The model. HR-focused software can do more than payroll today. How this software looks at employees is transforming the model that HR is using in performing its responsibilities to a corporate workforce and management.
Judy Gach, managing consultant in the HRIS Group of SSI Consulting (
www.SSIConsulting.com), says that there are two software perspectives to at your workforce. The traditional view is employee-based, where the software is a tool to accomplish the chore of preparing payroll and accompanying regulatory reporting. This model reflects the transaction-oriented administrative role of a traditional HR department.
The second model, already popular in systems for very large companies, is becoming more affordable for mid-size and smaller companies. This model is position-based, wherein the system is designed to empower the corporation's efficient management and oversight of a key resource. Not only does this software help prepare payroll and meet regulatory requirements, but it also allows the HR staff to actively manage human capital competitively. HR can now help advise on or make strategic workforce decisions.
In addition, this second model confronts some common, but often uncomfortable realities in many organizations. Employee information is entered and updated many times and in many different places. Keeping track of which version of which database is up-to-date information is challenging. Spreadsheets are used throughout the organization to prepare and calculate information about employees. We know how many errors can be found spreadsheet formulas!
These inefficiencies and error opportunities present real costs to any business. The more powerful software introduces new functionality that leverages the workforce to maximize profitability. Some of those features in new HR software might include:
- Point-in-time reporting. HR can now warehouse personnel data to answer questions that may come up about events in the past. Analyzing data or situations at a point in time with less flexible systems is usually impossible without a paper trail. For example, answering questions about exactly what date an employee was terminated and rehired or EEOC questions as of a specific date in the past can be near impossible with absolute accuracy. These systems were not designed to gather and retain data in this manner.
- Employee self-service. Empowering the employee to answer their own questions and learn about their own benefits can be very liberating for the HR staff in any company. The interactivity that web and kiosk technologies have created is a means of allowing all employees to control and enter much of their informational changes. Functions that the employee now has control of may include enrolling in or changing benefits information, changing personal data changes, managing 401(k) accounts and withholdings, calculating needs for retirement, and inquiring about benefits, retirement account balances, or personnel procedures. Finally, multi-lingual workforces may be better supported.This is particularly important in light of its cost savings opportunities. The Bureau of National Affairs reports that in 2002 the median HR budget dropped to the lowest level as a percentage of total operating costs, 0.8%. In addition, the report stated that the median ratio of total headcount has dropped to 0.9 HR staff per every 100 employees. Thus, no one should be surprised about the Best Practices, LLC study that showed self-service portals cutting cost per transaction by as much as 60%.
- User interface. The user interface of a HR system for either employees or HR staff is changing. The ubiquitous browser interface is taking the place of an older Windows feel. In addition the processing is moving to powerful computers hiding the granular pieces of data from the user and increasing computing responsiveness. This increases speed, decreases wait time, and can improve security of confidential employee data significantly. These features are also important to the self-service model.
Insuring usability means that the experience must be employee-centric. That means that the software may have abilities to address special access needs in a workforce. For instance, IVR (interactive voice response) may be considered for a workforce that may not be highly skilled with a computer or may not have computer or Internet access.
The user interface strategy includes how the HR tools are supported, especially to employees using self-service. A help desk function within HR as a fallback resource can be very beneficial.
The user interface can improve overall employee satisfaction rates and even reduce turnover in highly decentralized businesses as managers, local people responsible for the HR function, and employees can really be engaged in the HR function.
- EIM. While some niche software products have dominated enterprise incentive management software, vendors with integrated HR software and sometimes integrated ERP solutions are beginning to offer them. According to Gartner, "approximately 60% of all U.S. companies offer some form of pay-for-performance." In most companies, these sometimes very complex calculations are performed in spreadsheets or home-grown database applications. As incentive plans change, the likelihood of error in the calculations increase. Gartner estimates that errors cost 3-8% of total sales commissions. EIM systems is also likely to speed up the timeliness of the incentive. This closer association of action and reward, better emphasizes the behaviors desired.
- Workforce analytics. Emeritis (www.Emiritis.com), one vendor for such products, defines workforce analytics as "aggregating transactional data such as headcount, training effectiveness, recruitment/turnover or compensation into information upon which to base business decisions." Turning raw data into high value business information key performance indicators, defining and measuring against benchmarks looking for opportunities and strategies for improvements is a crucial function of proactive workforce management.
- Workforce planning. As a result of analytics, aligning workforce competencies with business goals is essential. Analysis of recruitment and retention ROI and understanding workforce practices and their outcomes for future planning can cut employee churn rates, reduce loss of critical intellectual capital even during layoffs, and even improve employee attitudes.
Make no mistake in understanding that the transition from the old model to the enlightened model of human resource software is not drastic. It will force a change in the way you look at everything to do with your workforce. But today's human resources software is "not for just processing your father's payroll system!" While the breadth of function in today's software may not be for every company size, the way you think about HR should be!
CHAIM YUDKOWSKY, CPA, is president of Byte of Success Inc., a technology consulting company specializing in helping small and mid-size business grow. He may be reached at 301-937-4555 or
cyudkowsky@ByteofSuccess.com. Chaim is available to speak to your group or business on a variety of technology topics.
