A Guide to Managing HR Challenges for SaaS Companies

Living on the cutting edge of technology, the Software-as-a-Service (SaaS) industry faces challenges as dynamic as its innovations. Data localization, General Data Protection Regulation (GDPR) compliance, and data security, already complex issues, are further complicated by the volume of sensitive data these businesses handle daily. The added layer of the COVID-19 pandemic has reshaped the SaaS landscape, especially concerning the HR experience.

Now, let's delve into these complex challenges and discover how comprehensive Human Resources Information System (HRIS) solutions like GoCo can help businesses survive and thrive in this dynamic industry.

4 Major Challenges for SaaS HR Departments

Rapid Growth and the Need for Scalable Solutions

Navigating the massive and ever-expanding SaaS industry presents its unique set of challenges. Among the key hurdles are rapid growth, market saturation, and subsequent hyper-specialization. The question for many in this highly competitive landscape is, "How can you differentiate your product, attract and retain top talent, and efficiently manage critical KPIs such as Monthly Recurring Revenue and Net Promoter Scores?" Amidst all this, the role of HR teams becomes crucial and, arguably, somewhat overwhelming.

As the industry expands, so does the global talent pool, bringing its own complexities to the table. 

Volodymyr Shchegel, VP of Engineering at Clario, brings light to the matter, saying, "The biggest challenge when building a team of engineers and developers is the sheer variety of educational backgrounds and experience. The pandemic has brought excellent engineers from boot camps rather than four-year degree programs. This shift makes educational criteria less meaningful, as time spent in school is not necessarily indicative of experience or depth of knowledge anymore. The outcome is a broader, more diverse talent pool, which requires more time in the vetting process but is ultimately rewarding."

These potential complexities beg the question: How can SaaS businesses manage growth seamlessly? GoCo's HRIS scales with your business. Automating HR processes simplifies HR management and reduces errors, freeing employers to concentrate on expansion.

Yet, another hurdle for growing SaaS companies lies in onboarding new senior leadership members. 

Linda Shaffer, Chief People Operations Officer of Checkr, articulates, "Bringing in a senior leader into the organization and managing the ripple effects it has on the rest of the leadership and employees is challenging. It demands careful consideration to ensure that the leader integrates well into the company culture and that their team is aligned with its operations. Managing changes effectively, without disrupting the organization, is crucial. It also requires flexibility among the rest of the company, with leaders adapting their styles to fit the company culture and employees being open to new ways of doing things."

Balancing the growth of the industry, its workforce, and the associated challenges calls for robust, scalable solutions. Overcoming these hurdles will pave the way for success in the ever-evolving SaaS industry.

Managing a Remote Workforce

Managing a dispersed workforce has surged to the forefront of business priorities due to the shift toward remote work. For SaaS businesses, known for their modern and dynamic startup nature, this remote culture often defines their operating environment. Yet, even with a product perfectly tailored for digital spaces, these companies confront unique challenges, especially in compliance, engagement, retention, and nurturing connections between new staff members.

One such unexpected hurdle in this digital transformation has been the phenomenon of candidates abandoning their contracts after being hired, also known as 'ghosting.' 

Mike Walsh, CEO of Cloud My Biz, addresses this issue, "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. Candidates now have more employment options, and some tend to disappear right until the moment they are hired." 

He elaborates on the solution his company has found, "We've added extra steps to the application process, which helps us to sift through and identify those who are genuinely serious about working with us. The more authentic applicants are typically more willing to invest extra effort to secure the desired role."

Given these complexities, robust solutions such as GoCo become indispensable. This platform assists businesses in managing remote workers effectively, providing easy access to essential HR resources, including employee profiles and PTO requests. It simplifies communication between HR and employees and ensures that remote workers stay engaged and informed, regardless of their geographical location.

In the realm of remote work, these novel challenges demand innovative solutions. By understanding the intricacies of managing a dispersed workforce and equipping themselves with the right tools, businesses can transform these hurdles into opportunities for growth and development in the new digital era.

