The Rise of “Multinational HR”: The Challenges and Essentials for Success

Over the past decade, and with accelerated pace since the Covid pandemic, the term “multinational company” has evolved. Gone are the days when only corporate giants fit this mould. Today, small and medium-sized enterprises (SMEs) are joining the ranks of multinational companies. In this blog, I explain the factors behind this phenomena, the implications for HR, and identify 3 essentials for success.

The Traditional Meaning of a Multinational

The concept of the multinational company emerged during the late 19th and early 20th centuries, driven primarily by the industrial boom and the expansion of global trade routes. Traditionally, these corporations were characterized by extensive operations and large workforces spread across multiple countries, typically managed from central headquarters. Indeed, Human Resources Management emerged in the 20th century to address workforce management complexities, as multinational corporations expanded globally, requiring standardized practices to manage diverse, cross-border teams effectively.

The New, Broader Meaning of a Multinational

In recent years, technological advancements and shifting labour markets have led to a new phenomena of SMEs having employees dispersed across many countries. The relatively small size of these companies in terms of their workforces, revenues, and profiles is new (most of us have never heard of these companies). Another significant difference is that whilst their employees may be based in many countries, this may not be the case for their operations or customers. In essence, the human resources function may be more more multi-national than the company itself. I call this “Multinational HR”.

This phenomenon is one of the reasons why the Employer of Record (EoR) industry has grown so rapidly. The EoR model is a service where a third-party organisation legally employs workers on behalf of a client company, handling payroll, taxes, and compliance. It is forecast to more than double in size globally from 2022 to 2028 to USD $3.4 billion as businesses increasingly seek flexible, global workforce solutions. 

The drivers of Multinational HR

There are a number of drivers for SMEs increasingly hiring internationally, whereas they previously hired only where they had offices. Interestingly, the following drivers are all interconnected:

  1. It is often hard to find the talent needed in local markets so companies have to look further afield;
  2. Many jobs can be done remotely now due to advances in technology, collaboration tools, and cultural acceptance;
  3. Relocating employees is expensive and involves adaptation risks (to the job, company and new country);
  4. Many people do not want to relocate for a new job because they are in a dual income household, meaning their partner will have to find a job;
  5. Tightening immigration rules may pose a mobility barrier, even for skilled candidates; and
  6. More stringent worker classification laws making it difficult and risky to engage contractors long term and full-time.

The challenges of Multinational HR

Managing a multi-country workforce involves many complexities, for example:

  • Diverse employment laws and regulations that must be complied with;
  • Different operational requirements, such as payroll, statutory deductions, internal reporting, and regulatory reporting;
  • Managing processes, documents and communications with government agencies in different languages;
  • Cross-border data protection considerations; and 
  • Managing cultural differences, fostering an organisational identity and teamwork.

Traditional multinationals typically have the resources – both locally and in headquarters – to manage these challenges. This is not the case for SMEs. For example, there may be only 1 or 2 people in an HR department that is managing a workforce of 100 employees in 7 or 8 countries. These HR teams often struggle to convince senior management that it is much more time consuming to manage an internationally dispersed workforce than employees in one or two countries. Even when senior management understand, they may be reluctant to give the HR team the resources (budget) they need to manage the complexity and ensure compliance with local requirements (and I have seen on numerous oocassions that, in the long run, non-compliance is more expensive than doing things properly).

Effective Multinational HR

The EoR model can be very useful short term to help a company rapidly employ talent in a new country. However, for some companies, it may not be sustainable longer term due to the costs, complexity and employment law, e.g., rules about temporary versus permanent employment. As such, small HR teams may find themselves facing the challenge of managing employees in several or many countries. Of course, for other companies the EoR approach may be a good long-term solution.

In my experience, for multinational HR teams to be effective, efficient, and compliant, they need these 3 essentials:

1. HR processes and systems that are both international and inclusive of different national requirements. PeopleWeek’s technology is designed to be one country or multi-country without the need for customised developments.

