An Era of Evolving "eHR"

By

Dr. G. Thomas
Professor & Dean
Shriram Center for Industrial Relations & Human Resources
Delhi

Ms. Puja Sareen
Lecturer
Ansal Institute of Technology
Gurgaon
 

INTRODUCTION

"Man alone, of all the resources available to man, can grow and develop. The resources capable of enlargement can only be human resources".                                                       Peter. F. Drucker

Human Resources (HR) constitute the most valuable asset in the context of development. Relative performances of nations, of regions of economy, of sectors of industry as well as of corporate enterprises are critically linked to quality of human contribution. Even the gains from the intervention of superior technology in any field are closely related to its interface with human factor with corresponding skills as well as attitude.

Over the last several years there has been an increase in the Human Resource Management literature that refers to Human Resources as a "Strategic Business Partner" rather than a monitoring and tracking organization. In the 1990s and into the 00s, we have seen that Human Resources is increasingly becoming a more strategic business partner - assisting senior and mid-level managers by providing critical data on which to make business decisions. With the high cost of benefits alone, having quality data from which to make business decisions is critical. Another area that receives a significant amount of press, in general, is mergers & acquisitions. Quality Human Resources data is critical to strategic planning in this area. As many of us are aware, it is no longer business as usual with international workforces and e-commerce adding yet other factors that may significantly impact Human Resources' ability to provide strategic support.

So, the Human resource management (HRM) has now become a partner with other management functions and has become increasingly responsible to cultivate the requisite culture that is conducive of required behavior. HR leaders, of today, are architects in the development of competitive organizational social systems.

The HR function today, is not only more integrated but is holistic as well. Effective HRM systems include activities such as manpower planning, staffing, training, development, performance evaluation, compensation management, health and safety, career planning and so forth, that work together synergistically with a strategic focus.

Synergy: Human Resource and Information Technology

In the new millennium, the way we do business will be revolutionized by Information Technology (IT).A key partnership is being formed between the human resource and information management professionals who work hand-in-hand and serve as the guiding relationship for all future activities and decisions.

As we prepare for our voyage into the future, we look forward to many anticipated benefits that will ultimately be derived from global information solution. Capitalizing on the latest web-based technologies, global access to human resource information should be provided to managers and employees to support a variety of management and personal decision-making purposes. Real-time information can be accessed and updated, all through a variety of global information solutions.

At the same time, organizations also need to be cautious of the fact that any external service provider cannot meet the HR business needs of a multinational organization. An in-source for human resource services is still needed. In fact, thorough analysis of some of the world's biggest organizations which have been early adopter's of HR outsourcing proves the notion. Various such studies corroborate this fact that until the HR leadership in an organization identifies the need for a corporate information system as their number one priority, they would face tough times in the coming years.

The New Evolving 'e HR' (Electronic Human Resource)

Using a variety of web-based technologies and Internet solutions, managers and supervisors are obtaining real-time information from their desktop. Non-secure information is available at home or from anywhere in the world through the World Wide Web. Decision-support information for decision-making and what/if analysis is readily available in a user-friendly format and the days of requesting information from the HR professional and waiting for structure queries to be built are long since gone. Business decisions based on old data no longer exist. Employees are accessing personnel related information from their desktop. Some personnel data can be read and updated from the desk. Personnel forms are now accessible electronically. Visits to the HR office are limited to matters requiring personal consultation or management advice. The virtual official personnel folder is here.

The "Paperless" office is a reality. Finally, the role of the HR professional is changing. Requests for personnel actions and related processes are no longer the core task for them as these processes are completely streamlined. Personnel actions are initiated from the manager's desktop and electronically forwarded to human resources for processing. The need for multiple levels of administrative staff to process the paperwork has long since disappeared but same-day actions are a reality.

Today, HR is not treated as a single function. It's a collection of highly specialized capabilities — each with distinct objectives, tasks and needs.

Today's Mantra – HR Optimization

At end of the day, it's about giving your HR staff the tools and information they need to work smarter and think strategically. It's about putting self-service tools and resources in the hands of the managers and end users.

It's about implementing new technologies that maximize efficiency, enhance return on investment, and accelerate the growth. It's about supporting your HR function; better manage resources for the greater good of organisation as a whole.

Towards eHR (Electronic-Human Resource)

eHR represents the synergy between information technology and the human resource function of management. In order to understand how the term eHR came into existence, gained prominence & how over the years has becomes synonymous to not only large multinational organizations and Fortune 500 companies but also the Small & Medium Enterprises across the world, it is important to understand the fundamentals of Enterprise Resource Planning or ERP which is the key to eHR systems.

