Once your stakeholders rank their requirements for a new HR technology, how do you find the products with the features that will deliver on those requirements? And how can you scrutinize vendor spec sheets and demos to compare products in enough detail to make the right choice?
Feature and function lists aren't much help because most products are mature and do the same things, said Brian Sommer, president of the TechVentive consultancy. "The issue is which products do a killer job of solving your most complicated, messed-up functions or process pain points."
Rather than looking for products that automate your existing processes, Sommer advised taking the time to investigate what’s possible with the new technologies on the market, reimagine your HR or talent management processes, then pick a vendor you believe can close the gap between idea and reality.
To do that, companies have to shift from viewing technology through the HR department lens to recognizing that any new system must serve the needs of all employees, according to Katherine Jones, an independent HR technology consultant.
"It's very hard to have them think about articulating in an RFP what they could do as opposed to what they did do," Jones said. "That's one of the things I think we really should spend time on with HR: Looking at how to move beyond yesterday."
RFI vs. RFP: Do you need both?
Sommer recommended against sending an overly detailed request for information (RFI) before the RFP.
"If you do an RFI, it's got to be something that's straightforward and easy for the vendor to complete," he said. Otherwise they might not want to bother with the deal, he added.
The aim of an RFI is to get a general idea of the breadth and depth of a software suite and whether it meets basic criteria, such as operating in the same countries as your organization. And its real value comes from other information submitted by the vendor, such as price lists, standard contracts and the names of implementation partners.
"You're trying to capture some high-level information about the totality of the deal," Sommer said. "The whole point of it is to figure out who's going to get knocked off the long list and who's sticking around."
He said the RFP should have a matrix with checkboxes for the vendor to indicate whether a feature is in the current version, on the roadmap for an upcoming version, is available through customization tools included with the platform, or is unlikely ever to be in the product.
Detailed use cases make demos meaningful
Demos are usually the best way to see how capable a module or feature is, but to really judge whether a product fits, you need the vendor to build the demos around actual use cases from your organization.
"The first thing we tell our clients is not to let the vendor run the show," said Jeremy Ames, CEO of Hive Tech HR. "Make sure that you're not letting them just do their typical dog and pony show that they might do for any company."
Fully scripted demos are the best way to tell if a product delivers what you need. Say an organization wants to investigate how well the module for onboarding new employees integrates with the learning management system (LMS). A script designed to show the exact steps from when an employee fills out forms on their first day to transitioning into online training can reveal if a vendor has a serious offering, Ames said. He recommended applying a weighting scheme to features and functions to ensure that the most important ones get enough attention.
HR technology research analyst Stacey Harris advises clients to come up with 10 use cases for the most critical things their companies do. The use cases should specify the "personas" who touch a given business process, as well as its data flows and outcomes, said Harris, vice president of research and analytics at Sierra-Cedar, a consultancy that for 22 years has surveyed companies about their HR technology purchases.
Ben Eubanks, principal analyst at Lighthouse Research & Advisory, said it's a good idea to include people outside the company in your persona group, such as job candidates just starting the recruiting process. "Take someone that does not know your company, have them sit down and go and apply for a job. Just watch -- over their shoulder -- what they do and see if they can figure out how to do it." Counting the number of clicks and tracking the time will give an idea of the user-friendliness of the process.
Eubanks advised mapping out the year to ensure that you include demo scripts for make-or-break processes, such as health insurance open enrollment. "Make sure you incorporate those other perspectives and personas as you're building out the scripts," he said, and after the demos, keep the most accurate picture possible of how well each vendor addressed the steps specified in the scripts.
A deep dive into HR tech features and functions
HR software vendors responding to an RFP will usually claim to handle most of your requirements, making it hard to choose among vendors. Experts identified features that help separate contenders from pretenders, make the most difference in improving HR processes or provide leading-edge capabilities.
For many companies, especially SMBs, the initial reason to buy a human resource management system (HRMS) is to digitize paper records. Electronic employee records remain the foundation of HR technology.
One big differentiator, according to Sommer, is the presence of a payroll module. Many HRMSes don't have one. The next question to ask is about the type of integration with third-party payroll providers. Even an HRMS that handles payroll might need to outsource part of this function to pay overseas employees, for example.
Sommer said to also make sure core HR systems can fully handle contingent workers, such as freelancers and contractors, including providing accurate headcounts without needing separate software, and giving them security IDs and other tools full-time employees receive.
