For most HR teams, the fourth quarter is a mad dash. Open enrollment, benefits administration, tax compliance, and year-end payroll take priority, accounting for 70% of their time overall. That’s also when most companies evaluate, purchase, or renew HR software.
Busy as the holidays are, there are practical (and budget-conscious) reasons why teams use that time to shop for engagement, performance, and employee development tools. If you’re weighing your options, here’s why you should act sooner rather than later.
1. It’s a natural time to focus on performance.
Veteran HR professionals measure experience in “year-ends,” not years. So after three months of extinguishing fires, fielding benefits questions, and meeting compliance obligations, what happens once the dust settles? The job you signed up for.
“We do our performance reviews and goal setting in January, for one simple reason: It’s the slowest month of the year for us,” said Dmytro Okunyev, founder of Chanty. “So, we and our HR team turn our attention to our internal processes.” Most companies, no matter their performance review cadence (annual, semiannual, or quarterly), use this time to reflect on employee performance and career pathing. Because those conversations are already happening, your people management platform serves a more natural, facilitatory role.
Practically speaking, January is also when goals for the first quarter or year have been finalized by leadership. If you want to implement new software for tracking OKRs and goals, doing so now means you don’t have to ask employees to input theirs twice.
2. It’s easier to budget for.
Most departments, including HR, finalize new-year budgets in the fourth quarter. That makes it the best time to weigh your options with respect to HR software. If you haven’t already, experts recommend using the late summer and early fall to develop your product wishlist and talk pricing with vendors.
“Naturally, as one year ends and another begins, it’s a time to reflect on what went well and where improvements are needed. Most companies' budgets run with the calendar year or the financial tax year,” said Carole Burman, Managing Director at MAD-HR, an HR consultancy. “In either case, that means year-end is when you’ll be securing investment or making the business case for software,” Burman said.
It also makes financial sense if you’re looking to replace an existing tool. Because most HR teams already implement software at the beginning of the year, those with annual contracts don’t have to worry about overlaps or early termination fees in January.
“You might be switching from another software provider that was on an annual billing cycle for the calendar year. At the end of the year, or the beginning of the next one, your People team will often have a much easier time switching software without being double-billed by two providers,” said Michael Alexis, CEO of TeamBuilding.
3. Showing ROI has never been easier.
This year’s pandemic forced companies to adapt to a new way of working, fast. Survey data shows that 70% of businesses had no crisis plan in place and most had to adjust to working remotely overnight. That shift elevated the role of manager conversations, one-on-ones, feedback, and engagement surveys. With little time to react, HR teams cobbled together what processes they could, using spreadsheets, documents, and other tools.
“Many HR initiatives and organizational changes had to be implemented very abruptly during the last few months,” said Jessica Lim, HR Manager at LiveCareer. At the height of the pandemic, most teams didn’t have the time or budget to look at people management software. Heading into the new year, the importance of engagement and the manager-employee relationship has never been more apparent.
“Due to the pandemic, January 2021 will be different from other years...By now, organizations have learned what is working and what needs to be adapted to ensure that businesses run smoothly,” Lim said. Given the year we’ve had, making the case to evaluate and implement new HR software should be easier for your team.
4. You’ll have time for fine-tuning.
If this is your company’s first attempt at getting serious about engagement, performance, and development, you might feel pressured to get everything right from the start. But the “ideal” approach for each of these will vary based on your company culture, and you’ll likely need to iterate along the way.
“From a practical standpoint, implementing HR initiatives and software at the beginning of the year helps monitor the process and make changes along the way,” Lim said. If you learn that employees want even more feedback from their manager and peers, for example, you’ll have ample time to implement mid-year performance reviews or informal check-ins. Similarly, if you find that the company goals rolled out in January were too ambitious, leaders can course-correct in the second quarter.
Smaller adjustments like these are more palatable than wholesale changes or rollouts. “In contrast, HR programs introduced in the middle or end of the year are more likely to be received with skepticism,” said Yaniv Masjedi, CMO at Nextiva. “Humans are creatures of habit, and employees often dread having to adapt.”
5. It’s employee psychology 101.
While the value of a “fresh start” sounds cliched, HR experts say it does play a role in driving adoption. “It seems that, psychologically, we are conditioned that the new year is going to bring something different,” Burman said.
Over her decades-long HR career, Burman has seen how much more receptive employees are to change in January. Similar to how some resolve to take better care of their health or adopt a hobby, others commit to improving their performance or making career moves. “As individuals or employees, that’s when we’re most open to change,” Burman said.
Other practitioners described a similar dynamic. “Psychologically, January is an excellent opportunity to start with new processes or software. We have more energy and creative ideas to improve our lives and organizations,” Lim said. But just like your own personal New Year’s resolutions, make sure you don’t drop the ball.
“However, there’s always the danger that we might fall into the ‘resolution’ trap and quickly drop our ambitious plans,” she said. Partner closely with your software provider to track adoption rates. Your contact should be able to advise you on how to increase participation in engagement surveys, performance reviews, and other key People initiatives.
Looking for your own fresh start? On average, it takes companies six to eight weeks to select HR software. Get a head start in your search by scheduling a Lattice demo today.