- HR Technology Assessment and Vendor Selection – Prologue
- The Two Most Common HR Tech Solutions
- Who Is Buying The Point Solutions?
- Are Employee-Focused Startups More Successful?
- What Frameworks Exist To Help These Purchase Decisions?
- What Questions Should We Ask The Vendors?
- What Should Be Included In The HR Software?
- What Tips Do You Have For Negotiations?
- What Are People Overlooking?
- Key Takeaways
HR Technology Assessment and Vendor Selection – Prologue
HR Technology appears to be a major decision. Get the wrong tech and you might be ‘that person’. If you have the right technology, you will have more and better opportunities. There are, thankfully, steps to success.
So, in this blog post, we will discuss some crucial points on HR technology assessment and vendor selection. In simple words, the kind of HR technology you need to buy. There is so much out there and we all know that wrong decisions can be detrimental to our organization.
The Two Most Common HR Tech Solutions
When making HR technology assessment and vendor selection decisions, what are the two most common HR tech solutions that people or organizations mostly go for? They’re probably applicant tracking systems and HRIS, which is a kind of basic HR software
So, we’ll contain our discussion with HRIS and ATS. But further, a new question arises, what is the case of buying an HRIS versus purchasing individual pieces that might work better for each function but don’t integrate well?
So, the basic trade-off is that buying HRIS versus buying maybe four or five other solutions is obviously a heck of a lot easier. Everything integrates it’s one vendor, one procurement process, one implementation, and one system to learn of course and it’s usually cheaper too because you are sort of getting volume discounting, it’s the right way to think about it. The trade-off is that you’re usually not getting the super-powerful point solution, the main thing you should keep in mind while doing HR technology assessment and vendor selection.
So there are companies that have absolutely phenomenal performance management systems or interview scheduling systems and if your company, for whatever reasons, needs that sort of power, you’re going to have to buy a point solution as there’s really no sort of HCM suite/ HRIS that has super powers of these kinds of check the box solutions.
Their business strategy is to be all-in-one so that somebody says you’ve got time in attendance, you’ve got performance, you’ve got whatever but the performance management it’s going to be an annual survey that goes out to a couple of people it’s not going to be anything compared to what you might get through culture ramp.
Who Is Buying The Point Solutions?
So, if you’re into HR technology assessment and vendor selection and surfing around on HR tech vending sites, you may come across many ads for HR point solutions and there would have to be a pretty amazing case like who are they marketing their stuff to?
Yeah, if you’re an HR team, you might be looking at one point solution for something that is really very important for your company for whatever reason. They’re really looking at the larger and faster-growing companies so obviously global fortune 500 they’re going to have tonnes of these different point solutions and to actually sometimes comical like you could talk to somebody that they might even have like two or three ATSs, that individually do the performance management all this other stuff
Then there are these companies that are many richer venture-backed businesses, they’re growing really quickly and they have high conviction that its people who are going to make them successful or not and so they’re willing to invest in tools that will allow them to attract or train people and it’s not uncommon for you as a 50 person venture-backed company to have two dedicated recruiters plus one or two people on the people outside
So, a fairly meaningful percentage of people actually that are working at this company is just focused on people operations and recruiting and those people are going to need sourcing tools, i.e, they’re going to need dedicated onboarding solutions, etc. and so those are really the big target markets for these point solutions because to your point if you’re company one HR person you’re not going to invest in cultural amp, it’s just not going to happen.
Are Employee-Focused Startups More Successful?
Okay, so you’ve got exposure to this, and this may be a question we might include but all these organizations that you see growing you know they’re venture-backed or whatever and they’ve got strong people to focus they are more successful than the ones that aren’t or that are fewer people focused.
But how do you define success?
Yeah, and that’s a huge question. However, you want to define success by knowing whether they continue to grow and whether they’ve got a great trajectory for growth and income.
Yeah, a lot of them are. So I started my career working in venture capital helping to fund these companies and of course, many of these companies never make it right there. Probably, 60 to 70 percent of the kind never make it to even a million dollars in revenue.
But the ones that do make it to some level of product market fit and that’s really the key to whether or not these businesses succeed is do they have something that people want. If you think about it if the worst-run company in the world came up with the iPod back in the 2000s they would still be extremely rich and successful it so happened that a well-run company did it and it became the most valuable company in the world and they use that to get into phones and other consumer electronics.
