HR Tech Stack Considerations

HR Tech Stack Considerations

I was doing some research, recently, and couldn't find useful examples of HR Tech Stacks. Besides companies pitching how their own products might fit into a hypothetical HR Stack, I didn't see much out there. So if anyone finds it helpful, (including me in the future,) here's what I'd consider for an HR Tech Stack.

  • The Basics

  • Future Planning

  • Talking to your employees

In each of those three areas, there are...

  • Considerations for companies of all sizes,

  • Items that are mostly relevant for larger or more complex businesses.

Before jumping in, here are two problems you're unlikely to solve and notes on reporting and historic records.

Unlikely To Solves

One Big Database
In theory, getting everything you need in one, easy to use software solution would be great. In practice, there are diverse needs between large companies, small companies, nonprofits, restaurant groups, retailers, warehouses, etc. You're unlikely to find One Big Database that elegantly covers all of your particular needs.

If you did find a single solution to rule them all, I'd expect the cost to install, pay for it annually, and hire consultants to maintain it would be prohibitively expensive.

When you have an HR Tech Stack that includes multiple software solutions, make sure your base system plays nicely with others. Look for vendors that have very cozy (and secure) relationships with the database you consider your main database, along with automated data sharing.

A Good Performance Management Tool
Most performance management solutions are flawed because they're based on flawed philosophies. As a society, good performance management remains a largely unsolved problem; it's hard to build effective software on that foundation. I can think of 2 solid performance management philosophies, and only one of them has been turned into a (very good) software solution.

At some point, with any software solution, you'll need reports. Most businesses are unique enough that canned reports aren't particularly helpful, once you get beyond the most basic reports any system would have. Instead of a solution with lots of canned reports, I'd target a solution that easily creates custom reports.

Historic Records
Always consider how a database stores historic records, and how easy it is to access that data. My personal preference is to store history on everything: former managers, change reasons, new addresses, raises, promotions... you name it.

The Basics


Payroll and Employee Data
No surprises here... you need to pay your employees and you need to store information about your employees in order to pay them.

Find a payroll vendor that offers as many payroll tax services as possible and purchase them all... especially if you operate in multiple states. You've got better things to do with your time than figure out Ohio's local taxes.

If you have hourly employees, you should have timekeeping and payroll in the same system, with as few moving parts between them as possible. That reduces mishaps while transferring data and gives you a better shot at paychecks that match employee expectations every single payroll run.[1]

If you're a small shop, your benefits broker[2] may have a website you can use to track benefit enrollment.

Similar to timekeeping, the convenience of having benefits and payroll in the same system is automating the process of turning enrollments into payroll deductions.

To keep employee information up to date in the provider's database, try to create a direct connection between your database and theirs. Otherwise, ensure your system produces CSV files that can be directly uploaded to your benefit providers.

The Basics+


Tracking volunteer hours
Many nonprofits need to track volunteer hours... depending on the size of your organization and the number of repeat volunteers, a digital solution might make sense. For what it's worth, I've always been hesitant to house volunteer hours in the same database that holds paid employees. This is especially true if you would have hourly employees and volunteers performing similar tasks and tracking their hours in the same solution.

Payroll in foreign countries
Paying Employees
When it comes to actually paying employees outside of North America, I'd strongly suggest looking for in-country accounting firms. With one employee or hundreds, foreign payroll is unfailingly more complicated than you expect. Establish a direct connection with a local resource, who can provide actual advice & direction and work through idiosyncrasies on your behalf.

Storing Pay Data
Tracking pay rates in foreign currency is a surprisingly tricky problem: Do you store the salaries in USD/Budget Currency or in Local Currency? What about exceptions? When doing currency conversions, do you use daily foreign exchange rates so your cash accounting is more accurate, or do you set a rate for the year so reporting between the two currencies is consistent? What's the gap between your ideal and your system's capabilities?

Storing Variable Compensation
If you're a company with a large number of salespeople and commission plans, finding an elegant way to store and retrieve all of that information becomes annoying quickly.

