(Originally published on Forbes OracleVoice)
When it comes to attracting and retaining talented people, midsize companies are, well, caught in the middle. They generally don't have the financial resources or brand appeal of larger enterprises, and they don't offer the get-rich-quick prospects of hot startups.
But their talent needs are just as acute—and their margin for error is far smaller than with big companies, which can afford to carry a few weak performers or lose a star player or two.
In other words, midsize companies better have a modern HR strategy—and modern software tools to execute it—if they're going to compete for increasingly scarce talent as baby boomers retire. Forty-six percent of midsize companies (defined roughly as those with $5 million to $100 million in annual revenue) plan to increase their spending on HR technology this year, according to a recent Sierra-Cedar survey. And all paths lead in one direction—the cloud. Here's why:
First, midsize companies need access to the same data analytics, reporting, and compliance functionality that come standard with large-scale, enterprise HR systems, allowing them to automate key HR functions like identifying high-performing employees and targeting them for retention policies. Cloud services give them that functionality out of the box, with enterprise-class security.
Second, while large enterprises have the leeway to ramp up their HR systems processes over months, most midsize companies “don't have that slack,” says Steve Cox, who specializes in best practices for midsize companies as vice president in Oracle's cloud group. (Cox notes that Oracle HCM Cloud for Midsize Companies is among the most popular destinations on Oracle.com.) Cloud-based HR services are much easier to purchase, roll out, upgrade, and scale, he says.
Third, on-premises HR systems are too costly for most midsize companies to maintain. Cloud services let those IT-stretched companies focus on their core competencies, leaving the application-support headaches to the application pros.
The typical cloud pricing model is by the month—there are no huge up-front infrastructure and license costs, and customers can cancel their subscriptions if they're not satisfied with the functionality, security, or support. For example, with its Oracle Human Capital Management Cloud application suite, Oracle has created special midsize-company bundles priced accordingly, along with minimum limits on the number of users/employees for a customer to qualify.
Last but certainly not least, on-premises systems often can't keep up with HR department and employee demands for new features, including a modern user interface. When it comes to recruiting, for instance, companies need the ability to incorporate feeds from employees' and others' social networks, since referrals from those sources tend to be of higher quality than those from job boards and career sites. Forget about waiting for the next on-premises software upgrade to get those modern features. HR departments engaged in a talent war need them now.
Cox notes that midsize companies are more vulnerable to HR disruptions than large enterprises are—whether it's a key employee leaving the company or going out on disability—making digitally supported HR best practices in recruiting, onboarding, talent development, and absence management even more critical.
Find more about modern HR on Oracle.com: