The HR Marketplace
The human resource marketplace is a highly competitive and fragmented industry that is poised for enormous growth in the next 10 years as companies and countries around the world invest in their human resources infrastructure.
The human capital marketplace (HCM) is a multi-hundred billion dollar industry encompassing tens of thousands of suppliers selling hundreds of different products and services including recruitment and staffing, employee benefits, payroll, talent management, training and development, workforce planning and analytics, legal and compliance and more. When you consider virtually every company purchases at least one HR product or service, you can appreciate the total size of this unique marketplace. In fact, in a given year an estimated $785 billion is spent on employee benefit products and services alone (Thomas Weisel Partners).
If you are a human resources supplier, aggressively targeting the human resources industry today is critical to secure your portion of this marketplace.
Understanding the Human Resources Marketplace
Before you can claim your target market or markets, you should have an overall understanding of how the human resources industry is organized.
In general, the human resources function of an organization is responsible for all the practices and processes that impact the company’s most important asset, its employees. And while admittedly there are many ways of categorizing the human resources industry, we believe the simplest and most logical method is to organize the industry within the following HR pillars:
- Recruitment and Staffing: This includes searching for and hiring new employees and a wide variety of services from job boards and job distribution to staffing and relocation firms, RPO, talent pools, communities, video interviewing, testing and assessment technologies, mobile recruiting, candidate marketing, employer branding, CRM, applicant tracking technologies (ATS), reference checking, executive search/placement firms, internet recruiting, background checking services, etc. For the most part, this category ends when the employee is hired.
- Compensation/Payroll: This includes everything from payroll processing companies to companies specializing in specific payroll and compensation services, compensation design, compensation modeling, forecasting and management, and salary statistics services.
- Employee Benefits: This category encompasses a wide variety of employee benefit and related services from traditional health and welfare benefits to worksite/voluntary products, pharmacy benefit programs, benefits administration and communication software, third-party administrators, retirement plan services, wellness programs, and workers’ compensation/disability insurance services.
- Talent Management/Employee Relations: This category includes all the human resources services related to managing the individual once they are hired as an employee — appraisal, evaluation, incentives, rewards and recognition, promotion, diversity, retention, and succession planning services.
- Training and Development: This category includes the many products and services related to training and developing employees from instructor-based training to eLearning solutions, analytics and measurement, blended learning, learning management systems (LMS), gamification technologies, online collaboration tools, surveys and evaluations.
- Workforce Planning and Analytics: Workforce analytics is a combination of software and methodology that applies statistical models to help organizations optimize human resource management (HRM). It includes benchmarking, HR scorecards, internal mobility, labor supply and demographics, modelling, org charting, predictive modelling, workforce planning and analytics, change management, etc.
- Legal and Compliance: This category includes all the services related to complying with and managing the various aspects of labor laws, labor relations, legislation, litigation, alternative dispute services, contract disputes, employment contracts, employment discrimination, OSHA, HIPPA, ADA, FMLA, ACA, wage and hour, privacy, termination, etc.
In addition to these specific human resources categories, it is also important to highlight services that are cross-functional in nature and relate to one or all the HR pillars:
- Consulting Services: This cross-functional category includes the thousands of consulting firms that can help HR departments with one or all aspects of human resources management and process improvement.
- HR Technology: At one time this might have been considered a separate pillar within HR, but today, technology is integrated with and impacts all aspects of HR. The Internet, social, big data, and other technologies are fundamentally changing the human capital marketplace as companies strive to become more efficient. Technology allows HR to automate processes and eliminate many of the more labor-intensive transactional and administrative processes that have burdened HR professionals for years.
- Outsourcing: Any and all aspect of HR can be outsourced. According to research by Gartner, Inc., 80 percent of companies now outsource at least one HR activity, and the number is swiftly growing. For this reason, we do not consider outsourcing as a functional pillar within HR, but rather cross-functional. Increasing numbers of organizations are turning to specialized firms to supplement various aspects of human resource management. While outsourcing makes sense for many reasons, the primary benefit is containment/reduction of costs of routine transactional and administrative work. Another key reason is the belief that a company should outsource all non-mission-critical aspects.
Selling to the Human Resource Department
In larger organizations, it is typical for HR executives to be strategically involved in business development, with the HR staff responsible for various HR-related functions including compensation and benefits, payroll, health insurance, 401(k) plans, etc. It is also common for IT, finance, C-suite executives, or even the CEO to play a role in the purchasing process.
In smaller organizations, it is common for a single person to have purchasing responsibility for all aspects of HR. And in many public sector environments, it is possible for a separate purchasing department, unrelated to HR, to play a role in purchasing HR products and services.
Regardless of the size or type of the organization, there is always a primary person or group responsible for purchasing HR products and services. Your challenge as a supplier is knowing who these influencers are because that determines which trade shows you attend, what mailing lists you purchase, which publications you advertise in and the tone of your marketing messaging.
|How HRmarketer Can Help! HRmarketer’s Research databases include all the information you need to effectively target and market to your buyers. Data is also segmented by industry verticals (e.g., healthcare, retail, logistics, food services, etc.) and also includes resources that can help you market to purchasing influencers like IT. Most importantly, our advisers are experts on the human capital marketplace and can help you create and implement winning marketing plans.|