Peek inside the stratosphere of the top 500 global companies and you’ll find a world where the future of work is being aggressively explored through experimentation, technology, and robust budgets.
The technology and institutional knowledge powering human resources functions have progressed rapidly in recent years, with the largest firms investing more than ever on people-related spending, staffing, technology, experimentation, and risk-taking. But there are millions upon millions of smaller companies that have fallen far behind thanks to budget limitations, outdated technology, and understaffed departments. The result is a stark divide of HR haves and have-nots. The gap is already huge — and I believe it’s getting much worse.
It’s Worse Than You Think
The largest global employers have advanced development departments within their HR groups that are always on the hunt for the next technology or process that will make their people decisions smarter or enhance the productivity of their team members. They have budgets and resources they can deploy to investigate the future of work and the future of their relationships with talent.
And then there’s everybody else, most of whom probably don’t have their people-related staffing back to pre-recession levels, much less their technology investments. Instead of one large integrated technology suite to help them manage their people, these smaller firms likely have more than a dozen different people-related technology solutions that mostly don’t talk to each other. This leaves HR leaders struggling to get ahead of the talent issues in their organizations, from recruiting and hiring to training and deployment.
The drop-off from the top tier is steep and vast — much more so than most people realize. There’s not much gradation between the hyper-advanced global companies and the smaller and slower businesses lagging far behind. The No. 1 thing I have been shocked to find is just how big companies will get without actually having anything close to adequate HR systems in place.
The Divide Is Driving Capital to HR Startups
If so few global firms are adequately staffed, adequately budgeted, and actively focused on the future when it comes to their people, that means there are millions of other companies out there that aren’t. That’s a huge market for nimble solutions, a fact entrepreneurs and investors seem to be waking up to.
I believe the gap between haves and have-nots and the opportunity it is creating are largely fueling the surge of investment capital into the HR technology startup space. Point solutions (much to the chagrin of the big system providers) are solving immediate issues for the majority of the employer population. If there is any silver lining in this current system of haves and have-nots, this is it.
The Have-Nots Don’t Have to Stay That Way
With a little research and effort, it is possible for smaller companies to at least chip away at the chasm between them and the large firms of the world, especially given all the amazing point solutions from startups in the HR space now hitting the market.
For example, I know a head of HR for a 500-person nonprofit in the Northeast who recently determined the organization needed a new payroll provider because its software was 12 years old, wasn’t functioning well, and had been abandoned by the provider. Her solution was to attend an HR technology show and spend two days going around to every provider that had payroll as a significant part of their offering. She narrowed the options down to three providers during the show and got proposals from each. She invited two of them in, and within four months she had a new payroll solution.
The technology solutions are out there, and many of them are attainable for smaller organizations. However, finding these solutions requires your company dedicate time and resources to identifying which ones will truly add value.
A transformation in the way we do work is already underway, and it’s past time for smaller organizations to step up and make sure they are not left behind.