Salary costs are only 50% of the total costs of employing Humans
Many of the conversations that are held early on with potential clients tend to focus, quite rightly, on the overall return on investment of Robotic Process Automation (RPA) technology. The calculation is always a simple enough sum;
RPA Costs – People Costs Saved = Return on Investment
Leaving to one side the fact that, actually, RPA also benefits a number of other nonmonetary aspects of any business. The “People Saving” aspect has remained a difficult one to both identify and quantify and gain agreement with potential clients. Without an open and honest conversation about the true costs of humans within the workplace, the total return on investment as well as the speed that the technology pays back that investment will always be underplayed. This has the impact on many potential clients discounting RPA investment as not worth the work as “they can get half a person to do that process”.
Culture of People – Rewarding higher numbers
One of the interesting observations is that, still, in UK businesses, we articulate our success in terms of the number of people that work for us. This is counter intuitive for many businesses that focus on manual or menial administration tasks. This also plays out in terms of Senior Operational Executives. If you interview them, they will always refer to the number of people that worked under them as a reflection of the way they should be rewarded;
More People = More Senior = More Rewards
Clarifying the True Cost of Humans in the Work Place
The Robot Exchange has started to investigate the true cost of Humans undertaking many of the processes that would naturally be automated using their RPA Software and the breakdown is as follows;
1) Direct costs identified on P & L for People
A subset of these costs is taken into consideration by clients;
- Salary and further package
- NI/PAYE and Pension
- Recruitment, both internal HR and External Recruitment
- Compliance and other training
- Sickness and Holiday Coverage
Many clients can reasonably quantify these direct costs; however, we will still discuss human costs in relation to their salary against the full costings
2) Indirect costs impacting P & L for People
These items will generally not be considered a cost to employing humans, but are really the “hidden” costs that, if included, would revolutionise the business case for RPA;
- Cost per Square Metre of building
- Furniture and IT Hardware
- Management costs
- HR Administration overhead
- Attrition and re-recruitment of roles
- Team meetings and team building events
- Other utilities (Air Conditioning, heating, lighting)
- Tea breaks and other comfort breaks
When you add these indirect costs then the business case, which was already strong due to the processing times for Software Robots, cements itself even more.
3) Intangible Benefits that further reduce costs
Lastly, these benefits may be able to be quantified, but are never considered as part of the equation in relation to ROI for RPA;
- Quality and reduction of Re-work
- Compliance adherence improvement
- Management Distraction, especially on managing ambition of manual/menial roles – Strategy adherence – preventing a dilution of your business aims by human decision making*
- Productivity variance
- The morning after the night out!
- Increased process efficiency upstream and downstream
- Work hours increase from 9 to 5 to 24×7
*Strategy Adherence, a good example of this is the scenario where your human employees will prioritise customers who are “nice” rather than your higher profit clients or focussing on easy, high reward tasks against more complex but higher priority for your company or clients.
In Summary – Take the Clients number and double it
Taking into consideration both the tangible and intangible savings of implementing RPA, as delivered by The Robot Exchange, it’s clear that the advantages far outweigh the costs or disruption clients could face. If British business continues to undervalue the total cost of their humans as a counter to the costs of implementation and on-going operations of automation, this will have the impact of a slower than necessary adoption of this critical technology for the UK with the delay in realising either the cost savings or the increase in business without an increase in our human resource costs.