By David Fiacco, COO and president, PeopleStrategy, Inc.
HR professionals in small and mid-market companies are tasked with an increasingly complex and broad list of responsibilities. Fortunately, HR technology has evolved over time as well, and small and mid-market companies now have access to affordable solutions that deliver enterprise-level functionality. The Cloud is here to stay, enabling companies of virtually any size to leverage the power of a Human Capital Management (HCM) solution to successfully navigate the challenges they will face in 2015 and beyond.
The Evolving World of Human Resources
Historically, the role of the HR department has been to serve primarily as a back-office support function controlling the administrative, payroll, and compliance tasks associated with managing personnel. In response to the significant changes within the workplace over the past decade—including an economic recession and recovery, changing demographics, and rapid technological advancements—HR is taking on a more strategic business role within an organization.
This is an exciting time for HR professionals as they come closer to earning a seat at the executive table, but it also is an extremely challenging time as they try to balance all that has been piled on their plates. Today’s HR professional is tasked with the monumental responsibility of shaping the organization’s culture and driving the business plan for the future all while ensuring that day-to-day, mission-critical functions are completed efficiently, accurately, and on time.
A recent poll by the HR Daily Advisor® confirmed that employee management, company policies and compliance, and recruiting activities still take up the majority of U.S.-based HR professionals’ time. While these are essential requirements of managing a workforce, these activities decrease productivity and hinder HR’s ability to play a bigger role in the organization and assume responsibility for critical areas that directly impact a company and its bottom line. Adding to HR’s mounting pressures are:
- An increasingly complex and ever-changing regulatory environment;
- A fiercely competitive job market where jobseekers now have the advantage;
- The entrance and domination of the Millennial population (and their “whenever/wherever/on-demand” expectations) in the workforce;
- The huge responsibility to attract, engage, and retain top talent; and
- The realization by company executives that HR is the keeper of critical data that can provide deep insight into the company’s past, present, and future (i.e., people analytics).
These challenges have HR professionals feeling overwhelmed, frustrated, and tired. It also has them realizing that it’s time to take advantage of available technology in order to help position the function more effectively.
The HR Professional’s New Best Friend
As the role of the HR professional continues to evolve, it has become abundantly clear that the ability to adapt and constantly look forward is critical. What is also clear is that manual HR processes no longer have a place in any organization, big or small. Not only are manual processes more likely to result in errors and inaccuracies, they also thwart productivity and efficiency. Enter the HCM solution—the HR manager’s best friend.
An HCM solution links an organization’s strategy to its people, combining planning, recruiting, hiring, onboarding, communication, benefits, payroll, time and attendance, performance, training, and employee data. It can quickly become one of the most important tools an organization has for managing talent, strategic decision making, and overall company success. It appears more and more companies are coming to this realization as recent industry estimates value the HR technology industry at more than $15 billion.
According to a recent survey by Towers Watson & Company, 1 in 3 companies planned to spend more on technology in the coming year compared with previous years. Twenty-nine percent were going to spend money on a new core HR system. There are a few reasons for this recent surge in spending:
- Organizations that have cobbled together myriad point solutions are looking to replace those systems with single, integrated HCM solutions that have become readily available.
- Companies have outgrown their current solution or want to replace it due to product or service deficiencies.
- Cloud technology has made HR technology—once reserved for larger enterprises—affordable for small- and mid-sized organizations.
This last point—the move to the Cloud—is perhaps the most significant trend to take place in the HR technology arena over the past decade. Forty percent of the companies in the Towers Watson report who indicated they would be purchasing an HR solution stated they were considering only cloud-based options. Industry analyst Gartner estimates that by 2017, more than half of all HR systems will be “in the cloud” versus on-premise.
What’s so great about the Cloud? The cost, for one thing—it is lower and more predictable than an on-premise application or multiple point solutions. The majority of providers offering HR solutions delivered in the Cloud do so on a per-employee per-month (PEPM) basis, enabling companies to more easily budget for expenses. While implementation costs vary by vendor, overall the cost to implement a cloud-based HR solution is significantly less than an in-house solution and will require minimal internal IT resources.
Cloud technology also offers organizations the ability to work in real time with instant access to the application and the data it stores. Mobility, or the ability to easily and quickly access information from multiple devices, is more easily accomplished through a cloud-based solution. And because there is a single instance of the solution, delivering new features and functionality is significantly easier and faster, which means users will have access to the latest technology more quickly.
