One of the most common questions we get from high growth companies is: what is the right HRIS system for an organization our size?
The first investment in a people system is usually a Payroll & Benefits system, for all the obvious reasons. The second system is most often an Applicant Tracking System (ATS) since hiring talent is so critical.
So, how do you know when it’s time to move from Excel and paper forms to a more robust way to manage your people – when is it time to invest in an HRIS (Human Resource Information System)? If you’re asking that question, it might be an indicator that it’s already time. There are a lot of factors that go into that decision: size of your workforce, complexity in your geography and types of positions, speed of growth and more. If your organization is close to 200-250 employees, you need to seriously consider adding a more comprehensive set of capabilities found in the modern HRIS.
If you are on the cusp of fast growth and your 200-250 employees will be 500+ in 18 months, make moving to a HRIS system an urgent priority. People can be the fuel, or the bottleneck, for growth. So, it makes sense that the earlier you establish a system for your people ecosystem, the easier you will be able to scale up efficiently and with speed.
Now you know you need an HRIS, where to start? There are five phases to deciding on your HRIS system:
- Phase I: Planning for what you need and can afford
- Phase II: Building a cross functional selection team for choosing and evangelizing the new system
- Phase III: Identifying and reviewing HRIS System options that are right for you
- Phase IV: Making your choice and negotiating the best deal
- Phase V: Get ready for implementation
We have built a "HRIS Features Checklist" and "Sample Questions to Ask in the Selection of Your HRIS" document, which you can download at the bottom of this blog.
Before we dive in, let’s talk about the often short changed but critical Phase I that we call “Planning”.
The right HRIS system should house or link to you company’s:
- Benefit administration
- Applicant tracking/recruitment
- Performance management
- Talent management
- Reporting to drive people acquisition and development decisions
Because of these many interdependencies, your HRIS is the technological ‘hub’ of your people operation and therefore this system, not payroll, is the foundational system of record for all your ‘People’ information.
Upgrading your HRIS is a big decision and once you know you need one, you will naturally be anxious to get started. Everyone knows planning is important, but too often, the planning phase for the HRIS involves outreach to a network of HR colleagues to find out ‘what HRIS do you use?’ Then a few minutes Googling, to complete ‘research’.
Although there is a role for referrals and research in the HRIS selection process, you need to take a step back first. In the Phase 1 planning period, the HR team and ultimate project leader gets his/her thoughts clear and organized about what the HRIS needs to do to support the organization. This step occurs before any outreach, research or establishment of even the HRIS selection team. HR is the primary user of the HRIS and will be most directly impacted, positively or negatively from this system, so the process starts and ends with HR as the owner of this new system. The outcome of planning is a ‘Model’ of an ideal HRIS.
The ‘Model’ is an outline of organizational needs, budget, and basic technology requirements based on HR’s assessment of needs. The 'Model' is the framework for the following phases which include finalizing the needs, priorities, budget, technology, etc. and creating a structured approach to researching and assessing HRIS systems. It is also the features that you DON’T need or want, perhaps because you already have them or they are more than your organization needs right now.
To create the Model, start by answering these questions about your organization:
- What are your current people needs, opportunities and challenges?
- What are your future growth plans that will exacerbate your current needs and add additional challenges to tracking, reporting, compliance and even retention?
- How ready is your organization (or how ready SHOULD it be?) for reporting that informs your decision-making around people or for developing and retaining talent for growth?
- Is there anything we don’t need or want right now in our system? For example, one company we worked with prioritized reporting and payroll, leaving performance management and talent planning off their list for the ideal system.
Once you have these questions answered, take the information in Questions 1-3 and put it into 3 buckets: Must Haves, Nice to Haves, and Wish List.
Must Haves: These are your non-negotiables and system imperatives for your HRIS.
Nice to Haves: These are the bells and whistles that would be great but you’re willing to compromise if they aren’t available or are too expensive.
Wish List: These are the cool features that you’ve seen in other systems or the answer to ‘it would be great if the system did this’. These feature(s) will often be the differentiator to help you choose your system from among your finalists.
Finally, you need to determine a budget or a range that you’re willing to consider for this system.
- Cost of current systems that you are replacing
- Soft cost of lost productivity due to paper intensive processes, manual tracking mechanisms, answering employee questions, etc.
- Lost business cost due to manual or no reporting to support ‘People’ decisions
- Culture, morale and external hiring brand costs based on suboptimal messages
Have some idea of your budget, but keep an open mind as you explore systems to make sure you select the right HRIS to support your firm. Also know that system providers can be very aggressive in pricing, especially when faced with competition and at the end of a quarter. If you would like a more detailed and expanded list of sample questions to support creation of your Model, please download the form below.
As the primary user of the HRIS and the project lead tasked with guiding the team and project to a successful conclusion, it is critical that the HR leader has created a solid Model before moving to Phase II, "Building a Cross-Functional Selection Team."
By doing this, it will assist you to:
- Stay clear in your own mind when working with the Selection team
- Sort through and accept or disregard suggestions from the Selection team without losing the focus of what this system needs to do
- Shorten the discussion in Phase II, where you work off the Model with your Selection team to finalize the functions and features needed for the HRIS
- Address any issues with your other 2 key stakeholders (Finance & IT) early in the process when they see your thoughts on the Model
It may be tempting to rush into demos of systems your colleagues have recommended. But take the time to first understand what YOUR organization needs and can afford can save you a lot of time and the heartbreak of a poor decisions for some time to come.
For more information, we encourage you to watch Insight's How to Select an HRIS webinar and email your questions to us at HRonCall@insightpartners.com.