Ventana Research Analyst Perspectives

Even the most casual observer of HR Technology trends and associated vendor marketing themes will have noticed that the notion of “putting people first” has become ubiquitous as a way for vendors to distinguish themselves. This has become a double-edged sword. Customers ultimately benefit from the intense competition to add functionality that supports this claim, resulting in richer and more robust offerings. The downside, as is the case when any core plank in vendor value propositions becomes ubiquitous, is that buyers are increasingly challenged by differentiating whose “people first” claims are more supported by product capabilities and plans. Also difficult to discern is which product will translate into tangible business improvements within their unique organizational context.

In my early days as an HR practitioner responsible for selecting and deploying HR/Payroll systems, one disconnect became apparent to me—new technology investments considered the most compelling by management typically revolved around quantifiable benefits to the organization such as efficiency gains, cost savings and shifting staff to more impactful activities. But expected ROI was rarely realized without enthusiastic adoption of the system by employees who frankly didn’t care as much about efficiency gains. What employees did care about in those days are arguably exactly the same things they care about today: having their value recognized, be fairly rewarded, have opportunities to advance and be challenged in meaningful roles, and feel like their interests, needs and welfare are being taken into account. These “conditions,” along with the organization’s effectiveness in removing sources of frustration and friction from an employee’s daily life at work, are the embodiment of a superior employee experience.

Fortunately, the long-standing disconnect highlighted above is on its way to being eradicated. Most HCM systems vendors and customers recognize that the products that deliver the most value over sustained periods directly support and enable the needs, goals and interests of both employer and employee, while readily adapting to changing needs for types of workers and operating contexts for organizational agility. Our market assertion is that during 2021, three-quarters of organizations will identify organizational agility as an HR-led business imperative, with one-half adopting an examination of worker types (e.g., gig workers) as an integral priority. That said, and digging a bit deeper, it’s important to realize that some business outcomes and results directly enabled by HCM systems have clear and quantifiable value to both employee and employer, while others such as cost savings or better compliance are, on their surface, much more in the employer camp.

Yes, when companies save money they can hire more and pay better, but let’s focus on other outcomes that are more obvious in their duality. Two such business benefits are improving employee productivity and elevating organizational agility. While both may seem more employer-centric in their focus, employees generally have an intrinsic need to be more productive (as it leads to a more meaningful workday), and to be employed by an organization that easily adapts to changing market risks and opportunities as opposed to being an industry laggard and losing ground competitively. The latter is also correlated with having to find new employment. Of these two benefits, improving employee productivity arguably edges ahead, and therefore gets the recognition here as the singular HCM system imperative for putting people first because employee productivity levels are much more quantifiable than degree of organizational agility.

Case in point: A 5,000 employee company with average revenue per employee of $100,000 increases productivity by a very modest 5% to $105,000 per employee. Doing the easy math, 5,000 employees multiplied by a $5,000 productivity uptick equates with value creation of $25 million dollars. In fact, the focus on employee productivity was also borne out by Ventana Research’s Next-Generation Human Resources Management Systems Benchmark Research, as over two-thirds (68%) of survey participants identified “increasing workforce productivity” as a major factor in evaluating next-generation technologies.

Productivity may be a universal and continuous goal, but it might not be the biggest pain point in an organization. Having a more inclusive culture and diverse workforce, for example, has not always been an easy goal to achieve for many business entities. It is also a goal that is typically shown to be correlated with better business results, which leads to attracting and retaining talent. In turn, productivity improves from having more highly engaged and skilled workers within the organization.

When asked by HR technology buyers which vendor functionality and sources of differentiation should get priority attention in their evaluation process, I respond by recommending the following approach and sequence of activities. This is essentially the same way to determine their HCM systems vendor short list:

1. Identify and gain consensus on the most important business improvements and outcomes needed to move the organization forward, and prioritize that list.
2. Logically group or link the business outcomes, such as “improving productivity” for example, to other business goals such as attracting top talent or providing career management tools to improve employee engagement, thus their commitment to excellence.
3. Determine the organizational and capability changes needed to achieve the outcomes.
4. Identify new/different/better technology capabilities and attributes to achieve the organizational capability changes.
5. Document, prioritize and be guided by other vendor-related considerations.
6. Compile a short-list of providers that demonstrably offer those systems and technology capabilities, differentiate in the market around them, and plan to strengthen them even further.

HCM vendor offerings that are highlighted by the provider in its marketing and positioning, or by the prospective organization in its independent assessment, might be obvious in their “purpose-built ability” to improve worker productivity. An uptick in employee productivity could also result from an indirect connection or vendor point of emphasis such as functionality for improving worker engagement levels by being able to broadly personalize their experience at work. Either way, the emphasis of “putting people first” is a solid starting theme. Work must then begin by customers to understand all the capabilities and develop productivity-related metrics that would enable an organization to achieve this outcome.