Michael E. Porter, Harvard Business School professor, author, and expert on competitive strategy defines strategy as “the creation of a unique and valuable position involving a different set of activities” (1996). A 2012 article published in strategy + business explains that strategy is, “the result of choices executives make on where to play and how to win to maximize long-term value.” Both definitions emphasize the importance of making decisions aimed at creating long- term value for an organization.
Strategies exist at all levels of the organization; an HR technology strategy should be born of this and support the overall strategic objectives of HR and the organization. HR must take ownership of their HR technology strategy and ensure that it aligns with the HR strategy (which should be in alignment with the business strategy). Additionally, they should emphasize more than just efficiency and effectiveness as a driver for the adoption of technology and choose solutions with agility in mind to allow for future growth and flexibility while focusing on deploying solutions that meet the current and future needs of the organization is paramount.
- Take ownership of your HR technology strategy
Technology has changed the way HR does their job. In David Ulrich’s book, HR Transformation: Building Human Resources From the Outside In, Mr. Ulrich explains that HR needs to become a “technology proponent”. He emphasizes the importance of HR’s role in leveraging technology to improve efficiency, to connect employees, and the need for HR to leverage new communication channels (e.g., social media) to engage with their employees.
HR should be responsible for setting the HR technology strategy in partnership with IT, and both should work together to make sure that HR is approaching business problems with the right solutions. While IT can certainly help inform the selection process and partner with HR during the implementation phase, HR needs to take the lead. HR has the employee perspective and an intimate understanding of the practices that support an effective workforce.
The new wave of HR technology (driven by the growing popularity of cloud-based HR) does not require much heavy lifting, and the space is ripe for a few wide-eyed technically savvy HR employees to help shape the future of their function. Software-as-a-service (SaaS) platforms can be deployed much faster and are highly configurable. With SaaS, HR now has the keys to the technology and no longer needs to call upon IT to make changes to the software; enabling HR to quickly improve the design of HR systems and processes quickly to meet the needs of the business. To effectively own the strategy, HR must:
- Understand technology and be able to liaise with IT on a regular basis
- Lead the creation, implementation, and maintenance of the HR technology strategy
- Understand how your employees interact with their work on a daily basis and how technology can be leveraged to support them
- Align your technology strategy with the key HR and Business Goals
Not having alignment to the business strategy is like putting up drywall without first framing the house. Without a shared vision or understanding of how HR technology supports the business, implementations will likely fail, and the full benefits of technology will never be reaped. The lack of alignment may even have negative repercussions for your organization.
To create an HR technology strategy or plan, it is imperative to become intimately familiar with your organization’s short and long-term goals (as well as those of HR), which means more than just reading them off of a PowerPoint slide. To gain a better and more holistic understanding of the importance of these goals HR should conduct interviews with stakeholders in their organizations that includes HR leaders, members of the executive leadership team and business line managers. The information and knowledge that can be gained from these interviews can add color and bring greater awareness of the strategic direction of the organization and the challenges that need to be overcome to be successful.
As is the case with any human capital management technology, no single application will drive effectiveness; rather it is important to align programs and actions that go together. Additionally, creating alignment not only provides a focus for your plan but also a means to assess or measure the success and impact of your strategy.
Aligning your HR Technology strategy should go beyond just aligning to the overall organizational goals but should also include alignment to critical business units. Creating a strategy that is aligned with multiple parts of your organization allows you to adapt to changes in the market better and ensure that you are focusing on the right things. To ensure alignment with the business strategy:
- Understand the current business environment – internally and externally; know what forces are at play
- Document the organization’s short and long-term objectives
- Take stock of the unique needs of each function and critical business areas
- Clearly understand how technology can/can not facilitate achieving your strategic objectives
However, merely having an HR technology strategy isn’t enough. Neither is having the best technology. What matters more and provides real differentiation is effectively executing that strategy. Effective execution requires having the right resources (software and human), creating a roadmap that is agile and change ready, and one that is focused on both short and long-term strategic goals.
