Marketing / Sales / HR

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 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, training and development 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 companys most important asset their 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 to staffing and relocation firms, testing and assessment technologies, applicant tacking technologies, executive search/placement firms, 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, 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, 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, recognition, promotion, 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.

• 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, OSHA, HIPPA, 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.

• HRIS/ERP/ATS Solutions: 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 from applicant tracking to eLearning. The Internet 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 of its business. 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, senior 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 informational 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.

Penetrating the Various Sales Channels

When selling to the human capital marketplace, it helps to segment the market into distinct sales channels, including:

• Large Employers

• Midsize Employers

• Small Employers

• Public Sector (federal and state)

• Education

• Labor Unions

• Misc: Associations, Affinity Groups, etc.

Selling to each sales channel requires a unique sales strategy, marketing message, and distribution model.

How HRmarketer Can Help!

HRmarketer tracks all the key marketing data for each sales channel. For example, if you need to launch a campaign targeting employee benefit decision makers for Unions, one simple search on HRmarketer will reveal all the publications read by union HR decision makers and the events they attend. HRmarketer can also get your press releases instantly distributed to the journalists that cover the labor beat, identify the trades that accept byline articles, effective direct marketing lists and more. Need more help? Simply pick up the phone and talk to an HRmarketer specialist.

Small Employer Channel

There are over 500,000 employers representing 34 million employees in the small employer market. Distribution is the primary barrier to success in this market as direct sales efforts are prohibitively expensive and inefficient. For this reason, it often makes sense to sell through intermediaries like employee benefit brokers who already have existing relationships with small employers.

Large Employer Channel

The large employer channel, often synonymous with Fortune 1,000 employers, consists of over 3,000 employers and nearly 40 million employees. Because the average company employees over 5,000 people, it is cost-effective for HR service providers to employ a direct sales force to call on HR professionals at these companies.

Midsize Employer Channel

The midsize employer channel consists of employers between 500 and 2,500 employees. This channel includes over 12 thousand companies and over 13 million employees. Penetrating this channel requires a combination of direct and non-direct sales efforts and cooperation between a vendors direct sales force and key broker/reseller partnerships.

Public Sector Channel

The public sector can be divided into federal and state employers. The federal government consists of over 200 agencies, represents nearly three million employees (not including uniformed military personnel). The highly fragmented state and local employer market employs over 15 million individuals. Procedures and processes to securing public sector contracts are lengthy, onerous, detailed, and often confusing. However, it is a channel well worth penetrating. Because of its uniqueness, HR service providers should have a dedicated sales professional focusing exclusively on the public sector channel.

Education

Faced with declining tax revenues and a sputtering economy, companies selling to schools are bracing for another tough year. The deep cuts in school budgets have forced more buying decisions to the districts and central administration in colleges and universities, which can be a difficult to penetrate. Plus, selling to senior-level school administrators can be intimidating to a lot of sales people. However, there are still many HR service providers that successfully sell millions of dollars of products and services every month to the education market.

Labor Unions

The Labor-Management Relations Act, more commonly known as the Taft-Hartley Act, governs the way employee benefits are financed and eligibility is determined in the negotiated settings of labor unions. Like the small employer market, selling to the labor market is complicated and time consuming. Nevertheless, the sheer size of the labor union market justifies some sort of sales effort.

Associations and Affinity Group Channel

Although associations and affinity groups face an ongoing challenge of recruiting and retaining membership, there are currently hundreds of active HR-related associations that represent a viable marketing and sales channel for human resource service providers. These organizations are good targets for discounted group sales and co-marketing opportunities that would in turn create new sales opportunities.?