Before You Head for the Cloud, Consider This
If you are reading this article, chances are you have been tasked with evaluating and selecting software at least once during your career. If that is the case, you know it can be a daunting task, especially in a market such as HR technology where there are more options than you can imagine. If you’ve never had the pleasure of choosing a software solution, buckle your seat belt. Seriously, although it can be a time-consuming and overwhelming process, if you keep the following considerations in mind, it should be a more pleasant and successful experience.
Identify, understand and document your specific needs and requirements. Here are a few questions to ask:
- Are you looking to change culture or simply establish more efficient processes?
- If you are changing culture, what are the business directions and organizational objectives driving the culture change (e.g., growth, diversification, competition)?
- If you are looking for efficiencies, where is your focus? HR? Employees (self-service)? Managers (self-service, reporting)?
- Are you interested in outsourcing part or all of your HR functions?
Have a defined project plan that has executive/senior leadership buy-in. Make sure your plan includes:
- Dedicated project team that includes IT
- An approved budget
- Timelines for evaluation, selection, and implementation
Failure to take these steps can result in a longer evaluation process or, worse, selecting a solution that doesn’t do what you need. If you are uncertain about what you need, engage a consultant, as it could save you time and money in the long run.
Don’t Get Distracted—Stay Focused on Solving Core Needs
OK, you have your requirements in hand. You have a clearly defined project plan and budget. Here comes the fun part—shopping! If you remember only one thing from this article, let it be this—you can’t build a penthouse without a solid foundation. If the HR solution you choose can’t perform the basic, core functions (payroll, benefits enrollment, life event changes) accurately and on time, the fact that you can immediately recognize a colleague via a social collaboration tool isn’t going to matter, especially if he or she doesn’t get paid properly.
It is an exciting time for HR technology as new features, functionalities, and capabilities are rapidly introduced into the marketplace, some of which your organization may need now and many of which your organization may want but never use. The point is to be able to easily differentiate between the “value-added” and the “nice-to-have” features. The best way to do this is to stay focused on solving your core issues first and foremost. Don’t worry—if you choose carefully, there will be an opportunity to add those shiny bells and whistles down the road.
That said, there are some basic key features you should look for in an HR solution. These include, but are not limited to:
- Functionality should meet your requirements—the integration of HR services should match your immediate needs and be able to accommodate and grow as your needs change.
- Speed and ease of deployment—if you choose a cloud-based solution, it should be quick and painless to implement.
- Ease of use and adoption—an intuitive, easy-to-use user interface is critical to maximize adoption, which will maximize the value of your solution.
- Consistent user experience across all devices—one of the key benefits of HR technology is employee and manager self-service, and making that functionality available and uniform across several platforms will drive user adoption and use.
- Future-proof technology—your solution should be highly configurable and adaptable to ensure you are always using the latest technology.
- Single point of entry—for simpler, easier, real-time access to your data, choose a solution that offers a single database.
As HCM solutions become “systems of engagement” versus “systems of record,” selecting a user-friendly system that your organization will quickly adopt and use will help you generate the highest return from your investment.
Making Sure You Have the Support You Need When Something Goes Wrong
No piece of technology is perfect and neither is any vendor. There will be issues no matter which solution provider you choose as your partner. That is why it is extremely important to fully understand what potential vendors offer with regard to service and support. What is the support structure? Do they provide a Service Level Agreement (SLA) or similar provision? Do current clients find them easy to do business with?
In addition to a vendor’s service reputation, you want to align yourself with a company that is financially stable, has an experienced team of professionals to implement and support your solution, and invests time and money into continuously improving its products and services.
It is also worth investing time and effort to learn about the company’s history as well as their short- and long-term business plans. In a market where new players emerge fairly regularly and acquisitions happen frequently, it is important to know the provider you choose is going to be around to support you for the duration of the relationship.
David Fiacco is the COO and president of PeopleStrategy. With over 33 years of experience in business and information technology, and having worked in the HR/payroll industry for more than half of his career, Fiacco has watched HR transform from a tactical, back-office department to the strategic focal point of an organization. “Big Needs, Little Budget” is based on his firsthand knowledge and experience with the HR industry and his deep understanding of HR, benefits, and payroll technology.
 Towers Watson & Co.’s 2014 HR Service Delivery and Technology Survey of 1,048 organizations around the world.