2. A reliable international payroll provider to ensure that HR’s most important responsibility – paying their employees on time and accurately – is seamless, including payroll accounting, statutory remittences, and audit compliance. PeopleWeek has built international payroll solutions and a partnership with Phileas80 B.V. to address this critical topic. Some organisations attempt to manage multi-country payroll in-house or using a local vendor in each country. I have never seen this be both efficient and compliant.

3. The bandwidth to work on organisational culture, employee engagement and performance initiatives. If 1 and 2 are in place, 3 should be achievable.

Here to Stay

Multinational HR is a reality and is here to stay. Companies that embrace this business model, which has many benefits, must provide HR with the tools they need to make it a success. The return on investment will be net positive. Reach out to PeopleWeek if you would like to learn more about how we can help you navigate the complexities of managing an international workforce so you are confident, effective, and compliant.

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The Cost of Unnecessary Organisational Complexity: It’s Time to Simplify

During my HR career, and now as an HR software provider with regular insights into how diverse companies operate, I often see mind-boggling levels of unnecessary organisational complexity. I wonder how these companies ended up with such complex practices and the potential cost savings of simplification (not to mention other benefits such as employee job satisfaction and innovation).

While some organisational complexities are necessary – e.g., unavoidable due to the nature of the workforce, legal requirements, or the regulatory landscape – many others are unnecessary. In this article I explore the impact of unnecessary organisational complexity, which reduces productivity and increases business operating costs.

I will share some practical examples of necessary and unnecessary complexity, the negative impacts of the latter, why top management need to proactively eliminate it, and how technology can help improve efficiency but is not a panacea.

Necessary Organisational Complexity

Organisational complexity is often an unavoidable aspect of business operations. Several factors contribute to this, for example:

  1. Organisations with a diverse range of jobs undoubtedly have to manage a greater level of complexity. Different types of job may require different processes for different groups of employees within the same organisation, for example recording working time, managing performance, recruitment, training, and health and safety.
  2. Organisations with operations in different sectors and countries will be subject to different laws, regulations, and market norms. Their processes and systems must be able to manage this complexity, for example managing employee absences, compensation, benefits, and statutory reporting.
  3. Many organisations have a significant employee population with no work IT access. This means that many core processes have to be designed to be done with and without computer access.
  4. Historically some sectors have had high levels of employee absenteeism and attrition. This results in a workforce that is very challenging to manage and HR departments often struggle to keep up with the volume of administrative tasks.
  5. Some countries, sectors, and companies more than others are subject to onerous legal and regulatory requirements. This is not a criticism of regulation. It is simply an observation that managing such requirements is usually complex.

Unnecessary Organisational Complexity

While some complexity is inherent, many organisations suffer from self-imposed complexity. Here are some examples that I regularly see in a variety of organisations:

  1. Decision-making processes where too many people are involved in a workflow. I recall an organisation asking PeopleWeek to build a workflow where 5 people must approve a job vacancy (one after the other) before it can be published.
  2. Lack of empowerment of employees resulting in the concentration of administrative tasks with managers or support functions. Examples that come to mind are HR managing employees’ absence requests, accounting submitting employees’ expense claims, and managers writing performance objectives for their team members rather than employees taking the lead.
  3. Lack of empowerment of managers is a similar problem and can result in a culture where managers do not take ownership (as they are not expected to). This creates complexity because workflows have to skip managers or include additional people to check that the manager has made the “right decision”, e.g., HR, Finance, or a more senior manager double approving timesheets, home-working requests, expenses, and even annual performance reviews.
  4. Employees having multiple reporting lines and it being unclear what each manager is responsible for. This can be challenging for the employee, doubles the managerial effort, and makes workflows in IT systems heavy to build and maintain.
  5. Heavy performance management forms and processes that require too much employee and manager time to complete and leave little time for the employee and manager to have a meaningful conversation (“dialogue”). HR also take on the role of the police to ensure completion deadlines are respected (which is rare in most organisations).
  6. A mix or design of employee benefits that may be very attractive to employees but is very challenging to administer and consumes a disproportionate amount of time. An example is employee share participation schemes that are so complex they are barely manageable, even with a customised software solution.