Close integration with the ERP finance module is essential, according to Jones. "If you can't figure out the cost structure behind the stuff that you're doing for talent management -- in the program where you're doing it -- that's just dumb," she said. Financial integration allows analysis about questions such as whether to hire two part-timers or one full-timer for a certain job, or the most cost-effective way to get work done around the clock with a global workforce.
Managing standard benefits such as health, dental, life and disability insurance, 401(k) retirement plans, tuition reimbursement and tax-advantaged flexible spending accounts is a long-standing function of core HR. In recent years, many companies have begun to move these functions off premises to SaaS providers. New health insurance platforms and wellness portals take healthcare beyond these basics to provide online access to fitness communities, medical advice and providers.
Organizations striving for recognition as best places to work have added trendy benefits such as pet insurance and identity theft protection. But such specialization increases the risk that a product won't handle all your needs, according to Sommer.
"Anything somebody has implemented that's novel or nonstandard or unique to that company -- those are the benefits they need to document to see if the vendor's benefit administration system can actually handle it," he said.
If you're eyeing a separate health and wellness platform, Sommer said to make sure it integrates with financials so you can more easily manage the tax and compliance implications of health benefits.
When buying benefits technology, most of your focus will be on partnerships with benefit providers rather than the software for administering them, according to Harris. "I rarely will make a benefit selection decision just based off of user experience, as I might have done with talent management or core HRMS," Harris said.
The issue then becomes whether a provider's software integrates with your company's HRMS. "There's a real power in the relationship between the [benefits] package I want to create or the [provider] I want to work with and the assets or the software that it's connected with," she said.
Verify that a vendor supports your company's full menu of benefits. Also look for tools for tailoring the system to handle the complex workflows needed to administer your company's specific rules and policies, such as the ability to recover tuition funds or allow employees to share vacation time.
HR departments are responsible for keeping an organization in compliance with the many regulations affecting employment, from fair labor practices to anti-discrimination laws and workplace safety. That's why it's important for core HRMS to have a breadth of tools for not only monitoring practices that can have legal implications, but preparing all the paperwork required by local, state and national governments.
"Compliance is a binary thing," Sommer said. "You either provide all the regulatory compliance requirements in a given location or you don't."
Check if vendors support the following:
- every type of documentation, including all forms, tables and exhibits your organization is required to file
- AI, analytics and other mechanisms for ensuring that talent management modules don't run afoul of discrimination laws by allowing sexism and other illegal biases
- employee records storage that follows privacy laws, such as the strict regulations of the European Union, especially for SaaS HR vendors who use public cloud services from other providers
Employee self-service (ESS)
Enabling employees to change their personal information, benefit elections and beneficiaries instead of asking HR to do it can save time and money. Vendors have worked to make these ESS features available on employees' personal devices, but there are limits. "Trying to switch shifts with somebody may be impossible to do on a smartphone because there's just not enough screen real estate to get the whole picture," Sommer said.
Service delivery in general is a growth area in HR tech, according to Harris, with vendors adding help desks, chatbots and feedback tools. The platforms can be challenging to set up in-house, integrate with HR systems and populate with enough data and documentation, which often makes them a better fit for large companies than for SMBs. Training chatbots for the particular needs and culture of an organization is another challenge.
- smartphone access to most self-service functions
- support for other devices, including shop-floor tablets, break-room computers and point of sale systems, if the workforce is mostly employees who lack smartphones and home computers and need other ways to access ESS
Manager self-service (MSS)
Managers need self-service features that go beyond ESS by providing access to the HR and business functions, applications and data they need to perform their supervisory roles.
- remote access to the full range of applications, with the same level of security and privacy as in-house systems
- department-wide visibility into work schedules, to help with vacation approvals and other changes
A payroll module or third-party service should have the following:
- support for every country where the company does business, regardless of whether it does so through a variety of payroll providers
- the ability to create and file the appropriate tax documents and other compliance requirements
- integration with the core financials, typically in ERP, to ensure accounting records reflect the latest payroll
Employee engagement and recognition
Employee engagement has been a hot growth area for tech startups, and major HR platform vendors have acquired these niche players or built their own tools. The dizzying number of options makes choosing one a special challenge.
Sommer said ease of use is the most important criterion because users are often managers with limited tech skills. "It's got to be brainlessly simple," he said, and sensitive to what motivates people from different generations. Baby boomers might scoff at receiving smiley faces, for example.
Employee surveys are a popular tool for measuring and boosting employee engagement. The most helpful software has a large selection of premade surveys with cross-tabulation capabilities. Ease of use is again key because most users are HR staffers who aren't savvy about technology.
Also look for:
- easy ways to attach documentation or data that supports badges and other types of recognition
- strong integration with your organization's email and collaboration platforms
- the ability to export recognition data to the performance management system
- quick return of survey results and synthesizing of data in near real time
Besides core HR, talent management is the largest discipline and most important driver of HR technology purchasing and product development. It covers the vast array of disciplines and processes for bringing people with the right experience and potential into the organization, developing their skills, motivating them, assessing their performance, compensating them, and retaining them or easing their departure.
In recent years, the emphasis in talent management has shifted to skills development and a greater awareness of how skills fit into job descriptions and career paths, according to Harris. "The language of the next generation is skill development," she said. "It has nothing to do with job role and job title and has everything to do with capabilities."
Harris said when buyers examine a product's features, they should pay attention to how well it captures skills and translates them in job roles that are updated regularly. Doing so can help companies with difficult decisions, such as who to furlough during a pandemic. Job titles aren't usually much help in identifying which employees really have essential skills and experience to keep a business going.
Eubanks said an emerging way for companies to build skills is internal use of gig marketplaces, a technology that began as a way for freelancers to find jobs. "You are able to take advantage, in a positive way, and you're able to leverage the skills and the strengths of your workforce," he said. "You have increased transparency from a career and skills development perspective so they can see what the opportunities are to grow inside the organization." Other benefits are improved employee retention and ability to maintain productivity during hiring freezes.
Many companies have a giant spreadsheet that shows employee's salaries and job titles, plus the salary ranges for each job, perhaps adjusted for local markets, according to Sommer.
"The problem is, where do you get the data?" he said. Ideally, the compensation management system comes with a big data service prepopulated with data. If it doesn't, buyers should ask how much it costs to buy it from an outside provider, and how current the information is. Salary databases are often outdated just when you need them: during an employee's performance or compensation review.
Other differentiating features include:
- support for specialized methods of compensation, especially variable compensation at companies that are heavily sales oriented
- ease of use that makes it feasible to switch from spreadsheets to calculate merit raises and bonuses during regular compensation cycles
Learning and development
The on-premises LMS is a common legacy platform in organizations that were early to the HR tech market. In recent years, many LMSes have been modernized and moved to the cloud. But the most important development is the rise of cheap new learning resources, such as short instructional videos on YouTube and the free massive open online courses (MOOCs) from universities and from companies that specialize in distance learning.
Finding useful ready-made content is a challenge, according to Sommer, and companies often turn to third-party providers, but it can be expensive. For those that already have an LMS, the issue is whether it's possible to import content from these new sources. Leading-edge products have Netflix-like AI that can recommend training based on past selections and career paths.
Eubanks said learning experience platform (LXP) is the new term for LMSes that incorporate external content. Some organizations add an LXP as their primary means of interacting with employees but keep their LMS for record keeping. "That creates better experiences for your learners without having to unplug the LMS," he said. Purchasers who want to pursue this model should make sure the LXP integrates well with their LMS.
It's also important to have good integration between the career planning and learning features of the talent management suite: "When [employees] can actually look at a path and figure out what their gaps are, it makes it more actionable, and it helps them feel like they're making progress toward a goal," Eubanks said.
Also look for:
- a large variety of learning formats, including classroom, remote, paper-based, video and audio, both live and on demand
- tools that make it easy for employees to create learning content, such as recording videos on smartphones and providing searchable transcripts
- a rich library of courses and materials on a wide range of relevant topics, including the software employees use the most, and courses that meet certification requirements of your industry
- support for xAPI, an integration standard that helps apply analytics to learning, which allows you to monitor employee use and improve offerings
Onboarding and offboarding
More companies are realizing that the onboarding process -- especially an employee's first-day experience -- can determine how long they stay.
"The big problem here is: Will the software integrate with all the non-HR solutions, and is there workflow and exception handling for all of that?" Sommer said. To onboard an employee, a company must coordinate a large array of processes, from issuing a security badge and laptop to ordering uniforms and scheduling orientation -- much of it in a certain sequence because some steps can't happen if the employee is locked out of the building. Coordinating these steps requires onboarding software that ideally integrates with the IT, time-clock and other systems needed to set up a new employee.
Offboarding is essentially the mirror image of onboarding, with the steps done in reverse order, according to Eubanks.
Other important features to investigate:
- integration with learning systems, so new employees can get quickly trained on required systems and processes and see future training opportunities for new career paths
- surveys and other tools that make it easy for departing employees to give feedback, regardless of whether they have done an exit interview; over time, it builds a database to analyze
Companies have started moving from paper-heavy annual reviews to continuous performance management, which provides tools for coaching, feedback and peer input. But vendor support is uneven, according to Ames.
