Bangalore, India — Investment in human resources management must be a financially sound move. It must also address the intangibles of the employees’ contribution to a company’s success. The right IT solution can help drive down costs and increase value to the benefit of both the company and its staff.
How human resources management and its worth are regarded depends on whom you ask. Some see it as a necessary evil, while others have no doubt about its positive influence on the success of a company. Why the difference? Basically, few companies are in a position to quantify the additional value generated by their employees (human capital) or calculate the return on investment achieved by human capital management (HCM). It is difficult to measure intangible factors like employee satisfaction and direct access to information, or, indeed, to assess their contribution to corporate success.
On the other hand, companies are increasingly aware of the cost of personnel. Employees represent between 20 and 50 percent of overall costs. For many managers, optimizing human resources management means cutting costs and reducing investment. However, it is easy to overlook the fact that there are definite links between corporate goals – such as higher productivity and customer satisfaction – and human resources.
This is where a purely cost-based assessment falls short, prohibiting any investment that will not produce immediate benefits. From an HCM perspective, for example, setting up a call center is not merely a question of fitting out the work centers with suitable hardware and software and recruiting personnel. Effective HCM can make a considerable here. E-learning, for instance, would shorten the training period of employees by about 15 percent, lowering the expenditure required for above-average fluctuation rates in call centers. In addition, tailored training courses would increase employee motivation and ensure high-quality customer service.
Cost-Cutting Versus Corporate Success
The bond between HCM and department personnel will become stronger as the tendency to decentralize increases and activities are transferred to individual areas of the company. So, how do human resource managers overcome the dilemma of cutting costs while actively seeking to secure corporate success through strategic functions?
First and foremost, administrative processes must be streamlined using appropriate technology. Added efficiency gained here will have considerable cost-saving potential. A study by SAP and Deloitte Consulting established the mySAP Human Resources (mySAP HR) can help pare down processes in travel management, pay roll, and time management by 70 percent and lower costs by 60 percent.
But strategic functions like e learning, talent management, and performance management are also becoming increasingly important. They contribute directly to value creation, whether through the efficient transfer of knowledge (e-learning) or because they harmonize employees’ goals with corporate strategy (performance management).
New functions in mySAP Human Resources
SAP supports HCM in all areas of a company. They goal is to implement efficient HCM that benefits the whole company, for example, by means of the employee interaction center (EIC). In this central service center, employees’ questions are answered quickly and efficiently. The EIC incorporates a variety of information channels, such as telephone and e-mail, and is supported by an integrated solution database. Analysis of queries identifies common problems, so the causes can be dealt with. The result is greater efficiency.
Corporate governance is also in the spotlight at SAP. This involves transparent management of a company with stakeholders’ interests in mind. The internal control system from SAP enables companies to map corporate governance guidelines, including those per-taining to human resources. In light of the Sarbanes – Oxley Act regarding corporate fraud detection, it is particularly important than U.S. companies demonstrate transparent corporate governance.
Nevertheless, greater efficiency and compliance with legal guidelines do not alone make human resources management worthwhile. To be of strategic value, HCM must have at its disposal transparent information and user-friendly tools that are also accessible to managers outside the human resources area. With this in mind, SAP is focusing its development activities on usability. An initial step has been the creation of the role of HR executive. In the future, HR managers will have all relevant codes and process information at their fingertips. They will be able to call up the status of budget planning at any time and, for example, ensure that expenditure on overtime bonuses does not get out of hand.
Such transparency increases the benefits of HCM and effectively demonstrates its contribution to the success of a company.