The Cost of Unnecessary Complexities

The cost of unnecessary complexity is high, including:

  • Inefficiencies leading to lost productivity and time wastage.
  • Low employee job satisfaction as there are too many menial tasks, decision-making is slow, and there is not enough time to work on higher value-added activities.
  • Low technology transformation as processes have to be managed manually (Excel and other “home-made” tools) or in many different IT systems, which is expensive, risky, and not a good employee experience.
  • IT systems need a high degree of customisation to be able to handle the complexity, which is expensive and renders the systems more difficult to maintain.
  • Bureaucratic organisational cultures that are slow moving and poor innovators.

It’s clear that an organisation exhibiting these characteristics may struggle to attract talented late Millennials and Gen Zs, who generally seek work environments that are dynamic, tech-enabled, and innovative.

The Role of Top Management

Top management, starting with the CEO, should actively identify and eliminate unnecessary complexity. While this task may not seem as glamorous or exciting as product design, marketing, or sales, it deserves equal attention. Just as management would never accept an unnecessary 10% discount on the selling price of a product or service, they should not tolerate a 10% reduction in productivity due to unnecessary organisational complexity. Prioritizing simplification can lead to significant improvements in efficiency and overall business performance.

The role of Technology

Well-designed technology offers a fantastic opportunity to automate organisational activities and streamline processes, significantly reducing complexity. However, if an organisation is unnecessarily complex, its IT solutions will mirror that complexity, making the implementation of new technologies and user adoption more difficult and costly. This could ultimately lead to failure.

By taking a proactive approach, organisations can align their processes and culture for success, leveraging technology as a powerful tool to enhance efficiency. Addressing unnecessary complexity unlocks significant benefits, including freeing up valuable resources, boosting employee satisfaction, and fostering innovation. Focusing on simplicity positions organisations for long-term success in a fast evolving world. As such, reducing organisational complexity is not just beneficial; it’s a strategic imperative.

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AI-enabled HR: Unlocking the potential with employee buy-in

Artificial Intelligence is the “flavour of the day”. We are subjected to predictions about its future impact – negative and positive – on all aspects of life. Organisations use AI-washing to Artificially Inflate (a different type of “AI”) their share price or attractiveness to investors. The world has gone a little AI crazy.

For these reasons, I have been reluctant to write about AI over the past few months. Nonetheless, like many of you, I do reflect about the future AI-enabled world. For example, I think about how PeopleWeek could or should build AI capabilities into our technology, and about how people management practices might evolve using AI. On the other hand, I am brought quickly back down to earth when I think about how many medium- and large-sized organisations do not even provide their employees, managers, and HR with basic HR technology, never mind AI.

In this article I consider the application of AI in human resources – as distinct from the deployment of AI tools in an employee’s own role – in terms of its potential impact on the HR function and on employees. I contend that while AI can offer many benefits for HR, employees will approach its adoption with scepticism, only embracing AI tools in HR if they enhance their overall work experience.

Benefits for the HR Function

The area of HR that has seen the most usage of AI (and Machine Learning) up till now is recruitment. Advocates of AI-powered recruitment tools argue that it drives more accurate and objective screening and selection, as well as a faster and more engaging candidate experience. Critics point out the potential data privacy risks and express concern about the possibility of an AI system being trained on past recruitment data, which may unintentionally perpetuate biases, leading to unjust and discriminatory results for specific applicant demographics.

