If you’re reading this, you’re probably somewhere in the process of making a change to your current way of working. No matter how far you’ve come on your own, we understand that it can be overwhelming, and that there is a lot of conflicting information out there. We’d like to help you navigate your way through the process with confidence.
Once you’ve made the decision to look into adopting a new HR system – or introducing a digital system for the first time – it can be difficult to know what to do next. You might have a lot of questions, or maybe you don’t even know which questions to ask yet.
This guide might be helpful if you:
There are a number of things it helps to know before you start that will save time, effort and stress as you work your way towards your goal of digitalising some or all of your HR processes. This guide is intended to be a starting point that takes some of the mystery out of the process. We will cover:
Once you have identified your needs and gained the support of leadership, you will ultimately need to find a supplier who understands and supports your organisation’s culture and values. While these things differ from one organisation to another, we know that Nordic organisations have certain ways of working, values and ideals in common, despite the huge variety of industries represented in this region. This guide is specifically tailored to Nordic organisations, whether you work locally in Denmark, Norway or Sweden, or you are based in the region but have a global reach.
From paper and spreadsheets to comprehensive software suites, every organisation has a way of managing their HR processes. But when we talk about HR systems in this guide, we’re talking about a digital solution that will:
Much like other business functions, HR has undergone dramatic changes in recent years. Focus is moving away from routine administrative tasks and there is increasing demand for more strategic work. The key to this transition lies in the kind of useful, reliable data insights that can only come from a digital HR system. When this type of system also automates many routine administrative tasks, this frees up time to focus on valuable, strategic work.
Organisations experiencing high growth will often struggle to cope with new staff volume without a digital system to manage it. These struggles will then impact the organisation’s ability to attract and retain talent. In addition, many employees and job seekers are beginning to expect that their workplace should be as self-service driven as their personal lives, particularly in regard to technological tools.
An organisation that offers digital, self-service solutions to its employees is likely to be seen as a modern, forward-thinking employer. Putting a system in place that can manage routine processes automatically, and that offers employees transparency and control, can have a positive impact both on employee engagement and your ability to attract and retain talent.
Further, there is an increasing demand for quality HR master data from IT and systems administrators in regards to access management. Erroneous software licences resulting from out-of-date employee records can cost thousands and waste valuable personnel resources in data maintenance.
When evaluating HR systems, keep in mind what these factors mean to your organisation and where they will be most valuable.
In your research of HR software solutions, you will likely come across many different acronyms and terms and it can be hard to know what the difference is, or whether there is in fact a difference at all.
Here’s a quick guide to the most common terms you’ll come across, and what they mean.
The term Human Capital Management (HCM) covers the full spectrum of routines and processes used to manage people in an organisation. An HR system should support your HCM practices, enabling you to meet your organisational goals unhindered.
While HR practitioners are responsible for maintaining the processes that underpin HCM, it’s managers at all levels who are usually responsible for establishing them and carrying them out. In this way, it’s easy to see how HCM affects an entire organisation and contributes to its success. An effective HR system should sit at the core of an organisation’s HCM practices.
Although there are many differing opinions about exactly which processes and functions belong within the scope of HCM, it’s generally accepted that the term refers to:
Other processes that may also be considered part of HCM include workforce planning, resource planning, time tracking, travel expenses, and payroll management.
HR systems are sometimes referred to as Human Resource Management Systems (HRMS) or Human Resource Information Systems (HRIS), or HCM systems. These terms are used more or less interchangeably, even though some may argue that one term or another refers to specific types or parts of systems.
Given that many modern HR software solutions are module-based and can be customised or acquired bit by bit, even the same solution can be quite different from one organisation to another. For the sake of consistency, and to minimise confusion, we will use the term “HR system” throughout this guide.
We regard an HR system to be a digital solution that assists your organisation in reaching both its HCM and organisational goals by managing HR processes.
Talent Management is a subset of the organisational processes within HCM that focuses on individuals, namely, the ways in which an organisation attracts, develops, motivates and retains talented employees. The purpose of TM principles is to support the development of a dynamic, sustainable and performance-oriented organisation that is geared to achieving its goals.
Talent Management generally consists of:
Talent Management is about establishing processes and measures that help place the right person in the right job at the right time. This then enables their team and, on a larger scale, the entire organisation to succeed and grow.
