Human resources and IT strategies

June 26, 2003 by SAP News 0

India, BangaloreThe intent of this article is to highlight the need and strategies required for IT to enable effective HR delivery system in the current and future business models of new economy companies.

The evolution of HR over the last decades has not ‘overcome’ the paradigm of ‘personal touch’. This has led to “HR @ Location” strategies involving HR staff running in parallel. It meant duplication of HR resources leading to unwanted parallel hierarchies in organizations resulting in high costs, increased approval processing time of basic services resulting in employee dissatisfaction and negative perception about HR. This unfortunately overrides the intended ‘personal touch’. Actually, its not the personal touch employees are worried about, it’s the ‘service’ attitude with which HR professionals need to ensure employee satisfaction. One of the key elements in an employee’s life cycle is the ‘touch points’ or a transaction experienced with HR. It’s the moment of truth for the employee. We can draw parallels to buying a product due to excellent marketing a company does but will lose customers if after sales service is below expectations or there is not connection to what is said and what is experienced as reality. While the need for ‘contact’ cannot be entirely eliminated, the ‘touch points’ or transactions can be automated in a way beneficial to employee and the organization.

In the current business context, new wave of HR cost pressure, driven by lower –cost structures of the new economy companies will force HR staff reduction. We see and experience this trend around us. Headcount is likely to be the largest source of savings. However, this trend contradicts Line Manager’s and employee’s unwillingness to accept reduced service levels. Meanwhile, the demand for exceptional responsiveness from our internal customers is only growing. This demands HR to off load transactional activities in order to focus on more value added tasks to achieve the status of ‘business partner’ and ‘trusted advisor’. Unfortunately, a remarkable percentage of HR time is spent on administration in most companies. Research shows that 80% of Human Resources professional’s time is spent on routine administrative tasks while only 20% is spent on value-added tasks like planning and analysis and consulting.

In the IT industry, HR is faced with a unique challenge of providing its services for globally scattered employees. It is not uncommon that business goals are achieved in virtual teams spread across various time zones and geographies. HR is facing the challenge of virtual hiring, induction and virtual integration, remote care/concern, performance appraisals with Managers whom they see very rarely, ‘here&now’ syndrome and above all identity crisis with the employer. In this virtual world, HR needs to ensure speed of service, rapid implementation of policies and benefits, e-enablement of communication strategies to reach out to employees.

Advances in technology have enabled significant changes in HR across the past five years. Enterprise-wide systems, self service delivery, streamlined process automation and datamining have transformed the way the function serves the corporations and the number of people required to do it. In the past, biggest money savers have been automation of administrative tasks while outsourcing is not the answer as it lacks HR ownership. In the future, the largest efficiency gains will come from using technology to replace live interaction with HR practitioners. The Internet makes it possible, offering a user-friendly interface capable of sparking employee usage. HR must bring to the table, value-added decision support systems and tools for line managers and ensuring seamless delivery of best-in-breed applications via web-enabled direct access to HR management systems.

Today, ‘virtual’ HR generalist is gaining momentum. Desktop self-service tools provide administrative and consultative HR functionality to employees and managers directly without the involvement of ‘live’ HR staff. The goal is to disintermediate HR from provision of transactional tasks in order to reduce costs and focus on value added activities. In the past, HR used technology for back-office, non-customer facing support, however, technological capabilities, today, are servicing HR’s desire to provide a point of employee interface.

Familiar, user-friendly web interface is likely to drive rapid adoption by employees. Despite user-friendliness of available modern tools, magnitude of change management intervention to wean employees from high-touch HR services will be significant; generating critical mass of functionality accessible online will be critical to changing employee behavior. Fortunately, the web offers good enough and widely used enough rich content and widespread adoption.

Growing number of companies are giving employees direct responsibility for all basic human resources transactions through deployment of desktop computer, kiosk, and automated voice response systems. Automation eliminates the need for Human Resources to serve as ‘middleman’ between employees and data systems, dramatically reduces the need for Human Resources staff required to deliver basic services. Technology can help HR at low cost complexity/high transaction activity like providing static content, form submission to high complexity and high value-added tasks like 360 degree review, performance management administration, career counseling to change management consulting. The biggest value addition comes in providing real-time, two-way dialogue with employees and managers.

Everything today is online with the emergence of self-service scenarios. Infact, Internet has changed the way people interact and interaction of HR-employee is indeed embedded in this technology revolution. Tech-savvy HR departments are aggressively adopting web solutions to off-load administrative and even value-added tasks. Via these web based applications, employees get virtual assistance with benefits selection, cost assessment of benefits and leave application to planning and accelerating self development by providing career counseling functionality. Applications like online benefits, sets eligibility criteria based on personal information, presents employees with a full range of options and provides calculation aids to select appropriate options. Such tools also summarize employee choices and sums total cost before asking the employee to submit choices. At the same time, manager self-service tools generate tailored human capital reports, which are real-time, that significantly reduce requests to HR for customized runs. While the majority of reports required by Line Managers are available online, some inquiries may require more sophisticated analysis. In those cases, HR staff can assist line managers with customized report generation; and these staff, called power users, undergoes specialized training, as they must work on databases to develop customized reports. Over time, HR expects to offer access to fully customized reports directly to line managers, which should reduce HR involvement even further.

