With all of the HR challenges over the past four years, it’s never been more critical for companies to build a robust HR tech stack that makes workforce management more effective and streamlined. By focusing on a few core principles, HR teams can build and maintain a tech stack that improves employee satisfaction, reduces waste, and improves strategic decision-making, says Rob Whalen, co-founder and CEO of PTO Exchange.
HR teams face significant challenges in 2024: a competitive labor market, economic uncertainty, and ever-evolving employee demands and expectations. Additionally, HR leaders need to navigate budget constraintsOpens a new window , low levels of employee satisfaction and engagement, and logistical challenges like the persistence of remote and hybrid work. It’s never been more important for companies to build a robust HR tech stack that makes workforce management more effective and streamlined.
When companies consider improving their HR tech stack, it is necessary to focus on security, integration, and automation. Systems should work together seamlessly to eliminate redundancies, increase efficiency, and improve transparency. Employee-facing solutions must also be accessible and user-friendly, and HR teams should actively seek feedback. Companies must constantly evaluate the performance of their HR tech stack to resolve issues as they arise, stay up to date with the latest innovations, and identify potential efficiencies.
The quality of a company’s HR tech stack can majorly impact everything from hiring and retention to employee productivity. By focusing on a few core principles, HR teams can build and maintain a tech stack that improves employee satisfaction, reduces waste, and improves strategic decision-making.
Centralization and Integration Are Critical
Disjointed and cumbersome manual processes are among HR teams’ biggest sources of frustration. For example, companies often have separate systems for payroll tracking and processing, benefits administration, and a wide range of other functions that could be consolidated in a single centralized platform. In the remote and hybrid work age, many HR teams also have to worry about different forms of legal and regulatory compliance depending on where their employees are based.
Companies that implement integrated HR tech solutions simplify administration, improve data integrity, and reduce security risks. Integrated solutions make automation much easier, which can drastically increase efficiency and limit the number of human errors. Centralization is also essential for effective data collection and analysis. Consider an HR team trying to reduce turnover and increase the utilization of benefits. Instead of using siloed administrative solutions for compensation and benefits, companies can integrate these solutions to compare uptake rates, benefit costs, and other relevant data points.
An integrated HR tech stack can also greatly impact hiring and recruitment. For example, companies with a single centralized database of prospects and previous applicants (what’s known as “talent rediscovery”) can target their recruiting efforts more directly. Centralized digital solutions can make recruitment much smoother—a key competitive differentiator when 72% of candidates say the quality of the interview process affects their decision about whether to take a job, as per Cronofy’s third annual Candidate Expectations report.
Centralized workforce management solutions will make life much easier for HR managers and employees. They offer greater accessibility, reduce time-consuming and error-prone manual tasks, and facilitate interoperability across departments and teams. All these improvements will drive user engagement and maximize the value of your HR tech stack.
Data Protection and Cybersecurity
As data privacy and security regulations become more stringent, HR teams need to be capable of collecting and managing data safely and effectively. HR solutions providers should possess security certifications like Star or SOC I and II, while employees and other users must be trained to handle data securely. Members of HR teams responsible for data collection and management should understand the architecture of their solutions, such as where data resides, how users access and interact with it, and whether the data is encrypted in transit and at rest.
Users are your most significant security vulnerability, so it’s vital to implement a full suite of cybersecurity controls such as multi-factor authentication (MFA), single sign-on (SSO), and zero-trust architecture. According to the 2024 Verizon Data Breach Investigations Report, 68%Opens a new window of breaches involve a human being at some point. This is why it’s no surprise that a recent IBM report found that employee training is one of the top mitigating factors in the overall cost of a data breach. Microsoft reports that when 60%Opens a new window of employees say they don’t have the right skills, cybersecurity training (as well as training for digital transformation more broadly) will help them advance their careers and prepare for the workplace of tomorrow.
Some sectors are more susceptible to data breaches than others. For example, IBM foundOpens a new window that the average cost of a data breach is much higher in healthcare than in any other industry. This is why some healthcare providers are working to reduce potential attack vectors while unifying the user experience. One way to do this is by enabling MFA and SSO through a single benefit administrator—an approach that improves security and the user experience for employees.
Companies are responsible for collecting and managing extremely sensitive data on employees’ finances, health, taxes, work histories, etc. While HR teams must gather this data, it’s also crucial to ensure that the data is as private and secure as possible. Data literacy and cybersecurity should be central aspects of digital transformation.
See More: 6 Things Your Employee Cyber Security Policy Needs
Managing the Digital Transformation
A recent Gartner survey found that 82% of HR leaders say managers aren’t “equipped to lead change,” while 77% say their employees are “fatigued from all the change.” Perhaps this is why Deloitte has found that 70% of digital transformation efforts fail.
As HR leaders improve their tech stacks, several critical priorities need to be focused on: user-friendliness, scalability, and adaptability. Beyond implementing centralized digital platforms, the best way to improve user accessibility is consistent training throughout the year. Companies can ensure broader adoption by providing access to self-service training via online webinars and other learn-as-you-go resources. Employees also need to be educated on how these solutions support them individually, which will increase buy-in across the organization.
A successful HR tech stack also has to be scalable. HR leaders should assess their current technology infrastructure to pinpoint bottlenecks or other obstacles hindering scalability. This assessment should consider system integration capabilities, data storage capacity, and performance under increased workload. It’s also important to align HR technology investments with the company’s goals, culture, and operational needs. A rapidly growing startup may prioritize agile and cost-effective solutions. Still, multinational corporations may require more robust global HR management capabilities and the ability to integrate with legacy systems.
Finally, HR teams should establish a culture of innovation and continuous improvement. This means soliciting and analyzing end-user feedback, staying updated on industry trends and emerging technologies (such as AI), and regularly evaluating the effectiveness of existing HR tech solutions. By embracing digital transformation and giving employees the resources to manage change effectively, HR leaders can build a tech stack that increases efficiency, engagement, and productivity.
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