An HR system that supports Talent Management helps to optimise your organisation by automating processes and storing data in a single system for ease of reporting and integration with other areas of HCM.
The best way to get started is to be clear about what you need in a broad sense; e.g. what problems or challenges are you trying to solve?
The purpose of your new HR system might be to improve productivity and efficiency, to develop common routines and processes, or to cope with fast growth. It’s important to find a solution that will meet your unique needs. That brings us to the next step:
Think about what the catalyst for your decision to make a change was. If you pinpoint the areas where your current system is falling short, or where you see possibilities for automation, you’ll be in a better position to decide where to start. Remember: you don’t need to change everything at once. Depending on the resources you have, it might be a good idea to prioritise the core functions of HR to begin with, like HR master data and onboarding.
An HR system that is customised to fit your organisation will not only provide value to HR, but also to management, IT, your finance department and, not least, your employees. This means finding out to what degree the systems you will evaluate can be customised or purchased in modules that you can add onto later.
In order to find the right solution for your organisation, it’s important to understand your own organisational strategies and goals. The following questions may help your thinking and planning:
|Strategic questions||Tactical questions|
|What are your organisational goals?||How does the way we run HR processes today add value to the organisation? Which processes are causing issues?|
|What must HR do, now and in the future, to deliver on these goals?||How can our processes be further streamlined?|
|What role do you want management and employees to play in performing relevant HR processes?||Which steps in the process – possibly those done manually today – can be eliminated and what effect will this have?|
|Which stakeholders do you need to involve (and when) to make sure you understand the full scope of key priorities and interests?||What integrations and data flows exist today? Do we use an HRIS or ERP system that will need to interact with the HR system?|
|What are the critical success factors for both the software and the end result?||Where should HR master data be stored as a primary source of information?|
|Who uses data and reports today, and where does the data come from?|
You don’t need to have your full business case scoped out before approaching vendors. In fact, there are good reasons to contact providers while you’re still thinking and planning. Vendors have a lot of experience working with many different companies, and they can help identify challenges and suggest solutions. A good vendor will walk you through the different parts of their solution and help you see potential in areas you haven’t even thought of yet.
Another benefit to contacting vendors early is that it will give you a sense of how it might be to work with them in the future, and whether you’re a good cultural match. A vendor who shows genuine interest in helping you succeed and meet your goals, is flexible in their approach, and who gets back to you quickly when you have questions is more likely to be a good partner in the long term.
You may also decide to enlist the help of an independent consultant to help you through this process, such as HerbertNathan, Deloitte, KnowIt, PWC, Martin Jonassen AS, etc.
As an HR professional, you will likely see the need for, and benefits of, a modern HR system more clearly than others in your organisation. But this is a change that will affect everyone, and they need you to guide them through it. After all, the right solution has great potential to make day-to-day tasks easier at all levels, attract top talent, increase employee engagement, and improve the bottom line. If you involve leadership, middle management, IT, and employees early in the process, it will help manage expectations and create a positive sense of expectation about the changes to come.
While adopting a digital HR solution should of course involve IT from a practical and procurement standpoint, systems administrators, data security experts and other IT folk can become your most vocal advocates. There is increasing interest from IT people in how good quality HR data can make their jobs easier. Helping them understand the benefits to their work in regards to access management and integrations with other solutions.
Most organisations use multiple cloud or SaaS solutions and services, and most charge a fee per user – often without distinguishing between active and inactive users. This means that former employees and erroneous or inactive users who haven’t had their access revoked across every service have the potential to cost businesses thousands.
There is also the issue of the individual security in each service. If a cloud or SaaS solution your company adopts doesn’t have adequate security measures in place, a single attack could leave you vulnerable to data loss, employee identity theft, and hefty fines for non-compliance with data safety regulations like GDPR.
The solution is an HR system that manages these issues automatically. When centralised, accurate and secure HR master data system controls data flow to and from SaaS and cloud licencing records, it becomes possible to automate tasks like revoking or changing access levels when, for example, staff leave or change roles.
IT people who understand these benefits will help advocate for your proposed plan to introduce a digital HR system to your organisation.
With all the above points in mind, your next task is to create a strong business case for this change by presenting compelling arguments centred on those factors that leadership will be most motivated by.
