22 February 2006

The Web
Business Today

IT and the changing role of HR

In today’s competitive business environment, company workforces are in a continual state of flux – skillsets and job requirements as well as the regulatory environment change at such a rapid pace that the staff needs of tomorrow are very different to those of today.
HR has therefore become a huge investment for medium and large companies across industries, with people-related costs averaging over 60 percent of total corporate expenditures. The leading firms have been taking steps to ensure that they extract maximum value from their HR investments, introducing models that go beyond basic HR functionality to embrace new ways of improving the quality, efficiency and productivity of their workforces. These businesses recognize that, to be fully effective, HR programs require new processes, supported by leading technologies.
For these companies, the siloed HR department, focusing predominantly on basic administrative, record-keeping and transactional duties, is a thing of the past. Businesses now realize that a strong foundation of information about individuals is a highly valuable organizational resource that can be used to drive efficiencies throughout the business.
Of course, “people are our greatest asset” is a mantra that companies have been chanting for years. Yet it is only relatively recently that businesses have started putting HR systems in place that support this philosophy. As a result, the information that sits inside the HR department is being made available for effective use throughout the wider organization, helping companies align their workforces with long-term business objectives.
The backdrop to the introduction of these new systems is the uncertain business conditions that followed the economic downturn. This situation has resulted in a relentless drive for cost control, which affects the HR department as much as any other. HR now has to demonstrate that it can develop and deliver programs as efficiently as possible, providing greater value at a lower cost.
The current economic environment has also forced firms to become more nimble. The time to evaluate before taking action has decreased dramatically; organizations now have months or quarters instead of years to modify and execute business plans to take advantage of opportunities. As a result, increasing workforce flexibility and responsiveness is a key objective for HR departments in leading companies.
These competitive conditions have led stakeholders throughout enterprises to demand an end to the siloed nature of employee data and quicker, more frequent access to information that can help all levels of leadership make better business decisions. According to the Chartered Management Institute, 80 percent of a company’s worth is tied to the value of its employees, yet there has traditionally been limited access to such workforce data outside the HR department. Managers have lacked visibility into even the most basic characteristics of their workforces, yet alone been able to answer more detailed questions about areas such as staff certification and training levels.
Yet with increased access to information on their employees, organizations can incorporate processes for leveraging worker skills across the enterprise, which in turn allows them to be more flexible. Firms with an in-depth view of employee competencies across regions or markets can immediately locate “best-fit” candidates, identify and resolve skill shortages, and re-allocate resources in response to changing conditions. In doing so, they often avoid expensive layoff/rehire cycles that sap morale, productivity, and profits.
Take Trintech, a provider of transaction management and payment infrastructure solutions to financial institutions, payment processors, enterprise retailers and network operators. The company found itself unable to optimize its human assets as its rapid growth and business acquisitions had resulted in a number of disparate human resources packages being used across global sites. From the central HR system at its headquarters in Dublin, Ireland, Trintech had no direct access to personnel information from its regional offices. Data had to be transferred manually between the different systems, a costly and time consuming operation.
A few years ago, the company decided to replace its legacy HR systems with the Oracle Human Resources Management System (HRMS), a single, Web-enabled solution accessible by all its global human resources departments. Oracle HRMS has provided Trintech with vastly enhanced reporting capabilities and business intelligence, while improving the accuracy of information and reducing duplication.
The system has eliminated the silos of information that existed across the group, thus enabling seamless collaboration across business units. The company’s managers can view relevant data about teams from any location and therefore make faster, more informed decisions. As a result, HR staff have time for valuable strategic activities such as ensuring the company has the necessary skills to meet its future needs.
Once companies have this kind of in-depth, accurate view of their workforce, they may find that they are less dependent on “quick-fix” solutions to solve problems relating to employee or skill shortages. In recent years, businesses have become dependent on non-permanent staff to cope with short term staffing short-falls. Yet finding, hiring and managing temporary workers, who can constitute up to 40 percent of a company’s employees, requires significant organizational resources. A contingent workforce is the number one commodity spend for many companies – as a result, the perceived cost savings behind deploying temporary labour in the first place are often cancelled out. With access to detailed, timely information about their current workforce capabilities, a company looking to fill a role might discover that there is already someone with the necessary skills within the organization, or an employee who requires minimal training to fulfill the role.
