Chart an HCM Middle Course: Customization versus Best Practices

Posted by Joseph Fung, Vice President of HCM Products at NetSuite

The recent HR Technology Conference held in Las Vegas was, once again, the premier place to dive into the past, present and future of human resources technology.

From the vendor side, I heard and saw a good deal about the possibilities of predictive analytics. Indeed, analytics and the lack of its uptake (via Brian Sommer), predictive analytics (via Bill Kutik), and Big Data (via Frank Kalman) were major themes of the show and important and exciting examples of innovation in our industry. Yet my conversations with customers and prospects tended to focus firmly on the persistent issues of HR implementation and user adoption.

Before organizations can start to take advantage of Big Data analysis and visualization, they need to ensure that their HCM systems are truly capable of generating accurate and timely employee data and consolidating all that information into a single place. Companies correctly identify customization and best practices as the key means to help resolve that challenge. However, most vendors position these two approaches as an either/or choice – companies can customize a system to their own unique HR needs or adhere strictly to ‘widely accepted industry’ best practices.

This kind of either/or positioning is a false choice. Invariably, the ‘best practice’ approach recommended by many vendors amounts to little more than a thinly-veiled ‘adopt our practice’ approach. As soon as any vendor says you need to choose between customization or best practices, customers need to think about what happens when best practices change.

There is a middle path organizations can and should follow, which takes into account the benefits of both HCM customization and HR best practices. Yet it’s often a path that HR technology vendors advocate against, not because it’s a poor choice, but because their systems either aren’t architected to enable full customization or fail to support existing customizations when the systems are upgraded. Companies that take this middle path can veer more towards HCM customization or more towards HR best practices depending on the stage they’re at in terms of implementing, upgrading, or extending their HCM systems.

Needless to say, any organization looking to adopt HR must ensure the system they choose is customizable in order to benefit from applying a mix of customization and best practices. For example, offering an attractive, informative, and easy-to-use employee experience will help companies ensure that staff regularly sign into their HCM systems and provide and update information. Firms can meet that goal for friendly and usable HCM systems by learning from and applying existing industry best practices around user experience. At the same time, each organization has its own unique characteristics, which it will want to replicate in its HCM systems. A firm can customize aspects of those systems so that they will have specific appeal or relevance to the company’s own employees. A similar mix of HR best practices and HCM customization can also be applied to the issue of arriving at a single consolidated source of HR data truth through software integration and master data management (MDM).

All too often, best practices are seen purely in the context of what the HR vendor and/or user communities recommend. Customers should keep in mind that these kinds of best practices are often solely focused on implementing the vendor’s software rather than providing any kind of insight into best practices for HR processes. Furthermore, with the changes rapidly cycling through the workplace, there are many areas within HR where best practices are still emerging, for instance, around the optimal uses of social collaboration. In this environment, it’s impossible for any vendor to claim to support industry best practices as they don’t yet exist. Organizations experimenting internally with social technologies are far more likely to arrive at best practices conclusions at a faster rate than the establishment of standard industry best practices. This extends to new methods in recruiting, performance management, and talent analytics. Companies themselves are great generating sources of best practices. Organizations should frequently look at tailoring existing standard HR best practices to their own unique processes and systems.

In general, I’m heartened by the ongoing maturation I see within the HCM arena, which was on show at HR Tech. More and more HCM vendors are building out additional capabilities from their core initial focus in single areas such as recruitment, learning management or performance management to provide customers with a broader swath of HR functionality. I’m also cheered by the increasing sophistication of customers as they select, implement, and upgrade their HR systems. In a world where every company is becoming a software company, HCM customers need to keep in mind their own unique advantages and strike a healthy balance between best practices and customization. They can’t let vendors bully them into walled garden ‘best practices.’ Balancing best practices and customization will help organizations take more control of their HCM systems now and better position them to adopt and gain advantage from emerging technologies such as predictive analytics. They just need an HCM system that allows them to do both.



 

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