Author: Samuel Greengard

Callit the byproduct of the information age. Today, just about every new system orlabor-saving innovation leads to additional complexity in our lives — and our work.Although a word-processing program makes it easier to write and edit documents, it createsnew challenges for tracking revisions and distributing information. While the Web providesan efficient way to exchange data and information across distance and computing platforms,it does little to manage all the documents, files, and information.

Ultimately,the solution becomes the problem. And another layer of technology becomes necessary toachieve strategic gain. Within the corporate arena, this problem has become increasinglyobvious over the last few years, as companies have tried to cope with the demands of theknowledge economy. In many cases, workers are completely overwhelmed with facts, figures,data, information and more. It’s becoming difficult, if not impossible, to siftthrough the digital landfill and separate the valuable nuggets from fool’s gold.

Nowhereis this more apparent than in the sphere of corporate intranets. Designed to focus contentand direct the appropriate information to workers, many intranets have become nothing morethan the electronic equivalent of a bottomless inbox that eventually begins to sink underits own weight. These days, the issue isn’t gathering information, it’s sortingthrough all of it and finding the right content. “It’s essential to provide asingle point of access to corporate information and resources,” says Hadley Reynolds,director of research at Delphi Group, a Boston-based consulting firm.

Thusthe enterprise portal was born. Just as commercial portals such as Yahoo! and Exciteattempt to make sense out of the chaos of the Web, these desktop interfaces help toaggregate and channel content that you need to manage benefits and make work decisions.Over the last couple of years, portals have blazed their way into corporate consciousnessand paved the way for a more streamlined and managed information delivery and retrievalsystem. “Portals allow processes that previously required human intervention to behandled electronically,” says Larry Dunivan, vice president of global HR solutions atLawson Software in St. Paul.

Butgetting to success isn’t always easy. Over the last year or so, portals have becomemore complex and begun to offer more sophisticated solutions, including linking tothird-party providers and handling sophisticated e-business transactions. Instead ofsimply offering “published” material like employee directories and policyhandbooks electronically, they’re making it possible to conduct myriad functions froma central Web page, including business analytics, e-recruiting, open enrollment,retirement account management, procurement, work/life program administration, groupshopping discounts, and more.

That,in turn, can translate into multiple portals handling different functions. And while morethan 80 percent of companies now operate some type of portal, many incorporating HRfunctions, unmanaged data and applications can quickly become a bottleneck, says Reynolds.“Ultimately, organizations have to find a way to manage all the various portals andcombine them into a single solution that puts the right information and tools at anemployee’s fingertips.”

That’scertainly the thinking at Verizon Wireless. The company is well on its way to creating ane-HR department that allows employees to use a portal for everything from basic employeeself-service, including updating records, to handling 401(k) transactions and makingbenefits selections during open enrollment. Managers can also handle an array offunctions, including transferring and terminating employees and managing pay increases.

Thesystem, based on software from portal vendor iClick, is helping to transform the humanresources department at Verizon “from the back room to the boardroom,” explainsKen Chin, manager of HR management services. Currently, about 15,000 Verizon Wirelessemployees use the portal, but the number will soon swell to 40,000 with the addition ofemployees from Bell Atlantic  Corp. and GTE,the companies that merged in June to become Verizon Communications, the largest local andwireless phone company in the nation. From the project’s humble beginnings almost twoyears ago, the focus has been on aligning human resources with the company’slong-term objectives. As Chin puts it: “HR must learn to think out of the box andinteract with the rest of the enterprise.”

ButChin also has put usability and functionality at the top of the list. The company targetseach employee as an individual, meaning that no two workers see the same portal page.“It is completely tied to what they do and what information they require,” saysChin. In fact, by setting up the system on the basis of roles and responsibilities ratherthan job titles, Verizon Wireless is able to display only the data and links appropriatefor each individual. “If you are not authorized to view specific content or handle atransaction, it’s simply not visible to you,” he points out. In the future,Verizon will add an array of capabilities, including sophisticated business analytics.

Oneof the major problems with first-generation portals is that they provide aone-screen-fits-all solution. A human resources manager and a line employee might view thesame basic screen and see the same links. If the employee is not authorized to click intoa particular area, he or she will likely view a message indicating a digital dead end.Even worse, getting from one portal or intranet page to another can involve multiplesign-ons and different navigation and search tools.

Whenthat happens, the operative word is confusion. Toss a mish-mash of tools, capabilities,and so-called solutions at an employee and it’s likely that an organization willachieve less than stellar results. Yet, according to Don Chun, director of global HRMSproduct strategy at PeopleSoft, an enterprise portal has some distinct advantages over itscommercial counterpart, provided that an organization thinks through the issues andmanages the technology efficiently. “Companies know who their employees are, how muchthey make, what different groups of employees are authorized to do, and what functionsthey are allowed to handle. An organization that creates a seamless solution can create asound value proposition.”

Theevolution from static Web content to dynamic transactional capabilities reflects thegrowing sophistication and requirements of today’s workplace, says Rosalia Bacarella,executive vice president of HR and corporate portal products at Consumer Financial Network(CFN). By combining work tools with features that center on life events, including grouppurchasing discounts at local retailers, discounted airline tickets, bill presentment andinvestment tools, it’s possible to create advantages for the enterprise and foremployees. “It can give workers the tools to do their job and also manage theirlives,” she says.