But it’s really a matter of market fit now. People can be the accelerant that they can make something go a lot faster and that’s basically the bet that these companies are making. The reason they’re making that bet is that there are board members of the venture capitalist who have seen the same movie play out over and over again for decades.
Over hundreds of different companies where if you get the right head of sales in there it’s going to be a heck of a lot easier to sell the product if you get the right head of engineering, etc. and you do that in such a way that you create a great culture, great incentive systems with the right compensation and right equity.
You create a structure where people have the freedom they can sort of exercise their entrepreneurial muscles while also helping the company grow all these different things that at the end of the day they come back to people operations and people management, etc. and so the short answer question is that these companies are a lot more successful and they become the googles and the apples of their field.
What Frameworks Exist To Help These Purchase Decisions?
So, let’s talk about helping people make these decisions during HR technology assessment and vendor selection. So, what are some frameworks that people can use for making their own purchasing of HR tech decision.
Well, the first place you need to start is where to focus there are so many different solutions out there I think there are literally 30000 different HR tools that exist right now in their ATSs and HRISs, and everything in between.
There are a few different frameworks that are most commonly used, which is talking to other people in the organization regarding what is driving the board’s decision what’s driving, sort of, the executive level compensation, is it increased profitability, is it growing sales team, or is it product changes, etc. how do people make an impact on that, how does HR make an impact and that’s where you should focus on your initiatives broadly, but really, on your tools as well.
So, a great example might be, we’ve got a call center, super high churn, increasing costs we need to fight this increase how do we increase this? we need to have better onboarding, we need to tell better stories at the top of the funnel employer branding to make sure people know that they’re getting themselves into, let’s get a new career site let’s get better onboarding process.
All this stuff is tools that back up the HR initiatives and make them more successful so that number one is talking to people in the organization understanding what the world cares about right now how people make an impact
Number two is “mapping your employee lifecycle”. So there are a couple of companies that have literally set up like pieces of paper taped together on a wall and it’s like okay first interaction is you meet somebody at a bar that works here or you go to Glassdoor or you go to a career website and there’s a bunch of things.
You can get really granular doing such things as you can find many experienced people, for instance, a guy who worked in Amazon and now works in a travel tech company and he has 200+ different points of contact throughout the employee life cycle that he mapped.
You can start to think about what are the ones that really matter, maybe it’s offer management, maybe it’s making sure that you have an interview panel that represents the company and maybe has somebody that looks like if it’s a woman candidate, let’s make sure there’s a woman who’s interviewing them, etc. so you can figure out where to focus or not effective.
The last one which is sort of like the easiest one is and some might say it’s the laziest one but probably the most effective is to “trust your gut”.
You are taking in data all day long from conversations from everything that’s happening on a subconscious level and we’re actually really good at figuring out what we should focus on. So in the back of your mind, your gut, you realize is the most important thing probably. You should then on a conscious level rationalize the reasons behind it and create a business case, back it up. But that’s a really good place to figure out where to focus. So these are the three frameworks that help in HR technology assessment and vendor selection and better make purchase decisions.
What Questions Should We Ask The Vendors?
So, our next point for HR technology assessment and vendor selection is, what questions should we ask the software vendors when we go to buy or test a particular product or get a demo.
In this case, firstly should drill into the workflows that really matter to you and these are the workflows that work in your current product as well as the ones that don’t work
The next aspect you must consider while questioning during HR technology assessment and vendor selection is, you should see the integrations, what integration means basically, and does it means that you need to download a CSV and upload it, which is not very good. Does it mean that there is an API, which is a much better integration, you need to understand who’s going to be your account manager
But the best practice here would ask questions like, “how has that person been incentivized? Tell me about the companies who have gone through this prior. Do you want to know the viewpoint of a reference or two? Overall, you should go for questions that are really specific and hard to prepare for because such questions will get you answers about the real data. Relying only on one end to understand a solution, whether a salesperson’s opinion or an online review, would be an utterly bad idea.
At the end of the day, all these are data points and they help you triangulate what’s the solution that’s right for us
if there are peer companies that you respect that are using some or the other software that’s a really strong data point as well. If you are an HR person and there are three to four that you really admire who are using a new comp management platform, that would probably be a good choice for you.
What Should Be Included In The HR Software?
Well, this question comes from google search queries and it’s super broad. But still, when doing HR technology assessment and vendor selection, it’s necessary for a person or an entity to know if one goes to buy HR software and should expect to get out of it.