Access to centralized workforce data through a core HRMS system not only enables companies to measure and leverage their workforce capabilities, it also allow them to manage risk by monitoring and recording compliance with statutory, regulatory, and industry requirements relating to their employees. A myriad of government regulations must be addressed by today’s businesses, and many include severe penalties for non-compliance. Statutes vary dramatically by country; some examples include EEO/Affirmative Action and Worker’s Compensation in the US, Statutory Sick Pay in the UK, Minimum Training Hours in France, and Working Time Directives in the European Union.
While managing compliance has become an additional responsibility of the modern HR department, technology has ensured that the traditional administrative and transactional elements of HR have been minimized. Progressive organizations have introduced automated workforce management processes to reduce the cost and cycle time of HR processes, with the additional aim of improving user satisfaction.
One example of this is Employee Self-Service (ESS), which has been rapidly climbing up the corporate agenda over the last few years. The concept of pushing access to HR information and transactions out to workers has actually been around since the mid-1980s with the deployment of interactive voice response (IVR) systems. It progressed to the delivery of initial Web-based ESS modules in 1996 and 1997, and ESS is now a mature product offering for most core HRMS applications.
Automating HR transactions and giving employees online access to central systems offers companies the opportunity to achieve two often-conflicting goals - improving HR service levels while cutting costs. Previously, even something as straightforward as changing an employee’s home address was done through a paper form or e-mail, requiring information to be re-entered into a central system by an HR administrator. More complex transactions, such as transferring an individual from one office or region to another, would involve extensive paperwork, management resource and support.
By automating these processes and allowing employees to serve themselves, much of this overhead can be eradicated. The efficiency benefits of ESS are well documented; for example, The Cedar Group’s “Workforce Technologies Survey” indicates an average 43 percent reduction in transaction cycle time in 2003 and 2004. Adoption is steadily increasing, spreading from the Global 2000 (e.g., $1 billion revenues and above) to mid-sized companies.
While ESS activity was initially focused on providing access to HR policies and procedures, sophisticated self-service transactions are now commonplace. For example, according to META Group, the most popular ESS application is benefits enrollment, utilized by 65 percent of respondents.
Increasing the depth and breadth of ESS functionality remains a primary goal for many firms. Participants in the META Group study listed ESS as the area of strongest interest for investment over the next three years, particularly medium and large-sized organizations.
Another key area for workforce automation is Manager Self-Service (MSS) described by the META study as the “next frontier” for many organizations. MSS includes multiple components, which are often deployed in phases. Typical phase one deployments include access to reports and the ability to view subordinate worker data and organizational hierarchy information.
Later MSS phases may include online compensation planning and performance reviews (sometimes including guidance on how to accurately and consistently describe levels of performance). Organizations are now using MSS to enable the manager to perform work events online (e.g., signing off holidays, transfers, promotions, hires, terminations). According to The Cedar Group survey, use of MSS is positively linked to business results.
One of the critical enabling technologies of this HR process automation is workflow, which removes the need for traditional paper-based approvals by replacing paper forms with electronic notification, reminders, routing, and approval. Robust workflow serves as the foundation for HR process improvement, as it delivers substantial cycle-time reduction and enables the linking together of multiple applications into a cohesive set of capabilities. Trintech, for example, receives automated email alerts using Oracle Workflow technology when an employee’s contract is due for renewal or a probation period expires. The automated notification typically includes a direct link to the item requiring attention, so the manager does not have to spend time locating the application, signing in, or searching for the relevant record.
Winning buy-in by highlighting the benefits to employees above corporate cost saving is therefore crucial. Some employees are persuaded by speed - the ability to book holiday time online, for example, or the fact that expenses are paid more quickly because the approval process is automated. Others will welcome the convenience of being able to browse benefit information from home. Self-service functionality also empowers employees to take more control over their own career paths, by providing them with the ability to enroll in training courses or update performance goals online. There are indications that employees’ support for self-service is largely positive; The Cedar Group survey indicates 50 percent improvement in employee satisfaction.
Better decision-making, significant employee benefits, increased efficiencies and reduced costs all create a compelling argument for implementing HRMS systems. For the HR department, these technologies provide the potential to break away from its administrative quagmire to become a front-line function embracing more strategic responsibilities that positively impact the success of the enterprise. Once time-intensive processes are streamlined, HR professionals are freed up to focus on achieving full workforce optimization, a key source of competitive advantage and, ultimately, profitability, as it means resources can be aligned with the company’s business goals and used strategically.
Kevin Attard is Business Development Manager for Oracle Malta and may be contacted on kevin.attard@oracle.com

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