Andin today’s tight labor market, that can often spell the difference between attractingand retaining quality workers and watching them flee to other firms. But it also iscrucial for an enterprise that wants to compete in today’s global digital economy.“Employees must make good business decisions, and in order to do so, they requireinformation from within their company and outside it,” Bacarella explains. Awell-designed portal can provide seamless links to other companies in the supply chain,third-party providers and other outside data sources, such as government or privatesubscription-based services.

Anothercompany traveling the portal path is Premier Inc., a San Diego health-care alliance that’saffiliated with 1,800 hospitals nationwide. Its HR department is moving “out of theprocessing role and into a consulting role” by offering 1,450 employees access to anarray of information through an intranet portal from Lawson Software, says Karen Poretti,director of HRIS.

Atpresent, employees and managers can handle self-service functions. The company also isadding e-recruiting tools, sophisticated data mining and reporting capabilities, andbusiness analytics for examining the cost of hiring and filling positions, determiningrevenue per employee, cost per fill, turnover ratios and other key indicators. It willsoon have a single sign-on system in place so that employees can use the entire systemseamlessly, says Poretti. “Managers and employees are becoming the guardians of theirown data. The intranet is driving greater efficiency throughout HR and the organization.”

Ultimately,says Reynolds, the idea is to create a single access point to all corporate informationand resources. And while a growing number of companies are pulling out all the stops tomake that happen, it’s also important to understand that a personal computer isn’tan end unto itself. A well-designed portal might link to a call center with live supportstaff or offer mobile tools that allow employees to access company directories, checktheir calendars, and make transactions on their 401(k) account through a PDA or digitalphone.

“Thefact is, portals are still in their infancy,” says Delphi Group’s Reynolds.“We have only begun to scratch the surface of what’s possible.”

Workforce,September 2000, Vol. 79, No. 9, pp. 22-24 — Subscribe now!

There’s no avoiding a basic reality in today’s dot-com, e-everythingworld: speed matters. Today, getting information, products, services and moreinto the hands of customers and employees at light speed is absolutelyessential. In an era of instant gratification, companies are pushing theboundaries to new heights — or some might say new depths.

Clearly, human resources is getting pulled along for the ride. Although itmight not experience the crushing pressures of an e-commerce site, HR isn’timmune from compressed technology cycles and growing demands for faster andbetter service. It’s no longer possible to install a new recruitingapplication or benefits system over a period of months or years. By the timesuch an implementation is complete, the functionality is obsolete.

“What makes e-business and the Web different is that it comes down tosurvival of the fastest, not necessarily the fittest,” states Ed Nazarko,managing director of Scient Corp., an e-business consulting and integration firmbased in San Francisco. Of course, the penalties for those who don’t play thegame effectively are steep: competitive disadvantage, and, in a worst-casescenario, outright failure.

If you feel like you’re sitting at the Mad Hatter’s tea party, you mightas well sit down and gulp the tea. Things aren’t going to change anytime soon.Because the underlying infrastructure of the Internet allows constant andimmediate change, it’s human nature to make constant and immediate changes.The important thing, says Jim Monastero, a lead partner for e-businessconsulting at KPMG Consulting, is to balance speed with the ability to deliveron your promises to customers or employees. “If you can’t deliver, yourreputation can be damaged, even destroyed,” he warns.

Here are seven rules for moving at Internet Speed:

1. Understand that the Internet is fundamentally different. Processes andprocedures that worked just fine in the brick and mortar world can turn theInternet into a logjam. E-business and e-commerce require more creativethinking and less bureaucracy. This philosophy must filter into a number ofareas, including site design, usability, performance and generalcapabilities. But it also means thinking up new ways to communicate anddeveloping new business models. Some of these models haven’t been inventedyet.

   
   

   Yet, regardless of the exact approach, one thing remainsconstant: The key concepts here are delivery and service. Within anenterprise, employees typically desire information about their benefitsselections, retirement accounts and more. Managers want information on theirdesktop to make critical decisions — and workflow solutions can provide thefuel to make that happen. When all is said and done, the Internet can createnew opportunities — but only if HR understands the need to move quickly andeffectively.

2. Elicit the support of senior management. It’s simple, if your CEO andtop executives don’t understand and support your HRIS project it’sprobably headed for the virtual trash bin. It’s essential for HR to builda business case for projects and then provide plenty of useful informationso that management can understand what’s required. Equally important:Senior management must understand the fundamental reasons for embarking on aparticular initiative. It’s not to become part of the dot-com generation,it’s to compete in today’s rocket-paced environment.

   
   

   Of course,one of the best ways to get senior management’s attention is to providehigh-level capabilities that can boost earnings and slash expenses. Forexample, at Broward County School District in Fort Lauderdale, Florida, aWeb-based business intelligence system helps administrators betterunderstand everything from demographic trends to scheduling classes at over200 schools. The latter used to take days or weeks but can now beaccomplished in a single afternoon. Once top administrators saw the businessand HR capabilities the system offered, it was a no-brainer to move forwardas quickly as possible, says Nancy G. Terrel, director of strategic planningand accountability.

3. Create a team or task force that is empowered to make quick decisions.Because e-business overlaps among multiple departments and domains, it isessential to develop teams that can communicate issues and understand theneeds and concerns of others. The timeline in the e-business and e-commerceworld is typically 60 to 120 days — and much of this thinking is filteringinto HR as well. “The conventional two-year implementation cycle thatmany companies have grown accustomed to cannot work on the Web,”Monastero warns.

