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A human resource information system (HRIS) system is an expensive and time-intensive commitment for any organization. Therefore, organizations should do their due diligence and involve the appropriate stakeholders in the evaluation and selection process. Many HRIS choices are available at different price points providing different levels of functionality. Given the importance of the choice the employer is making, the package selected should meet its current needs and have the flexibility to grow and expand with the organization into the foreseeable future. However, constraints from budgets, hardware and time will affect the choice made. Following is a framework for making the best choice possible for the organization.
Step 1: Initial Assessment
First, an organization must make the determination whether the selection process will be carried out by internal HR resources or if the organization would be better served to engage a consultant from the beginning. For smaller HR departments or HR professionals who have not experienced this process before, it can be a bit overwhelming and involve a huge time commitment. Therefore, if the department has the need but does not have the time available to take on the data-gathering and evaluation process, hiring a consultant to assist with this process may be a wise choice.
Step 2: Assessing Organizational Needs
When beginning the process of selecting an HRIS system for an organization, HR professionals should look beyond the needs of the HR department and consider the strategic plans of the organization. An organization on the precipice of an aggressive growth period will have different needs than one that is “right sizing” or condensing operations. Taking these strategic plans into consideration will help ensure that the system selected will be the right choice for the organization beyond the short term.
Assessing the organizational and departmental needs will be a company-specific endeavor. Generally speaking, the size and breadth of responsibilities that the HR department has will be different from organization to organization. Some departments will be responsible for payroll, and some will not. Some will have a fully functioning recruiting department with dedicated personnel, and some will not. Therefore, the minimum system requirements for each organization will differ to some degree. However, each organization will need a system that will gather, organize and securely maintain employee data. Additionally, the system must provide standardized reports such as turnover, terminations, new hires, EEO-1, VETS-100 and other compliance-related reports.
At this point, the specific requirements of the organization will determine the needed features (“needs”) versus the wanted features (“wants”). Needs for many organizations will begin with either an integrated payroll module or an HRIS that will work in concert with the payroll system currently in place. Due to the ever-increasing complications of benefits administration, a benefits module will be a need for many organizations. These modules allow organizations to enroll employees, track and process benefit enrollments and participation, and produce required notices. A companion module to the benefits module and the HR module is an employee self-service (ESS) module. An ESS allows employees to view and update their personal information in the system.
In making a choice between needed and desired features, organizations must consider the ways in which the system may improve current procedures such as new-hire processing and internal transfers. The greater the value that the organization will see from the module, the more likely it could be considered a need versus a want.
Additional modules that organizations may wish to consider as part of their HRIS package are performance management modules, training and development modules, organizational chart modules, position control capabilities, attendance modules, time-keeping modules, recruiting and applicant tracking modules, and e-forms.
Step 3: Assessing the Project Parameters
Once the organization has fully developed a list of minimum requirements and a list of additional desired features, determining the parameters of the project is the next step.
An organization must determine the budgetary limitations of the project. HR systems are available at various price points to fit within the budgetary constraints of differently sized organizations.
Consideration must also be given to the technological limitations of the organization. The HR department should confer with the IT department to obtain the necessary information related to the technological constraints of the organization. Does the organization have the necessary server space and infrastructure to handle a purchased software product? Does the organization have the IT support staff to meet the needs of a product that will reside on the organization’s servers? If not, should the organization consider going with a product hosted on the vendor’s servers and that the company accesses remotely? The advantages of having a remotely hosted system, known as an application service provider (ASP), are that organizations typically do not need internal IT support, nor do they incur additional server costs, and ASPs generally have lower upfront costs. The drawbacks of having an ASP would be potentially higher costs in the long run as these systems charge based on the number of employees. Purchasing a system that resides on internal servers will usually result in a higher initial investment, but will likely become more cost-effective over time.
Organizations should assess any specific project time constraints. Other projects on the HR calendar or annual events such as open enrollment and performance evaluations may limit the availability of HR staff to work through the implementation process. Likewise, a busy IT calendar may limit access to critical support staff for the implementation process. Therefore, it is essential to ensure sufficient lead time to complete the request for proposal (RFP), technology selection and review, and implementation processes.
Step 4: Evaluating Available Packages Against Needs and Project Parameters
Once HR has determined a master list of requirements and project parameters, it should develop a preliminary spreadsheet-rating matrix to measure the offerings and limitations of the products available. Next, HR should obtain specification and pricing information on the various products available and compare them to the parameters it created related to pricing and minimum requirements. Most of this information can be obtained through an Internet search. However, specific pricing information may require directly contacting the providers or the consultants who sell and service several products.
The specific needs and requirements can be listed down the left-hand side of the spreadsheet, and the vendors and products to be assessed can be added across the top. An example list of requirements and measurements may look like the following:
Within each of these requirement areas there may be multiple, more specific requirements. For example, under the training management requirements, the employer may include functionality for tracking needed and completed training, recording educational achievements, noting external training and certifications, scheduling internal training courses, and tracking educational courses eligible for reimbursement.