Attracting and Retaining Quality Talent

In the dynamic world of SaaS companies, attracting and retaining quality talent has emerged as a formidable challenge. The professional landscape has undergone a significant transformation, especially since the advent of the pandemic. Employees are no longer confined to a few options in this new paradigm. Instead, they can select an employer that meets all their needs and demands.

Shannon Garcia-Lewis, Owner and Principal of Strategic Business Partners, LLC, provides her insights, "This is their market, and they know it. Higher wages and total compensation may seem like easy solutions in a competitive labor market. Still, they are not scalable in the long run, particularly in a market where candidates can work virtually anywhere." 

She further stresses, "The importance of pay equity and financial rewards cannot be overstated, but businesses must also adapt to an evolving workforce to remain competitive. Providing an exceptional employee experience where they feel appreciated, supported, and recognized is fundamental. If we do not care for our employees, they will find a company that will."

Addressing this issue, many SaaS organizations have pivoted towards expanding and improving their employee referral programs as a strategic move to enhance recruiting and retention. 

Jeremiah Smith, Head of HR at Slingshot, sheds light on this approach, "It can be tough to compete with the allure of California and Silicon Valley for tech candidates, a challenge that compounds if you're a SaaS startup. Creating an engaging referral program your current team members are motivated to participate in is key to leveraging their communities for the organization's benefit. Couple this with a company culture your people truly want to be a part of, and you've created something special."

To facilitate these strategies, a robust solution like GoCo can provide invaluable assistance. It can help businesses attract top talent by offering a modern onboarding experience, providing customized onboarding materials, and simplifying the onboarding process.

In the new era of the job market, where employees' expectations constantly evolve, such integrative solutions can play a pivotal role in ensuring the growth and success of SaaS businesses.

Complying with Changing Labor Laws

Adapting to the continuous flux of labor laws presents a significant challenge for businesses, particularly for HR professionals. They are tasked with navigating the labyrinth of federal, state, and local employment laws that change frequently and operate in parallel, sometimes even overriding each other. This complexity intensifies for those managing a rapidly growing remote workforce, who need to align with the newest county or city ordinance depending on the geographical location of their employees.

Jocelyn King, CEO of VirgilHR, shares a practical example of this struggle: "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. I leveraged my membership with SHRM to do much research." 

She emphasizes the need for a more streamlined approach, "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."

Advanced solutions like GoCo are becoming essential in response to this daunting challenge. We designed the system to ensure businesses comply with the ever-evolving landscape of labor laws. With automatic updates of forms, real-time compliance alerts, and the ability to keep HR policies current, GoCo's HRIS reduces compliance burden and empowers businesses to operate confidently in line with all relevant labor laws. Amidst the complexities of changing labor laws, such integrated tools can provide the support businesses need to navigate with assurance and ease.

Tips from SaaS Leaders

To gain insight into the most pressing HR challenges in the SaaS industry, we reached out to top executives and HR professionals for their expert opinions. From managing rapid growth effectively to implementing robust talent management, here are 7 key challenges and solutions shared by these industry leaders.

Focus on Brand Building and Training

"The SaaS industry is growing at a rapid rate, so the competition is also growing and becoming more fierce. SaaS companies need to ensure they are constantly iterating on their product offering year-round. However, it is important to keep in mind that the staff who have been working on the product do not get left behind.

"Brand building is a two-fold process: making sure your target audience knows about your product and also ensuring that your internal team knows about changes and that they receive training on these updated products. This way, businesses become known for both innovation and employee evangelism."

Matthew Ramirez, CEO at Rephrase

Tackle Remote Workforce Challenges

"I'm part of the Localizely team, a SaaS translation platform. Let me tell you, in this fast-paced SaaS world, one major HR challenge we often encounter is managing a remote, globally dispersed workforce. You see, the talent we need is worldwide, but with that comes the tricky part—fostering unity and engagement across different time zones and cultures.

"Now, how do we tackle this? We have honed a culture that's all about communication and inclusivity. Regular video calls, virtual team-building activities, and open channels for feedback—these are all part of our daily work life. Our aim is to ensure everyone, irrespective of their geographical location, feels connected and valued.

