Mutualised Software Solutions: A Growing Trend

Over the past year, PeopleWeek has noticed increasing interest in mutualised HR software solutions. In this article I explain what a mutualised solution is, the main drivers and benefits of this approach, as well as the disadvantages.

WHAT IS A MUTUALISED SOLUTION IN SOFTWARE?

In simple terms, a mutualised solution in software is either a new platform, a new module, or a new feature that is collectively purchased (by clients) and sold (by the software company) to more than one independent organisation.

In PeopleWeek’s experience, mutualised solutions fall into one of the following three categories:

  1. A tender, or Request for Proposals, is issued by several organisations that are looking to implement a similar software solution;
  2. The software company is proactively approached by existing clients with a collective request to develop a new solution. This may happen as the result of shared clients knowing each other or even from spending time together at industry events and networking sessions; or
  3. The software company proactively approaches a group of existing clients to ask them whether they are interested in contributing to the development of a new solution that will subsequently be deployed to a group of customers.   

WHAT ARE THE MAIN DRIVERS OR BENEFITS OF MUTUALISATION?

This needs to be looked at from two perspectives: 1) software clients and 2) software companies.

Clients

The main driver of mutualisation is financial/budgetary and there are two reasons for this:

  1. Purchasing the same solution as part of a group of organisations increases the clients’ purchasing and negotiating power. This is particularly the case in RFPs.
  2. Sharing the costs of software development (design, development, testing, deployment) amongst several organisations.

There are other important drivers of mutualisation:

  • Smart design: Technology is a means to and end. It enables processes. When a solution is designed to be used by multiple organisations – that may have very similar or even slightly different existing processes – it encourages broad thinking, sharing of different practices, and may ultimately lead to improvements (e.g. user experience, efficiency, etc).
  • Smart technology: Technology built to work for multiple organisations is likely to be designed smartly as it needs to cater to slightly different needs (e.g. different configurations within the same underlying technology).
  • Simplification: Mutualised designs often result in a “90/10” or “80/20” solution for each organisation. They may not get all the “bells and whistles” they would like in the perfect solution but this may be helpful in forcing them to simplify existing processes or steps that are too complex relative to the value they add (and perhaps too expensive from a technology point of view).
  • Speed of implementation: Technology companies will invest more time and people on a project if it is being developed for multiple clients and they have a guaranteed client base (i.e. future license buyers).

Software Companies

There are multiple reasons why software companies should be open to mutualised solutions:

  • Client satisfaction, i.e. be responsive to client needs and offer value for money.
  • Evolve their technology (improve and enrich their software’s functionalities).
  • Win RFPs, i.e. acquire new clients.
  • Develop new technology with a group of beta clients that will help them to design and test it.

WHAT ARE THE DOWNSIDES OF MUTUALISATION?

Again, this question needs to be looked at from the perspective of clients and software companies.

Clients

There are two main downsides of mutualised solutions for clients:

  1. As mentioned above, mutualised developments tend to be a “90/10” or “80/20” solution for each organisation. It is not a customised solution.
  2. There may be an upfront time investment to build alignment on the common needs (and, conversely, agree what needs to be different). This alignment building typically needs to be done before approaching the software company because you need to be confident that there is, indeed, sufficient alignment to make a common solution viable.

Software Companies

There are three potential downsides for software companies when developing mutualised solutions:

  1. As with clients, it may be necessary to invest time to finalise alignment on the common needs and identify unavoidable differences.
  2. The technology solution will often be more complex from a development point of view because it will need to cater for client differences. This means that whilst all clients will be using the same underlying technology (code, architecture), the solution may need to contain a high degree of configurability.
  3. It may be incompatible with the existing pricing model. This is an important point and merits a paragraph on its own…

Unfortunately, the historical pricing and operating practices of most technology companies – past and present, large and small – are the polar opposite of mutualisation: they build a customised solution for one (the first) client; charge them the full cost of development despite the fact that this client has invested a significant amount of time co-developing and testing the solution (and has probably been the victim of lots of v1 bugs); and then re-sell it to other clients with a fat profit margin. This has been a very profitable modus operandi across the technology sector for as long as I can remember.

LOOKING TO THE FUTURE From the outset PeopleWeek designed its technology to be able to offer common solutions with different configurations. We then started offering mutualised solutions several years ago and can also deploy white label solutions. This approach has been an important way for us to develop our suite of software, acquire new clients, and respond to client requests in an affordable way. We see it as a win-win. Looking to the future, we hope that the trend towards mutualisation will continue to grow. This will put healthy pressure on software companies to evolve their modus operandi.

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Payroll System vs HRIS: Fusion not Confusion

In this article I explain why payroll systems and HR information systems (HRIS) are different – a payroll system cannot be an effective substitute for an HRIS – yet complimentary when designed and used as an integrated solution. This I call Fusion. In contrast, using a payroll system as a makeshift HRIS or without an integration with the organisation’s HRIS, is a recipe for Confusion.

CAN A PAYROLL SYSTEM BE USED AS AN HRIS?

A simplistic answer to this question is “yes” because many organisations do exactly this. They use a payroll system (either their own or that of their payroll partner) to store as much employee data as possible. Payroll systems have standard fields for personal data, job related data, organisational data, and compensation data. If the payroll system allows it, some organisations create customised fields or re-purpose empty fields to host employee data that a payroll system would not ordinarily contain.