   
   

   For example, at Dell Computer Corp., HR teamsfocusing on content and functional requirements, work closely with IT tospearhead the e-HR initiative. Management stands aside and lets these teamsmake their own decisions. That allows fast and efficient decision-makingthat mirrors the company’s customer service model for consumers. “Thegoal is to provide the best experience possible for employees and to putsystems in place to make that happen. It’s important eliminatebarriers,” says Terril Brummett, director of human resourcesinformation management at Dell.

4. Don’t use conventional ROI calculations. Although it’s possible to useROI for measuring major systems, it isn’t always possible to calculate thevalue — or meaningful return on investment — of many e-HR functions.Monastero believes that an organization must weigh various trade-offsrelated to implementing and maintaining e-business solutions and the speedof progress. “It’s one thing to say, ‘This project will cost us $3million or $10 million and we can’t afford it.’ It’s quite another toexamine the affect of not investing the money.” Indeed, when it comesto e-business and e-HR, many initiatives are so new and there are so many”soft costs” wrapped into the equation that it is nearlyimpossible to measure a direct return on investment.

   
   

   Some of thesesoft costs can lead to enormous productivity gains or simply happieremployees who are more loyal and less willing to look elsewhere for work.Nazarko puts it this way: “There’s no question that financial gravityexists. But you can’t think about ROI in a two month or six month window.And you cannot allow the financial considerations to get in the way ofproperly upgrading and maintaining a Web site.” Indeed, if employeesdon’t find a site useful and easy to use, they’re perfectly happy tovote with their feet and their phones. Instead of turning to the Web siteand using e-HR functions, they’ll buckle HR with countless inquiries.

5. Make sound business decisions. These days, it’s important to viewe-business as a balancing act, requiring trade-offs between scalable,personal and secure architecture and the need to deliver solutions quickly.That means working with other departments and IT to see the big picture ofhow various decisions affect HR and the entire enterprise. For example, asystem that benefits HR might not integrate effectively with systems fromfinance or operations. In the long run, it might create a roadblock as theorganization attempts to introduce additional functionality. Likewise, it’simportant to move fast but not leave gaping security holes or providemismatched content and capabilities. A poorly designed strategy or systemcan wreak havoc for months or years to come.

6. Build an IT architecture that is flexible and scalable. If you get lockedinto proprietary systems and cannot expand easily, you could find yourselfwith a subpar intranet or creaky Web site. Worse, you could wind up shellingout big bucks later on in a futile attempt to fix everything. The righthardware and software can make it easy to move quickly as things change.

   
   

   That means laying the foundation with a solid ERP, database andmiddlewear to provide maximum flexibility. Unlike changes to a Web site orfront-end systems, these tools can remain in place for years. Yet, incertain instances and for particular applications, it might mean turning toapplication service providers (ASPs), which offer a turnkey solution bymanaging software and systems remotely — including things like time andattendance, payroll and recruiting. It also means tapping into expertise,either internally or through consultants, to oversee and monitor anenvironment effectively. “Ultimately, you have to ensure that for everyentrance strategy there’s an equally valid exit strategy,” Nazarkopoints out.

7. Don’t be afraid to make mistakes. Even the most successful e-HRinitiative is fraught with mistakes and missteps. The key is to understandthe big picture and define the infrastructure and strategy as clearly aspossible. Then be ready to shift focus at a moment’s notice. Whensomething doesn’t work, consider changing it.

   
   

   In fact, it’s not aquestion of whether to move fast, it’s how to move fast. The biggestproblem, says Nazarko, is that companies adopt a strategy that is tooconservative and defensive. “Instead of grasping the opportunity theyare saying, ‘I don’t want to get hurt.’ They spend too much timeanalyzing things. The reality is that you are going to be wrong 30 percentof the time and need to build that into the process.”

Ultimately, you might question whether the pace of today’s businessenvironment is truly progress. Every time we turn around it seems that someoneor something is heaping more stress our way. But the simple reality is: Theclock isn’t going to travel backwards, the need for instant gratification isn’tgoing to vanish, and the Internet isn’t going to become passé anytime soon.

Better strap on your seat belt because the ride has just begun. Welcome tothe brave new world of e-HR.

Workforce, May 2000, Vol. 79, No. 5, pp. 20-21— Subscribenow!

When employees at Dell Computer Corp. need to update their addresses, checkon their career paths, or handle an array of other human resources functions,they log on to the company’s intranet and click their way to the forms orinformation they need. They can view personal records, type in changes, andglean information about company policies. The system is useful, but not a lotdifferent from similar setups at scores of other companies that have constructedHR intranets over the last few years.

Take a closer look and you’re likely to notice that Dell’s site isanything but business as usual. For one thing, employees can view a snapshot ofpersonal data from a single customized home page dubbed “You andDell.” With a few clicks of a mouse, they’re able to access an array ofHR services. The portal, available through PCs and kiosks on the factory floor,eliminates the need to hit various company intranet sites and use multiplelog-ons. For another, HR closely monitors systems so that everything isoperating at peak efficiency. It uses an arsenal of tools and strategies toensure that the site runs fast and is simple to navigate.

“Traditionally, companies offer HR services through static intranetsites. That forces employees to click through material to find exactly what theyneed,” says Terril Brummett, director of human resources info management.But at Dell Computer, which now employs more than 36,500 workers at its RoundRock, Texas, headquarters and beyond, HR is mimicking the Dell Direct model thathas helped make the company the No. 1 manufacturer of personal computers in theUnited States. “We want to deal with employees directly and remove anyadministrative overhead,” states Brummett.

