Blog Articles

HR Challenges for SaaS Companies

Obstacles in the industry, and how to overcome them

by Elle Mason - August 26th, 2022

SaaS can be a challenging industry, even when we're not experiencing a pandemic. Confusion around the location of data, GDPR, and data security alone can be a massive source of frustration and stress - particularly given the volume of sensitive data and information that SaaS companies manage. Data breaches have also been a concern for companies and customers alike, as a number of large businesses experienced them - not only creating an emergency for employees but also potentially impacting the user's trust and faith in the business.

Despite offering digital products, COVID-19 may have made it even harder on the SaaS industry - particularly as it pertains to the HR experience. While these types of businesses are often fully equipped to operate a remote workforce, their customers may not be. Having a potential influx of users that need significant amounts of training and help to get up to speed on not only how to adapt to the software, but how to adapt to the actual style of work can be taxing on even the most robust HR teams.

On the flip side, while there were many industries that may have developed a rapid demand for SaaS products (like healthcare), there were many who didn't have the operational resources to stay afloat - let alone invest in new products - such as travel and hospitality, for example. Depending on the target market of the SaaS company, COVID-19 could've either resulted in a demand boom or a rapid wipeout of a massive portion of its user base.

Key Challenges in the SaaS Industry

Rapid Growth

The SaaS industry is massive and continuing to grow. In fact, market saturation (and subsequent hyper-specialization) is one of the key challenges in the industry. When there are millions of players, how can you differentiate your product and remain competitive? How can you attract and retain top talent? What is the best way to manage KPIs like Monthly Recurring Revenue and Net Promoter Scores? And how can HR teams juggle all of these responsibilities?

As the industry grows, so does the global pool of potential employees. While this is a boon for many employers, it also comes with its own challenges, such as balancing experience and education.

"As the VP of Engineering and a former HR leader, I have to say the biggest challenge when building a team of engineers and developers is the sheer variety of educational backgrounds and experience," says Volodymyr Shchegel, VP of Engineering at Clario. "Especially [since the start of the] pandemic, we have seen a lot of excellent engineers come out of boot camps rather than four-year degree programs.

"This has forced us to make educational criteria less meaningful, as time spent in school is simply not indicative of experience or depth of knowledge anymore. This has opened up our talent pool significantly and does take a little more time in the vetting process. However, we find it is worth it to have a broader, more diverse range of candidates with valuable specializations."

As they grow, many SaaS companies also face the scaling challenge of bringing new senior leadership members into the organization.

"One of the most challenging parts of HR is to bring in a senior leader into the organization and manage the ripple effects it has on the rest of the leadership and the employees at large," says Linda Shaffer, Chief People Operations Officer of Checkr. "It demands a lot of careful consideration to make sure that the leader integrates well into the company culture, and that their team is brought up to speed on what the company does and how it operates.

"In addition, this new leader will have different ideas on how to do things, which can sometimes conflict with existing processes. It's important to be able to manage these changes effectively, without disrupting the rest of the organization.

"It also entails flexibility among the rest of the company.  Leaders need to be willing to adapt their styles to fit with the company culture, and employees need to be open to new ways of doing things."

Managing a Fully-Remote Workforce

SaaS businesses, due to the nature of their product, and the fact that they tend to be quite modern or newer start-ups are often working with a fully-remote workforce. Even the most seasoned of HR experts can have challenges with this particular when it comes to issues like compliance, engagement, retention, or fostering connections between new staff members.

One recruiting issue many HRs didn't expect to face after going remote or hybrid: Candidates abandoning their contracts after being hired (also known as ghosting). While the world has moved increasingly digital, with people hiring from around the world, there has been an awesome surge in new talent. Some, however, believe that this comes at a cost.

"When you get a good applicant, it is great, but with others, they can be a flight risk right up to the moment they sign a contract," says Mike Walsh, CEO of Cloud My Biz "Candidates have more employment options, and some have become prone to disappearing right up until the moment they are hired. 

"One way we are getting around this is by adding extra steps to the application process, which allows us to really weed out those who aren't serious about working with us. The more genuine applicants will be more willing to put in that extra effort to obtain the role they want."