Enterprise Resource Planning (ERP)

ERP covers the technique and concepts employed for the integrated management of businesses as a whole, from the view-point of the effective use of management resources, to improve the efficiency of an enterprise

In other words, ERP represents an integration of all data & processes of an organization woven together in an intelligent manner using technology into a single unified system. A typical ERP system will use multiple components of computer software and hardware to achieve the integration.

The term ERP originally implied to systems designed to plan the utilization of enterprise-wide resources. Although the acronym ERP originated in the manufacturing environment, today's use of the term ERP systems has much broader scope. ERP systems typically attempt to cover all basic functions of an organization, regardless of the organization's business or charter.

ERP is the planning of four M'S of an enterprise's resources: Man, Money, Materials and Machines to their best synergistic values. During early years organizations were primarily focused on the manufacturing sector and as they grew their technological landscape got bigger and bigger consisting of various stand-alone applications one for each of their enterprise functions like Supply Chain, Finance, Customer relation, Human Resources, and Warehouse Management to name a few.

Larger organizations implemented ERP systems in the 1990s mainly to replace legacy systems developed decades earlier. In addition, corporate downsizing, reorganization, mergers, and acquisitions also contributed to a significant percentage of ERP implementations during the 1990s. A surge in ERP implementation occurred in the late 1990s as many organizations prepared their information systems for Y2K.

Nearly all Fortune 1000 firms have ERP systems in place or integrate their legacy information systems with the ERP systems of suppliers or customers in their supply chain. Additionally, the ERP movement is not just for large corporations; many governmental entities and smaller firms are now implementing ERP systems. ERP vendors have begun to compete with software solutions that were traditionally geared for mid-size companies, as mid-market business software is dramatically taking on "enterprise-wide" characteristics rather than maintaining the traditional focus on single functional areas.

With advent of ERP, organizations today have a single enterprise wide application consisting of modules within, capable of absorbing all their functions under a single umbrella structure where these could speak to each other and co-exist without any adverse impact on their working and efficiency

ERP and HRM

With the passage of time organizations realized the growing importance of having a single unified system and how enterprise resource planning solutions had given a boost to productivity in manufacturing sector. Having imbibed enough success in this area, organizations started looking for area's where such innovation could help them increase their productivity, and what could be more suited for research, than their most valuable resource – Human resources.

It may seem obvious that organizations today should have HR information systems that integrate all processes or functional areas; however, integration within the different HR functions and with other business areas like Finance and manufacturing is a significant and continuous challenge for most organizations even today. Successful organizations understand that efficient, effective, and savvy use of information technology is a primary way to gain a competitive advantage. Organizations that are successful in obtaining a competitive advantage make system and process improvement an integral part of their HR operations

We now look at how in today's environment, HR function can leverage from some of the best IT solutions which have been developed specifically keeping in mind the strategic role played by each of the HR processes:-

Whether you name them as a Human Resource Management Systems (HRMS), or Human Resource Information Systems (HRIS), or HR Technology or HR modules, all these terms eventually shape up an intersection between human resource management function as a whole (HRM) and information technology. ERP vendors realized the potential of growth in this function early on and started to merge HRM as a discipline and in particular it's basic HR activities and processes by programming them into 'Data Processing Systems' which could evolve into standardized routines and packages of Enterprise Resource Planning (ERP) software.

The HR function consists of tracking innumerable data points on each employee, from personal data, their current and historical skills and capabilities, prior working experiences to their salary or payroll processing. Each of these tasks are manual in nature and time consuming. Above all, these data points were not constant and were required to be updated frequently with an employee's progression in the organization. To reduce the manual workload of these administrative activities, organizations began to electronically automate many of these processes by introducing innovative practices combined with technological advancement giving rise to Human Resource Management systems. These HR systems are characteristically developed around key areas of HR functions namely,

1. Talent Acquisition or Recruit Workforce – Finding right man for the right job is one of the key challenges for HR managers today. Recruitment was infact the very first area within HR functions, which caught the fancy of ERP vendors. ERP applications in this area, today help HR managers by automating and standardizing a series of sequential activities & steps which are followed in an organization while hiring a candidate for a particular position or a role. This has completely transformed the way organizations recruit employees, streamlining the complex task of recruiting for recruiters as well as hiring managers. In one online location, managers and recruiters can create and post requisitions, search the talent pool, screen applicants, perform background checks, and hire and onboard the best-fit candidates. It has led to the paper intensive processes associated with recruiting into a streamlined electronic system. By automating many time consuming tasks such as creating and posting job openings, matching candidate qualifications to job requirements, and converting applicants to employees these tools allow you compress the entire recruiting cycle, from job posting to hiring.These are now helping managers at every step in the recruitment cycle, starting from,

