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The Top 5 HR Software Mistakes and How to Avoid Them

Lessons Learned From HRIS Implementations

An effective Human Resource Information System (HRIS or HRMS) can lower administrative burdens, increase efficiencies, drive productivity, maximize morale, and improve retention rates. As such, many companies are clamoring to add these systems to their bailiwick. In fact, CedarCrestone's HR Systems Survey, points to a forecast for almost red letter growth in the "core" HRIS areas of talent management, social media, and analytics/planning applications for the next three years—91%, 93%, and 120% respectively. That being said, organizations can still encounter numerous problems with any HR system implementation. What follow are the Top 5 mistakes that companies encounter with HRIS implementation replete with tested tips to help you avoid some of those same pitfalls.

HR Software Mistake # 1 - Failure to Effectively Manage Change

Large-scale "change" initiatives like HRIS implementation are on the rise. Says Prosci, Inc. CEO Jeffrey Hiatt, "Thirty years ago, a Fortune 100 probably had one or two enterprise-wide change initiatives going on; today that number is…[closer to]…20," In order for these initiatives to be successful, critical "change" components in the form of employee needs, concerns and opinions are needed according to a 2009 study for the Asia-Pacific Journal of Human Resources. Unfortunately, effectively managing change can be an area of major deficiency for organizations. Indeed, PwC's quarterly Management Barometer Survey of 140+ large company executives found that 66 % of respondents cited "lack of change management skills" as a barrier to change initiative success.

Tip # 1: Take advantage (before implementation) of organizational impact assessment tools like Discovery Learning's Change Style Indicator).

Tip # 2: Communicate frequently and through various channels; designating specific mechanisms for addressing staff needs/concerns/opinions.

HR Software Mistake # 2 – Failure to Define, Validate, and Support Data Quality

Quality decisions come from quality information. That information needs to be valid, reliable, timely, and above all…useful. According to the 2009 Report, Data Governance, by The Data Management Association (DAMA) "data quality is synonymous with information quality, since poor data quality results in inaccurate information and poor business performance". Unfortunately, according to 2010 research by Capscan, only 40% of companies surveyed validated their data, while 57.7% thought their data was of great quality. "Getting organizations to understand the impact of poor data is seen as one of the biggest data challenges today"--Data Quality: Reality and Rhetoric.

Tip # 1: Establish clear-cut procedures and policies that define data-entry, especially for "core" HRIS functionality areas, being mindful of potential data corruption areas.

Tip # 2: Define when and how data will be validated, making sure to specify if outside vendors for this process will be used and how corrections will be made to any deficiencies.

HR Software Mistake # 3 - Failure to Properly Plan

According to the 2009 Standish CHAOS Report only 32% of IT projects are actually deemed by executives to be successful and none of the reasons for this failure reflect a problem with the actual technology. Rather, failure is indicative of issues that revolve around poor planning. Given the numerous and varied stakeholders present in any HRIS (HR, Payroll, Accounting, supervisors, employees, vendors, etc.), system information can be stored and used in infinitely-configured ways to meet the needs of each user group. Unfortunately, many professionals tasked with HRIS planning, system selection, and implementation fail these stakeholders by only focusing on the micro-level, operational needs--failing to recognize the long-term strategic benefits that data systems can bring. In turn, revenues, P & L, and the host of other key business markers used, can get lost at this phase, which is a major misstep (especially when trying to secure executive-level buy-in).

Tip # 1: Identify all business needs, strategic goals, and processes that the HRIS will have impact on, before any solution is selected--recognizing that disparate stakeholders will have different views about system wants/needs.

Tip # 2: Do not under any circumstance integrate a bad process into your HRIS! Invest the time to look over your organization's current processes to be sure that all procedures are as close to optimal outside the system first.

HR Software Mistake # 4 – Failure to Administer Data Security Properly

Data security issues (especially privacy and company safeguards) are becoming more prevalent and of critical concern to cloud-based HRIS solutions in particular. Grant Thornton International's 2011 Issues and trends: Assessing and managing SaaS Risk points out that any HRIS that operating through the web gives up full control of identifying data to a contracted 3rd party. While cloud solutions might prove cost-effective, breaches in cloud-stored data is a serious issue. On-premises systems HRIS data security remains an ever-present issue as well though, with FTC settlements concerning data security/storage happening just this year. Because of this seriousness, Gartner Research Director Thomas Otter, suggests that companies use vendors that "meet the security requirements of an internationally accepted framework" (e.g. ISO/IEC 27002).

Tip # 1: Get answers about encryption levels, detection capabilities, security documentation, dedicated security staff, and audit logs before vendor selection.

Tip # 2: Take time to determine your optimum balance between security and scalability.

HR Software Mistake # 5 – Failure to Understand Legal Requirements

Finally, perhaps the biggest HRIS mistake made by companies is the failure to understand the legal ramifications present with the data, the process, and the structure of an HR information system. Even small organizations can be held accountable for complying with countless regulations, from local labor to corporate mandates. In a recent Acquire Report (Top 10 Ways HRIS Data Can Unintentionally Invite a Sarbanes-Oxley Audit), Stephen Chipman of Grant Thornton Intl. says, "Millions are being spent by corporations to comply with…[]…and address internal control weaknesses". While some regulatory hurdles are easy to foresee and build into the data process, executives must be cognizant to the potential violation of obscure or country-specific laws.

Tip # 1: Consult with the legal experts on each given locale your company operates within, and do this before any discussions happen with any potential vendors.

Tip # 2: Negotiate as concrete of an indemnification clause as possible.

HR Software Bottom Line

For a growing number of companies, investments are increasingly being made in HR technology infrastructure. Many companies are belatedly realizing that these financial outlays are especially critical as they have a profound impact on one of the greatest assets and expenses the organization has—employees. However, as organizations scramble to get in the game with HRIS solutions, they must still be cognizant of pitfalls such as these that still exist when looking towards these implementations and investments. | Human Resources Management & Payroll Systems Blog