"One more thing: we focus heavily on recognizing and celebrating big and small achievements. By fostering such an environment, we've been successful in overcoming the challenge of managing our remote, global team."

Damjan Tanaskovic, CMO at Localizely

Foster Team Spirit and Camaraderie

"The SaaS industry has embraced remote and hybrid working more comprehensively than almost any other. Few SaaS companies require 100% office attendance, which presents challenges and opportunities.

"The biggest challenge in managing a dispersed workforce is maintaining a cohesive sense of belonging, connection, and loyalty to the organization, irrespective of physical distance. We also need to avoid unfairly favoring employees who attend offices more frequently, giving everyone an equal opportunity for promotion.

"One way we have overcome these challenges is by encouraging the enthusiastic use of team collaboration software. We promote staff social and professional communication online, helping foster team spirit and camaraderie. This approach helps the team feel connected and socially engaged, regardless of their physical work location."

Chloe Yarwood, HR Manager at Test Partnership

Prioritize Competitive Compensation

"Attracting and retaining top talent through competitive compensation is a significant HR challenge in the SaaS industry. 

"To address this, we adopt a proactive approach. First, we conduct thorough research to gain insights into industry standards, enabling us to offer salaries and benefits that align with market expectations. Recognizing exceptional performance, we implement performance-based incentives such as bonuses and rewards to motivate our employees.

"Furthermore, we emphasize the unique aspects of our compensation packages by effectively communicating the comprehensive benefits and perks we provide. To remain competitive, we regularly review and adjust our compensation structures to ensure they remain attractive and in line with industry trends.

"By prioritizing competitive compensation, we aim to create an environment that attracts and retains top talent, enabling our SaaS company to thrive."

Irina Poddubnaia, CEO, Founder at TrackMage

Adopt a Strategic HR Approach

"As competition for tech professionals in this sector intensifies, companies must be proactive and creative in recruiting and retaining their key personnel. It would help if you had a strategy in place to scout potential employees before they’re grabbed by a competitor.

"At the same time, you must keep your existing talents engaged and motivated. This requires a culture of continual learning and development, adopting flexible and innovative approaches to work, and offering meaningful perks to employees. A key part of this is having excellent leadership in place, with a clear vision and the ability to inspire and motivate."

Darren Shafae, Founder at ResumeBlaze

Focus on Language Skills and Training

"We're a dual-based company in Romania and NYC and operate all over the world, so trust me when I say that sourcing the right people to manage work with our clients in their geographies is a bit of a nightmare for an SME. 

"They have to understand the cultural context, speak the right language, understand our platform, and have the right sales and customer support skills to make the relationship grow. These types of people are extremely rare, so sourcing them can be extremely difficult.

"I find that what has worked best is finding those with the language skills necessary and training them on the other skills, as language and cultural context is everything in making the client relationship succeed."

Dragos Badea, CEO at Yarooms

Implement Robust Talent Management

"The rapid pace of technological advancements and the highly competitive nature of the market makes it imperative for these companies to have a workforce that is skilled, adaptable, and committed to delivering quality solutions.

"To address this challenge, HR leaders in SaaS companies need to develop a robust talent management strategy that focuses on attracting top-notch professionals through competitive compensation packages, growth opportunities, and a strong employer brand. 

"Additionally, they must also invest in the continuous learning and development of their employees by offering relevant training programs and fostering a culture of innovation. By nurturing an environment that encourages collaboration, creativity, and continuous improvement, HR and leadership at SaaS companies can ensure that they attract, retain, and develop the best talent available in the market."

Michael Lazar, Executive at ReadyCloud

How to overcome these HR challenges

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

HR Software that Grows with Your 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 support 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 daunting 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

Final Thoughts

The challenges facing the SaaS industry can be daunting. However, HR leaders can overcome these challenges by implementing a comprehensive HRIS solution like GoCo's. The benefits of an all-in-one HRIS platform range from data security and compliance to ease of onboarding and scaling, making it an essential tool for the growth and success of any SaaS business. We invite you to take a free tour of GoCo's HRIS solution to help overcome your business challenges and grow your SaaS business.