However, by its very design, the purpose of a payroll system is to manage payroll, which ends up in the generation of a payslip, tax documents, statutory deductions, a net payment to the employee, and accounting reports. The purpose an HRIS is to manage a much broader set of HR activities, such as time and attendance (which many payroll systems do offer), performance, recruitment, onboarding, off-boarding, talent identification, employee development, training, compensation reviews, expense reimbursements, etc.

As payroll systems cannot manage broader sets of HR activities, without an HRIS organisations need to perform such activities manually (paper, Excel, etc) or in a separate software. Alternatively, they can decide not to implement such processes, perhaps because it is too difficult without a system.

So, whilst I simplistically answered “yes” to the question “Can a payroll system be used as an HRIS?”, the answer should be “no”.

WHAT ARE DISADVANTAGES OF USING A PAYROLL SYSTEM AS AN HRIS?

The downsides of using a payroll system as an HRIS are probably self-evident to HR professionals. Here are just a few:

  • Managing the broader set of HR processes manually or in different systems – because it cannot be done in a payroll system – is neither cost effective nor a positive user experience (for employees, managers, or HR);
  • Manual processes are prone to human error and data security risks, while using different systems typically results in poor data quality unless the systems have been integrated (which is expensive to implement and maintain);
  • If HR, managers, and employees are not given user-friendly tools, organisations are far less likely to have effective people management practices that drive higher employee engagement and performance; and
  • Perhaps most importantly, and notwithstanding budgetary constraints, if an organisation persists in using a payroll system as an HRIS it is effectively sending a message that HR, managers and employees are not worth the investment. 

SO WHY DO MANY ORGANISATIONS USE A PAYROLL SYSTEM AS AN HRIS?

Over the years I have seen four main blockers to organisations introducing an HRIS:

  1. Budgetary constraints may be a barrier to implementing an HRIS even when the organisation understands that they need to evolve, digitalise, modernise. PeopleWeek often meets HR directors that have been trying (unsuccessfully) for years to secure the budget to implement an HRIS.
  2. Very few HRIS’ have been designed to help HR or Finance to manage the payroll process. They may offer great features for managing a variety of HR processes, but they do not contain all the data needed for payroll and cannot be integrated with the organisation’s payroll software. Those HRIS’ that can be used as the primary source of payroll data typically require a huge amount of customisation, which is very expensive and time-consuming to develop and maintain. As an HR Director, my team and I once customised our global HRIS to integrate with a global cloud payroll solution for managing payroll in more than 60 countries. The project took more than 1 year (which was actually very fast) and was very expensive.
  3. The payroll function may sit within the finance department rather than within HR. There are pros and cons of each approach, and the purpose of this blog is not to critique the merits of each. However, when payroll is part of the finance function and it works well for the purposes of finance, there is little incentive to invest in a real HRIS. “Working well for finance” means that payroll is accurate and on-time, payroll accounting is reliable, and reports can be generated (cost analysis, planning, provisioning, and forecasting). When all of this is working well, the finance department is often a barrier to implementing an HRIS as they worry that it will have negative consequences on data quality and payroll.
  4. The reality, unfortunately, is that despite 20 years of headlines about the “war for talent” and the shortage of skilled employees, many organisations simply do not care enough about people management and employee development to invest in an HRIS. Senior management in such organisations may say that “people are our greatest asset” but it is often lip service. Sadly, their employees also probably know it is pure rhetoric. This is very short-sighted in terms of attracting, developing, and retaining high performing teams. Moreover, it is difficult to create a culture where employees focus on product quality and customer excellence if they themselves are not given the basic tools in the workplace. An HRIS is a basic workplace tool.

TRADITIONAL APPROACHES TO CREATING FUSION BETWEEN THE PAYROLL SYSTEM AND HRIS

Once an organisation reaches a certain size, they need the following to operate effectively and efficiently:

  1. Country-specific payroll software (in-house or outsourced);
  2. HR systems to help manage HR processes, employee development and engagement;
  3. Finance and HR teams with fit-for-purpose tools; and
  4. Accurate and consistent data in their payroll system and HRIS.

At some stage, therefore, it is almost inevitable that an organisation of a certain size will implement a payroll solution (first) and then an HRIS (or a mix HR systems). Whilst the payroll system and HRIS may initially be managed in a siloed way, it soon becomes apparent that a lack of fusion between them is the cause of administrative and operational headaches. Usually because point 4 above is not being achieved. As such, the systems need to be aligned. I have also noticed that whenever data from an HRIS is used to calculate payroll, employees and HR are much more likely to take ownership for the quality of the data in the HRIS because wrong data leads to wrong payslips.

Traditionally, there have been three approaches for achieving this alignment:

  1. Relying on manual processes, i.e. double data entry, to keep the HRIS and payroll system aligned. This is clearly prone to human error and is inefficient.
  2. Purchasing a highly customisable HRIS that, with significant programming effort and ongoing maintenance, can be adapted to host all the data needed for payroll and is integrated with the payroll software. This is a good solution but an expensive one that is beyond the reach of most organisations.
  3. Integrate the HRIS with the payroll system for basic information that is stored in a typical HRIS (employee name, job title, department, cost centre, hire date, employment end date, etc) and then manually enter all other data needed for payroll into the payroll system. This is blend of 1 and 2. It is the best solution for most organisations given that 1 is not a long-term solution and 2 is too expensive.

