The state of HR technology

HR systems seem to disappoint when it comes to saving time, money, according to reader survey

In February, Canadian HR Reporter asked its readers to chime in on the technology their organizations use to manage human resources. A total of 250 readers completed the survey, providing an interesting snapshot of how technology is helping, or hindering, the HR department.

More than half of respondents (51 per cent) said their organizations don’t have a human resource management system (HRMS). That’s about the same as in 2001 when Canadian HR Reporter did a similar survey on HR technology.

Interestingly, more than half of respondents (54 per cent) said their current HRMS had not allowed them to reduce the amount of time spent on HR administration and increase the amount of time spent on more strategic or consultative HR contributions.

Below is a look at the results of the survey.

HR in the driver’s seat

In the majority of organizations, HR was the driving force behind getting an HRMS. A total of 70 per cent of respondents said the HR department led the charge, followed by finance (9.6 per cent), the executive team (6.4 per cent) and the information technology department (6.4 per cent.)

Eight per cent of respondents said “other” and most of those weren’t sure who was the driving force because the system had been in place before they arrived at the company.

Aging systems?

The majority of respondents have had their current systems for at least three years. Twenty six per cent have had them from three to five years, while 30 per cent have had their systems for more than five years.

Fifteen per cent are working with new systems that are less than one year old.

For the majority of organizations, the current HRMS is the only one they’ve ever had. A majority (60 per cent) said this is the first system the organization has had.

About a third (30 per cent) said they had one system before the one they have now, and 11 per cent have had more than one other system.

In-house systems disappearing

The vast majority of the technology being used by HR departments was purchased from a vendor, but nearly one in five (18 per cent) of respondents said their HRMS was built in-house.

A wide range of vendors were listed, with Ceridian, ADP and PeopleSoft leading the pack as the most commonly mentioned.


Talk to any consultant or software vendor, and they’ll tell you the less customization a software package has, the easier — and cheaper — it is to implement and maintain.

Less than half of respondents (42 per cent) said there was “none” or “minimal” levels of customization in their HRMS.

Thirty-six per cent said there was some customization while 22 per cent said their systems were heavily customized.

Most systems are standalone applications

Almost two-thirds (63 per cent) of respondents said their HRMS was standalone system, while 67 per cent said it was part of larger business-wide system such as an ERP.

Readers generally satisfied with their technology

A quarter of respondents (25 per cent) said they are “very” satisfied with their current systems.

About half (54 per cent) said they are somewhat satisfied, 13 per cent are not very satisfied and a small minority (7.5 per cent) said they are extremely unsatisfied with their current HRMS.

Respondents gave a wide variety of things their system handles really well. One said the HRMS is “utilized for many reports to assist in strategic direction.”

Another said their system is “easy to understand and user friendly.”

One praised how the system helps manage the HR workflow: “All of my hirings, orientations and performance reviews are tracked, assigned and stored for easy reference. It’s also very easy to make changes to our business process and adapt our software.”

But there are some common complaints among respondents about what the technology does not do well.

A few described their systems as “cumbersome” and “not user friendly.” One respondent said the system was fine, but it’s not useful for employees outside Canada. Another lamented about an “ancient” DOS-based system that was built in-house by a person that is no longer with the company.

Other complaints included:

•being forced to use metric time, which some users find confusing;

•links between payroll and HR are not friendly, fields are pre-set and based on an American HR operating model;

•not setup the way a HR person thinks or administers work.

HRMS wish list

Respondents were asked what their system doesn’t do that they wish it would. Some wish for a system that made it easier to produce understandable reports. Others wished the “three pillars” of HR administration — payroll, time and attendance and the HRMS — were completely integrated and able to produce real time reports. Some want more self service.

One respondent said the system’s inability to deal with collective agreements.

“The implementation was a struggle and I cannot understand why. Our collective agreements are no more complicated than others I have worked with in other industries.”

One said they have to, in the system’s eyes, re-hire terminated employees in order to pay them.

Others wished systems were easier to learn, and one wants an HRMS that can “read my mind.” Another said her staff told her to respond by saying they wish their HRMS would do “everything” better.

One respondent lamented that the current system lacks functionality and the company is in desperate need of a new system.

