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TCO: The Hidden Costs of HR Technology

Over the past year, the pandemic forced most organizations to re-evaluate their HR technology to better support their workforce in a new work environment. It’s easy to see how these solutions impact expenses, regardless of whether your organization has grown or downsized and whether you’ve implemented one, two, or more new technologies. But upon further examination, you may find additional costs that you don’t see on a balance sheet. These downstream costs come in the form of voluntary turnover, disengaged employees, and a poor employee experience caused by disjointed systems. All of these add to the Total Cost of Ownership (TCO) of your HR technology stack.

Don’t get me wrong, these shiny new systems have the best intentions and also hold the potential to streamline processes and improve efficiency. However, they can cause confusion, digital fatigue, and an overall negative employee experience when brought together. This article will examine the cascading costs caused by competing HR technologies and shine some light on the TCO of those platforms, tools, and programs.

Multiple Buyers, Multiple Priorities

HR technologies span a broad spectrum of applications. PwC’s Human Resources Technology Survey estimates the total value of the HR cloud solutions space at a whopping $148 billion. You have solutions for time and labor management, talent development, benefits administration, payroll, HR administration, and the multiple use cases that fall underneath each of these. Filling the needs presented by your organization can result in a slew of point solutions patched together, ostensibly to support the employee experience. But are they actually improving the employee experience?

The problems often start with having multiple buyers working to get these solutions in place. Too often, organizations arm each buyer with a different agenda and different initiatives. Each has a keen eye on their own goals and what technology they are bringing in-house. But with multiple buyers in the mix, the bigger picture is often overlooked. And the bigger picture can be what makes or breaks the employee experience.

What is the bigger picture? It’s the TCO of the whole HR technology stack and how these solutions work together.

Too Many Channels, Not Enough Bandwidth

Throughout the workday, employees change directions more than a weathervane in a tornado. They constantly switch between systems to communicate, track time, view benefits, take a survey, complete a learning module, and—yes—even get some work done. It’s simply exhausting. Also, that only covers a few of the functions within the sprawling HR tech stack. Thinking about it gives you a headache, doesn’t it? Or perhaps, that’s digital fatigue you’re experiencing.

Moreover, we’ve seen (and continue to see) a race to upskill and re-skill, a trend that has created the need for even more learning and development, coaching and mentoring, surveys, and other tools meant to support employees. The increase in the number of people working remotely and forcing interaction with these disjointed technologies from home has exacerbated the situation. Also, while pushing forward with upskilling and re-skilling, only 12 percent of employers plan to reward employees’ skill acquisition. The current rise in voluntary turnover is kind of a no-brainer. People work harder and longer at home. They stretch themselves to learn new skills and take on new roles–for no reward.

The Effects: By the Numbers

We know the competing HR systems and the subsequent chaos they cause result in a poor employee experience. But what exactly does that mean for your organization? And what does that cost? Now we’re getting to the TCO of HR technologies.

Burnout

Experts estimate that the healthcare costs of job-related burnout are between $125 billion and $190 billion. Once employees reach burnout, it’s often difficult to hit the reset button and get them back to their optimal performance engagement. Thus, voluntary turnover is often what lies next.

Voluntary turnover

With the average cost of hiring a new employee at $4,129, and onboarding averaging roughly $986 per new hire, organizations lose $5,000 each time an employee leaves. That doesn’t even account for the costs of the skill sets you’re losing, and the loss of the intrinsic value an individual brings to your organization. You can’t afford to lose your employees to something so preventable as integrating HR solutions.

Disengagement

Disengagement costs companies between $450 billion and $550 billion each year. Yikes! And considering one-third of most employees consider themselves disengaged, organizations must work to boost engagement. Among the several levers you can pull to boost engagement, streamlining your technology is a relatively easy move.

Management tax: Add it to the tab

The struggle of dealing with too many solutions is not one-sided. While employees grapple with multiple systems each day, managers work to pull data from each of those systems, manage vendor relationships, and learn each solution from top to bottom. Managing a sprawling tech stack is a huge distraction and can easily be minimized by combining point solutions to a larger platform.

