The State of Human Resources

Human resources needs a kick in the butt.

This article was published on February 07, 2013.
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Back office work is one thing I've had a lot of experience in doing while running TypeFrag, Carbonmade and other companies. I've set up and managed payroll, benefits, and on-boarding employees more often than I care to remember. It's always a painful process that you put off to the last minute because you just don't want to deal with it.

The State of Human Resources

Paperwork is distracting. For the most part, everyone who has ever dealt with HR as only part of his or her job has little more than a surface understanding of it. Unless you're in it full-time, you take it about as far as knowing what forms need to be filled out, signed, and handed in. Providers partly understand that you can't be bothered with the details, but also know that the less you know the more important their job is perceived to be.

It's always frustrated me that obfuscation, confusion, poorly worded, and terribly designed documents fill the time of back office administration. The government can only be blamed up to a point for their cryptic writing and regulations on a W-4, for example. Documents need to be filed in a certain way, and I get that. But someone or some company needs to come along and make sense of common human resources tasks — to alert me when I need to take action, alert me when I've made a mistake, and generally to make the process a whole lot easier for me to set up and manage.

Professional Employer Organizations

PEOs have emerged recently to tackle this problem. They claim to help you make sense of it all, but they're just another layer of abstraction that you have to understand and interact with. They haven't solved a thing. "All in one place," they say, but really it's only a few services (payroll and benefits for the most part) and you're simply trading one terrible user experience for another.

Additionally, many PEOs claim savings. "You'll save money on healthcare! We can get you a $750 healthcare plan for $450," a sales rep will tell you. What they don't tell you is that in many cases they themselves take a percentage of your payroll at 5% or higher. If you're a team of ten and on average pay people $100,000, then at 5% and $1m a year, you're paying your PEO a whopping $50,000. That $300 savings per employee per month on healthcare they pitched you turns out to only total $36,000 — a staggering $14,000 gap.

Now a lot of small companies around ten employees don't want to bother taking the time to run payroll and benefits on their own because they have the impression that it'll interfere with focusing on their company. That's true to some extent because it really is a pain, and nobody has taken the time to come up with best practices and help you through it. There's no Stack Overflow for healthcare and benefits as there is for programming. Maybe there should be? This allows PEOs, using shrewd sales shenanigans, to get away with charging 5% of payroll or higher because it sounds as if they've consolidated everything for you to make it easier. More realistically, however, most of the big players like ADP and Paychex have a PEO service as well as their traditional payroll and benefits services (did you wonder why?), because PEOs are just another way of spinning a marketing scheme in your direction.

What am I buying?

With payroll, benefits, and other human resource services, there's no sort of demo account you can try before you buy. For good reason. A hospital doesn't want you waltzing in with a Blue Cross Blue Shield demo account asking for service. That'd be costly and doesn't make a lot of sense.

With most web software, however, there's a try before you buy mentality — 30 day trials, 30 day money back guarantee, and so on. SaaS is famous for demo accounts, trial accounts, and other samplings of the product before you commit to it, but back office/human resource software wants you to fill out a form so a sales rep can get in touch with you. Sounds ludicrous in this day and age, when online business just isn't done that way.

I'm not advocating for a demo benefits card that I can take to the doctor to try out, but I do want to see behind and beyond the elusive login screen I'm going to get after signing up. What do I have to do to manage this thing? Show me what I'm buying into and what my employees are going to have access to. But no, many of these services don't even have a software interface and lots of things are still designed to get done over phone, email, and fax. Want to change your address? Please call us. And when you happen to get an email, it'll have six PDF files attached for you to print, fill out and return to them.

Purchasing Decisions

If you can't get a look inside any of these human resource systems, then how are you supposed to get an idea of what to buy? Sadly, you can't even compare prices on their websites without talking to a sales rep. Even then it'll take a week or more to get a "price quote specifically for you." Pro tip: They waive the setup fee for everyone. It's just another sales trick.

With no knowledge of price and sales, and buffeted by the marketing-speak plastered all over their websites, you're left to ask a friend. When signing up Carbonmade for payroll and healthcare, I sent an email to ten startup friends asking what they used and if they'd recommend it. I appreciated their advice, but unlike what you can find out about providers in most fields, there was little if anything to find out on the Web about these providers.

I thanked my friends for their recommendations, called and met in person with a few folks and went with the least sleazy sales person. I didn't feel like I'd made the best choice and it certainly wasn't the most informed, but I had no further courses of action to take. There are no best practices when it comes to human resource services and, sadly, nobody recommended any of them.

Obfuscation for Profit

In this industry, as incumbents rake in more and more billions every year, the industry continues to be broken. All costs are hidden behind sales forms, phone calls, and in-person meetings with sales reps. Unlike the consumer industry, enterprise human resource companies hide just about everything, as they hope to reel you in under duress, still poorly informed.

They claim very competitive — or even the best — prices because they believe that you won't have the energy to go out and find out for yourself. They're right for the most part. Those of us making these decisions early on don't really want to spend the time to get quotes from every service out there, and we're so dejected by the end that we're happy to just move on. Generally when we're looking for payroll and benefits it's because we need them immediately, and not because we need them three months from now with leisure to make considered decisions.

User Interface

We've come to expect at the very minimum a tolerable user interface with most Web services out there. Text should be legible, links should open new pages, forms should show error messages, and so on. Standard Web stuff. That's not the case with anything HR related whatsoever. When there is an interface, it feels as if they've been ported from Windows 95, and it wouldn't surprise me if some of them really had been.

No intelligent design choices have been made. Beautiful would be the last word you uttered when desperately navigating around a payroll system trying to add an employee. And don't even ask for any reports, as you'll get a PDF with so many unintelligible numbers on it that it'll make your head spin.

Why is this the case? Why hasn't beautiful, intelligible design made it into this industry yet? I think it's in part because of what I hypothesized earlier. Data obfuscation — i. e., confusion on an ugly, overcrowded screen — leads to poor purchasing decisions and companies feeling more indebted to these services than they really are. If only someone would enter this market focused on ease of use and customer service.

Employees

Lastly, I think the person getting the worst end of the stick is the employee. Employees are left as an after-thought by human resource systems. They're not the ones paying for the service, so ultimately it doesn't matter whether they feel that they're not getting good service, or service at all.

Employees' needs have been undervalued for so long that they've never known anything else. Of course it should be ridiculously difficult to get my paystubs and find out anything about my benefits package because that's how it's always been. Of course I should have to email my internal HR rep with questions when all they're going to do is pass my questions right back to Aetna.

Why can't employees go directly to the providers their company is paying for? Why isn't that part of the service? Shouldn't I be able to access my sensitive data from any device at any time without needing to go through an intermediary? Why can't I more easily see what my deductible is and book doctors' appointments through my healthcare provider's website? What about having my company's payroll provider help me pay my taxes? You've been sending me my paystubs in the mail, what about tallying them up and letting me know what I owe the government?

Sadly, in today's state of the market we can only dream.

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