"The annual performance review bashing started happening four years ago, and you still see plenty of vendors, especially full-suite vendors, who don't do a good job of it," he said.
Sommer said most organizations will do fine with a performance management module that has strong support for the nine-box grid, a standard tool that HR departments employ to rate the performance and potential of employees. It is used in both performance management and succession planning.
But analytics "is where the real action's at," he said. "The analytics are going to tell your where your problems and opportunities are." Workflow and exception-handling features help you do something about them.
Eubanks advised taking a careful look at social media and email integration, which are critical for prompting employees to send kudos and "nudges" to coworkers and making such feedback part of their daily workflow.
Also look for:
- integration with learning systems, so employees can improve their skills or take mandatory training
- retention analytics to help identify leaders and other high performers at risk of leaving
- integration with the compensation management module, plus the ability to analyze how modest across-the-board raises affect morale of high performers
The war for talent makes recruiting a constant priority even in recessions, but especially during booms when labor supplies are tight. Talent management suites have more tools for recruiting than any other process, and "talent acquisition" has become the trendy buzzword, with the market for recruiting software in constant flux and startups entering every year.
A company's tolerance for such innovation often determines what features it cares about, according to Ames. Some organizations weight recruiting low among their requirements and only need basic functions, such as an applicant tracking system (ATS), online job postings and a process for moving from intake to job offer. Others know they want innovative features. In that case, the RFP should emphasize more advanced features, including candidate relationship management, the ability to pull in resumes from a variety of different sources, LinkedIn connectivity and generally better visibility into candidates as they move through the hiring pipeline.
- SMS texting, which helps reach candidates who lack easy access to laptops or PCs and prefer texts over voice calls
- auditing that records every contact with a candidate on every communication platform you use
- natural language processing for analyzing unstructured data, such as text messages
Job postings and job boards
Gone are the days of posting every listing to as many job boards as possible. Nowadays, postings usually cost money, according to Sommer, shifting the priority to managing job postings so they will be as effective as possible. Recruiting modules now have more tools that help you create job descriptions and write job posts.
Important features include:
- integration with popular job boards and others you want to use
- support for other digital channels, such as social media and text, for more precise targeting of promising candidates
Recruiting candidates, like many business functions, can be more effective when it's backed up by a concerted marketing effort. That's what recruitment marketing software and services do. "It's every function and feature you would think of in an CRM system, but just switch out CRM for HRM," Sommer said.
The process is driven by the same motivations that drive CRM purchases, which are mostly about managing sales leads, according to Ames. "Just like the sales prospect, you should be treating [the human prospect] with as much care and attention as you would in your sales process," he said. How a company treats candidates in the recruiting process says a lot about how it might treat them as employees.
Key features include:
- LinkedIn integration for reaching both active and passive candidates
- content management for building content that keeps candidates engaged
- event planning to manage networking events such as after-hours office socials
- market segmentation capabilities for managing separate talent pools
Basic interviewing simply involves using webcams to replace an in-person meeting. Things get a lot more interesting with video interviewing software, which lets an employer send the same set of questions to thousands of candidates to produce interviews in a consistent format, according to Sommer. The technology is often used to winnow down the list for in-person second interviews.
Jones advised giving careful scrutiny to services that record and manage the videos for you, which can be expensive. It's also important to ask who technically owns the videos, how long they're stored and accessible on demand, whether they can be downloaded and if they are ever shared with outsiders. Videos recorded in an ATS might require buying more storage capacity.
Key features to look for:
- AI that can analyze voice modulation and visual cues for signs a candidate is nervous, evasive or lying
- Analyzing candidate vocabularies to measure intelligence
- Easy ways to move around and make notes in videos and jump quickly among videos
- Automated transcriptions you can easily search for keywords that suggest skills your company needs
Some talent management suites have a succession planning module that helps in planning what should happen when executives and other high-value employees leave. It can also help retain good employees by spotting signs of dissatisfaction and providing career paths, according to Sommer.
Ease of use is critical here, especially if people outside of HR, such as senior managers, need to use the tools.