In all the hubbub about moving at Internet speed and adopting leading-edgee-business and e-HR systems, the fact that a site must perform efficiently andprovide simple and streamlined access often winds up lost in the shuffle. Andthat’s a recipe for problems. “It’s not good enough to merely develop asite and offer various electronic capabilities,” states Kim Mathias, vicepresident of EurekaDIGITAL, a Burbank, California, e-business professionalservices company. “If you want to achieve success, it’s essential tocreate an outstanding customer experience. A company must achieve a positiveinteraction with employees.”

On the front end, that means designing Web pages that are navigable and fast.It means making the user experience easy and pleasant — while keeping up withthe rapidly evolving look, feel, and functionality of the online world. But italso requires attention to an array of technical details, including assessingthe scalability of the underlying architecture, ensuring that adequate bandwidthexists, and managing tools that can make or break site performance.”Managing traffic and bandwidth is a huge challenge,” states Alexis dePlanque, program director for consulting firm Meta Group in Stamford,Connecticut. “Without the right technology, an organization risks losingits audience or customers.”

The net effect? HR must develop a well-conceived strategy and forge a solidrelationship with IT. In fact, unless all the pieces are properly in place,employees are likely to assault the human resources department with phone calls,e-mail messages, and personal visits as they become frustrated and confused byvarious functions — and lack of functionality. “The tools that anorganization uses to optimize performance go a long way toward defining successonline,” states Matthew Kovar, a senior analyst for the Yankee Group, aBoston-based consulting firm.

Dell Computer certainly believes that Kovar’s words ring true. Over thelast couple of years, it has worked closely with its HR information managementstaff to transform a strategy into a reality. The human resources department hasdivided the initiative into three main components: the user interface, productmanagement and deliverables, and technical IT issues. It has established teamsto manage each of these areas, and when HR puts all the pieces together, theresult is a highly focused strategy.

A few years ago, for example, a manager at Dell had to click to the proper HRhome page in order to gather specific information about policies and procedures.The manager would then have to click to another HR home page to handlepromotions. Today, the same person can venture to a single online HR page,select a particular employee, and view only relevant, contextual informationabout policies and procedures. If the manager wants to promote the employee orenter a new salary, it can route all approvals. “The information isorganized so that the manager can view it and act on it more quickly andeffectively,” says Steven Moritz, senior manager of HR systems management.

Dell’s HR department doesn’t rest on its laurels. It is constantlytweaking, adjusting, and refining things to improve the user experience. SaysBrummett: “An HR department shouldn’t view employees any differently thancustomers. The user experience determines whether they will turn to the site orsteer away from it.” In fact, Dell’s goal, as HR delivers a greater arrayof content and services online, is to integrate and streamline servicesseamlessly. “We’re steering away from a silo-based approach that forcesan employee to jump from one site to another and deal with multiple passwords.We’re working to get HR out of the middle of the transaction.”

Mathias points out that several factors play an important role inconstructing a top-notch site. One of the most crucial is personalization. It’sno longer good enough to slap together generic content for all employees. Justas Yahoo! and Excite have transformed the way consumers use the Web –aggregating news, information, and even personal account data such as bankbalances and frequent-flier miles — human resources must provide options.”Personalization is what keeps a person coming back to the site. It’swhat holds their interest,” she says.

Indeed, the problem with a general approach is that most people are alreadyoverwhelmed with information. “Once you start providing information that’sperceived as unnecessary or irrelevant, employees begin to tune outeverything,” Mathias adds. On the other hand, a portal or site that lets aperson make choices about content can “seduce” them into using theonline capabilities to monitor general company information and personalaccounts, such as a 401(k) or benefits selections. However, she warns that it’simportant not to flood employees with too many choices. “The goal should beto understand what’s critical, what’s desirable, and what’sunnecessary.”

Another important consideration is how quickly pages load and how easy theyare to navigate. Although the media and consultants have harped on the subjectfor years, many sites continue to implode under the weight of poor performance.Users must slog through pages that load at glacial speed, and they often cannotfind what they’re looking for. The problem is especially vexing among thosewho log on from home or on the road using a 56 kbps or slower modem. In somecases, a site that blazes at T-1 speeds inside a corporation crashes and burnswhen users access pages remotely.

In some instances, the root problem can center on data ownership and whichcorporate systems hold information that’s required to run an intranet. Systemperformance, data consistency, and how carefully a particular department ordivision oversees various databases can all have a major impact on siteperformance. “If a particular page has to load, reload, and regenerateitself so that a person can view it, it’s consuming precious seconds. Theunfortunate reality is that people aren’t patient. If they have to wait, theygive up and go back to doing things the conventional way,” says Mathias.

Sometimes, the problem is more insidious than it first appears to be. In oneinstance, Mathias worked with a major bank that had stored documents in morethan a dozen file formats. In order for workers to view and use the files, thecompany had to install the associated programs on every desktop. That, in turn,led to a great deal of disorganization centering on the storage and exchange ofdocuments through the intranet. “People had dozens of different programsand files sitting everywhere, and many of them couldn’t figure out what wasgoing on,” she says. The solution? Use only Word and Acrobat applicationsto store files, and standardize the underlying software applications across thecompany so that employees would no longer generate documents in a wide array offile formats.

