“Whether you look at it from an economic or a strategic perspective, a company’s human resources are its most important asset,” states Leslie A. Weatherly from the Society for Human Resource Management (SHRM), highlighting the challenges and opportunities associated with state-of-the-art Human Resource Management (HRM). The key task faced by HR managers, he explains, is to recognize the true value of each employee and to employ the systems necessary to utilize them more effectively. Weatherly describes personnel management as a strategic task of the HR Department for recognizing the value of the employee. He also develops the notion of comprehensive Employee Relationship Management (ERM) which, in a similar way to CRM, defines the employee as a customer of the company.
Structural change leads on to growth
In the EU report “The Future of Education in Europe until 2010”, British researcher David Mercer talks of a paradigm change in which life-long learning throughout a person’s career will in future replace conventional learning methods which stockpile information. The report states that the structural change taking place in the economy and society is exerting considerable pressure on HR work at SMBs. According to Jens Bahner from the Department of Human Resource Management at the University of Stuttgart, “personnel managers at SMBs recognize the opportunities and potential that E-HRM has to offer, particularly as regards cost-cutting, improving efficiency and cost-effectiveness, and increasing flexibility”.
This is reflected, for example, in the growth rates expected for the HR market. Market researchers from IDC believe that the market for HR and personnel management software will reach a volume of US$ 5.7 billion by 2007, compared with US$ 4.3 billion in 2002. They expect the global market to show particularly strong growth in the SMB sector. While cost considerations mean that small companies are making more use of outsourcing solutions, a fact confirmed by HR specialist Jens Bahner, companies with 500 employees and more prefer to install HR software in-house so as to be able to monitor internal data for analysis and planning purposes. The trend in the future will be for companies to move increasingly towards interactive (E-HR) personnel work, which will include job exchanges, corporate data, personnel planning, personnel deployment and assessment procedures. Jens Bahner believes that the reasons why SMBs are currently being dissuaded from investing in E-HR solutions include (at least in part) the lack of suitable technology and data protection considerations. Bahner also emphasizes that “SMBs are currently also some way behind” in strategic personnel management. “But in this respect SMBs are beginning to change the way they think, due in part to Basel II”, he explains and goes on to add that “since they can use documented personnel strategies – such as the regulations governing successors – to significantly improve their rating”.
E-HR does more than simply use software to formalize the process of recording and managing the know-how stored in employees’ heads. Instead it represents a strategic corporate planning tool that systematically focuses on this employee expertise. Consequently, “the actual knowledge process takes place in the interaction between man, content and processes”, explains META Group consultant Marc Tenbieg. A survey of 200 SMBs conducted in northern Germany by the “Motivated Small and Midsize Businesses” initiative discovered that SMBs can benefit from this knowledge, since staff that are kept regularly informed by management are more motivated than others.
Motivation, expertise, training measures and employee recruitment form a mix that can be diversified by utilizing employee portals offering integrated e-learning, knowledge management and e-recruiting solutions. An employee portal can also be used to bring all the information frequently scattered across various systems onto a standardized user interface. This also provides a vehicle for incorporating external service providers such as employment agencies with direct access to HR processes via their own password. According to a business-to-employee study published by IT consultants Cap Gemini Ernst & Young at the start of 2003, no less than 68% of German companies believe that such a solution will cut personnel costs, particularly for administrative activities, and improve the quality of the stored data. It also found that 25% of the 480 German companies surveyed are looking to use portals to bring all employees up to the same level of expertise and to ensure faster access to information.
As well as providing an opportunity to cut costs, employee portals also have other things to offer. Personnel management tasks such as holiday applications and recording of working hours are delegated to employees and management via an Employee Self Service (ESS) feature. This requires a Web-capable HR software package such as mySAP HR which supports individual functions and information on a role-, function- and person-specific basis. mySAP HR is also universal and can be adapted to any country’s legal and business management specifics. SAP Business One specifically provides SMBs with an interface for linking up mySAP HR. This gives SMBs inexpensive access to all central, HR-relevant processes of their parent companies, such as wages and salary data, legal reporting requirements, travel management and programs for recruiting and motivating employees.
Improved communication with HR
In the final analysis, however, it doesn’t just boil down to employees taking charge of part of the HR management activities. The HR Department must also provide employees with added value by focussing on service quality and development opportunities through an Employee Relationship Management (ERM) solution. This is the only way that a concept of this type can gain acceptance with staff. At the same time, the entire communication flow within the company must be made more efficient. Integrated procedures for applications and approvals, for example, provide a vehicle for conveying data and processes directly to the decision-makers via the employee portal. Such a process-oriented way of working, based on automated workflow functionality, can significantly increase efficiency. For this to work effectively, a fully integrated personnel development system is required which takes into account how long the employee has been with the company and links this information to the company’s strategic focus.
In addition to reliable personnel planning – for employees and applicants alike – cutting-edge communication and analysis processes and state-of-the-art personnel management systems have a key role to play. Integrated and Internet-capable software solutions such as mySAP HR support these processes and, at the same time, enable complex evaluation, analysis and simulation capabilities. Internet-based employee portals help improve HR processes, cut administration costs and provide a source of advisory and other services. However, it’s important to plan an employee portal carefully in order to make the best possible use of HR technologies. The “most important task of cutting-edge corporate management” is therefore to harmonize the “four strategic resources – namely employees, financial resources, infrastructure and partner network – in order to maximize efficiency”, stated Claus Heinrich, Member of the Executive Board of SAP AG, in a speech made at the SAP Human Resources and Financials Congress 2002. He went on to add that companies could only exploit the opportunities offered by the market by making use of state-of-the-art application and system landscapes. Fully integrated personnel planning is therefore more than just a necessity, it’s an absolute duty.