Streamlining HR technology will make life simpler—and more productive—for managers and employees. Of course, bringing these solutions together can also be more cost-effective for an organization. Which means you don’t need to eliminate existing systems altogether. Just simplify your systems. How? By integrating and combining forces. A lot is riding on this—more than you see when usually assessing TCO.

With this in mind, adopt an integrated approach that combines talent functions to create a more fluid experience for your people. Do it for the employee experience, higher productivity, and a better bottom line. When evaluating the number of technologies in your organization, less is more.

Your Employer Brand Owns The Candidate Experience

By now we’ve all seen the October 2013 Gallup report on employee engagement, The State of the American Workplace. Words that come to mind when I re-read the report:  bummer, disheartening, bad news.  But I also wonder: what exactly did we expect? Look around you, managers, and you’ll see disengaged employees with the Zombie stare, some with the sour look of the disappointed, a few with the overly positive, can-do smile, trying desperately to make things work. A lot of this is the fault of a poor connection between managers and line-of-business employees and it inevitably trickles into a broken recruitment and communication process with potential candidates. The good news? We can change these statistics. It’s in your power to take control of your recruiting process and employer brand. The truth is most job seekers are looking for more than salary when they decide to apply to work at your company.

Can employee disengagement and bad branding be prevented? Can HR and Leaders learn to bring people back to productivity? Absolutely. Will it be tough? You know it. Will it be worth it? Yes, a thousand times. How do you start? Let’s take a closer look at employer brand.  Are you true to it in your hiring and recruiting process? How your employees represent the company’s mission and brand is as important as anything Leaders or HR says in the hiring process. Make sure the stories align well and is accurately reflecting your current brand and the overall mission.

Then look at the employee experience – What employees do everyday, the actions they take, and how they perceive the actions of their managers and top management.  As Blue Ocean Strategy Institute co-directors W. Chan Kim and Renée Mauborgne suggest in this month’s Harvard Business Review, focusing on the acts and activities of management and employees is critical to understanding how a company operates. Actions, as our moms have told us, do speak louder than words, and in the world of work they separate good managers, and great companies and truthful branding, from the mediocre. My latest piece on Dice.com provides more information on just how much technology is changing in the world of work for leaders and hiring practitioners around the globe.

Then look at how you’re hiring: think candidate experience. Do you force job seekers through a maze-like microsite for career opportunities, then fail to acknowledge their applications with an email or letter (spoiler alert: approximately 70% of hiring companies are in this camp)?  Do you put people through tests and five phone screens, then never follow up? If so, you’re doing damage to your brand. Smart companies know better: they’ve begun to adopt new technologies to streamline the hiring process: video, digital interviews, social recruiting and more.

A few more things can make or break employer brand and candidate experience:

Communicate throughout the process. If you do a phone screen, give feedback.  If a candidate comes to your career site, acknowledge the visit with an email explaining your hiring process. Technology is available now to make these steps easy; there’s no reason not to do it, unless you want to damage your brand.

Think like a candidate. Another timeless reminder: treat others as you’d like to be treated. This Golden Rule is especially important if you want to ensure good candidate experience. And why wouldn’t you?

Be a person first, an HR manager second. People want to deal with people. Make your hiring process as personal as you can. You’re not dealing with robots (just yet at least).

Set expectations. This is part of the communications process but it deserves a call-out. Don’t leave people hanging; let them know what your process is, when they can expect to hear back, how quickly you’re planning to make a decision.

Candidate experience is a two way street. Make sure yours is good and true to your brand, or you are setting the brand up for damage both upfront in the recruiting process and to your internal employees and stakeholders. It’s easier to maintain a good reputation than it is to rebuild it. Employer brand and candidate experience are linked, and they matter greatly to recruit and retain your talent.

A version of this was first posted on Forbes.

