Survey: HR Tech Helps Smaller Firms Excel

The 2016-17 Sierra-Cedar HR Systems Survey shows how evolving technology is helping organizations reach goals that match their corporate cultures.

By Jack Robinson

Cloud-based HR software has been a boon to smaller companies, new research suggests. Some with as few as 50 employees are embracing tools once available only to Fortune 500 employers.

That's one point highlighted by the 19th annual Sierra-Cedar HR Systems Survey, to be released today at the HR Technology Conference & Exposition®, running through Friday at the McCormick Place convention center in Chicago.

Companies no longer need their own data centers to run specialized software. Lower capital costs and scalability of cloud-based applications gives smaller companies access to "more sophisticated technology," says Stacey Harris, vice president of research and analytics at Sierra-Cedar, an HR technology consulting firm based in Alpharetta, Ga.

And "competition for talent makes it necessary" for many smaller companies to have those tools, she says.

The Sierra-Cedar survey concluded that HR technology has become a "major differentiator" for smaller firms that outperform their peers. Those that had above-average adoption of HR technology reported double the revenue per employee, the survey found.

Adoption of cloud-based HR tech is surging in small companies, perhaps in part because they have not made the same investments in older technology as larger firms. The survey found, for example, that 57 percent of firms with under 2,500 employees have a cloud based HR management system, compared to 39 percent of those with 10,000 or more. year's survey, conducted from May through July, polled more than 1,500 organizations employing nearly 21 million workers. Among other key findings:

·         Strategy rules: Companies continue to focus on strategic issues in HR technology, with 40 percent of those surveyed planning a major initiative in the coming year. That's about the same as the 43 percent who said the same in last year's survey.

·         Cloud gains steam: For the first year, more than half of organizations surveyed are running their payroll software in the cloud, up sharply from 2015. In part this may be due to a larger number of small companies included, the report notes.

·         Experience matters: Employers are becoming more picky about how well software works for the end users. Two-thirds of respondents said a poor user experience influenced their decision to give vendors  a low satisfaction rating. That's up sharply from 47 percent a year earlier.

·         Mobile goes mainstream: Rollout of mobile HR technology continues to soar, though the growth rate is slowing as more organizations get on board. Of employers surveyed, 39 percent are using it in some form, up from 23 percent in 2015 and 13 percent in 2014. And 47 percent plan to launch mobile HR tech in some form in the coming year. Those that have younger workforces or are heavily invested in cloud technologies were more likely than other organizations to have a mobile component.

·         Social media becomes standard: Use of social-media platforms such as Facebook for strategic HR purposes has "become the norm," with over half of organizations surveyed reporting it.

·         New ideas gain traction: Wearable devices at work continue to grow in popularity as strategic initiatives, as are "machine learning" and sentiment analysis. About 8 percent of respondents reported using wearable devices to gather data on employees; another 8 percent are considering such a step.

This year's Sierra-Cedar survey included an analysis of how organizations are using HR technology based on their culture. The firm created indices for those that are "data-driven," "talent-driven," as well as "top performers" in a traditional business sense.

Traditionally, companies invested capital in HR technology simply to bring down long-run costs, the report notes. With the shift to cloud-based software that is essentially rented as a service, more see HR technology as a tool to achieve other goals.

This is seen in different HR tech priorities set by the different types of organizations. Top-performer organizations, for example, are more than twice as likely to invest in an enterprise integration strategy as those in a comparison group. Talent-driven organizations put a higher priority on workforce planning. And data-driven employers are more likely to emphasize development of an HR systems strategy.

What's ahead?  Among the trends worth watching, according to this year's report , is increasing friction between privacy concerns and employee expectations for individualized experiences.

Many employers are worried about use of employee data in ways that could compromise confidentiality, Harris says. At the same time, younger employees in particular value technology that helps them have  a voice in the organization. "Employees want to be known," she says. "They want to be heard."

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Oct 5, 2016
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