* Administering & Posting Job Requisitions on Co.'s intranet & internet portals
* Managing the applications received online as well as a variety of other sources like vendors, placement consultants, walk-in or employee referrals.
* Searching for most qualified & suitable applicants amongst the applications received
* Hiring Applicants
* Organizing Interviews
* Tracking Recruitment Expenses

2. Workforce Administration – Today, more than ever, competitive advantage depends on intangible assets—especially human capital. People and their efforts are what make organization different from its competition. The HR department today needs new tools and processes that can help it complete the transition from an administrative role to a strategic one. This is made possible by ERP solutions which provide solutions which are flexible and help them connect human capital processes to business results. These enterprise applications increase the productivity of workforce by delivering business processes based on best practices. By automating administrative tasks, they enable HR department to focus on managing the most important asset: people. It eventually helps in reducing costs and increasing efficiency throughout the employee lifecycle. This module would deal with the most crucial aspect of any organization – its data. The module helps automate the activities such as

* Manpower Database Maintenance which includes recording employee personal data, dependant data, & organizational data.
* Setting up Employee categories (Regular, Temporary, Full-Time, Part time, etc)
* Setting up the organizational hierarchy basis which the enterprise application would operate, configuring the basic framework or how the organization operates.
* Record of every milestone in an employee's tryst with organization, right from hire to separation is all recorded under this function.

3. Enterprise Learning / eLearning / Training Administration – eLearning is an online method of developing skills and knowledge across the entire workforce as well as with customers and partners. eLearning comes in many formats: self-paced courses, virtual live classrooms, or informal learning driven by the user. It is often "blended" with other learning approaches such as classroom instruction, discussion groups, or on-the-job training. It is used for new employee training, certifications and compliance, business skills, leadership, desktop skills, and IT skills. To be successful in today's work environment, employees need to know the skills required for their job and easily find the appropriate learning pieces, knowledge articles, or even experts to talk to for help doing their job. Today, eLearning encompasses much more than courses online. Employees are taking more responsibility for their learning and work and melding the two together. Employee development is one of the most important and challenging function within the HR functions. It is one area which can make a huge impact to an organization's ability to retain the high performing talent. The module would generally include,

* Defining Training Courses and Program
* Setting Up Training Costs
* Administering Course Sessions
* Enrolling or Wait listing Students
* Tracking Employee Training

4. Competency Management / Career & Succession Planning - This forms a core part of Organizational Development in an organization. There are a host of activities and tasks which are clubbed together under this function and different organizations choose and implement these activities in a structured manner, which best fits' in with their need and objectives. All processes under this function have a high level of interdependency on other functions like Enterprise Learning or Training & Development. ERP applications help integrate all these functions and help present management with actual picture of existing talent, key skills available, which skills are in short supply etc. These tools tie up the loose ends between the three constituents of Employee, their current skill assessment and their development opportunities and plans. This is of an immense value to an organization basis which they are able to forecast their training calendars and need based training programs on an annual basis. The modules would include some of the following processes,

* Defining competencies and accomplishments
* Identify and associate competencies with individuals, jobs, positions, and teams.
* Ranking and Rating the Competencies
* Identify employee development needs and enrol them in various training programs.
* Find leadership and talent gaps in your organization, and identify and follow up on high-potential employees.
* Identifying Key Positions & Succession Planning for those positions.

5. Time & Labour/Monitor Absence – One of the key pain area's which HR in any large organization would always put on top are the transactional and administrative tasks & activities which are non value adding but integral to any HR function in an organization. Some of these manual and labour intensive administrative tasks have now been automated by ERP applications which require little or no manual intervention from the HR staff on day-to-day basis. One such area where technology has come to aid of HR managers is keeping a track of employee's leave records and tracking their actual time spent on productive output.

Today, most of the activities under this function have been automated and pre-built in HR modules which are flexible, integrated solutions in the form of a single repository, which give organizations the intelligence and power to determine key performance indicators that are impacted by time-related data. They are designed to support the time reporting needs of a wide range of business functions, including payroll, financial and cost accounting, project management, employee benefits, and organizational administration. These modules can be configured to process transactions related to following components,

* Define the kind and type of different absences / leaves which an organization offers.
* Classify these leave types into classes or grades of employees, eligible for those types.
* Developing a flexible standard 'work schedule' for entire employee base or many different versions applicable to different segments of employee population
* Holiday schedules which are either governed by regulatory or legislative guidelines as well as what organization may offer to its employees.
* Tracking the actual time employees spend on the work once they enter the work location till the time they leave for the day.