Photo Credit: YES4UTOPIA – Y4U via Compfight cc

Onboarding Is The Holy Grail Of Employee Retention, Engagement and Productivity

How does effective onboarding relate to retention, engagement and customer satisfaction? Simply put, in every way.

Onboarding is a widely misunderstood practice. Some companies believe it’s a handshake on day one with a pile of papers for the new hire to complete. In actuality, great onboarding begins at the first touchpoint in the relationship. This means, the first time the company representative engages with a job candidate, the onboarding begins. Further, should this touchpoint result in a hire, it should carry through to the first day of employment and all the way through the employee’s tenure.

Onboarding Is Not Brain Surgery

I read many a horror story about how job candidates and employees, alike, are treated like a commodity rather than contributors. This mistreatment stems from the apathy and disregard many experience when starting a new job. Lack of communication and the feeling of being lost among a crowd of other disregarded co-workers are commonly heard remarks. Without a connection to help employees feel part of the organization, disengagement often times results in a lack of productivity because employees don’t understand how their role contributes to the company’s mission, vision and values.

According to researchers at the Abderdeen Group, 62 percent of companies that have a solidified onboarding program experience faster time-to-productivity with 54 percent claiming to have better employee engagement. After reviewing these stats, it’s clearly counter-productive for companies to forego having an onboarding program, yet there are still many brands who have chosen to forego a structured onboarding program.

We Don’t Know Where To Start

For leadership to truly appreciate the value of an onboarding program, they first need to understand what they’re missing. An analysis of relevant employment data is a good start. Tracking the following metrics is advisable for businesses of all sizes:

  • time-to-hire
  • time-to-productivity
  • client retention
  • referrals
  • contributions to problem solving
  • synergy with co-workers
  • promotability, and
  • tenure

In today’s business world, there’s no excuse to not track employee data of this type. There is no shortage of systems that enable organizations to track and review the numbers at regular intervals so there’s really no excuse not to be doing so. But here’s where the tough part comes into play. Once you have the data, how do you interpret it and what should be done?

  • First, you need to decide what you want to accomplish. Decide on what success and failure will look like; this helps steer the understanding of the data and guide your action.
  • Second, organize and formalize when you’ll review and interpret the data. Incorporate user-friendly technology that allows easy input or seamless conveyance of the metrics. If you plan to use a manual input methodology, be warned, this may lend itself to human error or worse, lack of compliance to follow through on the input.
  • Third, be consistent. Set a schedule for when you’ll review the data and stick to it.
  • Fourth, have a plan of action on how to adjust for changes. The data may not present the results you wish to see. You’ll need to be prepared for this by having a plan-of-action to achieve what goals your organization wants. For example, initiating short, informal performance reviews more often during the first year to maintain open lines of communication can make a significant difference in retention and employee engagement. Conversely, the results may come in favorably, so be prepared to capitalize on that information and take it to the next level.
  • Fifth, be patient. It takes time to gather significant data and more time to look for noteworthy trends.

So What’s Really In It For The Company?

In a word… everything. Take customer service, for example. Companies with unproductive customer representatives inevitably lose market share due to a decrease in customer loyalty and/or gain a bad reputation as a service provider. According to Gallup, when employees are engaged, they will be more productive and more likely to experience good relations with customers. This behavior can be supported by getting off on the right foot with new employees. Set the stage for how their customer involvement is pivotal to the company. Ensure all employees understand the mission, vision and values of the organization and are able to convey this sentiment to customers (by the way, customers should also be onboarded.) The same factors are in play regardless of the industry or occupation. Keep the lines of communication open and keep “recruiting” your employees to show them how they are valued and always strive to align personal goals with the company’s. Adding these simple communications and tactics can be the difference maker in both employee and customer retention and satisfaction.

Knowing that great onboarding leads to a more productive and engaged employee, which in turn creates happier and more productive workers, should be an established initiative for all companies. Unfortunately, there are still too many organizations that have not adopted this train of thought, even though the research and even common sense supports it.

It really comes down to this… everyone wants to feel valued.

Image credit: Gratisography