A NEW APPROACH

PeopleWeek has created a new approach.  We have built an HRIS that enables our clients to store all information needed for managing payroll in any country. The main features are:

  • Country-specific payroll data management configurations
  • Client-specific pay and benefits configurations
  • Payment instructions are entered into PeopleWeek (one-time payments, repeat payments, employee benefits, overtime, deductions, etc)
  • Payroll cut-off and processing dates are configured in PeopleWeek, and on the relevant dates all the information needed for payroll (including absences and timesheets information) is exported from PeopleWeek to the payroll department or external vendor
  • Integrations with third-party payroll software
  • Payslips and tax documents are imported into employees’ personal profiles within PeopleWeek
  • Payroll Partners can access payroll information within PeopleWeek without having access to non-payroll related information [click here to learn more about PeopleWeek’s Payroll Partnership Programme].

This new approach means that organisations that do not have the budget for Approach 2 – or do not want to unnecessarily spend hundreds of thousands of dollars on a customised solution – can now have it for a fraction of the implementation cost (a few thousand dollars) and quickly. This solution works for organisations with employees in one country or in many countries. HR and Finance can be confident that payroll is accurate, efficient, and secure, whilst other important employee processes are managed using a proper HRIS.

PeopleWeek would love to see more HRIS’ taking a similar approach to help normal organisations with normal budgets benefit from “fusion” and to end “confusion”.

Feel free to contact us at admin@peopleweek.com to learn more. Final thought: I’d like to recognise the under-recognised work done by payroll professionals across the world. It is often stressful with high workloads and tight deadlines. As an employee we take it for granted that we will be paid on-time and accurately. Whilst this is nearly always the case for employees in most organisations, a lot of effort happens behind the scenes to make this a reality and payroll professionals rarely receive a thank you from employees or senior managers.

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HR Analytics: Rubbish In, Rubbish Out

Despite the proliferation of articles and solutions for producing advanced analytics and fancy dashboards, many organisations – both large and small – struggle to produce basic HR reports.

For the HR professional this can be extremely frustrating. On the one hand, we constantly read about “big data” solutions (for processing large, complex, and fast data sets), artificial intelligence (AI), bots (software applications that are programmed to do certain tasks), and machine learning (systems that learn and adapt from patterns in data without following explicit instructions), yet many HR teams cannot reliably produce core data such as headcount, turnover, and demographics. I won’t even mention more complex data such as payroll related costs, payroll accounting, and productivity analysis.

In this article I look at the following topics:

  1. The main reasons why many organisations have poor “HR data”;
  2. Some relatively simple steps that organisations can take to improve the quality of their underlying data (and thereby lay the groundwork for more sophisticated analytics); and
  3. How the design of HR software (HRIS) can help to address points 1 and 2.
WHY DO SO MANY ORGANISATIONS HAVE POOR HR DATA?

Based on my personal experience, both as an HR professional and working with clients, there are a number of common themes, including:

  • Lack of investment in intuitive HR systems, which leads to HR and line managers handling data in Excel files.
  • Use of multiple HR systems (for different processes) that are not integrated with one another, which results in too much manual effort (data entry) and human error.
  • Different areas of the same organisation using different systems for similar processes (usually with different data fields, values, and formats), which leads to complexity and inefficiency in consolidating data for reporting. In larger organisations, this may be the result of mergers and acquisitions, and an inability to consolidate systems.
  • Too much focus on the data needed by the finance/accounting department at the expense of what is needed to manage an organisation, including the people.
  • The use of different systems for HR data and payroll data, which removes the incentive for the main HR system to have complete and accurate data.
  • HR teams lacking quantitative skills and a general interest in data and numbers. The HR profession does not tend to attract people with this passion and these competencies.
  • An organisational culture that has never emphasised the importance of good quality HR data, perhaps because it is seen as “HR data” as opposed to “business data”.

Of course, these themes are often interconnected. For example, a lack of investment in systems may affect the ability of HR and managers to effectively manage data. Conversely, the organisation’s culture or a lack of relevant skills or interest in the HR team may be a barrier to the organisation getting value from a perfectly decent HRIS.

STEPS FOR IMPROVING THE QUALITY OF ORGANISATIONAL DATA

At some stage every organisation finds itself in situation where it has little choice but to improve the quality of its organisational data. It may take many years, even decades, to arrive at that point but the day will surely come. Here are some practical suggestions for when it does:

  • Organisations need to select HR systems that are intuitive to use and easy to maintain. This may even mean trading off on some desired functionality in a bid to keep things simple, or simplifying certain processes (click here to see the Q1 2022 blog on this theme). Some organisations have very little HR software and their HR teams would love a simple solution. Other organisations have very complex (and expensive) solutions that do not, in reality, sufficiently help HR and line managers in their day-to-day tasks.
  • Organisations need to either use a “one-stop-shop” HR solution (of which there are many) or, if the organisation has made the strategic decision to use different/specialist software for different processes (e.g., recruitment, performance, training, etc), invest in integrating your HR systems so they contain consistent and up to date data. 
  • I have been involved in acquisitions and mergers, as well as inherited HR roles where I have been responsible for business units post a merger or acquisition. Whilst it is undoubtedly hard work and fraught with cultural tensions when HR systems are consolidated, doing so is essential if organisations are to be able to produce good data and business insights. Consolidating systems also adds a lot more value when the exercise involves harmonising the data of the different organisations.
  • Thankfully, I am seeing an increasing tendency of organisations to realise (perhaps after many years of push-back on HR directors), that a finance system or a payroll system is not the same thing as an HRIS. A finance system cannot be expected to meet all of an organisation’s human resources needs. Likewise, an HRIS cannot be expected to meet all of an organisation’s finance and accounting needs. Nonetheless, a sensible balance needs to be struck and there are an increasing number of HR software solutions that have been designed to meet the core accounting and finance requirements.
  • By using an HRIS that includes a payroll module or integrating the HRIS with the payroll system, you immediately “up the ante” on the importance of the HRIS having complete and accurate data. This is because if the HRIS contains inaccurate data it is likely to result in inaccurate payroll (payments, tax withholding, social security, pension deductions, etc). Missing mandatory data may event prevent an employee from being paid. Making payroll dependant on the quality of data in the HRIS concentrates the minds of employees, managers, and HR alike.
  • HR directors need to ensure that their HR team has a good mixture of professionals with strong quantitative and qualitative skills, and an interest in numbers and data. Ideally all HR team members would have a good all-round skill set, even if they prefer a role that is less data oriented. It is, however, no longer realistic to think that an HR team/department can be high performing if it is unable to manage data and work with numbers. You need to get your recruitment right and make it clear that a minimal level of data competency and numeracy is expected of everyone in the HR team.
  • Changing – or evolving – an organisation’s culture is probably the most challenging theme to address, and I certainly do not have the time here to do the topic justice. In essence, leaders need to make it clear that everyone is responsible for the quality of organisational data and ensure that there are positive and negative consequences associated with this. For example, HR cannot have good data if employees and managers do not share information with HR in a timely manner. If HR is not receiving timely data there may be underlying causes such as poor or unclear processes, which will need to be fixed. HR teams also need to take pride in the accuracy of their data and very low error rates on processes that require data, such as payroll.
HOW SMARTLY DESIGNED HR SOFTWARE CAN HELP

We have tried to design PeopleWeek in a way that helps organisations to have clean and complete employee (personal and professional) and organisational data. Other HR software may have similar features. Even if your organisation does not have an HRIS, some of the design principles used by PeopleWeek would help you to better manage data in an Excel spreadsheet or “DIY” database. Here are some examples:

  • Use dropdown lists rather than free text fields: Avoid data entry errors and the proliferation of unnecessary data values, for example, job titles, contract types, absence types, cost centres, department names, pay elements (for payroll). A classic example is that you want to run a report based on job titles but 10 employees performing more or less the same role all have slightly different job titles;
  • Explain what different data fields mean: It may not always be obvious what a field means. An example is that sometimes HR get confused about the differences between “original employment date”, “continuous employment date”, and “employment date”. A simple explanation in the UI of a system (or in a spreadsheet) can eliminate the errors;
  • Use an HRIS that contains a payroll module* or can be easily integrated with your payroll system that is used to calculate payroll and generate payslips.
  • Control who can create new values in the HRIS: In many organisations, HR (and even managers) are free to create new values such as contract types, leaver (termination) reasons, work locations, department names, cost centres, job titles, training types, grade levels, etc. By controlling who has system admin rights to do this, you can eliminate such data “pollution”. When combined with the use of dropdown lists, it is even more effective;
  • Hard code rules in the system: By creating simple system logics or rules you can avoid human error. Examples are linking departments to a pre-defined cost centre, mapping pay types to pre-defined monetary values, and work permit expiries triggering an “invalid data” value;
  • System generated reminders: Notifications or alerts are a great way to remind employees, their managers, and HR to take specific actions on time, thereby keeping data up to date;
  • Easy workflows: Processes that avoid unnecessary (too many) steps and walk you through a complex task (e.g., transferring an employee from one entity to another), greatly reduce error rates;
  • Use Date Pickers: Something as simple as a date picker tool helps to avoid human error entering dates and confusion between date formats;
  • Make fields translatable to help with reporting: Often systems and spreadsheets are unable to identify that data contains repeated (the same) values but in different languages. If a system allows values to be translated into multiple languages, you can generate smart reports that recognise two values that look different are, in fact, the same (e.g., “Male” and “Homme” or “Marketing Director” and “Marketingleiter”).

*PeopleWeek has a Payroll Data Management module that is customised for each country’s payroll requirements.

QUALITY IN, QUALITY OUT

Quality data is the starting point – the foundation – for value-adding analysis, metrics, reporting. This is what all organisations and their HR teams should be, and usually are, striving towards. However, it can feel like a distant reality. Without doubt it takes time to go from “rubbish in, rubbish out” to “quality in, quality out”. Nonetheless, I know from experience that it is achievable by addressing the root causes of an organisation’s poor data quality and using smartly designed HR software to make data management easier.

Author : 

PAUL JON MARTIN
MANAGING DIRECTOR AT PEOPLEWEEK SA

Date:
21.12.2022

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Do HR leaders need to have an HR IT strategy?


In this article I explore how the role of an HR leader has evolved and that an HR IT strategy is now a “must have”. Over the past decade or so there has been an abundance of literature on how the role of a CEO has changed and that understanding technology and investing significant time in the organisation’s IT decision-making is now a key requirement. I argue that the same is now true of HR leaders and that an HR IT strategy is the link between (efficient) HR operations and the organisation’s (desired) culture. Towards the end of the article, I look at some of the common reasons organisations lack an HR IT strategy and share some ideas on overcoming the barriers.