So, basically, it depends on the budget and the size of your company. Or in other words, the amount it will be able to spend. But at the very least, you are going to be looking at the employee database which has an integration with the payroll solution or has its own payroll solution so that you can easily run payroll through it.
If it has some employee experience module so it can allow you to run pulse surveys, and do some performance management stuff it’s probably not going to be the peer-to-peer recognition or total rewards, but it should have these basic things in it. Additionally, it should also contain recruiting aspects and an applicant tracking system along with a job description feature. Thus, making your HR technology assessment and vendor selection process more fruitful.
So, that’s a kind of more baseline stuff. But if it goes one step further, the new-age HR software has to be more intuitive in its structure which would help new users to grasp its features and functions very quickly. Further, the software should possess features of more strategic functionality, like there is a great solution named chart hop, which initially started as an org chart creator and it allowed you to run these scenarios.
So, if the company gets that big partnership our org chart would like this and if we lose that partnership the chart may look this way. If a company does Merger and Acquisition deal or something like that, it should have a strategic human resource management aspect aligned to it, and it has some of the most modern super-powered HRISs.
It should have stuff for HCM suites and you might also get some decent employee engagement functionality so the ability to run some sentiment analysis.
Integration of artificial intelligence should also be a factor to look upon because it could help in employee onboarding, making sure that an employee connects with the right people. For example, if a new female engineer joins the organization the software would help her connect with other people engaged in engineering-related tasks in the company. Thus, improving the talent management process in the organization.
What Tips Do You Have For Negotiations?
Okay, so another important aspect of HR technology assessment and vendor selection is the price negotiations which many people wish to know about. How do we negotiate any of the pieces of cost of this HR tech?
So here, the number one thing that internalizes is the fact that you can negotiate the price asked by the vendor at any point, even if it’s clearly mentioned on their web portal. Like there are application tracking systems priced at 1500 bucks a year that can be acquired for 1000 bucks a year if you negotiate properly.
So there’s always room at the end of the month or end of the quarter or whenever the term ends to get these deals done, adding to the advantage for the ones who are into HR technology assessment and vendor selection.
But the question arises, why do we say that there’s more opportunity at those times of the year aforementioned?
Well, there is basically the fact that individuals are trying to hit certain numbers to get their bonuses and companies are trying to hit certain numbers so that the BPU sales and CEO can get their bonuses out of it.
Or, in another case, they might be trying to impress their venture capital board members so that next year they can raise money at a higher price and if you’re able to end the year with more revenue compared to the previous year by closing more deals at a lower price, that makes a big difference for the company in terms of evaluation going forward that can impact the equity value a lot
Hence, people are willing to make concessions around those times.
What Are People Overlooking?
So, when it comes to HR technology assessment and vendor selection process, what are one or two things that people often overlook in this selection process that they shouldn’t?
Firstly, one of the things that people mostly screw up is internal stakeholder management and getting people onboard pretty early in the process. Many a time, people will spend much of their time talking to the vendors without having any budget or any relevant stakeholder person that they really need.
So upfront, it is highly recommended that you outline what you are going to do, why you will do it, and what the expected results would be. And how those results would translate into money and get the right people on board, keep them performing. Potential buyers must know the complete process of what they’re doing and make sure that at the end of the day, the vendors going to support you to do this and also help them implement it as well.
So that’s something a lot of people gloss over. There are some things that other people don’t do enough is question the advice that they get. There are so many people that give bad advice.
Basically, there are very few people that understand the landscape of HR technology, which is highly dynamic and changing very quickly every single day, and still, people tend to stick to just one vendor for years and years, saying he’s very great.
Many times you dig into recommendations, but it would always be a wise move to note down both the good and bad aspects of the HR tech being discussed and act accordingly. Making it a crucial part of HR technology assessment and vendor selection.
Considering the points discussed above, we make a wise decision of purchasing the right HR technology by inferring some simple points, viz., prices are always negotiable and buyers shouldn’t hesitate to negotiate. Secondly, to negotiate the prices well, make sure that the vendors you know are looking at a variety of systems. Simultaneously, it is recommended to take insights from experts who regularly publish helpful articles on the hr tech outlook website before making any purchase decision.
At the same time, it’s true that the time of the year matters too, increasing your chances to save more on HR tech costs and do a proper HR technology assessment and vendor selection.