Yet even the best-designed Web sites and most innovative online concepts canfail. Today, it’s also essential to optimize back-end systems for speed andefficiency — and to ensure that the site is available 24-7. In fact, simplyadding servers does not necessarily eliminate performance problems, and cansignificantly boost costs. That leads many organizations to load test systems,use sophisticated monitoring tools, and install various performance tools suchas caching, mirroring and load balancing that manage traffic more effectively.

PHH Vehicle Management Services certainly understands the importance ofbuilding a rock-solid systems architecture. The Hunt Valley, Maryland, company– a division of Avis Rent A Car System Inc. — leases more than 750,000vehicles to about one-third of Fortune 500 companies. With both public andinternal Web sites providing everything from sophisticated e-business tools toemployee information, the company has learned that upfront testing can go a longway toward ensuring high performance.

Early on, Mickey Lutz, senior vice president of information technologyservices at PHH, turned to Web testing and monitoring tools from MercuryInteractive Corp. to verify that his firm was constructing an efficient sitewith adequate bandwidth. PHH ran traffic-simulation tests across business units,servers, and databases — and at different time intervals. In the end, theload-testing software was able to generate a “best guess” scenario forhow customers would use the site under various situations and conditions and tomeasure what effect different traffic patterns would have on speed andreliability. The company used the data to tweak and adjust various systems formaximum performance.

Optimizing back-end systems is difficult because every company must approachthe problem in a unique way, says Cormac Foster, an analyst for the New YorkCity-based market research firm Jupiter Communications. Organizations thatgenerate a huge number of dynamic pages require far different capabilities thanthose with static HTML pages. HR departments that rely on an intranet primarilyto manage employee record updates face far different system demands than thosecoping with a crush of transactions during benefits enrollment.

Kovar believes that the solution typically lies in a multi-pronged approach.One way to add flexibility is to outsource operations to an outside hostingservice, which can oversee servers, provision telecommunications circuits, andprovide bandwidth on demand. Because hosting services closely monitor trafficpatterns at a site, they’re able to boost connectivity on the fly. “Mostcorporations don’t have the ability to dynamically allocate bandwidth. Theydon’t have a telecommunications infrastructure that can adapt at a moment’snotice,” he explains. Moreover, most organizations are unable to set upredundant systems that can handle major system crashes and other assortedproblems.

Other companies have recently turned to application service providers (ASPs),firms that manage software and systems remotely. Not only is it a way to installtop-tier solutions without any significant investment in IT resources, but it’salso possible to tap into the expertise of the ASP to refine systems for maximumperformance. Yet, even then, an organization or human resources department mustput all the pieces together and ensure that smooth integration exists. Anythingless can cause headaches … and heartaches.

To be certain, developing fully optimized and integrated e-HR systems is nosimple task. It requires painstaking attention to business strategy andtechnology. “A human resources department must understand its employees,the type of information it is managing, how people access information, and howvarious systems interact,” concludes Mathias. In some cases, it’s alearn-as-you-go proposition. “The problem is that if an organization windsup suffering from paralysis and doesn’t move forward, it’s actually goingbackwards. It’s essential to constantly strive to improve the usability andperformance of any Web capability.”

Workforce, May 2000, Vol. 79, No. 5, pp. 46-54— Subscribenow!

Here are some of the ways that human resources can benefit through electronic systems:

• Portals can create a single interface for accessing key data.


• Online recruiting can eliminate paperwork and speed the hiring process.


• Employee self-service can automate record-keeping.


• A Web-accessible knowledge base can reduce questions to the HR department or a call center.


• Electronic benefits enrollment lets employees sort through options faster, while reducing paperwork and questions for HR.


• Electronic payroll can cut costs and make data more easily accessible.


• Trading exchanges and e-marketplaces can reduce the cost of products and services.


• E-procurement can eliminate catalogs and manual processes that are expensive and slow.


• Electronic travel and expense reporting can crumple the paper glut and speed reimbursements to both employees and the company.


• Online retirement planning can help employees map out their future, while reducing questions and paperwork for HR.


• Online learning can slash travel costs and make training available anytime, anywhere.


• Competency management can help an organization identify strengths and weaknesses.

One of the great contradictions of our time is that in the Age of Information, many companies still don’t have a clue how their workforce thinks and feels. HR directors — and CEOs for that matter — muddle through an endless array of choices based only on a partial understanding of how a given decision, directive or program affects the mentality and productivity of workers. The 1997 UPS strike and last February’s American Airlines pilots’ walkout are perfect examples of a disconnect between management and the workforce.

Of course, most outcomes aren’t so traumatic, but without soliciting feedback from employees, ongoing problems can chip away at productivity and profits. All too often, corporate programs and HR initiatives — ranging from strategic alliances to a new benefits package — begin with trumpets blaring. Then, weeks or months later, they fade quietly into oblivion. Executives tick off a number of reasons for the failure. But, in the end, it almost always boils down to the human element. If workers don’t understand or accept a new program, even the best execution won’t produce positive results.

That might not seem like rocket science, but filling the gap between corporate expectations and reality might make you feel as though you need a booster engine. Though companies, and particularly human resources departments, have used employee feedback and surveys for years to design and refine programs, the capabilities now exist to build surveying into a powerful enterprise tool — one that can help craft policy and programs on the fly, and deal with the fast-changing business conditions of today.