THE TRADITIONAL ROLE OF AN HR LEADER
During my 20+ years in HR, and now as an HR tech leader, I have observed that HR leaders (typically HR directors) broadly fall into one of two categories:

  • Technical Expert – Highly knowledgeable of HR processes, operations and, perhaps, employment law/policies.
  • Business Partner – Trusted advisor and coach to a business leadership team, strong knowledge of the business and, probably, focused on culture, strategy and transformation.

In many large organisations, the HR function has been organised around the concepts of HR specialist departments (Centres of Expertise, HR Operations, HR Shared Services) and internal client-facing Business Partners. This model became prevalent in the mid to late 1990s and is associated with Dave Ulrich, the management and HR thinker.

I learned a lot working with Technical Experts and respected their focus on delivering core HR activities such as HR admin, payroll and processes like compensation and performance reviews. However, often they were not very inspiring and added limited commercial value to their businesses.

I learned less working with Business Partners, in part because their work with their business leadership teams was less visible. Nonetheless, they had significant organisational impact and were often inspiring. On the other hand, they could be frustrating to work with because they were often too distant from the operational realities and lacked technical depth (indeed, in some organisations Business Partners may not have an HR background).

During my HR career I did not work with many “All-Rounders”, i.e. HR leaders that combine both strong technical expertise and business partnering capabilities. They were very impressive in the same way as an all-rounder in any team sport. They were also highly valued and respected by colleagues, business leadership teams and CEOs.

THE MODERN ROLE OF AN HR LEADER
In today’s world, being either a Technical Expert or a Business Partner is too one-dimensional. Organisations need HR leaders that are All-Rounders and can help them to address two challenges that are key for success: Operational Efficiency and Organisational Culture.

Operational Efficiency

In era of rapid digitisation, increased competition and thinning margins (compounded by inflation and, in some markets, recession), organisations’ operational processes need to be highly efficient, robust (scalable, reliable) and business continuity-proof (e.g. pandemic ready).

As an HR director I spent a lot of time working with colleagues on initiatives to improve companies’ (or divisions within companies) operational efficiency. Such initiatives included analysing and benchmarking existing efficiency levels and identifying opportunities. One of the things I learned very quickly was that my own HR department needed to be very efficiently run before I could expect line managers to partner with me to improve the efficiency of their own departments. Otherwise, I simply lacked credibility.

As such, HR leaders need to ensure that HR is run efficiently and (then) work with their peers to maximise the efficiency of other departments.

Organisational Culture

HR leaders have an important role to play in defining an organisation’s culture, as well as the values and expected employee behaviours to maintain and promote that culture. The culture should be a positive force that unites and energises a diverse group of employees. Ultimately, it is a driver of organisational performance and success.

Maintaining an organisational culture is increasingly challenging because organisations exist within societies and many of our societies are increasing polarised. Examples of polarisation include “right” vs. “left”, facts vs. fake news, social progressives vs. reactionaries, green committed vs. green-washed, right (for a woman) to choose vs. right to life, different work/life expectations of generations Z, Y and X, and internationalists vs. nationalists. An additional challenge that many organisations are grappling with is maintaining their office culture in an era of increased remote working.

AN INTEGRATED HR STRATEGY
Modern HR leaders need to bring together operational efficiency and organisational culture in an integrated HR strategy. A pre-requisite of any strategy is knowing what the desired outcomes are. A focused list of interventions or activities can then be designed to deliver those outcomes. An HR strategy typically involves aligning the HR operational processes to the stated culture, values and desired behaviours. For example:

  • Recruitment process needs to identify candidates with the required technical skills AND cultural fit;
    Performance management needs to include an evaluation of employees’ delivery (results) AND demonstrated behaviours;
  • Compensation needs to reward what was delivered AND how;
  • Promotions need to be awarded to employees that have consistently demonstrated strong performance AND alignment to the organisation’s values; and
  • Talent identification and succession planning need to focus on performance, potential AND behaviours.

TECHNOLOGY ENABLES OPERATIONAL EFFICIENCY AND CULTURAL ALIGNMENT
Technology is a means to an end, not an end-in-itself. It should enable an organisation to improve operational efficiencies and, in the case of human resources, promote the desired culture.

Recruitment, performance management, compensation, talent management, and many other people management processes can be “enabled” by smart software. “Enabled” means made more efficient and designed to deliver the desired behaviours/culture. For this reason, HR leaders need to have an IT strategy. It is an essential lever for driving the efficiency of HR processes and reinforcing or transforming the organisational culture.

BARRIERS TO HAVING AN HR IT STRATEGY
There are number of common reasons why organisations do not have an HR IT roadmap:

  • HR leaders’ reluctance to ask for an IT budget because they think it will be declined;
  • Linked to the above, a perception that the investment will be very expensive;
  • HR leaders taking a piecemeal approach to identifying the needs (this often results in organisations having an expensive and clunky patchwork of software for different processes); and
  • Concern that new IT will result in significant change management that neither HR nor the line have the time to manage.

OVERCOMING THE BARRIERS
Organisations that have an HR IT roadmap overcome these barriers. Their HR leaders have typically addressed the following points:

  • Articulated the business case – in words and numbers – for investing in HR technology. Such a business case highlights the existing deficiencies such as inefficiency, quality and control issues, and places a monetary value on them;
  • Taken a holistic approach to the organisation’s HR software needs, focusing on the overall user experience (for employees, managers and HR) and the total cost of ownership (“TCO” in IT speak) of different solutions;
  • Made the link between HR software and culture, and how the new HR IT investments will enable or reinforce the organisation’s desired culture; and
  • Demonstrated that change can be managed responsibly, is needed and is healthy.