Following an initial elimination of packages and providers that do not fit the needs of the organization, it is time to take a more critical view of the remaining options. Although several packages may offer time-keeping options, each may have limitations or efficiencies that will be a better fit for the organization and its capabilities. For example, having an online time-keeping system may be more valuable for a workforce heavily involved in travel or one with a large group of telecommuters. A time clock-based system may be more effective in a manufacturing environment in which all employees pass through specific entry and exit portals and all work is performed onsite. Matching the system availability with the needs of the organization will help ensure a better value on the investment.
Step 5: Selecting the Project Committee
Once the initial and secondary evaluation process has been completed, HR should be left with three to seven packages that match the organization’s needs. At this juncture in the process HR should organize a project committee to view the project beyond the scope of the HR department. Critical stakeholders may differ from organization to organization, but the consideration and evaluation committee should at least include members from the following departments:
Operations team members may provide important day-to-day perspectives of both the value and challenge of using these tools and may bring concerns to light that could become issues at the time of implementation. Additionally, helping operational representatives see the value of critical reporting and tracking mechanisms within the software and the potential impacts on productivity may also pay dividends at the time of implementation. The IT group may want to involve multiple representatives from areas such as IT security, networking, the organization’s website and hardware to review the project.
Step 6: Request for Proposal (RFP)
From the list of four to seven software packages and vendors, organizations will want to provide a detailed RFP seeking bids for the business. See, Evaluating Screening Vendors: Get the Most Out of Your RFP Process.
Vendors should meet the minimum requirements that HR has established and should be willing to hold a price point for 90 to 180 days. The RFP should include information about the organization as well as the project specifications such as minimum requirements, budgetary constraints, and targeted selection and implementation schedule. Organizations should provide RFPs to no fewer than four vendors because some vendors may be unable to meet the specific needs in one aspect or another.
Step 7: Demonstration and Evaluation
Upon receipt of the RFP responses, HR should select three to four vendors to come onsite to present a demonstration. The complexity of the system and the list of minimum requirements will have an effect on the length of time that HR should schedule for the demonstration. Each member of the project committee should be able to attend the presentations and to ask relevant questions. HR can use the list of minimum requirements to create a checklist for the demonstration to ensure that each item is sufficiently addressed. The scorecard may also include some or all of the desired items from the list of original organizational needs assessment, which could potentially serve as “tie-breaker” items during the evaluation process. Additional HR items for the software scorecard would be a review of the system navigation, help functions, data entry functionality, reporting and data table capabilities, and search functionality.
Committee members should use this opportunity to ask questions and to fully explore any aspects of the software that may be potential challenges or difficulties. They may also want to explore the process of recording a new-hire employee in the system from beginning to end to gain both an HR and a payroll perspective. Additional items from an IT perspective may include hardware requirements, security protocols, remote access capabilities and requirements. Operations team members may want to include a demonstration of the employee/manager accessible screens that will be used on a day-to-day basis.
Finally, committee members should consider and evaluate the service provided during the RFP and demonstration process. Though attentive service during this process may not always be indicative of excellent service following the purchase, a failure to be responsive during the RFP and demonstration process should create some level of concern and should affect the overall evaluation of the software.
Shortly after the demonstration, ideally that day or within the next two to three days, HR should convene a debriefing meeting with the evaluation committee. During this debriefing the committee members will share the results on their scorecards and bring any concerns to light. Team members will also discuss how the software meets or exceeds the requirements of the organization. This evaluation and debriefing process is repeated for each software package demonstration.
Step 8: Choosing Between the Finalists
Once HR has reduced the list of packages down to two or three final candidates, HR should conduct reference checks and onsite visits if possible. The finalist vendors should be able to provide a list of current clients that are using the product that the organization is evaluating. If possible, some committee members may want to visit a client reference to view the software in use and to ask as many questions as possible, focusing particularly on those issues and concerns brought up during the debriefing process.
Following reference checks and site visits, HR should reconvene the selection committee one last time to review the results of the reference checks and site visits, in conjunction with the original scorecard results. During this meeting the final provider candidates should be measured against each other, and the team should be able to reach a selection decision at this point. Following a decision, HR can make the appropriate recommendation to the senior executives of the organization, complete with a presentation outlining the justification for the purchase and the value added by the software.
In negotiating with the service provider, organizations should secure a service contract providing ongoing maintenance, updates to address changing compliance needs and software updates to ensure compatibility with other software packages (e.g., Windows updates, payroll system updates, accounting system updates). Now that HR has completed the arduous process of selecting an HRIS system, HR managers’ work is just beginning as they prepare for the implementation of the software.
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