Also look for:
- what-if capabilities for considering different reporting structures and reorganizations, or the effect of corporate mergers on succession
- an org chart tool, ideally one that goes beyond static PDFs and makes it easy to move large chunks around
- close integration with learning management tools to facilitate career development for employees earmarked for eventual promotion
- the ability to plan succession for non-executive-level employees
Time and attendance
The old punch-in time clock is mostly a relic of the past, but hardware choices are still key to administering time and attendance, according to Sommer. "We get into some really interesting problems," he said, such as when retailers require workers to walk to their point of sale system to log every arrival and departure -- including breaks.
Key features to watch for:
- support for multiple platforms, including smartphones and wall-mounted shop-floor tablets
- integration with email and scheduling software
- integration with operational information and weather forecasts, which enables more responsive scheduling
Workforce planning and management
Though it has obvious affinities with talent management, workforce management is a distinct discipline, often with separate software devoted to it. The process is heavy on analytics, as executives and HR managers parse external demographic and labor data alongside internal data to spot pending shortages or decide where to reassign employees to better address strategic priorities. At the same time, workforce management can be extremely detailed and help decide whether to call in two more retail clerks for a weekend sale.
Scheduling software is the primary tool of this more granular form of workforce management. It's especially valuable if it lets employees schedule themselves while ensuring that shifts will be covered, according to Sommer. "This is critical in nursing. Nurses want more than any profession I've ever run into to set their own schedules, and it's the key to retaining them," he said.
Also look for:
- daily tracking of individual employees' security credentials, including whether they have been revoked
- awareness of certification requirements of jobs, ability to assess the validity of certifications and their expiration dates and links to an LMS or LXP for related training
- notification when employees are nearing weekly hours that will require paying them benefits or overtime
AA battery: Two embedded technologies transforming HR
Artificial intelligence is perhaps the biggest technology to hit HR tech since cloud computing. AI's purported ability to spot patterns, make decisions and even predict the future clearly has huge potential for a discipline focused on managing and developing people.
Business intelligence and analytics technology have had a much longer history in helping managers and HR practitioners make sense of the mountains of data collected in HRMS and ERP. While some HR software comes with a separate BI platform or closely integrated with external ones, most recent development has emphasized embedding analytics in the numerous places it can do the most good, from social media used for sharing job listings to performance management to workforce planning. Adding AI is like putting analytics on steroids.
The experts shared advice on how to investigate a product's AI and analytics features.
Many vendors pitch AI as a product, but HR practitioners aren't looking for an AI product most of the time, said Ben Eubanks, principal analyst at Lighthouse Research & Advisory. Instead, they want to improve a particular function like recruiting.
Eubanks recommended hands-on testing to decide if AI features are a fit. AI-powered recruiting chatbots, for example, might vary in how well they can converse with applicants in high-volume industries such as restaurants vs. technical ones like software engineering. Chatbots for employee self-service might need to be able to go beyond handling help desk tickets to tackle more nuanced communications for confidential harassment complaints.
What makes something AI is its ability to learn and make decisions. Some sophisticated chatbot features are really just workflow applications, according to Katherine Jones, an independent HR technology consultant.
She advised not going in intending to buy AI, and instead look for what you hope to gain from it. Also have someone who understands how the AI works so they can explain it and judge whether its algorithms fit your business. And ask the vendor: "How will I know if it goes rogue?"
Most applicant tracking systems have an AI machine learning back end, according to Brian Sommer, president of TechVentive. It's important to ask vendors how the AI decides which resumes to accept and reject, and what the process is for providing feedback and changing algorithms. He also recommended asking vendors if they will defend your organization if an AI-based decision leads to a discrimination lawsuit.
- for as much detail as the vendor can reveal about the workings inside its AI "black box"
- if the AI engine is from a different vendor and how often those vendors swap out
- what kinds of signals a predictive AI tool works with -- zip codes, for example, can introduce socioeconomic and racial bias into recruiting
Choosing BI and analytics tools is especially challenging, according to Stacey Harris, vice president of research and analytics at Sierra-Cedar. "It's a kludged together group very similar to what's happening in service delivery," she said. "There are no platforms that have all the features that you need."
A company might want data visualization capabilities, be able to export data from its environment, dig deep into the data to find outliers and compare it to business information, and share the findings in a secure PDF, but it won't find one platform that can do all of those well.
Jones advised to beware of "analytics" that are really just reporting, and metrics, such as time to hire that are only a type of counting. One way to find the analytics capabilities you need is to ask yourself this question before examining products: What data has your CEO asked you for?
Also look for:
- The ability to analyze operational data, internal "dark data" (unused digital information) and external big data in addition to the transactional data generated by normal use of the HR software suite
- Exception handling and workflow tools that help you act based on insights gleaned from the analytics