GETTING STARTED
If you are an HR leader without an HR IT strategy, I would encourage you to develop one. Getting started is not easy and the current macro-economic environment may make it daunting to ask the CEO or the Board for investment in HR software. On the other hand, a strategy can be implemented over a number of years if needed and a well-constructed business plan should demonstrate that the return on investment (ROI) is relatively short. The financial investment may also be less than you expect.

PeopleWeek works with organisations to help develop such business cases and implementation roadmaps that are aligned with their operational and financial realities. Other HR software providers may do likewise. Exploratory conversations are free and may help you take the first steps in developing an HR IT strategy.

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Can HR software be designed to minimise its environmental footprint?

When I think about the impact of technology on the environment, the first thing that comes to mind is the energy used to power and cool data centres. It is in these data centres – usually sprawling, high security buildings that and are full of servers, cabling, and racks – that software code and customer data is stored. If software companies have a fall-back data centre and regularly back-up customer data, the consumption of hardware resources is even higher. These are realities that we accept, a bit like the fact that very few people switch off their electrical devices at home rather than leaving them in standby mode (although we know this consumes – in fact, wastes – electricity).

A few years ago, the PeopleWeek management team asked itself what PeopleWeek could do to limit our impact on the environment. We already hosted our data in a world-class, energy efficient data centre. What else could we do? We rarely travel as most client meetings and are by video conference. It is also rare that team members travel for meetings. The offices are paperless. We don’t use disposable plastic in the office. In short, our environmental footprint was relatively low and as a start-up we did not even have many customers and their data to host. However, we knew that overtime we would acquire a lot of customers and their precious data.

MINIMISING DATA STORAGE BUT NOT THE USER EXPERIENCE
With this in mind, PeopleWeek decided in 2020 that all modules and new features would be designed to prevent unnecessary data storage by our clients – and consumption of CPU and RAM. This philosophy was first put into practice with the design of our Recruitment Module. We decided that it would only be possible for candidates to upload 1 document with their job application, i.e. their CV. The system would allow applicants to write a cover/motivation letter directly into the UI (if the customer wants this feature) but they would not be able to upload a cover letter, educational certificates, employment references, samples of work, etc.

We received a mixed reaction. Most organisations said that they do not need the supporting documents until they make a final hiring decision or have identified their top 2-3 candidates. At that stage, they might look at supporting documents, though they would probably only need them as part of the onboarding process (using PeopleWeek’s Onboarding Module). Other organisations were very surprised that applicants could not submit as many documents as they like. “This is not how we are used to working” was the typical response.

When I asked the less-than-enthusiastic organisations how many of the applicants’ supporting documents they typically reviewed prior to making a hiring decision (as opposed to as part of the onboarding process), they all said it was rare unless they received only a few job applications. This made me wonder why their initial response to this aspect of the design of PeopleWeek’s Recruitment Module was not to their liking. There are a few themes:

  • Discomfort amongst HR professionals to adjust to a new way of working;
  • Nervousness about the reaction of some hiring managers (personally, I could not imagine many hiring managers spending time on reviewing supporting documents); and
  • Concern that applicants may feel deprived of an opportunity to submit more information about themselves.

However, the primary reason for the initial objection was that they had not really thought about the data consumption, and the environmental impact, associated with giving applicants the option to upload multiple documents. Once I pointed out to them that if 100 people applied for a job and they each submitted on average 15 pages, it would add up to 1,500 pages. If the applications are held on record for 24 months – before being anonymised and all attachments deleted – that constitutes a significant amount of data. What’s more, PeopleWeek performs a daily back up of client data, meaning you have to double the data storage. Now imagine the organisation has 30 job vacancies per year, that adds up to 45,000 pages. And 100 job vacancies is 150,000 pages or 300,000 once backed-up. Now imagine a software provider like PeopleWeek has hundreds or thousands of customers (as we hope to have one day), that constitutes a heck of a lot of data storage. This may be fine if hosting all those documents adds operational value but, as I have seen in my conversations with HR professionals, they rarely even read them apart from for the candidates that are selected for hiring.

CAN THIS PRINCIPLE APPLY TO OTHER DESIGN FEATURES IN AN HR SOFTWARE?
A recruitment module is just one example of how environmentally conscious design can minimise the environmental impact of software. The principle can be applied to other features of an HR software. Here are a few simple ideas that PeopleWeek has implemented or is in the process of implementing:

  • Applying a cap to the size of attachments that can be uploaded;
  • Applying a cap to and compressing photos that can be uploaded (PeopleWeek is photo heavy as we are also a collaboration platform for sharing news and creating events);
  • Building a core set of reports for all clients for each module so that they do not have the need to create tens or hundreds of reports that are auto-generated but nobody actually reviews them;
  • Replacing an updated payslip rather than adding it;
  • Placing a cap on the number of applicants when a job is posted, at which point the vacancy is automatically unpublished (but can be re-published later if needed);
  • Anonymising job applications, which also necessitates the permanent deletion of any uploaded documents (this is also a required feature for sound data privacy practices); and
  • Transferring onboarding documents from the Onboarding Module into the new hire’s Employee Profile, thereby only storing them in one location.