6. Monitor Workplace / Occupational Health and Safety - Monitor Health and Safety provides you with the tools to help you track detailed health and safety information, manage a health and safety program, and comply with governmental and insurer regulations and standards. Report Regulations helps you meet human resources reporting requirements for several countries by generating reports specific to a country's requirements (USA). You can report on Affirmative Action requirements and track data necessary to comply with the Americans with Disabilities Act (ADA). In addition you can,

* Track health details of the employees and their families.
* Health claim schemes
* Track Injuries or any incidents at work

7. Plan Salaries / Administer Compensation / Base Benefits – Plan Salaries enables you to develop salary increase budgets by department, create salary plans by individual employees or departments, associate standard salary matrices and review rating scales with salary grades. Online salary modelling is available for department managers. Managing Variable Compensation specifies building blocks that control employee incentive plans, including how they are valued and vested. The system allows you to build a comprehensive set of plan types, plan calculations and eligibility criteria, and specify payout amounts. You are able to define and determine group build rules, set goals and determine if group members are eligible for incentives, and determine incentive liability. Finally, the calculation of award amounts can be interfaced to Payroll for payment to the employee and to Stock Administration for the processing of stock options.

8. Payroll Solutions - Today ERP applications such as PeopleSoft provide the organizations with automated and flexible solutions which take care of processing employee salaries after taking into account all essential factors which impact an employee monthly pay out, like the no. of leaves, hors spent on work, any deductions on account of benefits, retirement and gratuity contributions etc. They offer a wide variety of options which are comprehensive set of payroll solutions. A robust payroll management system, a rules-based global payroll system, and a payroll interface for outsourcing or integrating third-party payroll systems.

i) Payroll for North America is a flexible, robust solution for processing large volumes of payroll data. Over 400 customers—with over 10,000 employees each—are in production on Payroll for North America. It features an intuitive web design that leads to significant savings in data entry, calculation time, and manual intervention. Though you'll spend less time preparing and running your payroll, your records and pay checks will be more accurate.

ii) PeopleSoft Global Payroll is an innovative payroll system that gives you control over all aspects of your payroll operation in a multinational environment. A single, scalable platform enables you to install and operate payrolls that fully comply with local requirements on a worldwide basis. It is composed of a core application and related country extensions.

iii) Payroll Interface- If you are using an in-house payroll system, or an external payroll service bureau, Payroll Interface gives you a full-featured payroll interface solution. It is a pure internet application that gives you access to all Payroll screens, so you can easily transfer employee data and updates from your Human Resources Management application to your payroll system.

Today, there's hardly an ERP application which doesn't come with built in Self Service collaborative applications which enabled the employees, managers and administrators to act in different capacities and have different level of authority to operate these systems.

REFERENCES:

* Luthans Fred, Organisational Behaviour,Tata Mc Graw-Hill.
* Dessler Gary, Human Resource Management, PHL.
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* Bilbrey, Darrell, PeopleSoft Administrator's Guide, San Francisco, Sybex, 1999.
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* Dietz, Lisa Ramsey, What Every Business Needs to Know about SAP, Rocklin, CA, Prima Publishing, 1999.
* Leyon, Alexis, ERP Demystified, Tata Mc Graw Hill.
* Human resource management system from Wikipedia, the free encyclopedia
* HR Management - e-Synergy - ERP, CRM, HRM- 2020software.com
* Walker,Alfred J, HRIS Development: A Project team guide to building effective personnel information system, New York:Van Nostrand Reinhold Company,1982
* Leslie A. Weatherly,HR Technology: Leveraging the Shift to Self-Service-It's Time to Go Strategic, SPHR, HR Content Expert (March 2005)
* Boyett, JosephH,Heidi Spirgi Herbert, "HR in the new economy" Peoplesoft White Papers Series, March 2001.
* ISACA's Control Objectives for Information and related Technology (COBIT) guidelines. COBIT® 3rd Edition©.
* Gartner Group, The Next Evolution of ERP, Stamford, CT, Gartner Group, 2000
* O'Leary, Daniel E, Enterprise Resource Planning Systems: Systems, Life Cycle, Electronic Commerce, and Risk, Cambridge, Cambridge University Press, 2000
* R. Caldwell, Champions, adaptors, consultants and synergists: the new change agents in HRM, Human Resource Management Journal 11 (3), 2001, pp. 39–52.
 

Dr. G. Thomas
Professor & Dean
Shriram Center for Industrial Relations & Human Resources
Delhi

Ms. Puja Sareen
Lecturer
Ansal Institute of Technology
Gurgaon
 

Source: E-mail May 9, 2008

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