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HR software is not what it used to be — and that’s good news. Programs of old were designed to help managers administer and monitor various people practices, and, while that’s certainly useful, new systems help employees and managers actually manage themselves.

Put plainly: HR software has been undergoing a critical transformation, from “systems of record” to "systems of engagement.”

First, some definitions: systems of record refer to data-centric and operational programs that companies use to run their business. They’re highly structured information storage and retrieval systems — enterprise resource planning (ERP) and customer relationship management (CRM), for example. 

Systems of engagement are more dynamic platforms that employees use directly (and more frequently) — like e-mail and social networking. “Social systems of engagement have already become the primary way that we communicate in our personal lives and this is also happening for businesses,” says Dion Hinchcliffe, executive vice president of strategy at Dachis Group.

HR Implications

HR employees are using more social- and mobile-enabled processes, according to the CedarCrestone’s 2012-2013 HR Systems Survey. Further, early adopters of social-enabled processes show a link to 8 percent higher revenue per employee, as a result. Hinchcliffe says that systems of record will remain important to back office business infrastructure and aren’t going away anytime soon, but, as businesses grow, keeping employees engaged and sharing information will increasingly depend on developing these social systems of engagement, as well.

Why should companies integrate these systems of engagement on top of traditional record-keeping programs? It shows that "organizations are now moving from a top-down, HR-centric view of people management toward one of agile management and agile business,” Josh Bersin writes on Forbes.

And employees are clamoring for this type of engagement boost. According to a recent Cornerstone OnDemand survey, employees are not just bringing their own devices to work, they are also often relegated to buying their own applications to get their jobs done. Of those currently using software for work, nearly four in ten employees (37 percent) said they are likely to spend their own money to download applications for work purposes in the next 12 months. Even 20 percent of employees not currently using applications for work said they were likely to do this.

Systems of Engagement Boost Business

Research shows that businesses are implementing systems that enable people to work better. According to the CederCrestone survey, HR technologies spend is on the rise. The survey identified top-performing organizations and found that they have higher user adoption of HR technologies outside of the HR department (read: more engagement). The following survey results show how the companies that increasingly rely on systems of engagement outperform their competitors:

  • Employees outside of the HR department at top-performing organizations are much more likely to be actively using HR technologies, freeing up HR to focus more on value-added activities.
  • On average, 64 percent of employees at top-performing organizations are directly accessing HR technologies, compared to just 55 percent at other companies.
  • Managers are more likely to have direct access to the workforce data they need for decision-making, in real time with integrated data from multiple sources.
  • At top-performing organizations, 28 percent of managers have direct access to HR data through business intelligence tools versus 18 percent at other companies.
  • Top performers have more HR technologies in use and spend 12 percent less on HR technology per employee, and 50 percent less per employee in the categories of business intelligence and integrated talent management.

At the end of the day, the transition toward systems of engagement is giving employees tools that they actually want to use. Read the full results of the CedarCrestone survey.