Attracting and Keeping Quality Talent In Today's Job Market

The professional landscape has changed significantly since the start of the pandemic. Employees can now pick an employer that meets all their demands rather than a few.

"This is their market and they know it," says Shannon Garcia-Lewis, Owner and Principal of Strategic Business Partners, LLC. "In a competitive labor market, the easy answer is to have higher wages and total compensation. Not only is that a quick fix, but it also isn't scalable in the long run, especially in a market where candidates can work virtually anywhere.

"The importance of pay equity and financial rewards cannot be overstated, but businesses must also keep up with an evolving workforce in order to remain competitive. It is fundamental for employers to provide employees with an exceptional employee experience so they feel appreciated, supported, and recognized. If we do not take care of our employees, then they will find a company that will."

Many SaaS organizations have turned to expanded and improved employee referral programs as one method of improving recruiting and retention.

It can be incredibly difficult to match the draw of California and Silicon Valley with tech candidates, and that difficulty compounds when you're a SaaS start-up," says Jeremiah Smith, Head of HR at Slingshot by WorkWave. "Creating an engaging referral program that your current team members want to participate in is key to leveraging their communities to enhance the organization. Couple that with a company culture that your people want to be a part of, and you've something really special."

Complying With Changing Employment and Labor Laws

For HR professionals, keeping track of and complying with ever-changing federal, state, and local employment and labor laws has always been a headache. They not only change frequently, but they operate in parallel and sometimes override each other. HRs, particularly those working with a rapidly growing remote workforce, have to comply with the newest county or city ordinance, depending on where their employees work.

"When I had an employee in California let me know she was taking maternity leave, I spent about six hours researching the legal requirements we needed to meet as an employer, as multiple laws played a part in her leave entitlement," says Jocelyn King, CEO of VirgilHR. "I leveraged my membership with SHRM to do a lot of the research. Even though I did not leverage a tool in this example, I can encourage readers to find a more automated solution, such as automated chatbots, that can help save time in the research process and reduce risk by minimizing the manual work."

How to overcome these HR challenges

Fortunately, GoCo is well-equipped to help you manage and overcome these challenges through our array of features designed to support HR teams with their biggest obstacles.

HR Software that Grows with Your Business: GoCo’s all-in-one HRIS is designed to scale with your growing business. Our employee management platform has everything SaaS teams need to run HR, benefits, payroll, and time-tracking

Protect Your Data and Remain Compliant: Tech companies face heightened data security threats, and GoCo is here to protect your HR data. Our modern HRIS is built on a secure infrastructure, including: 

  • SOC 2 Certification - Type 1 & 2 - Protection of system resources against unauthorized access

  • Two-Factor Authentication - An extra layer of security to protect sensitive files from unauthorized access

  • ISO 27001 and FISMA Certified Data Centers - Highest compliance standard federal-grade multi-layered security

  • HIPAA Compliance - National standard for sensitive patient health information data protection

Onboard and Empower New Hires: The market for top SaaS talent is competitive, and you never get a second chance at a first impression. Our HR management platform makes employee onboarding easy and delightful for your new hires. 

  • Send a digital offer letter with a built-in benefits preview tool

  • Provide employees with self-service tools for benefits, PTO, pay stubs, and more. 

Simplify Remote Work: SaaS solutions are supporting an increasingly distributed remote workforce across the globe. GoCo is here to set your team up for success with fully digital document signing, time-tracking, self-service benefits, and simplified compliance measures at the click of a button. New team members are guaranteed a great first day wherever they are!

Save Time & Money with All-in-One HR: SaaS businesses often run on limited budgets, especially in the startup phase. GoCo’s employee management platform eliminates the need for separate hiring, benefits, and payroll software. Our all-in-one platform features:

  • Client Product Demos

  • Simple and intuitive benefits administration

  • Flexible payroll options -- bring your own payroll, or try our embedded option

Minimize Costly Errors with Modern Time-Tracking: Time-tracking can be a daunting task without a large HR team or budget. GoCo guarantees maximum accuracy so you can pay employees accurately and on time.

  • State and federal overtime rules are automatically calculated

  • Timesheets can be reviewed and approved with a click

  • Track time to specific Labor Groups for the company to keep track of costs

  • Centralize attendance management