Some things to evaluate in a potential solution: the ability to store records in Local Currency vs Budget Currency, foreign currency conversion, the ability to store data for employees with 2 separate plans, how does the system handle historic records, how do you get all of that info out of your database and to your CEO or accounting team?

What does IT need?
Since your database already holds information IT needs for their systems, a direct connection to IT to populate their records and automate account creation and deactivation might be helpful.

Future Planning


Applicant Tracking
You'd have to be a Very Small Organization to prefer getting resumes via email vs. having an applicant tracking system.

I'd advocate against using technology solutions to filter applicants in most situations, so I wouldn't focus on that feature in a potential solution. With automated filtering you only get exactly what you already think you want, and there's no opportunity to:

  • Make real time corrections to any bias that's present in your filtering, or
  • Learn and make non-obvious connections that illuminate new possibilities.

If you can't expand your sense of what's possible, you'll trend toward very mediocre results.

Future Planning+


If I were starting my own software company...

All businesses need to accurately track what's happening right now. Large, complex, growing businesses need a lot of help sandboxing and forecasting what the future could look like.

Most HR technology I've seen is focused on tracking a company's current state and isn't particularly good at allowing users to simulate future states. I think this is the largest missed revenue opportunity in most HR software solutions.

Org Charts
Creating org charts manually is irksome. If you need them, you should probably find software that does it for you.

Any good org chart solution accurately reflects the current state of a company; look for one that allows users to easily imagine future states. If you need to shift the structure of your organization, taking a current org chart as a starting point and then creating drafts of other structures is a wonderful way to visualize the change.

Pay Increases
When the time comes for raises, if you're lucky enough to get by with one or two spreadsheets and a few backs-of-napkins, there's no need to complicate matters. That said, once you get to a certain size you'll want software that:

  • Allows visibility for direct and indirect reports,
  • Can switch between currencies, if necessary,
  • Can finalize and save those new pay rates in the database, without additional data input,
  • Makes it easy to forward finalized pay rates to all the people and departments who need them.

Data Visualization, KPIs, Forecasting
Depending on the type of data you need to provide to your leaders, grantors, board members, donors, etc., you'll want the ability to produce (and quickly update & reproduce) visualizations that tell your data's story.

Tracking Open Positions
As employee counts increase, it's easy to lose track of how many positions a company currently has open, especially if they're not in active recruitment. A software solution can help track those openings and also track future cash requirements[3] and vacancy rates.

Talking to your employees


Talk to your employees

If you're a manager, you should talk to your employees.

When I think of talking to employees, these are some of the things that come to mind:

  • What does my employee want to do with their career? Are they on track to do that thing, whatever it may be, even if it means they won't report to me anymore?
  • What things do I really need someone to do? Are those things getting done? Are they getting done well?
  • How good is my employee at doing stuff? What about, specifically, stuff I need done that is currently going undone?
  • If my employee left, how much would I have to pay their replacement? Would I be able to find someone as good?

Talking to your employees is useful because you learn things that help you answer questions like the ones above. In place of talking to their employees, many companies do "Performance Management". In all flavors, performance management is more focused on telling than learning; if you don't learn, you don't improve.

If you can find one, get a software solution that facilitates managers talking to their employees. What you learn will help you focus your workforce; the people in your workforce, in turn, will run your business more successfully.

Talking to your employees+


Learning Management Systems
If you have a number of skills that new employees need to learn, or trainings and certifications that employees need to complete, a Learning Management System is a great way to have those trainings/certifications in a single system and easily trackable.

Talent Assessment
Even when managers do a good job of talking to their employees, they'll still need a way to consolidate and store some of those learnings and, perhaps, find skill sets that aren't on their immediate teams. A solution that helps assess the talent in your employee population can help you match undone tasks and future opportunities to the right employees.

  1. Scheduling software can be a huge help for retail, factories, warehouses, etc. So much so, it could easily be reasonable to separate timekeeping from a payroll solution to attach timekeeping to a scheduling solution. ↩︎

  2. If you don't have a benefits broker, consider getting one. It's a very personal relationship, so I'd ask around and see if anyone has a team they're crazy about. ↩︎

  3. Based on estimated hire dates. ↩︎