HR Strategy and Technology Alignment

The Needed 2 Step Approach to HR Technology and Business Strategy Alignment

Human Resources departments tend to be very busy with the day-to-day business of tracking attendance, managing benefits, bringing on new hires, complying with regulations, responding to employee requests and getting payroll out. With so much transactional activity, it’s hard to find the time to stand back and consider the big picture. This is especially true in SMBs where the HR manager may well be in the trenches with whatever employees he or she is lucky enough to have on the team.

The decision to buy new HR software offers one of those rare opportunities for the HR manager to step back from the flurry of daily activity and reevaluate the whole Human Resources operation and its relationship and contribution to the company. More importantly, it’s the time to align or realign HR goals with those of the larger company to achieve long-term plans; the very definition of strategy. If this company to HR strategic alignment opportunity is not embraced during a software evaluation project, it misses a pivotal opportunity and is not likely to be addressed again for a long time.

If your HR department has been solely focused on operational activities, the shift to strategic thinking is a big one. Suddenly, it’s not enough to track employees, run payroll and manage benefits. Now you’re responsible for setting and reaching long-term goals that will impact the company’s most important objectives and bottom line. Now you’re thinking about human capital management, how to attract a higher quality employees and retain them, how to map resource contributions toward specific tactical objectives, how to increase employee engagement for improved productivity, workforce management, succession planning … your job just got a lot bigger.

A Two Step Approach

HR technology strategy alignment within a company exists on two levels: one is the strategy involved in selecting HR software, which is core to your technology strategy. The second is the goals you want the human resources software to be able to deliver in terms of supporting the company’s most important business objectives. This is your alignment with business strategy. Both are important, but if you don’t get the first one right, you stand little chance at the second.

HR Technology Strategy

Selecting new HR technology is a enterprise software project and needs to be managed as such. But the HR department doesn’t exist in a vacuum. It is part of the company’s front-office and back-office operations that includes finance and others. Therefore, HR technology needs to be addressed in conjunction with the IT department as part of a company-wide integrated technology strategy. The goal is to acquire, over time, a complete information technology solution that eliminates disparate information silos and redundancies across the company while supporting the company’s long term (often 5-year) technology plan.

An HR technology strategy consists of three parts:

1. Current assessment—For example: Our HR department currently consists of three employees, we outsource payroll and we hire too many temp workers to fill gaps, which leads to high training costs, higher labor costs and a lack of institutionalized knowledge in the company. HR is not integrated with the accounting system, business processes are fragmented, reporting is not adequate, and we have poor employee retention rates due to compensation issues.

2. Requirements assessment—For example: We want to bring payroll processing in-house, expand the HR department to five employees, hire and train more full-time employees, cut the number of temps and integrate the HR software and payroll system with the accounting software system. We also want to initiate compensation planning, recruitment planning and performance management.

3. Destination assessment—This is the plan to get there within time frame and budget. For example: Within 6 to 9 months, we want to acquire a hosted, back-office, Enterprise Resource Planning (ERP) system that integrates finance and HR, runs payroll and supports strategic HR and talent management functions. We will add cloud HR software modules during that period until we have completely integrated systems.

Business Strategy

Once the HR technology strategy is in place you can take the next steps. Ask yourself how we as an HR department can become more strategic as opposed to just counting heads and transactions. Does Human Resources have a 5-year plan that directly supports the goals stated in the company’s 5-year plan? Has it come up with a leadership development plan or succession plan to cover key positions if they become vacant? Are employees being groomed and supported with their individual career advancement goals? Does the company’s compensation and benefits package make it a destination employer for top marketing and sales talent? These are all example of how the HR strategy can support the company strategy.

To achieve these goals, remember a basic strategy truism: For any strategy to be successful, it must come from the top down. Getting buy-in from the president, owner or CEO is critical to sustaining a strategic project over time. Likewise, the HR manager is responsible for creating a culture that will achieve HR’s strategic goals.

If in Doubt, Hire an HR Consultant

SMBs often try to make HR software technology decisions relying strictly on in-house expertise. When making strategic decisions and long term purchases even a small business can benefit from the knowledge of a consultant, even if just to help them make the assessment and put a plan in place. Tim Stevens, of HRIS Consulting Group, says that consultants who normally work with enterprise-level clients will sometimes make allowances to work with smaller companies in a reduced fashion. "Many consultants will work with SMB clients at reduced rates, setting up the project and then checking in at certain intervals to evaluate progress and tweak the project to keep it moving forward."

The High Cost of Not Being Strategic

Failure to establish and follow through on strategic initiatives, especially HR technology initiatives, can have dire consequences as the company fails to reach its goals. You may never achieve ROI, you may have redundant systems that lack integration, difficulty reporting on the company as a whole or on projects or people because there are no consolidated sources of information. You usually have a lot of different interfaces, bringing about additional redundancy. This results in lost money to due both operational inefficiencies and an inability to move forward with revenue-generating goals.

The costs of duplicate data entry, transposition and clerical errors, inefficient labor, redundant data depositories and lack of timely information reporting pale in comparison to smart technology investment which remedies each of these all too common situations and puts HR managers in position to directly contribute to the company’s mission and most important business objectives.