Tighter times, leaner technology: shop smarter and get savvier about using what you already have

HR Magazine, June, 2008 by Jennifer Taylor Arnold

Whether you call today's economic problems a downturn, an adjustment or a recession, the economy clearly is generating trouble. But that trouble doesn't have to derail your HR technology strategy. Tough times and leaner budgets can actually prompt you to get more value from your technology dollars, HR professional and consultants say.

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Hunt for functions your current software contains but you don't use. Negotiate more effectively with your current HR technology vendors. Tinker with systems to re-purpose them for new uses--perhaps handling HR tasks related to job cuts. These and other ideas can help HR squeeze services and functions from vendors and products.

"We're hearing anecdotally that industries across the board are hunkering down" on HR technology spending, says Michael Cornetto, a New York-based senior strategy consultant for HR service delivery for consultant Watson Wyatt Worldwide. "By the end of this year, next year's budgets will be much tighter."

At Capital One, a financial services company based in McLean, Va., Douglas Krey, senior vice president for HR, says HR technology budget requests for 2008 were about 10 percent lower than in the past few years. He attributes the drop-off partly to pressures from the economy and partly to a tapering off from large investments in technology in 2004-06.

Smart Shopping

Tight budgets don't necessarily mean a halt in spending. A tougher economy might prompt some employers to invest in HR technology as "a way to become more efficient, to save operating costs, better manage data [and] understand their workforce," says Michael Martin, a New York-based principal with Mercer Human Resource Consulting.

For example, a retail business might be wise to buy a time and attendance application to optimize employee schedules, thereby helping to lower labor costs.

Or companies with contingent labor might consider using a vendor management solution--an application that helps track contract employees such as consultants, temps and vendor personnel. A company might save money by reducing or boosting its contingent workforce, but it's impossible to know what option saves money unless you have data--such as that generated with vendor management solutions--to back up your decision.

Companies "spend tens of millions of dollars on contingent labor and have no idea what that spend is made up of in terms of skills and talent," says Ed Newman, president of The Newman Group, a Los Angeles-based talent management consulting firm. "Without that insight, when the decision to cut back comes, how do you know where to cut back?"

Recruiting and talent management applications are high priorities during tough times, employers and consultants note. "Usually, the job market changes in a downturn," says Matthew Timberlake, senior systems administrator with the Arizona State Department of Administration, an HR service provider. The state has frozen hiring for all but the most critical positions. While that reduces recruitment, Timberlake says, the talent management system remains vital. "There are fewer open positions; you're getting more applicants," he says. "Selection criteria automation gains importance. You don't want to lose the few good applicants you get for your few postings."

Talent management applications can handle more than just recruiting data. They also may help with skills inventories, succession planning, and identification and development of potential leaders. These functions help with retention during a hiring slowdown or a freeze.

Employers considering a restructuring should take advantage of the workforce planning tools in many talent management applications, Newman says. "Workforce planning tools can give you insights into your workforce and build what-if scenarios," he explains. If economic realities lead to staff reductions, these scenarios can help HR better analyze the possibilities.

Make a Business Gase

Tighter budgets mean tougher audiences in the finance department when you request more HR technology dollars, Newman and others say.

Be prepared with a strong business case and data on your expected return on investment (ROI). Focus on function connected with the business, such as improving the quality of information for decision-making, boosting employee efficiency and streamlining compliance with regulations.

"You've got to speak the language of the business," says Capital One's Krey. "Why does it matter? What's the payback? You've got to 'dollarize' the benefit."

For example, when proposing an investment in an onboarding application, don't just talk about "increased productivity" for new employees. Crunch numbers to show how much money that productivity saves.

To justify purchasing a system that automates common HR transactions, measure transaction time or count the steps in the automated process and the time each requires. Compare that with how long the same transactions take on paper. "These are good, solid measures," says Freddye Silverman, a Baltimore-based HR technology consultant with Silver Bullet Solutions.