However, there are many other potential uses of AI that would make the job of HR teams more efficient and enjoyable. Here are three examples with varying degrees of complexity:

Low Complexity

Job descriptions are a foundational tool for so many HR activities, including recruitment, performance management, workforce planning, compensation benchmarking, career planning, and talent management. Yet, in my experience, most employees do not have an up to date job description because it is too time consuming for HR and managers to do it properly. With only a little bit of basic information, a tool like Chat GPT can quickly write a job description that may be a ~70% match and can then be personalised and finalised with relatively little effort.

Medium Complexity

Job and compensation benchmarking requires very large data sets. In particular, the task of matching like-for-like jobs across relevant geographies and industries is painful. I used to dread the annual process of preparing the data with the survey vendors. Sadly, at least double the amount of time was spent on data preparation than data analysis of the results to make informed decisions. AI could surely take a lot of the pain out of this important activity and free up HR time for analysis and informed recommendations.

High Complexity

AI could drive Predictive HR. Today, HR tends to be reactive rather than predictive. For example, HR intervenes because there is a vacancy, a performance issue, a behavioural issue, a resignation, etc. With the right data set and algoriths, AI could help organisations to identify patterns that lead to the need for reactive HR interventions, and thereby mitigate them or avoid them altogether. For example, imagine if HR had access to data that indicates a certain employee – and a highly valued one at that – is susceptible to a near-term burn out. This “prediction” could be derived from analyzing the employee’s data alongside a comprehensive historical dataset encompassing individuals – both internal and external to the organization – who have previously experienced burnout. Factors considered may include age, gender, family situation, marital status, income level, post code, performance evaluations, vacation patterns, and absenteeism.

Benefits for Employees

The benefits of AI for HR would also indirectly benefit employees. Nonetheless, I doubt that any of the examples above would particularly interest them and predictive HR may raise concerns about the use of personal data even if it could prevent the talented employee having a burn out.

We know that some industries are already shedding jobs due to AI-powered productivy gains. This is very rarely the result of an entire job having been replaced by AI but, rather, some parts of many jobs having been replaced by AI and this, in turn, meaning that collectively less humans are needed. This trend is an important factor in the record share prices of the “Magnificent Seven” technology giants: they have been able to significantly increase revenues whilst reducing costs thanks to AI-driven productivity increases and resultant workforce reductions.

As such, the starting point for many employees is that AI is a threat to their job security, earning power, and personal data. For this reason, organisations will have quite a challenge selling the virtues of using AI in HR. Using AI to automate administrative people management tasks could also alienate employees by making HR less human or personal. For example, whilst ChatGPT could help managers to prepare an employee’s job description or a reference letter, an employee would surely be upset if the AI generated output was a lazy, generic job description or reference letter that did not acurately reflect their responsibilities and achievments.

Organisations need to think about uses of AI within HR that will make the quality of working life better for employees, as opposed to implementing tools that will make them less relevant and job secure. Here are some examples of how AI within HR could benefit employees:

• Job Fit – The precise and thoughtful use of AI in recruitment can help organisations and job seekers (and internal candidates) to find the right match of role and organisation to person. This would increase job satisfaction and, therefore, both productivity and retention.

• Process and Product Improvements – AI can be used to perform organisational analysis designed to identify trends in customer and employee complaints and pain points. This could help to drive improvements in processes, product design, and systems that would make work more enjoyable and rewarding. This type of analysis would require the processing and cross-referencing of a large data sets, for example from emails, ticketing systems, performance reviews, customer surveys, etc.

• Information Management – In many medium- and large-sized organisations, employees spend excessive time trying to find the information they need on the corporate intranet, SharePoint, Slack channel, etc. The use of an AI chatbot can help employees to find answers to questions far more quickly, for example information on company policies, procedures, training material, etc.

• Well-being – Tools exists today to help proactively identify stress or tension amongst employees by analyzing their voices during video meetings. This software is integrated into the company’s meeting app and performs the analyses using machine learning algorithms.

Conclusion

There is a lot of potential for the use of AI within HR and this goes well beyond recruitment. It offers the prospect of HR departments becoming more efficient, thereby freeing up time to focus on higher value-added tasks. It also raises the exciting possibility of Predictive HR, though this will raise concerns about the use of personal data. Despite this great potential, which must be embraced by HR rather than resisted, I see two major challenges. The first is that organisations need to be willing to invest more money in HR technology, be it in AI or HR software in general. HR departments in most organisations still struggle to secure the fair share of the IT budget despite CEOs declaring that people are their greatest asset (“blah, blah, blah”). Secondly, organisations – led by HR – will need to demonstrate to employees that AI used within HR will improve their quality of life: not all workplace AI threatens job security, earning power, and data privacy.

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Could Standalone Applicant Tracking Systems Become Obsolete?

Throughout my HR career I often wondered why my colleagues and I were using a standalone, specialist recruitment software (commonly referred to as an “Applicant Tracking System”) rather than a recruitment module within our HRIS. It did not make sense to me for many reasons, including the efficiency of the end-to-end process if an applicant ended up being hired, and the high cost in terms of running two systems and potentially an integration between them.

In this article I will explain why it does not make sense to use a standalone ATS if you can manage the recruitment process just as well in an HRIS.

WHAT TYPE OF FUNCTIONALITY DOES A MATURE ATS OFFER?

A mature ATS enables an organisation to manage all steps of the recruitment process in the platform. Here are some examples of the functionality needed by most organisations:

  • Create a job vacancy using a database of job descriptions
  • Job vacancy approval workflows that include relevant information for budgeting
  • Posting jobs on their careers page and on external websites
  • Advertising the same vacancy in different locations
  • A quick and easy process for candidates to apply to vacancies
  • A way to manage spontaneous job applications
  • Ability to assign an existing job application to a different job opening
  • Ability to invite an applicant in the database to a new job opening
  • Customisable folders / categories for managing the job application workflow
  • CV filtering tools
  • CV database management
  • Interview questionnaires
  • Ability to identify job applications originating from an employee referral
  • Bulk downloading of CVs
  • Email templates and bulk email management
  • Capturing interview feedback and ratings
  • Assigning applicants to talent pools
  • Calendar management for scheduling interview slots
  • Automated notifications at different steps of the process
  • Onboarding tools for converting a candidate into an employee
  • Data protection compliance in all jurisdictions.

IF THE ATS OFFERS SUCH A COMPLETE SET OF FUNCTIONALITIES, WHY DOES IT MATTER IF IT IS A STANDALONE SOLUTION?

There are several disadvantages of a standalone ATS versus an ATS built into an HRIS. Here are the 5 main ones:

  1. Dual data entry: Unless the ATS is integrated with the HRIS, the organisational data in the ATS must be kept up to date manually, i.e., dual data entry. Examples are the lists of employing entities, departments, cost centres, recruitment managers, managers, email addresses, job descriptions, etc.
  2. Integrations: The best way to avoid the inefficiencies associated with point 1 is to build an integration between the ATS and the HRIS. However, this is expensive to implement, the integration must be maintained, and the integration may not offer a real-time synchronisation of data. Integrations also break occasionally and need to be fixed.
  3. Onboarding: Once a preferred candidate has been selected and accepted the offer, they need to be onboarded into the HRIS. Whilst an integration between the ATS and HRIS may help with certain aspects, it is very unlikely that the ATS will enable you to manage all steps of the onboarding process, e.g., transfer documents and signed forms into the new hire’s employee profile, share information with the IT department, complete any compliance processes, etc.
  4. Costs: Implementing and running both an ATS and an HRIS is likely to be more expensive than managing the entire employee lifecycle (including recruitment) in one system.
  5. Data protection: Storing employee data and job applicant data in the same platform means that you only have to manage the security of one system.

In my opinion, these downsides of a standalone ATS are so significant that even if an HRIS is only able to offer 80% of the functionalities of a standalone ATS it may be worth making compromises. And we should never forget that the most important user experience in the recruitment process is not that of HR or the hiring manager, but of the applicant (I would be hesitant to make compromises in this regard).

