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Is asking for system referrals really the best way to source new HR/Payroll Tech?

As I scroll through LinkedIn trying to keep up to date in this ever changing market that we call HR tech, I keep coming across post after post of people putting a generic message out there asking for recommendations for a HR system, and do you know what, it baffles me. So I decided to reach out to my connections and I put a post out of my own to ask what methods people would use to source their new HR system.

Option 1 – A full system selection project. Including full requirement gathering from all departments across the organisation (after all, you are likely buying the technology for the organisation as a whole, not just HR), benchmarking against vendor capabilities followed by the usual beauty parades (demos) and then a decision thereafter.

Option 2 – A referral/ recommendation from another organisation

Option 3 – A tender (a lengthy process normally carried out by public sector organisations)

Option 4 – Using one of the many free system selection tools out there to use as a starting block, but remember, this is only as a starting block, you will still need to compare against your requirements and invite the vendors to demo.

What I was surprised to see, is that 50% of my connections (that voted) chose option 1. To those of you who selected that option I salute you as this is no easy choice as a HR system selection project in itself is a big project and you should be never underestimated.

I had 10% of my connections choose a tender process and I hope that the 10% that chose this option is because they work in an organisation that requires a tender process and not because they chose to. Tenders are lengthy processes with a lot of red tape and restrictions and a lot of the time do not add value to the project. I won’t get in to that now but myself and tenders do not get on, I’m not a massive fan of the process (in case you couldn’t tell)…..but anyway.

Now here comes the surprise, or at least it was to me. None of my connections chose the system selection tool option, is this because people don’t know they exist? Or do they not see the benefit in them? Yes there are some out there that are very generic, however there are others out there (like Phase 3’s hint hint) where you can really drill down and get that initial shortlist you need to start the process

I’ve included the link, feel free to have a play around and see whether what you have matches what your requirements are and does the tool bring up your current system here?

Remember, this is just a starting point and, in my opinion, holds more merit than a recommendation as you will receive a shortlist based on your organisation size, structure and requirements. Bear in mind though that you will still need to invite the vendors to do a demo and benchmark against other systems.

That means that the other 40% of the people voted that they would ask for recommendations from other organisations. Now don’t get me wrong as with anything this method does have it’s pros and cons. I would be very keen to speak to companies that selected this option to see why you would choose that as your first port of call so I’ll put another post out to follow up on that later this week. But also, how many of you that selected this option have then gone on to implement a system based on a recommendation from another organisation. In my opinion this is a good way to get a first list but doesn’t have the benefits of a system selection tool and really is just an opinion based on someone else’s experience.

Referrals can be a great first stop but have their pitfalls. They can be a quick way to get that initial shortlist of potential vendors especially if you’re new to the market or you (like many) find the market confusing and a lot to take in. That for me is where the positives end and there needs to be a lot more consideration around asking for referrals. So many times, I see people that have chosen HR systems purely on the back of a referral and it hasn’t worked out.

I wrote an article on Bad HR systems previously and the short version of it is that there are no bad HR systems, only ones that are suitable for your organisation. If you’re putting a post on LinkedIn asking for a HR system recommendation, how many of the people that reply work in a similar size of organisation, a similar sector and have a similar organisation structure? From the replies I’ve seen this is few and far between. So how can you take that recommendation knowing that the system in question might not be suitable for your organisation?

If you asked people what is a good car and someone came to you and said a Ferrari would you go look at a Ferrari? Maybe, maybe not. It depends on your circumstances. If you had a family of 6 with 2 dogs and you were looking to replace your only family car then you wouldn’t even consider a Ferrari (not unless you wanted the others to start walking everywhere). The same goes for HR systems. If you work in a council for example that has over 3000 employees, with lots of people in multiple positions, would you take a recommendation from an organisation of 50 people who have a simple structure? I would hope not.

If you are going to ask for recommendations, then you need to follow up with the person who has recommended the system and really go in to detail about their experience. Were the initial requirements similar to yours? Was their budget the same? How long was the intended length of the project? Did it include payroll? How much of the processes did they already have in place, did they have to change their procedures to fit the system or could it take their existing procedures? If you’re speaking to someone who has maintained their database and kept their procedures up to date, but you’re an organisation that is still using paper and spreadsheets, again not a good comparison and therefore I’d be sceptical about accepting their recommendation.

My final point on recommendations is to not forget the service they have received from the vendor. Now before you read on, I’m not going to bad mouth any vendors or anything like that. BUT. Even though someone has had a successful implementation and received amazing service from a vendor, this doesn’t guarantee that you’re going to get the same experience. So many times we see a varied level of service from one customer to another and unfortunately this is just the way of the world. You need to put everything in place that you possibly can to make sure that this doesn’t happen to you. You need to make sure that you have a solid Project Manager who knows the world of HR tech. You will need to map out all of your desired processes and this shouldn’t be based on what you’re doing now whether that be in your current system or your manual processes. Use this as a time to implement change, streamline your processes, do things that will make it easier for your employees which in turn will lead to their buy in of the new system. Doing these things will make your life easier throughout the implementation, so even if the service from the vendor isn’t as good as the recommendations then you’re not going to be compromised. A wise man once said to me “Drive don’t be Driven” and when it comes to HR/ Payroll technology projects I couldn’t agree more .

A recent figure showed that 70% of all HR technology implementations were deemed to be unsuccessful at the end of the project. That figure is astoundingly high. Now don’t get me wrong there are a lot of reasons why this figure is so high, but don’t fall at the first hurdle by choosing the wrong process to source your HR system or by underestimating the level of detail needed to make the correct choice. Make sure you back up the recommendation. Our former MD Kate Wadia used to always push us to “Ask why 5 times” whether that be when writing a blog or writing a process map or choosing a HR/ Payroll system. Challenge everything, including the way you think. Don’t underestimate that this project if done correctly will take up a lot of your time and that if you rush through the selection of the system and make the wrong choice you could easily fall in to that 70%.

For more hints and tips on how to successfully implement a HR system have a read through our 12 steps to success ebook which can be found here:

If you want to discuss this or any of my other posts then drop me an email: matthew.ramm@phase3.co.uk

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