Chief Technology Officer at Safeguard Global
The year 2023 will be a doozy for employers—especially those relying on brittle HR technology stacks. They will struggle to adapt to uncertainties, identify skill gaps and make talent a competitive edge.
Take the United States as an example of the challenges ahead. Unemployment is hovering at 3.4%. In December, there were 11 million open jobs—up 6.7% from November—but only one job seeker for every two openings. In January alone, nearly 70,000 tech workers were laid off. It’s unclear how a recession or further interest rate hikes will affect hiring. Meanwhile, commentators are warning that ChatGPT is—or isn’t—going to automate white-collar jobs. How is HR supposed to plan ahead?
The best defense against uncertainty is an agile HR stack. Yes, the word “agile,” among the most overused buzzwords, deserves some unpacking. I’ll share why most companies don’t have an agile HR stack, the qualities that make one agile and use cases that become possible with a more agile system.
Death to RPA
Agility is the capacity to adapt to unpredictable circumstances. The architecture of an HR stack determines whether it can adapt to new talent strategies—like hiring remote talent abroad, using contractors and preemptively increasing wages before valuable employees hop jobs for higher pay.
Unfortunately, many HR stacks are integrated using Robotic Process Automation (RPA), which automates tasks based on how workers manually perform them. RPA was once ahead of its time. It automated data reentry, sparing people from tedious tasks like typing an employee’s address into four systems.
However, app-to-app integrations built on RPA proved brittle. Attempts to change vendors or integrate a new app could break RPAs, meaning that a company would have to test and update hundreds if not thousands of automations after changing, alternating, or adding apps. Introducing new data fields was equally perilous. Overdependence on RPA has meant that many HR tech stacks are frozen in time, unable to adapt to changing talent strategies.
The Three Qualities of an Agile HR Stack
If RPA is brittle, what would make an HR stack more agile? The key is to use an integration platform that can add and subtract apps and data fields rapidly, without breaking the whole stack. That integration platform should rely on three key technologies:
1. Events: In event-driven stacks connected via application programming interfaces (APIs), apps share data based on if-then logic. For example, if a candidate in an applicant tracking system (ATS) is hired, then that event populates the new employee’s data in your HRIS, payroll and learning management systems. This occurs in real-time via messages (i.e., packets of data). Whereas RPA replicates manual steps, the events-driven logic holds even as workflows change.
2. Microservices Architecture: RPA treated the HR stack like one, monolithic app that could never change. With microservices architecture, each app in a stack is understood to do one thing only – the payroll system strictly executes payroll tasks, for example. If the company wants to swap in a new payroll system, it can without breaking the stack. It’s like replacing the steering wheel on the car instead of the whole vehicle.
3. Data Mesh Framework: The parallel to swapping apps is swapping data as an independent product. That is what data mesh frameworks enable. HR can change, remove, or add new data fields for time tracking, location, expenses, performance, productivity, compensation, etc. without breaking the stack. It also allows nontechnical users to perform cross-app analytics (perhaps using AI and machine learning tools) without depending on data scientists for the heavy lifting.
Regardless of the HR platform vendor you decide on, vet their technology for these qualities.
Putting Agility to Use
I’ve argued that most HR stacks are brittle because they rely on RPA—a once popular technology that, in retrospect, killed agility. In addition, I’ve claimed that the core of an agile HR stack is an integration platform that is event-driven, architected with microservices and built with a data mesh framework.
What’s all that good for? Picture Anne, an engineer at ACME Tech Company. The company’s HR stack has data on Anne’s compensation, location, time tracking, performance incentives, benefits and more. Pre-COVID-19, Anne worked only from San Francisco and was simple to manage from a compliance perspective.
That all changed with Covid-19:
- Anne moved from San Francisco to Austin and planned to spend two months in Colorado each year looking after her aging parents. This precipitated changes in her payroll withholdings.
- Anne was then promoted to engineering manager and tasked with building a mission-critical product. She needed to hire the best possible talent in a tight market. So, she chose developers in Nigeria, Brazil, and France to work full-time. She also contracted a UK-based project manager for six months.
To support Anne and her team without falling into a compliance nightmare, ACME Tech would need an agile HR stack. For example:
- In the UK, HR would need to collect data illustrating that the project manager is indeed a contractor and not someone who should be classified as full-time.
- It would need to track and provide compliant vacation and parental leave benefits for the employee in France.
The team would likely need new apps and data fields to be compliant in each country. An agile HR stack makes these adaptions possible, meaning that Anne can be where she chooses and hire talent based on merit, not location.
An agile HR stack helps make managing employee mobility a competitive advantage. While RPA-bound competitors are coming up with the reasons they can’t let Anne work from Colorado, can’t hire in Nigeria and can’t risk the complications of a French employee, ACME Tech retains and hires the talent it needs, even amid economic uncertainty. Put simply, an agile HR stack enables you to analyze, recruit, hire, manage and pay talent wherever. So whatever 2023 brings, you’ll be ready.