Sunday, November 22, 2009

"TRV" -- or Total Realized Value -- on HR Technology Investments

[Blog written by this author and originally posted on Starr Tincup]

There's no denying that HR technology solutions continue expanding in both sophistication - and intended usage by a broader community of diverse stakeholders. Consumers and purveyors of transactional HR systems have transformed themselves into consumers and purveyors of strategic HCM solutions used to effectively acquire, deploy, assess, develop, reward and engage talent. If it weren't for the worst economy in 70 years, this might have been a good time to be an HR or HR Technology professional.

Notwithstanding the various industry studies over the years that found higher than expected dissatisfaction rates and lower than expected utilization rates of major brand HR-ERP's and Talent Management suites, many if not most HCM solutions in the market do what they say they do ... namely automate, enable and (in some cases) link HR processes, transactions and events, while also improving and (in some cases) optimizing workforce-related decisions and outcomes.

The bottom-line reason why "HR basics" ... like truly knowing actual and potential workforce costs, impending HR risks, and the supply and demand for certain competencies and skills under different business scenarios ... have been shortchanged among some of the "higher-order" benefits of HR technology is perhaps aptly framed by a new concept that may be the answer to finally getting HR basics right --- Total Realized Value or "TRV."

"TRV" on HR technology investments, simply defined, is the degree to which the broad potential value that a robust HCM solution can deliver gets translated into a more narrow range of tangible value, due to such factors as system underutilization, improper utilization, ineffective change management (causing lower system adoption) and other "value inhibitors or dependencies" ... such as the need to painstakingly maintain standard job families and competencies when leveraging a particular talent management suite, or the need to account for different data models across the spectrum of HCM systems in use.

The "TRV' concept might be just what the doctor ordered to replace the long beleaguered "ROI" metric in HR technology circles, a metric which has perhaps outlived its usefulness. Indeed, TRV = ROI - Reality.

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