LEADING BY EXAMPLE
At PeopleWeek we believe that we need to show leadership on this topic, even if some organisations ultimately decide that they will not purchase our software because, for example, they want applicants to be able to upload 3 or 4 documents or as many pages as they like. Of course, we need to bring our clients with us on the journey and we can only do this if the user experience is a positive one despite certain environmentally minded features. However, we also need to invest time to help raise awareness amongst potential clients and existing clients. In our experience, perhaps after some reflection, organisations typically understand PeopleWeek’s philosophy and embrace it. They also soon realise that it involves only minor changes to existing ways of working, the overall user experience is positive and business operations are unaffected.

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HR Software: Ready-made or Tailor-made?

Selecting the right HR software platform is challenging. Firstly, organisations need to make the strategic decision on whether to purchase

Selecting the right HR software platform is challenging. Firstly, organisations need to make the strategic decision on whether to purchase a “one-stop-shop” solution, a variety of stand-alone solutions for different activities, or a core HCM system with integrations to specialist software (e.g. recruitment, learning, talent, etc). The trend for organisations of all sizes is to implement one-stop-shop solutions. Secondly, once the strategic decision has been made, there are many HR software solutions to choose from and other important criteria such as IT security, customer support and pricing.

Most HR software is either highly customisable (tailor-made) or off-the-shelf (ready-made). Nonetheless, when selecting or implementing software, companies – small, medium, and large – tend to expect the new solution to deliver content and processes that are identical, or at least very similar, to their existing ways of working. Whilst the importance placed on causing as little internal change as possible is well-intended, the long-term downsides are often overlooked.

More importantly, business and HR leaders need to remember that in an increasingly competitive world your mid- and back-office processes need first and foremost to be efficient in terms of cost, quality, and speed.

In the case of HR processes, they are certainly important in the promotion of an organisation’s culture. However, bespoke processes – that require bespoke software solutions – are very unlikely to be a differentiator in an organisation’s success and culture is primarily shaped by humans, not by technology.

In this article, I will share my thoughts on the following points:

  • Why organisations want to maintain existing processes
  • Why seeking the status quo is not always a good idea
  • Why it is difficult to select an HR platform
  • How technology can help
  • Whether organisations should adapt or customise

WHY ORGANISATIONS WANT TO MAINTAIN EXISTING PROCESSES
There are many reasons why organisations want software to “bend” to their existing ways of working and the main driver is usually minimising change management.

In the case of HR software, the HR department (or at least the HR decision-makers), often have a fear of requiring employees or managers to change their existing processes, for example their company-specific way of managing performance reviews, recruitment, timesheets, or expenses. They may also be reluctant to introduce changes that have a downstream impact on other departments, for example, accounting, finance, and IT.

It is also often the case that HR is one of the least well-resourced departments, with a heavy workload and little capacity to take on additional change management. Unfortunately, many HR teams are also poorly equipped to manage change because they lack the experience and skills, or are perceived as an administrative function, so they have limited ability to influence business leaders and drive change.

WHY SEEKING THE STATUS QUO IS NOT ALWAYS A GOOD IDEA
In our experience, making software decisions with an imperative to maintain existing processes is often flawed for 3 key reasons:

  1. The existing customised processes are often inefficient and/or add little business value. Moreover, there has usually been very little (or maybe no) internal discussion about the efficacy of existing processes or consideration of alternative approaches;
  2. The additional implementation costs associated with building bespoke IT solutions may be disproportionate to the added value they bring; and
  3. Bespoke IT solutions tend to be significantly more expensive to maintain, which results in increased systems overhead costs (internal operating costs or system licence fees).

Of course, if an organisation has a large budget for implementing and running customised HR processes, then points 2 and 3 will be of less concern.

However, the reality is that most organisations operate in cost sensitive environments. Even in good times you need to prepare for difficult times, competition continuously puts pressure on margins and not-for-profit organisations are usually dependent on unpredictable external financing. Current macroeconomic conditions suggest that there will be more pressure on profits in the next few years, e.g. inflation, commodities shortages, supply chain disruptions, and exchange rate volatility. The war in Ukraine is now compounding these challenges.

WHY IT IS DIFFICULT TO SELECT AN HR PLATFORM
PeopleWeek talks to organisations in many sectors, of varying sizes (revenue and employees), and with a presence in many countries. We regularly see HR directors and other decision-makers struggling with the available HR software solutions in the market. There are 2 main reasons for this challenge:

  • The highly customisable solutions are too expensive (and require lengthy implementation times and internal resources); and
  • The off-the-shelf solutions offer limited customisation possibilities and functionality.

These two points are often compounded by a lack of pragmatism about adapting – not completely changing – current ways of working to use existing software solutions.

HOW TECHNOLOGY CAN HELP
Software companies need to accept these realities and offer their clients practical solutions. The answer is not “forcing” clients to work within narrow technology boundaries or charging expensive fees for developing unique solutions that are then, typically, paid for by the first client and re-sold with very high profit margins to other clients. This approach is neither sustainable for the client nor for systems architecture, which becomes overly complex.

PeopleWeek was conceived with the ambition to offer the best of both worlds by being an off-the-shelf solution that also allows a significant amount of customisation. In addition, customisations need to be affordable and the only way this can be done is by building the customisable features into the core system design and making them configurable by the client themselves without any IT skills needed. This is PeopleWeek’s raison d’être.