Now may be the time to renovate your survey process.
Consider the HR department at MindSpring Enterprises Inc., an Atlanta-based Internet service provider. The 1,900-employee company used to conduct surveys manually by tabulating responses and importing them into a spreadsheet — a costly and time consuming process, says Cindy Buell, director of leadership and organization development.

Earlier this year, the HR department began using Saja Software’s Survey Select software to gain feedback about core values. After drafting the questions, the software converted the survey into HTML. Buell sent it to the Webmaster, who placed it on the firm’s intranet. Five weeks later, corporate executives were discussing results — and showing off PowerPoint® presentations with elaborate charts to employees at nine locations around the country. “The software has renovated the entire survey process. It has allowed us to do the job faster, cheaper and better,” Buell explains. Team-effectiveness surveys and 360-degree evaluations are now in the works, she adds.

Indeed, the power of the PC combined with corporate networks, including intranets, is forever changing the face of surveying. A Web site can now become a research and analysis tool that allows management to put its pulse firmly on workers’ thoughts, ideas and feelings. Specialized survey software along with e-mail or floppy disks can help HR conduct 360-degree assessments, design more effective compensation packages and quickly understand what workers want in retirement benefits, training and more. In fact, by tracking answers over time, it’s possible to measure organizational change.

Surveying tools from companies like Scantron Technologies, Training Technologies Inc., Saja Software and others can automate the entire process. Instead of generating paper, mailing it out and waiting for responses to trickle in — only to have someone in HR manually tabulate results — it’s possible to use pre-loaded templates for survey design, and automated tools for administration and analysis. Instead of spending weeks to gather information that’s nearly obsolete by the time anyone can act on the results, it’s realistic to design a simple survey in the morning and take action the same afternoon.

There’s a right and wrong way to conduct an e-survey.
However, navigating this new electronic frontier is no simple matter. It doesn’t take a genius to figure out that every technological opportunity can easily become a black hole of money and time.

Instead of mining for answers, an HR department can find itself setting off organizational landmines — as people become confused and systems bog down with inefficiency. In fact, even the best and most highly automated survey tools can’t solve the fundamental challenge of asking the right questions and finding the right answers. That requires knowledgeable people who must design systems and structures that make survey solutions work.

It’s also wise to understand a few realities about the new media. Effective surveying is more than the sum of technological capabilities. Just because you can send out a survey with a few clicks of a mouse doesn’t mean you should. Just because you post a survey on your intranet doesn’t mean you’re going to get the desired number of responses. Achieving maximum results means recognizing the nuances of the survey medium — Web, e-mail, floppy disk and more — and tailoring the entire process appropriately.

For example, if you opt to send out an e-mail questionnaire, your odds for success will likely increase if you keep surveys relatively short — usually no more than 25 questions — and create a meaningful subject line. It’s also essential to recognize that e-mail is not confidential, and only those with e-mail addresses can participate. The latter fact can skew results by limiting representation or polling an invalid sampling.

On the other hand, a Web-based survey isn’t a license for prodding and poking into every aspect of a person’s work life. Every time you place a survey on the intranet, you’re competing with reams of other data and information. You might know that the subject of the survey is important, but a worker is likely to tune the survey out if he or she feels inundated by questions. As a result, it’s crucial to market it, advertise it and promote it — with catchy headlines and graphics. It’s also a good idea to provide incentives to participate, whether it’s a raffle for an extra vacation day or a pair of tickets to a performance.

Finally, it’s essential to provide employees with results, whenever possible. At MindSpring, an executive discusses results with groups of employees at their offices. Other companies let employees view a live summary of results from their browser once they’ve voted. Every time they click to the page where they voted, they can view updated results.

All this can make the entire process fun, interactive and interesting. “It can transform surveying from a rigid event into an ongoing method of communication,” says Marcie Levine, president of Saja Software in Longmont, Colorado. But it doesn’t have to stop there. By routing the appropriate data to the appropriate people in the organization — essentially creating different views of the same data — it’s possible to fully leverage the power of information. That can allow different departments, even different teams, to compare and contrast performance and results.

Of course, electronic surveys don’t work for every organization in every situation. Some firms simply have too many people in different locations — with too few of them using PCs. In such instances, paper and snail mail might remain the best solutions. But, more often than not, e-surveys offer tremendous advantages. They can cut costs by as much as 70 percent over traditional methods. They also can speed the surveying process and allow management to understand data far more effectively.

When it comes to reaching across an organization and surveying the landscape, the answer increasingly lies in the questions.

Only a few years ago, Cari Willis was thrilled to have employees update their personal information online. The idea of automating a cumbersome and time-consuming process seemed like a breakthrough that could help revolutionize the HR department. And in many respects it did. “It was one of the first steps toward becoming an electronic human resources department and a better-run company,” says the manager of HR e-business solutions at IBM.

But one year’s headline is another year’s old news. No longer is it good enough to provide employee self-service. In order to meet the needs of more than 140,000 active employees and 116,000 U.S. retirees, IBM’s human resources department has migrated almost entirely to electronic tools. Benefits enrollment, retirement planning, succession planning, e-recruiting, online learning, competency management, and more have gone the “e” route. In addition, HR is now working to seamlessly link HR data to payroll.

“We have applied the vision and road map for IBM to the human resources department,” says Willis. “There is a tremendous value proposition in conducting transactions and business online. The goal is to become totally e-HR so that we can create greater value for everyone involved.” Already, human resources has slashed costs, shredded paperwork, and improved its ability to manage data efficiently. In fact, in today’s emerging digital economy, HR is quickly becoming a hub for corporate systems and data.

