SaaS and the commoditization of HR Processes

In one of my last posts on HR SaaS I was referencing the inability to customize SaaS solutions as one of the major advantages. I still hold this true, however, it also means that HR processes of companies running the same SaaS solution will be more and more similar, do no longer mean a competitive advantage. This is totally fine with the major administrative processes like payroll or employee data management. It actually is perfect for these processes, for example for companies that struggle with these today, as they will get an excellent, proven blueprint when implementing a SaaS solution that they can take to fix their own process. But what about the talent processes? – what about performance management, succession planning, competence management, etc.? These processes are absolutely critical and need to be a differentiation for the company. In times where employees, the talent is the most critical ingredient for a company to be successful and build competitive advantage, processes that are designed to keep such an advantage are critical and need to be differentiated from any other competitor, right?
Well, in principle this is correct, however, I still believe that HR SaaS solutions support this differentiation more than they hinder. Why? – there are four aspects that should not be underestimated:
(1) Process blueprint does not equal content – talent processes always consist of two important aspects, the process-flow or -map which shows step by step what needs to be done and the process content which tells you how it should be done. The HS SaaS solution only brings a blueprint for the what – tells step-by-step what needs to be done and brings it into a flow, into an order. What it does not bring is the how. How these steps should be executed and filled with life. Let’s take performance management as an example. The process blueprint will tell what the steps of the process are, like target cascade, target discussion, target agreement, etc. – but it lacks the how. And this is where the differentiation for competitive advantage comes into play. How are targets cascaded, how are targets split between company and individual goals, how is the conversation between employee and people manager set up, etc. These are the real value adding activities that no HR process blueprint provides.
(2) Process blueprint and SaaS provide time to focus on what is important – and with this part (see (1)) of the work in place, the process blueprint and step-by-step guide already done, the HR organization/ project can spend its time on what really matters and what really adds value. How is (if we stay with performance management) performance management utilized within the organization, what are the goals. How should it “feel” to be part of this process, how should the conversations be run? And how do we ensure that managers and employees are ready to embrace this process? With most of the talent processes it is very little about the actual process steps that should be done, but more with how these are executed.
(3) Execution does not equal blueprint – the real differentiation, and this is more true with the talent processes as with any other processes (where it is still true though), the major factor is execution. Performance management is not successful because it is executed and followed step-by-step, but because of how it is executed. Do employees understand their goals, their target achievement and how it relates to the rest of the team and company. Does it motivate employees to bring their best to the table every day? Does it offer real life and supporting improvement feedback and methods? This is where most of the project time should be spent, not on the steps in the system.
(4) IT does not equal 100% of the process – last but not least, not all process steps will be executed within the new HR SaaS system. There are many steps outside, left and right of the system. And defining these steps as well as the content of these steps can bring additional, major value. Let’s also stay for the last aspect with performance management. Performance management often is still a three-part process: target agreement, mid-year review, end-year review. And these are the steps tracked and supported by a system. However, the real value of performance management does not really lay in any of these processes. The real value is in between. Management of performance every day, supporting employees in improving their skills and abilities every day, promoting employees into “bigger” roles – this is what really supports performance improvement and what a people manager needs to do every day with his/ her employees. Supporting people managers in doing this, building the infrastructure and competence within a company to do this, improving these parts of the process every day. This should be the focus of HR, not a system – and the SaaS blueprint supports HR in doing so by bringing an “almost-ready-to-use” process blueprint to the table.
In essence, SaaS solutions enable HR organizations to focus on what really matters and enable differentiated HR solutions to build a competitive advanced workforce.