Like any department within an organization, the discipline of Human Resources (HR) is increasingly dependent on technology to effectively recruit, engage, manage, and develop employees. An HR tech stack, therefore, is the group of integrated digital tools, software, and platforms an HR department uses to streamline, optimize, or otherwise support HR functions at an organization. In this post, we’ll review the benefits of leveraging HR technologies and also cover the considerations you should keep in mind when selecting the mix of tools to include in your own HR tech stack.
How to build an HR tech stack from scratch
With the wide array of tools and solutions on the market, it can be overwhelming to choose the right combination of technologies for your organization. Every new, shiny object that hits the market promises to be the one-stop answer HR teams have been waiting for. That is, until you peek under the hood and find the flaws. Due diligence before sinking budget and development time into a tool can help you avoid buyer’s remorse over investing in a product that misses the mark. That work begins with asking yourself whether the systems you’re evaluating:
- Provide discrete functionality: Too often companies purchase systems with overlapping responsibilities, or that duplicate capabilities from systems they already have. When building your HR tech stack, favor systems that add discrete functionality not offered in other or existing systems.
- Integrate with each other: A system considered in isolation might be great. However, if it doesn’t integrate with your systems of record or other HR technologies, you’ll be left with siloed systems that create more work than they save.
- Solve mission-critical challenges: With finite budgets it’s essential to identify the must-have functionalities and separate those from the “nice to haves.” If you don’t first address your mission-critical needs, you’ll be left scrambling for manual—and time-consuming—answers.
- Deliver enterprise-ready scalability: When building your HR tech stack, it’s important to build for both the present and the future. Choose systems capable of scaling as your business expands and your HR needs grow more complex.
Why you need an HR tech stack
Organizations are running leaner than ever, and this absolutely applies to HR teams as well. While many recommend a HR-to-employee ratio of two staffers per 100 employees, many organizations run closer to a 1.4/100 level. This makes it nearly impossible for teams of this size to effectively manage the broad responsibilities required of them without leveraging technology. With a robust HR tech stack, smaller teams can deliver outsized results. A proper tech stack can enable HR to more effectively streamline and automate tasks while simultaneously minimizing the mistakes and delays incurred when completing tasks manually.
HR functions can benefit from technology
Any organization building an HR tech stack must address some foundational functions of the department. Typically, these include candidate assessment, applicant tracking, diversity and inclusion, onboarding and training. Additionally, teams can greatly streamline activities demanding precision, accuracy, and efficiency by leveraging technology to manage payroll and benefits. Since HR teams manage significant amounts of sensitive information, using technology to handle performance management and reviews can effectively manage tasks, protect employee privacy, and streamline compliance. Finally, many organizations struggle with employee engagement, particularly given today’s geographically distributed workforces. Leveraging technology to engage and reward employees has become an essential tool in any HR practitioner’s quiver.
Functionality to include in an HR tech stack
Since an HR tech stack is a must, let’s explore a few examples of the associated functionality you may find in a typical HR tech stack.
- Applicant Tracking: An application tracking system or ATS is a one-stop tool for a seamless hiring process. It can manage everything from automating candidate pipelines to creating dedicated candidate pools. It can also help you engage the hiring teams early and efficiently in the candidate screening and routing process.
- Applicant Assessment: Before you hire, it’s essential for you to measure and assess the skills of your candidates to make sure you make the right hire. A candidate assessment tool can help you save time and lower costs from prepping, assessing, and evaluating candidates. They can offer digital assessments, insights, and automate the communication process with candidates.
- Onboarding Tools: Once candidates are hired, the hard work begins to acquaint them with your organization, processes, policies, and more. An onboarding tool creates a consistent, repeatable process that ensures every employee has a solid foundation from the start.
- Diversity and Inclusion: These tools enhance diversity and inclusion in two ways. First, they can help enhance the diversity hiring practices and help spot areas where team composition can be better diversified. Later, these tools can help keep organizations accountable by helping to measure diversity, equity, and inclusion data.
- Payroll and Compensation Equity: Payroll is a complex process fraught with opportunity for errors, both from an employee compensation perspective, but also in terms of tax compliance. The right platform will automate part of your payroll operation, saving time and providing accuracy and analytics about your payment process. This includes providing data you need to ensure compensation equity.
- Benefits: Each employee brings a unique set of preferences and personal circumstances to the benefits process. A digital tool can help your company personalize some of your benefit options so workers can take advantage of the ones most meaningful for them. This positions your company more competitively in the marketplace and boosts employee satisfaction with the packages they receive because they had a hand in crafting it themselves.
- Culture and Employee Engagement: Employees want to be heard, so you need an efficient way to collect their feedback en masse while also ensuring they feel engaged and rewarded. The right employee engagement tool can promote a two-way exchange of ideas, foster a culture of praise-giving, and enable your team to receive regular rewards and gifts. Together, these help keep staffers feeling authentically appreciated.
Considerations when purchasing your HR tech stack
When evaluating technology, it might be tempting to settle on one solution for all your needs. But it’s unlikely that one solution can deliver exceptional experiences across all HR use cases. This leaves your HR tech stack lacking in fundamental ways when compared to organizations that use best-in-class tools designed for specific HR capabilities. Instead, choose complementary solutions that combine to provide the rich experiences employees expect. Here are a few factors to keep in mind as you evaluate your mix of tooling:
- Support: Select a solution with the right level of support based on your in-house IT resourcing and expertise.
- Ease-of-use: Ensure high adoption for your HR programs by choosing technology that’s intuitive and accessible across a range of user technical abilities.
- Training: Some software packages come with personalized training to get your team up and running. Others have eLearning modules and documentation to ease the onboarding. Keep your training needs in mind when selecting your platform and factor any additional training costs in from the onset, if they’re not already included.
- Security: Infrastructure security is only one aspect of security to keep in mind. Be sure your chosen solution also has workflow, permissions, and roles to ensure sensitive information is only viewed by authorized personnel.
Implementing your HR technology
With cloud-based SaaS solutions, organizations have the ability to get the latest platforms free from worry about maintaining on-premises infrastructure. With that concern out of the way, companies are free to focus on other priorities, like how much customization they’ll need or whether they can use tools out of the box. Even if you don’t require customization, you will likely require some specialized assistance to configure your integrations, so they work as intended.
To avoid resourcing issues, many organizations take a phased approach to their HR tech stack implementation by onboarding systems one at a time. This keeps projects manageable and ensures employees can be effectively trained before the next platform launches. It also ensures you take a holistic view of your needs and understand each platform’s shortcomings, so you can best identify complementary HR IT products.
Once launched, you may want to consider contracting for managed services to keep your solutions updated, bug-free, and operating properly. Further, contracting for enhanced training can ensure you are leveraging the full functionality your system offers. Too often, insufficient training leads to underutilization of platform features leading organizations to purchase technology they don’t actually need. Better training can ensure you avoid this fate.
Final considerations for your HR tech stack
When it’s time to implement or overhaul your HR tech stack, be sure you identify key considerations going in. What are you trying to accomplish? What functionality does your organization need? Once you know, choose complementary technologies covering a wide range of HR needs, from recruitment, payroll and benefits, to employee engagement and diversity and inclusion. Ensure your platform integrates as needed, is easy to use, and that your teams are properly trained so you get the most benefit out of your IT investment. Decide whether you want to implement all at once or in stages, and whether you’ll be handling it all with in-house resources. Contracting out for managed services has a cost, but it can be the best way to ensure your team is utilizing your technology to its full potential. When smartly configured, your HR tech stack can be the backbone of your human resources team for years to come.