The Cloud

Anatomy of a Buying Decision

A CFO seeks and finds an HR technology solution to address some very-specific needs.
David McCannMay 14, 2013

This is the fifth of five articles in a special report looking at the buying of HR technology from a CFO’s point of view. Also included are: Why Upgrade Your HR Systems?; What Kind of HR Automation Do You Need?; Making a Mess of People-System Purchases, which explores pitfalls to avoid; and HR Tech Vendors: Who’s Out There?


Having good technology is not a worthy goal. Technology is an enabler, a tool for achieving the true goals of a business. CFOs understand that but may be less rigorous about walking the walk when it comes to selecting HR technology than, say, an enterprise resource planning system.

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Not John Toth. The finance chief at ARC Document Solutions personally oversaw last year’s selection of an HR system intended to satisfy some very specific business needs related to human-capital management.

When Toth joined ARC Document Solutions as CFO in 2011, the company was completing a shift in its mission. Whereas it had previously been a manufacturer of architectural and engineering blueprints for the construction industry, it was now mostly a service company, managing engineering and regulatory data for building owners, architects and contractors.

That shift meant starting up operations in many more locations around the world in order to be close to customers. As always, such a transition produced some pain points. For ARC, a 2,500-employee company, one result was an increase in litigation from ex-workers claiming wrongful termination.

Toth sees that as a potential problem for many midsized but growing companies. “If you think your HR people can still be in touch with all the employees, with what’s going on and the rumor mill, old-style HR ­– well, that’s not happening anymore,” he says. “The way you preempt litigation is by making sure you have a strong training muscle in HR.”

In other words, Toth wanted HR to train managers companywide how to manage in such a way that incidences of wrongful termination lawsuits would decrease. “HR would no longer be the front line,” he says.

And so, under a deal that closed on Dec. 31, ARC, a $400 million publicly traded company, will use learning, recruiting and onboarding modules from software provider SilkRoad.

The SilkRoad learning software, Toth hopes, will help with the training mission. It can be configured to facilitate quick detection of trends in employee complaints from region to region and identify appropriate training that can be delivered quickly and remotely, “because we can’t afford to fly HR people all over the world to support this.”

It will be HR’s job to train regional managers how to use the software and organize their consumption of video training modules provided by SilkRoad. There are sets of videos on, for example, avoiding age discrimination, the latest EEOC regulations and the Foreign Corrupt Practices Act. “Rather than invent documentation in these areas, we’re partnering with SilkRoad, which knows these issues well and has lots of customers that are dealing with them,” Toth says.

He says research by ARC’s marketing department “shows that people are six times more likely to click and watch a video than they are to read a multi-page document.”

Toth is also looking for a one-week reduction in the time it takes auditors to complete labor-compliance audits of the company.

The recruiting software comes into play because Toth believes “half or more” of firings or otherwise losing employees are because of making wrong hires up front. SilkRoad’s software, he says, “helps us use a wider variety of platforms to advertise jobs, and allows us to do more pre-screening because candidates can log on to the system to enter information and answer questions.”

He says his examination of products on the market brought the choice down to SilkRoad and Workday, and from there he let his HR team make the final choice.

Toth declines to quantify how many wrongful-termination lawsuits ARC has been hit with. The company’s quarterly and annual reports in recent years do not mention any, so however many there are, ARC evidently does not consider them potentially material to financial results.

Still, the CFO has a specific early ROI target for its investment in SilkRoad: three fewer lawsuits in the first year. And the performance of HR leaders will, in part, be evaluated on that basis.

“We make too many mistakes in hiring employees and letting them go, and there are far too many incidences of litigation or complaint,” Toth says. “So this is me drawing a line in the sand.

“Now, you could have three fewer lawsuits just because you had a lucky year. But creating a quantified, crisp statement of the objective makes for a better focus than if I just say I want litigation to go down.”

ARC is also using SilkRoad solutions for onboarding new employees and collaboration between employees and with customers.


This is the fifth of five articles in a special report looking at the buying of HR technology from a CFO’s point of view. Also included are: Why Upgrade Your HR Systems?; What Kind of HR Automation Do You Need?; Making a Mess of People-System Purchases, which explores pitfalls to avoid; and HR Tech Vendors: Who’s Out There?