position like HR, qualitative benefits can carry just as much weight as quantitative ones. Here are a few advantages that are harder to quantify but still make a real impact:

A Better Employee Experience

HR platforms simplify everyday tasks, such as enrollment and time-off requests, by putting them directly in employees’ hands. This not only reduces administrative back-and-forth but also gives your team some autonomy, which enhances their overall experience.

More Time for Strategic Work

By automating routine tasks, HR leaders can refocus their efforts on people strategy. This might include refining your onboarding and offboarding process, supporting employee growth, or improving workplace culture.

Improved Compliance with Less Stress

Payroll and HR software help reduce business risk by providing compliance support—tracking changing regulations and automating essential filings to keep your business compliant. This lowers the risk of errors or penalties without requiring constant manual oversight.

Tips to Maximize ROI From Your HR Software

The right HR software can deliver real value, but only if you’re using it strategically. From setting clear goals to asking for additional input, here are a few ways to make sure you’re getting the most out of your investment: 

1. Set Clear Goals

Ask yourself: What are we trying to achieve? Faster onboarding? Fewer payroll errors? Reducing time spent on admin work or improving employee satisfaction? Defining these goals up front gives you a benchmark to track against and helps you stay focused.

2. Ask for Feedback

Check-in with your team to understand how the software is working for them. Is it intuitive? Are they using the self-service features? Honest feedback from employees and admins can surface friction points early and help improve adoption across the board.

3. Prioritize Integrations

Your HR software shouldn’t operate in a silo. Look for tools that integrate with your existing systems—payroll, accounting, benefits, and time tracking—to avoid duplicate work and reduce errors. 

4. Think Long Term

Your business won’t look the same a year from now, and your HR needs won’t either. Choose a platform that can grow with you, whether that means adding new features, supporting a remote workforce, or scaling to handle more employees. 

How Justworks Supports Your HR Needs

Measuring the HR software ROI is essential for small businesses seeking to maximize their investment. By tracking the right metrics, you’ll get a clearer picture of how your HR platform is supporting your team and your bottom line. The right HRIS systems can help you stay compliant, improve employee experience, and scale confidently as you grow.

Looking for HR software that delivers real value? Justworks combines payroll, benefits, compliance support, and HR tools into one easy-to-use platform, designed specifically for small businesses. Reach out today to understand how Justworks can be a key support pillar for growing small businesses.