HR Tech Benchmarks
While building Knoetic, we've had the chance to speak with hundreds of Chief People Officers. This hasn't just helped us build a world-class people analytics product and community of incredible CPOs, it's also allowed Knoetic to compile a library of best practices, benchmarks and industry standards.
We consistently receive questions from Heads of People who are making critical HR technology selection decisions, but don’t know where to start.
At Knoetic, we’ve found that in choosing a new HRIS, ATS, etc., executives need to think most about the cost & scalability of the product, the size of their company, the ease of implementation, its compatibility to transfer existing data, and its user interface.
To help provide some guidance, we’ve compiled benchmarks from over 2,500 companies and our learnings from over 300+ conversations with CPOs at companies ranging from 50- to 5000+ employees. We hope you find these benchmarks helpful in your decision-making!
Recent trends in HR tech
In the last decade, many new HR tech systems have entered the market (Greenhouse, Namely, Lever, etc.) with more ease of use, better visual design, and lower price points than previous market leaders (PeopleSoft, Taleo, iCIMS, etc). This has led to more companies adopting a best-in-class approach to choosing their HR technology, but as a strategic people leader, how do you know when the time is right to invest in a new system?
Choosing the right HRIS
We’ve seen a common journey and movement between HRIS software as companies grow and face different challenges. I’ll outline that journey and walk through some of the pitfalls and various mistakes I’ve seen that have negatively affected the People function.
- Most small companies start by using a professional employer organization (PEO) which will handle all HR, payroll, and compliance responsibilities.
What I notice: More and more small companies are starting to use software like Justworks to replace the need for a PEO during the early stages of the company.
- At the 50 to 100 employee mark is when it makes sense to invest more in company culture, engagement of employees and quality benefits programs which will require an in-house People function. Hiring dedicated HR personnel displaces the cost effectiveness of a PEO, so most companies will move to an HRIS like Bamboo or Namely at this point.
What I notice: Bamboo seems to be the most common option for forward-thinking companies, while we’ve heard continuing problems with Namely’s payroll offering.
- Bamboo, ADP Workforce Now, Namely, etc. are the most common choices during the growth phase of a company, and these systems tend to scale until organizations hit 500 employees. At that scale, however, inadequacies with supporting a large workforce like the lack of powerful analytics start to become apparent with this type of software. The most common route by far is to graduate to an enterprise system like Workday.
What I notice: While I recommend this necessary switch away from something like Bamboo as your company moves beyond mid market, I have also seen a trap where an organization will switch to Workday too early without a sufficient growth trajectory to support the change. This burdens the organization with a large budgetary line item that is hard to cut out if times get tough (and often requires an in-house Workday analyst as well).
According to the data: Bamboo and ADP are the most common HRIS for companies with 100-750 employees. These two HRIS systems alone are used by 59% of the companies we collected data from.
Choosing the right ATS
- Most companies get an ATS at around 50 employees, but because of a lower and lower cost burden, you are seeing companies get an ATS when they have as few as one or two dozen employees. Greenhouse and Lever are by far the most popular options.
What I notice: I have seen a significant amount of organizations who are using Greenhouse or Lever, and are planning to switch from one to the other. This desire arises most often from frustration with a lack of robust analytics, poor recruiter experience, or a general sense that “the grass is greener on the other side.” I hear often that Lever provides a better user experience for the candidate whereas Greenhouse provides a better experience for the recruiter, but have not seen evidence that one system is significantly better than the other overall. Neither have been able to provide the level of analytics the consumers are hoping for, so I don’t see the value in switching from the system you have in place today.
- In contrast to the HRIS journey, there is not the same pressure forcing organizations to graduate to an enterprise-level ATS as they grow from 50 to 1000+ employees. I often see organizations with more than 1000 employees still using Greenhouse or Lever (which they often adopted at a couple hundred employees) without major issues.
According to the data: Greenhouse and Lever alone are used by over 50% of the companies we collected data from. However, while these two systems seem to be market leaders for companies with 100-750 employees, Greenhouse is used by over twice as many companies.
Other HR systems
Based on our benchmarks of over 2500 companies, here are the most common systems for companies 100-1000 employees that round out an organization's HR tech stack:
- Equity: Carta
- Comp benchmarks: Radford
- HR comms: Zendesk
Want to collect insights from the Knoetic CPO community? Send us an email at firstname.lastname@example.org!