SOC 2 Compliance: Why Every HR Tech Vendor Needs It

With the ongoing pervasiveness of data breaches across multiple industries, data privacy and security are hot topics—especially in the HR space.  According to Verizon’s 2019 Data Breach Investigations Report, there were over 53,000 incidents and 2,000 confirmed data breaches in 2018 alone. And what’s more alarming, 73% of these breaches were perpetuated by outsiders. 

When a vendor is storing or analyzing sensitive information belonging to your most important assets (i.e. your employees’ personal information), you want assurances that it is safe.

Beyond the basic security protocols such as two-factor authentication, limiting data access, and regularly changing passwords, what should you look for in an HR tech vendor to ensure they’re doing everything possible to curb security issues? And more importantly, obtain some level of comfort that these commitments can be verified? 

This is where a SOC 2 accreditation comes into play. For simplicity, we’ll refer to this as “SOC 2 Compliance.”  This accreditation offers more peace of mind that your sensitive data is safe and sound with your vendor.

What is SOC 2 Compliance?

SOC 2 Compliance is difficult to earn and keep, and with good reason—compliance means the organization has gone through great lengths to prove it can protect sensitive data like names, contact details, source code, and other confidential data which often are the crown jewels of an organization. 

Developed by the American Institute of Certified Public Accountants (AICPA), SOC 2—short for System and Organization Controls 2—involves an extensive third-party review of an organization’s corporate environment in accordance with the Trust Services Criteria (security, availability, confidentiality, processing integrity, and privacy). 

SOC 2 Compliance is relevant to all service organizations–regardless of industry, regardless of services being provided, regardless of size. Organizations who operate within these spaces can strive to become SOC 2 accredited – software as a service (SaaS), platform as a service (PaaS), or infrastructure as a service (IaaS).  

Through an independent audit performed by a certified CPA firm, the service organization  demonstrates to existing and prospective customers, business partners, and other stakeholders that it has solid governance and technical measures in place to meet the Trust Services Criteria against which it’s being assessed. 

This is no easy feat! The process to implement the necessary control activities can take anywhere from six to twelve months for a smaller organization with fairly straight-forward operations; to several years for more complex, multinational organizations.   

And after a service organization has obtained SOC 2 Compliance, there is a requirement to recertify and demonstrate that the organization’s controls (the “people, processes, and technology” areas) are still operating as intended. SOC 2 Compliance is a dynamic program which a service organization must undergo every year to remain compliant and accredited. 

“SOC 2 Compliance is difficult to earn and keep, and with good reason—compliance means the organization has gone through great lengths to prove it can protect sensitive data.”

Why SOC 2 Compliance Matters for HR Tech Vendors

While SOC 2 Compliance is applicable to service organizations that span almost every industry, it’s a particularly important accreditation for HR technology service providers. When HR leaders are shopping for an HR tech partner, it’s a major differentiator to consider.

SOC 2 Compliance isn’t mandatory for HR tech vendors, but working with an HR tech vendor that has obtained this distinction is important for several reasons:

HR Stores the Most Sensitive Data

The department that typically stores the most sensitive kinds of data—personal data for individuals—is HR. HR leaders need access to sensitive information for employees across their organization. If compromised, this kind of data could be used for malicious actions such as perpetuating identity theft, social engineering attacks against individuals or organizations, or performing other fraudulent and unlawful activities. 

Often referred to as Personally Identifiable Information (PII), this sensitive data category includes details like a person’s full name, Social Security Number, driver’s license number, home address, bank account details, and email address (just to name a few!). 

Because HR stores PII data linked to specific employees, partnering with an HR tech vendor who has obtained and maintained SOC 2 Compliance will provide the much needed peace of mind to HR leaders. 

SOC 2 Compliance Offers Reputation Protection

Data breaches are increasingly mainstream, with reports of new hacks making headlines on a daily basis. This kind of data breach can, and often does, result in detrimental damage to the organization and its reputation. When sensitive personal information is inadvertently exposed, the public and partners in the industry can lose all trust in that organization!  A reputation which took years to establish and build…can be lost in a flash. 

SOC 2 Compliance helps mitigate these situations from occurring. When HR tech vendors submit to this audit process, it demonstrates management’s commitment to data security, and that they’re doing whatever is necessary to continuously protect sensitive data. And when HR leaders partner with a SOC 2 Compliant vendor, it can both strengthen trust in your supply chain program by minimizing your risk of threat vectors via your third party service pipeline.      

SOC 2 Compliance is a Competitive Advantage 

Organizations don’t just store sensitive employee data—they often have personal or sensitive data about customers and corporate information as well. 

Because SOC 2 Compliance is a difficult accreditation to achieve and maintain, this accomplishment will also serve as a great value proposition to potential customers. SOC 2 is a differentiator for organizations that want to show customers and prospects they are serious about the business partnership and protection of your data.  

With the SOC 2 Compliance, you can rest assured about deferring technical security concerns to the service organization so you may focus on your key strategic initiatives and scale your business. 

“While SOC 2 Compliance is applicable to service organizations that span almost every industry, it’s a particularly important accreditation for HR technology service providers.”

Moving Forward With Tech Vendors With SOC 2 Compliance

Because it requires a tremendous degree of commitment and investment to acquire the SOC 2 accreditation, HR leaders can confidently seek out and choose technology vendors that have earned and maintain their SOC 2 Compliance in good standing. 

And now that you understand the “what” behind SOC 2 Compliance, you can more easily make the case as to why your organization should invest in HR tech vendors with this accreditation.

Author Photo
Ian Cook |
Curious about the differences between gaussian and pareto distribution? Ask Ian. Want to know what it’s like to kite ski North of the Arctic Circle? Ask Ian. Not only is he an expert in statistical analysis and HR metrics, he’s also an avid cyclist, skier and runner. At Visier, Ian helps customers drive organizational change through linking workforce analysis to business outcomes. He is responsible for the workforce domain expertise within the Visier solutions.