SO WHY DON’T ALL ORGANISATIONS MANAGE RECRUITMENT IN AN HRIS?

The primary reason is that most HRISs do not offer the functionality required. In other words, an ATS typically offers much more complete and powerful functionality. As such, HR departments may have little choice but to use the HRIS for all processes apart from recruitment (this is also often also the case for training or Learning Management Systems).

ISN’T AN ATS TOO EXPENSIVE FOR MANY ORGANISATIONS?

The price of an ATS varies but it is true that they may be prohibitively expensive or not represent good value for money for some small and medium-sized organisations. This may either be because they do not have the budget or because their recruitment volumes are too low to justify the investment.

AT RISK OF BECOMING OBSOLETE?

From the point of view of an HR and technology professional, in the year 2024 there should be no technological rationale for the continued dependence on the standalone ATS. An HRIS should be able to offer recruitment functionality that is equivalent to that offered by a mature ATS. While 2023 has seen a widespread fascination with the possibilities of artificial intelligence, paradoxically, most organisations do not even have an HRIS with an in-built ATS, which is clearly a lot more basic than deploying AI. (Incidentally, certain ATS solutions leverage AI, especially in assessing applicants for potential suitability, but this practice is not without its share of controversy).

At PeopleWeek, we’ve developed a solution. We now offer clients the option of a comprehensive ATS called the “Recruitment Plus” module, or a streamlined version called the “Recruitment” module. Both modules are available at a significantly lower cost than a standalone ATS and offer the advantages of being part of a “one stop shop” solution covering the entire employee lifecycle.

PeopleWeek hopes that our all-in-one approach to HR and recruitment software may inspire other HRIS solutions. As this approach becomes commonplace, it could result in the traditional ATS becoming obsolete.

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The Strengthening Of Data Protection And Cyber Security Regulations: What Does It Mean For HR?

The regulatory regime for data protection and cyber security is fast evolving. The bar is being raised and it is hard to keep up with the new regulations, both local and international.

In this article we look at the effect this has on how organisations manage their employee data, where the most common risks lie, and some PRACTICAL suggestions on how organisations can improve their overall data protection posture.

HOW FAST IS THE REGULATORY ENVIRONMENT EVOLVING?

Very fast and the changes are only moving in one direction, namely more stringent requirements, improved enforcement mechanisms, and tougher financial and criminal penalties.

Here are just a few examples:

  • The European Union’s NIS2 directive (Network Information Security 2), with a national adoption deadline of 17th October 2023 for all EU member states, impacts critical sectors like energy, transportation, and healthcare. It mandates stricter cybersecurity measures for these industries, improved incident reporting, and greater cross-border collaboration to bolster the resilience of Europe’s digital infrastructure against cyber threats.
  • Switzerland’s new Federal Act on Data Protection (nFADP), which came into force on 1st September 2023, heighten employer obligations, demanding stricter data handling, consent, and transparency to safeguard employee privacy.
  • South Korea’s amendment to the Personal Information Protection Act (PIPA) expands data protection obligations for employers, requiring stricter consent and security measures. It strengthens individuals’ privacy rights and imposes harsher penalties for non-compliance, prompting employers to enhance their data handling practices to safeguard employee information.
  • Changes to the California Privacy Rights Act (CPRA), effective January 1, 2023, introduced enhanced data protection requirements on employers. It grants employees more control over their personal data, requiring transparency in data handling, and imposes stricter regulations on businesses.

WHAT DOES THIS MEAN FOR HR?

HR handles some of the most sensitive data within an organisation, including employees’ personal data, family data, health data (e.g. medical certificates), compensation data, bank account details, tax data, etc. Historically HR teams have relied on their IT departments to keep this data secure within the organisation’s IT environment. HR then simply needs to follow common sense day-to-day working practices to avoid personal data being seen by the wrong person, e.g. save sensitive documents on a secure drive, don’t leave documents lying around the office, and be very careful to enter the right email address when emailing a document.

