One of my readers asked me to talk about trends in HR, and about HR companies getting funding and M&A in that space. Very relevant for this blog as one of the great advantages of building a tech business these days is the incredible array of tools and services available to assist with that process - and there are a host of companies now doing this on the HR side.
For start-ups needing HR help, gone are the days when you needed people early to manage this function. Ten years ago in my first start-up there were very few tools to help, so people had to do it all. We had to use a broker for health benefits and do a lot of analysis ourselves on choices, costs etc.. We had to use an antiquated payroll service like ADP. We had gazillions of forms and reports and compliance things to address. We had to develop our policies and procedures from scratch or We had to use big excel workbooks for commissions, to develop compensation ranges etc. We had to buy salary data to see how competitive we were. In going from 25 to 175 people in a year and getting IPO-ready I had to have an HR Director, a manager, a comp analyst, an HR admin and three full-time, in-house recruiters to handle everything. All of which is not focused directly on developing the core value of the business. Yikes!
Today I simply turn to an outsourced service like Trinet (contact Carolyn Phelps at [email protected]) orJose Montes at Nationwide HR ([email protected]). With their help I don't need to hire any dedicated in-house HR person until I have maybe 100 people - or more. These folks will manage all of the things I mention above on a 100% outsourced basis. I get a far wider range of benefits choices for my employees, I get an HR person in my office to help when I need it, I get all my handbooks and policies, all my compliance issues handled - in the case of Trinet for $40 per employee per month. Employees enroll and sign up by themselves online. All I need to provide is a part-time person to enter payroll data twice a month. How cool is that?! You do need someone (a CFO, or Controller perhaps) to manage the relationship, check things like Workers' Compensation rates etc. (watch this latter particularly carefully).
An IPO tip: expect Trinet to go public within the next 12 months. They're getting big (recently acquired Gevity) and keep building out their Board (Ray Bingham, Board member at Oracle and Board member at one of my prior startups, joined not too long ago. Ray is the sort of person you bring on as a financial expert to head up an Audit Committee for a public company).
One area that is still a huge problem is recruiting. If someone can find a better solution to match companies and candidates than the existing weak job boards like Monster and Hotjobs, or even DICE, then you will make a fortune. In this economy someone needs to find a better way. Recruiters are not the answer. Yet this is not insoluble with technology, surely. There are a bunch of startups trying to tackle this but nothing compelling that I've seen ... so far.
There are a number of other private or public companies that are very interesting in the HR space. SuccessFactors is a fabulous company that went public a couple of years ago that offers on-demand goal setting, performance management and other tools. Expect new product announcements from them later this month. Taleo is another public company focused on talent management. Xactly is a private, venture-backed company focused on sales compensation planning and management. As one who has had to deal with this area in many prior companies I can tell you that it's a complex management challenge and ususally hard to administer. Xactly has a good set of tools and recently rounded out their management team with the ex-CFO of Salesforce.com who took the latter public. Guess what he's at Xactly to do ...? Another early stage start-up in this space is IncentAlign which just recruited a good friend and former colleague, Bill Hunt, as CTO. All of these companies are SaaS-based - so its easy to get started and the solutions are scalable as you grow. Expect some of the public players to also look at acquisitions of the smaller players and a consolidation in the space.
Great, simply great article. And yes recruiting, and especially sourcing is still the 'weakest link’. It really is strange that none of all this companies listed below is not doing anything in that space?
@Philip,
I think I found a bug in Twitsume.
It reads on the screen you are alerted?
My email ending with seoconsultant.ie is in your database. Get in touch if you need repro steps.
Ivan
Posted by: Ivan | JobsBlog.ie | September 03, 2009 at 08:50 AM
Hi Philip
Have you seen http://twitsume.com?
Launched 2 weeks ago today - may be of interest?
In a nutshell, Twitsumé.com allows anyone with a Twitter account to connect and create an online résumé/CV (or “Twitsumé”) for all registered Twitsumé.com users to see. They can also see who of their friends and followers have Twitsumés and invite those who do not. Their are public/private settings enabling users to decide which aspects of their Twitsumé can be seen by all registered users and which are hidden.
Let me know if you have any questions about this.
Posted by: Pete Flynn | September 03, 2009 at 07:24 AM
As a victim of your inflicting Trinet on the employees at Habeas, I can tell you... actually the whole experience was really very good. The on-boarding process went so easily from the employee's perspective. The Trinet website was very easy to use and had everything the employee needs on a day-to-day basis. It's an easy way to get big-company HR services at start-up prices.
Posted by: Ray | September 02, 2009 at 02:25 PM