ADAPT OR CUSTOMISE: WHAT’S THE BOTTOM LINE?
I regularly remind myself of the key drivers of business performance outlined by Ram Charan’s in his best seller “What the CEO Want You to Know”: Cash, Margin, Velocity, Growth, and Customers

Whilst effective HR processes are clearly important for organisations, HR professionals and business leaders must not lose sight of the fact that overly customised approaches are unlikely to make a fundamental difference to overall performance. In addition, organisational culture is driven by people and leadership, not by processes and technology.

As such, and given the additional costs involved in overly customised software solutions, PeopleWeek’s advice is:.

Question the effectiveness of your organisation’s existing processes;

Select software that is easily and sufficiently customisable to meet your organisation’s needs with low or no additional costs;

Customise with a pragmatic mindset, remembering that technology is a means to an end and not an end in itself; and

Unless the customisation will genuinely increase efficiency or you have a lot of money (to waste), do not customise.

These principles make commercial and operational sense, though it may be uncomfortable accepting the need to adapt. On the other hand, “if nothing ever changed there would be no butterflies”.

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Performance Management and Technology: Modern Solutions for Age-Old Challenges

The value-added of performance management has been known for years. Yet, many organisations do not have a performance review process

The value-added of performance management has been known for years. Yet, many organisations do not have a performance review process or struggle to complete it properly. Why is this?

In this short article we cover the following topics:

  • The numerous benefits of performance management
  • Different approaches to performance management
  • Typical challenges
  • The role of technology
  • How we can help

THE NUMEROUS BENEFITS OF PERFORMANCE MANAGEMENT
Conducting performance reviews efficiently can have positive all-around results.

It is well-understood that setting clear expectations for employees and aligning individual priorities with those of the team, department and wider organisation is a basic building block for high performance.

There are other well-recognised benefits of effective employee performance management. For example, it can contribute to employee engagement, a positive work environment, and stronger connections between leadership and employees. Ultimately, all of these things lead to higher organisational performance, such as profitability, customer satisfaction, productivity, etc. This has been well-documented in many studies.

DIFFERENT APPROACHES TO PERFORMANCE MANAGEMENT
As to be expected, organisations have different performance management practices, which is often linked to factors such as company culture, industry-specific norms, historical practices, legal requirements, the type of jobs, etc. For example, there can be significant differences in:

The frequency of performance reviews

  • Performance rating scales (or even no rating scales)
  • Incorporating (or not) 180 or 360-degree feedback
  • Including (or not) employee self-reviews
  • Providing ongoing feedback vs. performing more formal reviews at fixed times (e.g. mid-year and end-of-year)
  • The focus on business / operational objectives and individual development objectives
  • Assessing competencies
  • Asking work environment-related questions
  • Proposing compliance-related questions for organisations in more regulated sectors.

TYPICAL CHALLENGES
Employees, managers and HR professionals alike may recognise some of the following challenges associated with performance management, irrespective of the organisation’s profile (industry, country, maturity, size, etc):

  • Lack of alignment between the organisation’s strategic objectives and those of employees
  • A mismatch between the design of the performance management process and the desired culture of the organisation
  • Complaints from employees and managers that they do not have the time to complete the processes, especially at year-end when they may be asked to review the current year and set objectives and individual development plans for the next year
  • Too much time spent chasing employees and managers to complete each step of the process (e.g. set objectives, write the reviews, and have a 1-on-1 discussion), where HR teams end up becoming an “enforcer”
  • Poor quality of written comments, e.g. non-existent, too vague or too long Lack of consistency on ratings (i.e. performance expectations) between managers
  • Lack of consistency between ratings on individual objectives vs. the overall rating
  • The risk that the process becomes a box-ticking exercise and 1-on-1 conversations either do not happen or are of poor quality
  • Completing each step of the process weeks or months after the original deadline, meaning that it is now out of sync with the organisation’s business performance cycle and even with compensation decisions
  • Enabling the review process in different languages for employees in different countries who may not be comfortable in the organisation’s primary language
  • Remote working / Covid has made some of these challenges even greater (especially 1-on-1 discussions and ongoing feedback).

THE ROLE OF TECHNOLOGY
Technology, i.e. HR software and collaboration tools, can help solve many of these challenges. Here are some examples:

  • Digitalizing the current or desired performance management process, while respecting each organisation’s cultural or historical approach
  • Providing flexibility in attributes to include in the objectives review, the preferred rating scale, and the design of their very own evaluation forms
  • Combining or separating the timing of objectives, individual development and evaluations
  • Making it mandatory to complete the 1-on-1 part of the review process
  • Giving managers the opportunity to schedule the 1-on-1 review with their team members at the same time that they launch the self-evaluation process
  • Displaying the organisation’s strategic objectives in an objective setting User Interface
  • Allowing the option to make it an obligation to write comments and put a cap on the length of comments (limited number of characters)
  • Creating detailed reports for the HR department on completion stats and results
  • Offering complete adaptability on the timing of performance reviews, including within the same organisation
  • Providing organisations and their employees with a multi-language User Interface and forms

HOW WE CAN HELP
As both HR practitioners and technologists, the PeopleWeek team has significant performance management experience and deep insights into market practices. We have used this expertise to develop technology that addresses the practical realities of employees, managers and HR.

Our suite of tools is well-suited to medium-sized and large organisations alike and offers a lot of flexibility in the design of the performance management processes. This enables our clients to have tailored solutions without having to pay customised development costs or high license fees.

There are modern solutions for age-old challenges.

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