Effective use of technology provides a competitive advantage to many elements of relationship between employer and employee. What we can achieve is move from a centralized management of employees as a homogeneous mass to shift of focus, responsibility to team/individual, customized service to employees, instant access technology and relationship of trust. Achievement and perpetuation of optimal transactional efficiency requires movement beyond service centralization and consolidation; the next giant step in optimization of transactional operations lies in automation and radical redesign of workflows. First generation efforts at automation accepted previous work patterns ‘as is’; HR expedited some paperwork, but did not eliminate service redundancies or the confusing customer roadblocks inherent in service organized by specialty silos. In second generation efforts, automation coming into its own as a tool for fundamental change in ‘service geography’; transaction managers jettisoning process flows that exhibited inefficiencies, focusing upon information technology as a tool to rationalize workflow. Most promising workflow innovation to date has been self-service delivery designed to allow employees and managers to directly initiate and manage transactional exchanges, HR extracts itself from burdensome role of information middleman.

The Toronto-Dominion Bank, a $8.6b Canadian Financial services firm with more than 30,000 staff, employed a web based career counseling tool, vastly reducing per person cost of service provision and extending reach of career coaching services. This helped TD bank to move from one-on-one career counseling to ‘anytime, anywhere’ counseling. In 2002, SAP, the leading enterprise business solutions company, rolled out ‘SAP Career Portal’ with a aim to virtually provide career coaching services and re-recruiting within SAP. This served dual purpose of retaining employees by opening up a world of opportunities and providing counseling by experts drawn up from different parts of the world.

Computerized ‘talent roster’ or Human asset ‘Yellow Pages” of skills housed on a system of networked databases allows managers to identify employees with relevant competencies quickly and identify skill deficits within the organization. Increasingly important for stretched middle managers to circumvent conventional barriers such as distance and organizational structure that prevent from flowing to the point of need. Tactic enables companies to optimize the utilization of their own workforce, and ultimately, to access the global labor market within the corporation. However, the drawback of such databases is it being real-time, uniform understanding the variations of competencies by employees across geographies, and updating data based on acquired new skills.

Representative problems with the current Human Resources Management Systems packages have been; firstly, its high implementation costs – Many purchasers of client/server HRMS solutions encounter areas of unexpected costs, stemming largely from complexities in implementation, thereby lengthening total implementation time and increasing consulting fees paid to third party vendors; it is not unusual that companies experience consulting costs 150% higher than originally anticipated. Secondly, Need to adopt vendors business model, difficulty retaining best practices – because extensive modification of packaged software is time consuming and expensive, most companies assume the vendors business model, requiring organizations to modify their best practices to fit software specifications. Thirdly, Inability to change HRMS drastically post-implementation – majority of client/server HRMS solutions statically bind an organization’s business processes to underlying programming code during the compilation process, making it extremely difficult to accommodate changed HR practices in technology without enlisting the support of external (expensive) consultant.

The answer lies in “Process-Adaptive” HRMS: Still experimental, process-adaptive HR systems house a ‘mimic’ interface that immediately adjusts system architecture to mirror workflow improvements inputted by HR professionals. To alter existing HR practices, line managers and HR professionals access the process adaptive HRMS via an intelligent interface, which first prompts users to describe intended changes through a list of diagnostic questions and second, guides translation of end users modifications into rules and logic, which transforms underlying programming code.

At core, process-adaptive software has an interface that guides alterations in business practices – thus allowing HR experts to change those processes without concern for time, expenses usually invested in underlying IT adaptations. Separation of business processes from underlying technology encourages continuous evolution of best business practices, while reducing software ownership costs – including customization, implementation and upgrading – significantly.

This brings us to the big question: What should HR do to overcome implementation difficulties. The answer lays in having its own Rapid Technology –Deployment Team. Technology team housed entirely within HR possesses full range of software development skills necessary for rapid rollout of new HR products. Goal is to increase speed of implementation of changes into the solution adapting new and changed business processes, facilitating employee and manager self service by establishing a group under HR’s control with all requisite skills. America Online Corporation, a $5+b company, consolidates specialists in back-end (ERP), middleware and front end (web interfaces) technologies into a single technology team reporting directly to SVP of Human Resources. Team capable of quickly developing a range of self-service applications. AOL’s HR technology team plays two important roles: high-speed self-service application developer and creator of innovative HR products.

In India, although at most companies, Human Resource Information Technology staff maintain back-end systems and assist with report generation, HR must rely on corporate IT department for the development of new applications to achieve its automation goals. In many such instances, mission critical tasks take priority and HR is always at the bottom of the priority list. Two problems often characterize this relationship between HR and IT: firstly, corporate demand for scarce IT resources results in a struggle for space in the limited IT queue – HR projects often receive too little attention; in addition, reallocating resources on short notice is difficult, as decision making regarding priorities often lies outside of HR control. Secondly, IT staff lack HR knowledge necessary to develop applications efficiently and effectively.

Given the strong likelihood that technology issues will increasingly dominate the HR agenda across the next five years, a qualified recommendation for the creation of a self contained technology group within the HR function, at least for the small set of tech-savvy companies as a transitional step on the way to placing technology solutions at the center of HR enterprise.

Three arguments that support a technology team within HR:

Argument 1: Pragmatically, many HR departments will have difficulty getting adequate attention from internal IT functions that have turned their attention to customer facing technologies; hiring dedicated resources may be the fastest, most flexible way to push forward HR technology initiatives, important if HR is to get control of its costs before the less discriminate corporate budget axe is wielded.

Argument 2: Because traditional HR staff will understandably resist change, especially technology driven disintermediation, the creation of separate group under the control of the HR Head may help build necessary momentum for technology transformation.

Argument 3: An examination of ways that HR will add value to the business across the next five years suggests that much of it will be technology focused; compared to today’s staff make-ups; progressive HR departments in the future will likely to have considerably more technologists.

Profile of the head of the HR Technology group is critical to success. Because few practitioners exist with both strong HR and IT skills, group cohesion is likely to be dependent on the ability to attract and retain one or two visionaries to lead the department.