In today’s world, this is far from an adequate approach. HR teams need to go much further to ensure that employee data is secure and that they can demonstrate that this is the case.

WHAT ARE THE MOST COMMON RISKS?

There are five main risk areas:

  1. Storage of employee data
  2. Access to employee data
  3. Supply chain management (of outsourced activities)
  4. Transmission of data
  5. Job applicants

Let’s look briefly at each risk and what a robust approach looks like.

Storage of employee data

Employee data should be stored in systems that are following industry best security practices and are therefore more resilient to data-breaches and data-leaks. For example, software that stores employee data should be designed to be secure (e.g. meets OWASP’s architectural standards), the hardware that supports the systems should be secure, and independent penetration testing should performed regularly. The systems storing the employee data should be reliable, durable, regularly backed up and have fall-back procedures in case of disasters.

Access to employee data

Access to employee data should be limited to individuals that need that data to perform their job or the service being provided. This means there needs to be role-based access to employee data and the configuration of systems must enforce that the access cannot be compromised. Two factor or multi-factor authentication should be used for accessing systems that store employee data. 

Supply chain management

Most organisations externalise some aspects of their people management, for example payroll, work permits, pre-employment background checks, and benefits administration. Organisations need to select vendors that have robust data protection and IT security practices and effective people management practices (including training of their own employees). It is also important to ensure that end-to-end processes are secure, such as who has access to personal data and how it is transferred for processing.

Transmission of data

Employee data needs to be shared – both internally and externally – using secure platforms. Sending personal data by email and in Excel files is very risky. It is easy to type in the wrong email address. Emails can be easily forwarded to a person that should not see the data. Password protected files are very easy to crack. Such files often end up being saved on a person’s personal drive on their laptop. The information is then often less secure and very difficult to control (e.g. to permanently delete or anonymise).

Job applicants

Job applicants should consent to their data being processed and stored. In many countries job applicants also have the legal right to request the organisation that has their job application to delete and anonymise all personal data stored on them or any combination of data that would make them identifiable. They may also be entitled to request the organisation to make changes to their personal data in an old job application. As such recruitment systems need to be able to manage these requirements.

HOW CAN WE ASSESS WHETHER OUR ORGANISATION IN COMPLIANT WITH DATA PROTECTION AND CYBER SECURITY REGULATIONS?

Whilst the requirements vary by jurisdiction, in most developed markets there are many commonalities and there has been a lot of international alignment of the rules over the past 5 – 10 years.

If you are unable to answer “yes” to these 4 questions, you are unlikely to be fully compliant with the data protection and cyber security requirements in many countries:

  1. Is employee data stored exclusively in a cyber secure HR system or systems that are backed-up at least weekly, are accessed via a dual authentication mechanism, have role-based access, and are penetration tested at least annually?
  2. Are all exchanges of personal data with third-party vendors managed via a secure platform rather than by email?
  3. Is your payroll managed without any exchanges of employee personal data or remuneration data (internally or externally) by email or Excel?
  4. Are you able to permanently delete, or anonymise, and change job applicants’ personal data?

AN OPPORTUNITY FOR HR DEPARTMENTS

PeopleWeek often talks to HR directors that continuously struggle to have the required budget to implement the systems they need to manage and develop their people, as well as help their HR teams to work more efficiently. Whilst most CEO’s talk the talk saying that “people are their greatest asset”, all too often this does not extend to investing money on systems for employees and managers. However, you can be pretty sure that when the HR director highlights that their current processes – and the systems that underpin them – are not compliant with data protection requirements, the CEO and CFO have a different sense of urgency. It is a shame when this card needs to be played but it is perfectly legitimate when, indeed, the organisation is non-compliant with the legal requirements.

PeopleWeek is very happy to talk to you if you have questions on this topic. You may also like to complete our HR Systems Maturity Survey here.

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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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