“We are doing twice as much work than we have to because of things like error reconcilling and monthly reports. We are doing all of these manually. Of course, getting a new system costs money and the company is not willing to put the money in to change it. They just don’t see the picture. For the size of our company, we are in major need of an ERP. Our company would be much more efficient.”

What the systems are used for

The majority of respondents are using their HRMS to handle administrative functions. Payroll (72.3 per cent), benefits (67.2 per cent) and time and attendance (57.1 per cent) led the way as the most common things handled by the system.

About half (47 per cent) are using the system for training and development while 43.7 per cent use it for compensation planning and forecasting. About a quarter (27.7 per cent) use the system to track employment equity and 23.5 per cent use it for health and safety.

Few respondents are using systems for strategic items such as workforce planning (23.5 per cent) and succession planning (15.1 per cent.)

Other uses include:



•performance reviews;

•stock options;

•emergency contact information for employees; and

•drug and alcohol testing.

Few organizations measuring ROI

The vast majority (84 per cent) of respondents said they did not measure return on investment for the system.

Of the minority that did, more than half (52 per cent) said the system did not achieve ROI. For those whose systems had not met financial expectations, more than half (56 per cent) said they expect the system to achieve its goals while 44 per cent said they don’t ever expect to achieve ROI on their HRMS.

Some said return on investment was never part of the equation, that the HRMS was a necessary tool and part of the cost of doing business.

“For us this type of system is not ever going to make us money,” said one respondent. “A new system may save us some positions here and there, but would add to our technical side.”

Another respondent said it is impossible to determine if the system would achieve return on investment because it was 20 years old.

Implementation timelines and costs

The amount of time it took to implement a system and the costs involved varied wildly:

•12 per cent took less than one month;

•18 per cent took one to three months;

•15 per cent took three to six months;

•27 per cent took six months to one year; and

•28 per cent took more than a year.

There is a wide range of costs attached to various systems, ranging from a low of $1,000 for a company with fewer than 50 employees to “millions” for a company with more than 5,000 employees.

Most didn’t use outside consultants

The majority of respondents (77 per cent) did not hire an outside consultant to help select a system.

Nor did most respondents hire a consultant to help with the actual implementation, as only 39 per cent said they used an outside consultant.

Painless implementations

Few respondents seemed to have implementation horror stories. The majority (58 per cent) said the most recent HRMS implementation was relatively painless. A small minority (5.2 per cent) said it was completely painless.

On the flip side, 9.5 per cent said it was “very” painful and 28 per cent said it was relatively painful.

Systems not freeing up time?

As mentioned above, more than half (54 per cent) said their HRMS has not helped reduce the amount of time spent on HR administration and increase the time spent on more strategic contributions.

One respondent, who recently moved to a single HR and payroll system, said the single system hasn’t reduced workload at all and, in fact, the company may need to actually increase staffing to handle it.

Another lamented the amount of time it takes to ensure all of the data in the system is accurate.

Others are hopeful newly implemented systems will eventually free up time for them to contribute more to the organization.

“In the future the system will reduce the HR administration tasks,” said one respondent. “But that level has not yet been reached. In the meantime it has tripled the workload in an effort to get to that stage.”

Another said the system has the potential to reduce HR administration, but the organization still had to re-engineer a number of processes to enable that to happen.

Outsourcing technology

One in five respondents (19 per cent) said their organizations outsource some technology, but 81 per cent do not outsource any technology.

Payroll and time and attendance are the most common items outsourced. Others include:

•disability assessments;

•leadership development and mentoring;


•pensions; and

•salary reviews.

The vast majority of respondents (87 per cent) who did not outsource any technology said they have no plans to do so in the future. Those who said they would consider it would look at outsourcing:


•health-care and RRSP administration;

•performance management;



•applicant tracking;

•online orientation; and

•succession planning.

Why don’t organizations have an HRMS?

For organizations without an HRMS, a wide range of explanations were given as to why they had not adopted one.

Many said they are simply too small, and don’t have enough employees to justify one.

“With just 122 people on staff, we haven’t really found it difficult to track employee data in our own fashion,” said one respondent. “We have thought about some sort of system to have our employees track their own paid time off such as vacation and sick days, but would consider doing that in-house.”

Some said senior management simply don’t believe in the value of an HR system. Others said they get by using software such as Microsoft Access, Excel and Word. Some said the systems are just too expensive.

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