It’s no trivial matter. According to Forrester Research, business-to-business transactions could top $2.7 trillion by 2004. It’s a tectonic shift that’s allowing some organizations to supercharge revenues, gain millions of new customers, and boost their companies’ market capitalization to stratospheric levels. But only with the right architecture in place. And, increasingly, that requires HR data and systems that can support broad organizational initiatives.

That’s certainly the goal at IBM. The Riley, North Carolina, office hasn’t spared any effort to evolve toward a totally electronic future. Already, 40 percent of all active IBM employees handle their benefits enrollment through their Web browsers. They’re able to log on from work or home, click off selections, and navigate through the task within five minutes. “In the past, the process was disjointed and confusing. It wasn’t unusual for an employee to need days to figure out what to do,” says Willis.

For the company’s HR department, the paper-intensive process created its own set of nightmares. Human resources found itself sinking under the weight of various booklets and forms. Managing printing, mailing, and processing proved time-consuming and expensive. And the number of calls from perplexed employees had become overwhelming. Although call center reps are handling the same call volume as before, they’re fielding fewer inquiries, says Willis. “Today, they’re able to provide aid to those who need it the most.”

Analyze any of IBM’s other e-HR initiatives and the story is much the same. Big Blue is steadily transforming processes internally and beyond. (For more about IBM’s Optimas Award-winning program, see “Out of the Red, Into the Blue,” in the March 2000 issue of Workforce.) Willis notes that IBM has more than 500 data elements related to each employee. Although HR maintains a proprietary database that holds all employee records, other departments use the data for an array of purposes — from handling travel and expense reimbursement in finance to managing procurement approvals in the purchasing department. In every case, the data is routed electronically throughout the enterprise.

According to David Link, vice president of The E-workplace Initiative at the Baltimore-based Hunter Group, a well-designed enterprise resource planning (ERP) program or human resource management system (HRMS) is at the center of such efficiency. Increasingly, this central repository for data serves as a traffic cop for routing data, forms, and approvals to the appropriate person or department — usually with sophisticated workflow. “Though e-business within human resources is still in the early stages,” he says, “more and more employers are saying, ‘I need to get extended value out of the ERP.'”

Establish new boundaries.
Yet if an enterprise resource planning system is the brain of today’s organization, then the Web is the heart. It pumps data to all corners of a company, and beyond to the supply chain. It can cull disparate data from diverse systems and present it in new and valuable ways — via online reports or portals that serve as a window into information, knowledge, and key metrics. Equally important, the Internet can tie together seemingly unrelated systems to ratchet up the value proposition.

For example, an e-procurement system might use HR data to establish rules about authorizations and approvals. An operations system might access HR data to tweak staffing levels or help a company plan an expansion more effectively. It might also play a central role in designing more efficient production or sales methods.

This brave new world requires a different HR department than in times past. According to Thomas B. Hickey, a vice president for META Group Consulting, based in Westboro, Massachusetts, the walls between enterprise systems are crumbling. That’s making it necessary for human resources departments to understand the business side of IT, including the analysis and planning process.

Explains Hickey: “HR must ask itself, ‘Which systems offer the greatest payback and value, both within HR and for the organization? Which technologies and tools best integrate with other systems?’ It’s essential to understand how the various pieces of the enterprise puzzle fit together.”

It’s also essential to look outside the four walls of the corporation for opportunities. Employees can view electronic check stubs or their 401(k)s from PCs at home or work, even though the data might reside thousands of miles away on another company’s computers. The emergence of application service providers (ASPs) has also opened doors to new tools and capabilities, particularly for smaller firms that don’t have an IT department or cash to plunk down on expensive software. ASPs let HR departments rent software — ERP packages, time and attendance applications, benefits systems, and more — to run a department or even an entire organization.

Location means less and less.
To be sure, in today’s e-business-oriented world, it’s also irrelevant who oversees a process and where the computers reside. The key consideration is, who can manage a task most efficiently? That has led to new tools, such as Web-based trading exchanges, that are quietly redefining the way buyers and sellers come together. Many of these tools simply weren’t possible in a brick-and-mortar economy.

One such hub, TrainingNet, is a good example of how an e-marketplace can transform business-to-business transactions. TrainingNet aggregates various types of instruction — classroom, on-site, online, books, videos, and CD-ROMs — from over 1,200 providers. When clients, which include the likes of Harvard University, Lockheed Martin, Harley-Davidson, and Scientific-Atlanta, log on to the Web site they can select courses through TrainingNet’s e-commerce marketplace. Later, it’s possible to import data into a time-management system or ERP application. “It is a powerful way to access professional training opportunities … without adding complexity,” boasts Dave Egan, TrainingNet’s vice president of provider relations.

Genzyme Corp, a Cambridge, Massachusetts, biotechnology firm, turned to the system in 1999 to boost its e-HR capabilities. Previously, the company had operated its own training program, but that had proved costly and inefficient, explains Russell Campanello, senior vice president of HR. For one thing, employees from 20 Genzyme offices around the country had to fly into headquarters every time they needed instruction. For another, administering the program had become a headache. “In the past, the courses consisted only of what HR considered useful,” he says.

Using TrainingNet, the firm’s 3,500 employees can now locate courses close to home. When an employee logs on to Genzyme’s intranet site, he or she can search through more than 150,000 course offerings that the biotech firm has screened and approved.