- Build agility into your HR technology strategy
“Agility is the new currency of the economy” (Source: The Changing World of HR Technology: 2012 Report Card) and technology plays a crucial role in an organization’s ability to remain competitive and better able to deal with an ever-changing business environment. Technology that supports the management and development of an organization’s human capital needs to be agile enough to respond to both external and internal factors.
The strategy should be multi-year, spanning several years and be frequently revisited to assess progress. Continually monitoring internal and external business conditions and linking those back to the strategy is vital to remaining agile and ready to adapt when needed.
In most cases, being agile with workforce technology means – having it in the cloud and being able to reconfigure offerings quickly or switch technologies (neither is possible with perpetual licensed software or ASP providers (on/off-premise). Technological innovations, like software-as-a-service (SaaS), have the ability to make the world smaller and organizations more efficient. Through standardization of processes, SaaS applications can reduce complexity and take upgrades quicker. In a unified and/or integrated global SaaS system this can facilitate much greater simplification and enable the organization to react more quickly to the changing business environment.
By implementing SaaS (cloud-based), HR technology organizations can become more agile in the management of people, their most valuable assets. However, for some organizations, like Nationwide, taking a hybrid approach is the right way to go. As a result of heavy customizations to their PeopleSoft system, they decided to keep their HRMS on-premise while moving their talent management processes to the cloud.
Consider the following:
- Implement technology that facilitates (not inhibits) the organization’s ability to change
- Build in scenarios to factor in changes to both the internal and external business environment (i.e., downsizing, M&A, regulatory changes)
- Create a 5-10 year rolling HR technology strategy that has yearly check-ins and evaluations as a part of the process
- Select technology that is scalable and flexible; vendor dependability is an important factor to consider when selecting solution providers
- Think beyond efficiency and effectiveness
For HR to be able to make a direct contribution to the long-term success of the organization the function must stop thinking about HR technology as solely a means to automate. Automation alone does not drive organizational success. Human capital applications that help to attract, retain and develop the right people, with the right skills and the right cultural fit are the things that can begin the strategic transformation of the HR function. To support strategic initiatives, organizations should be able to answer the following two questions:
- How does technology enable the effectiveness and efficiency of our people, programs, and initiatives? Remember, technology is not the solution but rather an enabler (and in some cases a distracter). Focus on the role that technology plays in the management of your human capital and not on any one particular vendor or type of tool; keep an open mind as you begin to find the answers to all of these questions. Once a tool (or tools) has been selected, involve employees of all types to help identify which features make the most sense to implement and to assess how user-friendly the interface is and workflow is for all employees who will be customers of the system.
- How can technology improve the effectiveness of how your organization manages its talent? According to research from the Institute for Corporate Productivity (i4cp) (see: The People-Profit Chain) high-performance organizations effectively manage talent by creating an environment that maximizes employee productivity and performance. High-performance organizations understand that success does not rely on the inner workings of talent management processes but rather by making better evidence-based workforce decisions via workforce planning and workforce analytics, and equipping managers (and leaders) to manage the workforce. Technology that supports rather than hinders the effectiveness of managing talent should be simple, easy to access (mobile) and allow for faster, more accurate decision-making.
Consider the following:
- Employ HR technology as a strategic tool to help drive performance in your organization; not solely as a means to improve efficiency and effectiveness
- Technology should only be implemented where it adds value (or where required by law)
Developing an HR technology strategy begins with taking a deeper look at business priorities and validating how current systems are and are not supporting the organization’s goals. This helps create a path toward synchronizing the organization’s priorities with the HR technology strategy. A successful HR technology strategy should be aligned to the needs of the business, agile, focused on strategic enablement rather than just efficiency and effectiveness, and should be owned by HR (in partnership with IT).
Recommendations for Building an HR Technology Strategy
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