HR Tech: A New Play For Financial Services
Have you ever considered HR tech in financial services?
You probably wouldn’t expect a large bank to dabble in HR technology. HR seems compliance-driven, and what banks do seems very revenue-driven. Those are often very different lines of business/business models. But banks are increasingly entering the HR space. Note this from The Wall Street Journal:
Investment banks better known for big trades and mega-mergers are descending from the C-suite to pitch for business managing companies’ employee-benefit programs. It isn’t a glamorous business but it offers the type of sticky, predictable revenue that bank shareholders want—and executives are willing to embrace—as core Wall Street businesses struggle.
Why this might actually be logical
Financial services is one of the most-regulated, i.e. compliance-driven, industries in the world. While its end focus is making money, and the end focus of HR is not directly about making money, there is overlap in the focus on regulation and compliance. Big banks understand what companies want and need from HR technology, which is usually a 1-2 punch of functionality (i.e. it works properly) and compliance.
The major upside to more financial institutions getting involved with HR
We may increasingly see the pace of HR technology innovation increase. Banks understand technology, are often at the forefront of it as users, and also often help fund it. One of the problems that has traditionally held back HR technology is that it doesn’t work as effectively as it should for the end user. A deeper commitment from financial institutions might accelerate that curve, which is good for everyone. More efficient, tech-driven HR process can only benefit organizations in the long run. Those with a focus on compliance are even better for organizations.
Understanding the current compliance landscape companies are playing in
In the EU, America, and Canada, the compliance regulation environment looks like this:
- In the US, the EEOC prohibits adverse impact, defined as a substantially different rate of selection in hiring which works to the disadvantage of members of a race, sex or ethnic group.
- The OFCCP enforces compliance with affirmative action programs that require companies to recruit minorities, women, persons with disabilities, and covered veterans. They also enforce compliance with the data collection requirement of the race, gender, and ethnicity of “internet applicants”.
- In Canada, the CHRC enforces employment equity programs that require employers to ensure full representation of the four designated groups (women, aboriginal peoples, persons with disabilities, members of visible minorities) within their organizations. They also ensure no person in the four designated groups “shall be denied employment opportunities or benefits for reasons unrelated to ability.”
- EU Directive 2000/78/EC prohibits discrimination in hiring, defined as when “one person is treated less favourably than another is, has been, or would be treated in a comparable situation.” It also prohibits indirect discrimination, defined as when “where an apparently neutral provision, criterion or practice would put persons having a particular religion or belief, a particular disability, a particular age, or a particular sexual orientation at a particular disadvantage compared with other persons.”
- There is also the increasing reality of effective-in-2018 GDPR regulations.
Ideal can help companies in all three areas stay compliant through Applicant Tracking System integration.
The future world of HR tech?
We could be moving towards a HR technology ecosystem that’s equal parts:
- Tied directly to big money resources
What a glorious time that might be for HR practitioners and the end products they use!
Compliance will continue to be a major driving force in the HR world regardless of the overall financial landscape, however. Many HR tech buyers buy primarily from a place of compliance, because compliance is often the primary function that HR owns internally. So when you pick a solution, backed by Wall Street or Silicon Valley or not, make sure you pick one with robust compliance.