In 1963, management consultant Peter Drucker was quoted as saying, “There is nothing quite so useless as doing with great efficiency something that should not be done at all.” This might resonate with talent managers responsible for purchasing HR technology. While the market is hotter than ever — 57 percent of companies plan to make a major new HR software purchase in the next 18 months, growing this $14 billion market, according to Bersin & Associates’ “Managing Talent Through Technology: HCM Buying Trends in 2013” study — many are wasting money on lavish tools unnecessary to improve their business.
The problem is that although more companies realize that talent is their biggest challenge, technology is not always the solution to better align processes such as recruiting, employee development and internal employee communications with business goals.
“It comes down to having a clear strategy about what your measurables or metrics are before you add any new tools,” said Tim Sackett, president of HRU Technical Resources, an engineering contract staffing firm. “So many HR vendors will use this weakness against you and drop on new measures as they add new tools, knowing all along their tool with have a positive impact. They go, ‘Hey, look, we did what we said we would do. It works.’ Yet you don’t feel like you’re getting any more candidates or better hires.
“So much of what is being sold in the talent management market now is about organization and reporting,” he said. “This is all great stuff to have, but at the end of the day, did it really help get better talent and keep great talent? These are the questions TM executives need to ask themselves.”
John Sullivan, management professor at San Francisco State University, said talent managers should start with the business impact. Know the problem and invest in that. Prioritize business units, and then within those units, prioritize what HR function has the biggest impact. Then when resources and time are limited, money goes where it matters most. “Sit down with the CFO and say, ‘Let’s figure out what business units are growing and where we need to concentrate our HR spend,’” he said.
Boston Consulting Group’s 2012 study “Realizing the Value of People Management” compared the difference in revenue growth and profit margins at firms with very-high-capability individual HR functions to the business impacts of low-capability HR functions. The recruiting function came out on top with 3.5 times the profit growth and two times the profit margin, totaling a 5.5 times performance improvement.
“If someone comes in and says they want a 20 percent increase in customer satisfaction, we need to know if it’s better to hire or better to train employees in customer satisfaction,” Sullivan said. “We need to know which of our tools and HR processes will have the biggest impact.”
Sullivan said HR leaders should invest more in predictive technology. In 2009, Google developed an algorithm designed to identify which of its 20,000 employees are most likely to quit. The system, which uses data from employee pay, promotion histories and performance reviews, helps the company get inside people’s heads even before they know they might leave. Major retailers often have similar predictive analytics devoted to understanding not just consumers’ shopping habits but also their personal habits, so as to more efficiently market to them. It’s how retailer Target figured out a teen girl was pregnant before her father did, as reported in a viral news story that broke in February 2012.
“We seem in HR to be desperate to retain our seat at the table if we’ve still got it, so we grab onto things,” said Clinton Wingrove, executive vice president and principal consultant for Pilat HR Solutions, a global human capital management technology company. “We constantly hope the next one will be the magic answer.”
Wingrove also said talent managers should focus on predictive technology, and that many of today’s tools offer false promises. He said these glitzy tools promise to make things simple, but managing people isn’t simple. “That’s why we pay managers more. That’s why leadership is constantly, and will always be, a challenge. Managing people, managing talent, is not simple, and a lot of tools and technologies out there trivialize it and justify it by saying it can be simplified.”
Kimberly Currier, vice president of talent development at American Cancer Society, said she has found a few tools that help her team streamline work, and they’re all free. Favorites include PicMonkey, a free photo editing and collage making software, Screenr, a video and screen share program, Pinterest, infogr.am, a chart and infographic creator, and groupzap, a cloud-based brainstorming organizer.
“We look at it from a solution perspective, not ‘bring all the cool tech gadgets into our business’ perspective,” she said.
Jonathan Stearn, a partner at management consultancy Schaffer Consulting, said companies should keep their eyes on social networking technology. These tools can create a community for practitioners in the HR industry to share their experiences and tap into the collective wisdom of their own employees. For instance, he said he has seen companies have success with Salesforce’s Chatter.
“In a business world where collaboration is so important, social technology can help organizations with people all over the world, across time zones and a number of different functions keep in touch with each other, share knowledge, leverage expertise and get to know each other,” he said.
HRU Technical Resources’ Sackett said he invests mostly in talent acquisition tools. He said automated referral programs, Zao and Jobvite specifically, are worth every penny because employee referral programs at 99.9 percent of companies are terrible and outdated the moment they are launched. To solve that, he said HR leaders must make it a part of everyday recruitment processes. Don’t make it a launch. Make it something employees see every day, every week and integrate it into how they communicate via social and mobile outlets.
Warren Lindley, divisional vice president of organizational design and effectiveness for drug store chain Walgreens, disagrees. He said technology in the talent acquisition space has become too complicated. “Over time it has been designed and developed to make HR administration easier, but the user experience and applicant experience, specifically the hiring manager experience, has suffered.”
The more transparency there is for the hiring manager in relation to candidates in the funnel, the better, Lindley said. Otherwise, hiring managers may feel like there is a black box around the applicant pool.
Regardless of whether other practitioners agree with Lindley, they don’t seem to be stopping their spending. The 2012-2013 HR Systems Survey white paper by consultancy CedarCrestone reported four big trends for human resources technologies: cloud, social, mobile and analytics. Reported spending outlook is strong, with more than 40 percent of respondents indicating their budget will increase. The three-year forecast showed three areas with more than 50 percent growth projected: analytics, social and service delivery technologies.
“People have 50 apps on their screens but only use five,” San Francisco State’s Sullivan said. “The most effective HR departments do not use more technology than other people. They don’t spend more than others. They use technology, but it’s limited for areas with the most power.”
Tips From the Top
Tim Sackett, president of HRU Technical Resources, an engineering contract staffing firm: One issue most organizations face with TM technology is they want everything they buy to match their current processes. Talent professionals hate changing a process they developed — it’s their baby. So they try and get every tech company to customize their system for them specifically. I’ve found if you just give in and blow all of your processes up, the tech companies do so much more due diligence in terms of best practice processes [that] you end up being farther ahead by following their recommendations than trying to jigsaw in your own outdated process. Every HR shop thinks that somehow they’ve created some special process and it has to stay for everything to work. In reality, you can come up with a million different ways to get TM done well — stop fighting. If you buy tech, it’s designed to work a certain way. When you start changing it around, it doesn’t work as well, and you won’t be happy with your purchase.
Dwaine Maltais, executive vice president of Technomedia, a talent management technology company: Before looking for something new, take inventory on what you’ve got and reach out to partners and vendors you’re already using to see if they have new, updated solutions that might meet your needs. New tools aren’t necessarily better in all cases. If you can find an approach where you can adjust an existing relationship to enhance what’s in place or add something that’s new, that’s certainly worth investigating.
Alan Kisling, managing director for Brand Velocity, a management consultancy: I’d be real careful if I was in HR IT, only implementing the bare minimum necessary systems to get the work done, because there will be integrated systems later on. You don’t want to close those doors of design because suddenly you’ve got this huge installed base of 40 different things that you can’t change very easily because you’ve had to interconnect it yourself over the years.