Five factors influencing how the C-suite is selecting HR technology
The need for sustainable, differentiated, highly integrated and value-added HR technology service provider relationships has never been greater.
There are a number of catalysts driving employers to embrace the best and brightest HR technology offerings from our industry’s robust marketplace, including an expansive HR remit, highly mobile workforce, omni-channel strategy, rapidly changing regulatory environment, data-hungry enterprise, re-org-happy business landscape and clear call for wellbeing, among others. Knowing that business leaders require assistance is one thing, but determining with whom to partner can be a daunting task for even the most well-informed leaders.
Let’s face it: The HR technology provider landscape is crowded, noisy and incredibly difficult to navigate. No sooner does a new work-related acronym emerge than everyone with nominal adjacency adds it to their copy, website, and event booth. And do not forget the emails, newsletters, podcasts, research, blogs, social posts, cold calls and even text messages imploring you to consume the latest and greatest insights covering the entire employee lifecycle and every subvariant therein.
I do not envy those trying to break through to the C-suite, but quantity seems to be outpacing quality in so many corners of the market.
Despite the frustration, nearly half of all HR leaders have named HR technology as their top concern for the second year in a row, and it is little wonder why. The rapid pace of change in how we do work, combined with the pressure to always be innovating, means HR leaders are focused on finding ways to improve performance, connection, and service across the organisation. Technology is an important factor in increasing business process automation, scalability, and data accuracy—all areas where HR leaders strive to find improvements.
Doing more with less—with your HR technology partner
Unfortunately, budgets do not always reflect the importance leaders place on HR technology. A recent survey of HR leaders reports that technology budgets have been shrinking, not growing, falling from an 8.7% increase in 2022 to a mere 1.8% in 2023. Facing higher productivity goals with a smaller people function requires HR leaders to find ways to stretch their budgets while still maximising productivity.
As always, being a member of the C-suite continues to be an exercise in compromise. HR leaders often face the challenge of balancing the cost of provider services with the quality and value they provide. They need to ensure that the provider’s offerings meet the organisation’s requirements and provide a defensible return on investment, while also considering budget constraints and cost-effectiveness. Leaders are keenly aware of the downfall of “tech debt”—technology the business is paying for but failing to utilise properly, if at all. As such, they have given a more critical eye to provider relationship management and governance to ensure they are getting what they pay for. (IA’s co-leader, Kimberly Carroll, and I will be unpacking this specific issue in more detail during our mega session at the fall HR Technology Conference in Las Vegas.)
5 factors in evaluating provider value for HR technology
In our work with C-suite leaders, we have witnessed these evaluations up close, hearing what leaders care most about, how they perceive provider value and the dynamics that can make or break a successful partnership with an HR technology provider. While every organisation is unique, these are the five most common factors that C-suite executives consider when deciding to engage with a provider:
Expertise with insight
HR leaders understandably look to their provider partners to be true experts in their field. As HR capacity wanes, providers offer scale and oftentimes capability that exceed the organisation’s internal resourcing. But beyond simply knowing their domain, provider differentiation comes in the bespoke application of that expertise to the unique nuances, use cases and outcomes of their clients. It is no longer acceptable to simply generalise, lean on theoretical benchmarks or push product. Providers must have the supporting data to explain every facet of their company’s point of view, and a failure to adequately prepare most certainly will eliminate them from ongoing consideration. Those who excel in this area stand out among their peers and successfully navigate the desired leap from “vendor” to “partner.” This also requires activating that oft-ignored skill of active listening. A well-placed question is worth a hundredfold in value over endless self-aggrandising or competitive bashing.
Value over time
Traditional RFP approaches are an imperfect means of fostering deep and sustainable relationships between two parties. Applying a transactional engine to a transformational moment is counterintuitive at best, yet a facilitated RFP selection can serve as a means of documenting requirements and use cases, aligning decision authority, engaging impacted stakeholders and building meaningful connection. When we facilitate a provider selection, we redact pricing from the decision-making process until the team has identified which provider meets the organisation’s needs. Once the delivered value is assessed, the cost certainly comes into play. If a provider’s cost is too low, HR questions its ability to sustain service and support. If the cost is too high, HR questions what the premium will bring and whether that extra value is truly needed at this moment in time. When assessing overarching value, HR leaders place value in the total cost of ownership, potential displacement and unification of existing solutions, performance measurement and commitment, the envisioned roadmap and the ability of the provider to scale across populations, geographies and/or scope. HR leaders need to feel confident that they can directly quantify the benefit of an HR technology provider both during budget season and throughout the entire time horizon of the engagement.
Relationship management and governance
If there is one area where we see providers struggle, it is in developing and maintaining a meaningful and engaging relationship with HR leadership. I often note they must be both “interested” and “interesting.” With so much information in the public domain, there is truly no excuse for walking into a conversation ill-informed and ill-prepared. Being interested means provider account executives and relationship managers have an insatiable and forensic appetite for client-centric information. Being interesting, then, requires the application of proactive intervention and solutioning to those real-time and long-term organisational considerations. Providers that take the relationship for granted will find themselves on the outside looking in. Even providers that think they have an inside track, whether it is because of a connection on the board or a past partnership with the C-suite, will ultimately be judged by their ability to effectively partner with HR leadership. Notably, several providers are reinvesting in and reinventing their client relationship and governance models to ensure relevancy, utility and currency.
Experience and integration
These ubiquitous, yet under-defined phrases are among the top factors HR leaders weigh to help them evaluate the success of a provider partnership. Moreover, they can often be the burning platforms that drive an organisation to seek new provider relationships. The heart of employee experience comes down to whether the provids tools and resources enhance or hinder an employee’s experience. It does not matter how powerful an HR technology system or service might be; it all comes down to whether the end users both perceive and derive value. In fact, in many organisations, employee sentiment is thought to be the singular and preeminent measure of success. Integration is closely tethered to experience as one should be able to easily navigate across channels and solutions to rapidly identify and execute upon contextual interactions. Those HR leaders who are disappointed in their provider’s ability to play well with others will either create solutions themselves or displace non-integrated providers with those that seamlessly thread content, data and experience among and between their critical solutions.
Direct alignment with strategic vision
The C-suite is responsible for setting organisational strategy and executing upon the vision, which frankly means that providers must directly align themselves with those outcomes, once established. In addition to system and service performance, a successful provider must meet the needs of the organisation now and in the future, or leadership will begin to look elsewhere for a partner. If a provider intends to sunset a particular offering, it must communicate that clearly and without equivocation or confusion. If a provider intends to introduce a new offering on its roadmap, it should build confidence through timely execution and client preparation. Leadership also places increasing importance on the voice of the customer, meaning, it considers how much influence their organisation will have in shaping the provider’s future offerings and enhancements. Community is key, so provider personnel should also overtly foster connection among and between key organisations across their portfolio. These activities strengthen the connection between strategy and execution and can play a major role in the evaluation of the long-term provider relationship.
Whether you are an HR leader actively evaluating your provider relationships or are simply preparing for a difficult discussion, these five factors can help you prioritise your key care-abouts and assess what you are truly looking for in a provider partnership. With budgets and resources getting tighter, expectations growing and velocity of change increasing, it is incumbent upon C-suite leaders to make the best decisions for their organisations, and they need their provider partners to rise to the occasion. Any provider focused on supporting their clients would do well to recognise the C-suite’s priorities. Only then will all parties find success going forward.
Mark Stelzner is Founder and Managing Principal at IA, and a contributor at Human Resource Executive. This article was first published on Human Resource Executive.