HUMAN RESOURCES SECTOR
PRODUCT
The human resources function of an organization is responsible for all the practices and processes that impact the company’s most important asset, its employees.
The human capital marketplace is a multi-billion dollar industry encompassing tens of thousands of suppliers selling hundreds of different types of products and services.
When you consider virtually every business purchases at least one HR product or service, you can appreciate the total size of this unique marketplace.
In fact, the HR department, arguably, makes more purchasing decisions for more products and services than any other corporate department.
Consolidation.
Large HR software and services companies continue to acquire smaller vendors across all HR categories as they strive to be an ‘end to end’ solution provider.
However, this does not mean the total number of HR vendors is decreasing.
More vendors.
Cloud computing and other technological advancements have significantly reduced entry barriers.
This, combined with and an abundance of new investment capital, has lead to an overall growth in the number of HR solution providers.
Funding at record levels.
The HR marketer M&A Friday is a weekly recap of funding and mergers & acquisition news from the human resource, recruitment and employee benefits marketplace.
Based on the data, we feel quite confident that there continues to be record amounts of money being invested into this space.
More partnerships.
Many corporations prefer to work with a limited number of vendors.
This, combined with the trend of larger HR solution providers wanting be end-to-end has resulted in an increased number of partnerships amongst HR vendors (e.g., a large talent management vendor partnering with a smaller video interviewing company).
More choices and pricing pressure.
With the number of HR solution providers increasing (more supply) businesses now have more choices and this has resulted in price wars within certain HR product categories.
6.More social.
HR has traditionally been a hard to reach group compared to other business departments.
While this is still the case, more and more HR professionals are active on social and this makes communicating with them easier.
Before we can claim our target market or markets, we should have an overall understanding of how the HR industry is organized.
We understand there are many ways of categorizing the human resources industry but we believe the simplest and most logical method is to organize the industry within the following HR pillars:
Recruitment and Staffing:
The area of human resource management responsible for finding and hiring new employees.
Types of products and services related to recruitment and staffing include: job boards, position description software, job distribution technologies, applicant tracking technologies (ATS), relocation firms, recruitment process outsourcing (RPO), talent pools and communities, chatbots, employment branding, video interviewing, background screening, testing and assessment, mobile recruiting, candidate marketing, candidate relationship marketing (CRM), candidate experience, reference checking, executive search/placement firms, onboarding technologies, etc.
For the most part, with the exception of outplacement and exit interview products, this category ends when the employee is hired and onboarded.
Compensation/Payroll:
The area of human resource management responsible for compensating employees.
Types of products and services include: Payroll processing, time and attendance, tax and compliance, compensation design, compensation modelling, forecasting and management, salary statistics services and total compensation statements.
The products and services related to compensating employees is highly integrated with the next category, employee benefits.
Employee Benefits:
The area of human resource management responsible for a wide variety of non-wage compensation (e.g., benefits and perks) provided to employees.
Types of products and services include: traditional health and welfare benefits, worksite/voluntary products, discount shopping, pharmacy benefit programs, benefits administration and communication software, third-party administrators, retirement plan services, wellness programs, workers compensation/disability insurance services, employee assistance (EAP) and work-life, dependent care and on-site childcare services, backup child care, professional employment organizations (PEO), etc.
Talent Management/Employee Relations:
The area of human resource management responsible for all the human resources services related to managing the individual once they are hired as an employee.
Types of products and services include: screening and assessment, performance evaluation, employee surveys, employee engagement, rewards and recognition, diversity training, mentoring, succession planning services, talent management software, etc.
Training and Development:
The area of human resource management responsible for training and developing employees.
Types of products and services include: instructor-based training, eLearning solutions, analytics and measurement, blended learning, learning management systems (LMS), gamification technologies, online collaboration tools, surveys and evaluations, etc.
Workforce Planning and Analytics:
The area of human resource management responsible for identifying an organization’s future workforce needs.
Types of products and services include: Workforce planning software, organization charting and redesign, predictive modelling, change management, benchmarking, HR scorecards, competency analysis, internal mobility, labour supply and demographics, etc.
Legal and Compliance:
The area of human resource management responsible for ensuring compliance with employment and labour laws.
Types of products and services include: labour relations, legislation, litigation, alternative dispute services, contract disputes, employment contracts, employment discrimination, OSHA, HIPPA, ADA, FMLA, ACA, disability, wage and hour, privacy, I9, termination, etc.
In addition to these specific human resources categories, it is also important to highlight services that are cross functional in nature and relate to one or more HR categories:
Consulting Services:
This cross-functional category includes the thousands of consulting firms that can help HR departments with one or all aspects of human resources management and process improvement.
Outsourcing:
Any and all aspect of HR can be outsourced.
According to research by Gartner, Inc., 80 percent of companies now outsource at least one HR activity, and the number is swiftly growing.
For this reason, we do not consider outsourcing as a functional pillar within HR, but rather cross functional.
Increasing numbers of organizations are turning to specialized firms to supplement various aspects of human resource management.
While outsourcing makes sense for many reasons, the primary benefit is containment/reduction of costs of routine transactional and administrative work.
Another key reason is the belief that a company should outsource all non- mission-critical aspects.
HR Technology:
At one time this might have been considered a separate pillar within HR, but today, technology is integrated with and impacts all aspects of HR.
The Internet, social, big data, and other technologies are fundamentally changing the human capital marketplace as companies strive to become more efficient.
Technology allows HR to automate processes and eliminate many of the more labour-intensive transactional and administrative processes that have burdened HR professionals for years.