When writing a business case, there are some key points you need to address when seeking support from decision-makers; regardless of what your proposal is about, most high-level managers will base their decision on these areas. Making a clear case for how your proposal will affect these areas will increase the likelihood that you’ll gain the support you need.
If your proposal was a success and you have management behind you, it’s time to move forward with the vendor selection process. This means you have some preparation to do. Before you finalise your list of candidates and start attending sales meetings with vendors, you should take time to ask yourself some important questions.
The successful selection of an HR system is the result of good planning. The business implications and consequences are at least as important as the choice of the technology itself.
Know your goal, purpose and vision, what you want to achieve for your organisation, and which problems your chosen system should solve. The successful vendor needs to be able to support you in this vision.
It can take a long time from when you start the HR system selection process until a contract is signed. You should expect to take up to twelve months but, depending on your needs and the number of solutions you look at, it could be even longer. This may sound like an exaggeration, but it takes time to define your selection criteria and then map them to the various solutions and make your evaluation. Companies that have taken their time tell us that keeping their patience is difficult but that it’s worth it in the long run.
When you’re happy with your selection criteria, prepare a list of needs and a description of future HR processes that you can present to the suppliers you invite to your process. We recommend keeping your list of vendors fairly short (no more than five) and that you ask for references before you book your sales meetings and demonstrations. This will give you a good idea of what the suppliers are offering – and what they’re like to work with – before you are given their sales pitch.
Think long-term and holistically, making sure organisational strategy is at the core of the changes you want to make. Think about what you want your organisation to look like at the end of the process, rather than focusing on the way your practices are today.
If you think you’ll need to bring additional areas into your digital system later, make sure the solution you choose accommodates that. You might start with one key area – such as HR master data – and then aim to expand when the organisation is ready. If this is your approach, you should find out if the vendor’s interface is consistent across different modules. This will help your employees recognise new additions as part of a unified system and assist in streamlining onboarding to additional modules in the future.
Today, there is more focus on the collection, storage and use of HR data than ever before. It’s important to choose a system that both complies with data privacy regulations and also helps HR and management make decisions based on accurate, relevant data.
In May 2018, the EU’s General Data Protection Regulation (GDPR) entered into force. This meant more stringent data security requirements and privacy protection measures for all businesses that collect or work with the personal data of EU and EEA residents, including employee data. This regulation not only imposed stricter requirements on businesses’ IT and HR departments, but also on the suppliers of HR systems. Suppliers are now held to a number of stricter requirements as Data Processors. This increase in the security of solutions is, of course, relevant to you from a general data security perspective, but it also impacts your responsibility invest in a new HR system that is GDPR compliant by design.
Let’s take a closer look at one of the most important aspects you should keep in mind when dealing with GDPR and the selection of an HR system.
There are specific requirements outlined in the GDPR for HR systems to provide complete control over HR data. This includes privacy-by-design, migration and export of data, deletion, and access to personal data. By choosing a solution that can support multiple processes, e.g. LMS, master data, absence, etc., you will also find it much simpler to meet GDPR requirements with your data stored in a single system.
In the past, purchasing an IT system involved buying licences and installing a database on a server, either hosted by the supplier or self-hosted. Sometimes this required installing a program or application on each individual computer that needed to use it. These systems, sometimes called “on-premise software” could be adapted to business needs as long as you were willing to pay the price for customisation. Upgrades were issued every 2-3 years, could take several months to implement, and were extremely costly.
Today, it’s more likely that an IT system will be purchased under a Software as a Service (SaaS) agreement that is delivered and operated from the cloud, i.e. hosted in a specialised data centre and accessed via a browser from anywhere, on any device, via secure login. SaaS suppliers issue around 3-4 updates per year, which take minutes to implement, giving customers access to the latest version of the software at all times.
Though there are somewhat fewer on-premise solutions available today, it’s important to understand that choosing between this and a cloud solution will rule various providers in or out of your selection process.
We hope this has been a helpful start to your thinking process, regardless of far you have come by yourself. These are the key takeaways you should have gained from reading this guide:
If you’d like to talk to us about your HR-system needs, we’re happy to meet with you and talk over your options, even if you’re not ready to start evaluating vendors yet. Get in touch with us to set up a workshop or demo at your convenience.
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