But what sold Campanello and other company executives on the concept was the ability to dynamically adjust offerings in response to competency needs and actual demand. HR can view reports and plug data from TrainingNet into its PeopleSoft system for deeper analysis. It also can monitor how employees click through the site.

Developing such capabilities in-house would have been out of the question, says Campanello. “It would have been impossible to assemble the vendors or create all the courses.” But even a scaled-down homegrown training program would have met formidable barriers. “Getting the attention of IT to build a training intranet would have been impossible,” he states.

Nevertheless, the online education and training program is only one part of Genzyme’s ambitious electronic business strategy. Other e-HR programs include recruiting, retirement planning, health-care administration, and managing various policies and directories. Genzyme has also linked its HR data to payroll, security, and supply-chain management projects.

Take it a step at a time.
Larry Dunivan, vice president of HR systems at Lawson Software, believes that the revolution has only begun. “Dramatic changes are afoot in the way HR users interact with each other and the external buying community, thanks to the evolution of e-business.”

A good case in point, he says, is online recruiting. Not only is it possible to post a requisition to a system and have it go out to job boards such as Monster.com or HotJobs, but it’s also relatively easy to tie in ancillary activities such as real-time background checks, credit checks, and reference checks — all without human intervention. “The HR system itself becomes a portal for related services.”

Yet achieving outstanding results through e-business is anything but a slam-dunk. Link says that any HR department considering an e-business initiative must thoroughly understand the new economy. “In reality, e-HR touches every corner of a business. And it requires new tools, such as portals, to consolidate, manage, and deliver information efficiently. Ultimately, human resources must be aware of the dynamics of e-business in the marketplace.” That means viewing and analyzing Web sites of dot-com companies on a regular basis, and even thinking like a dot-com company.

Genzyme’s Campanello couldn’t agree more. He now focuses on thinking and reacting like an Internet start-up. “There’s no way to get e-HR systems operating at 100 percent efficiency right out of the gate,” he says. “The goal should be to hit 70 percent and improve things incrementally as you learn.”

Campanello also recognizes the importance of marketing — something that has made the Amazons and Ebays of the world household names in only a few short years. “E-business can succeed within an organization only if there’s a way to migrate customers from paper to computers,” he says. “People have to see value in what you’re offering them and have a reason to change the way they do things.”

More often than not, this new era of e-HR also requires cooperation and effort from all the various departments, and the support of senior management. It means creating task forces and implementation teams, as well as gleaning the expertise of outside consultants. And it requires an understanding of security and design issues. In the end, fitting everything together is not as simple as buying and installing best-of-breed programs. Detailed analysis and a thorough understanding of IT and strategic business issues are essential. “The Internet has raised the bar in terms of functionality and capabilities,” says Hickey.

Despite the many challenges, companies like IBM and Genzyme are proving that e-HR can redefine processes and elevate performance. It also can help transform technology into an asset that boosts the importance and value of human resources. Says Link: “Many HR departments have automated a few specific processes. The real gains will come over the next few years, as organizations evolve to a totally electronic workplace.”

Inside the offices of QUALCOMM Inc., San Diego, a senior electrical engineer is sitting in a cubicle tapping away on a computer keyboard. At the moment, she s not calculating complex formulas or designing the next generation of wireless chips. She’s simply viewing her personnel records and taking stock of her accomplishments via the company intranet. With the click of a mouse, she can review the courses and training modules she has already completed, and see what s required for a promotion. The information is customized for her specific position.

After spending a few minutes perusing course descriptions, the engineer clicks on an e-form to make a selection: she opts for a business management course that’s conducted through the corporate intranet. In an instant, she s able to receive course materials, including videos, slides, and interactive quizzes. What s more, she is able to log on from home or while on the road. It s efficient, it s painless, and it is helping QUALCOMM dial into the 21st century.

It s no secret that many organizations have turned to computer-based training (CBT) and distance learning over the last few years. According to some estimates, it s now in excess of a $1.5 billion industry. But few have focused their energies as ambitiously as QUALCOMM, the inventor of code division multiple access (CDMA) technology that s used for digital wireless communication throughout the U.S. and beyond.

The 6,000-plus-employee firm–which also sells Eudora e-mail software and until recently manufactured digital mobile phones–now offers more than 250 course modules online. These range from basic word processing to technical design and engineering. QUALCOMM also offers employees the opportunity to obtain an MBA through San Diego State University and a master s in electrical engineering through the University of Southern California s distance learning program.

“Because our founders come from an academic background,” says Dawn Ridz, a human resources specialist at QUALCOMM, “we ve always been committed to education through continual learning and training. The organization s entrepreneurial spirit, which focuses on education and learning, is essential within such a highly competitive arena. Over the years, that philosophy has become deeply ingrained in the mindset and culture.”

That you can credit to Irwin M. Jacobs, a 66-year-old former Massachusetts Institute of Technology engineering professor who co-founded the company in 1985 and has built it into a telecommunications industry powerhouse. Jacobs, the firm s chief executive, believes that ongoing learning and profits go hand in hand. And who s to argue? Last year, QUALCOMM s sales topped $3.9 billion, with an 85 percent profit increase. The firm s digital technology has been adopted as a global standard for next-generation wireless cell phones. It receives a license fee almost every time a digital phone is sold.

They know their stuff.
At QUALCOMM s sprawling campus of 18 buildings near UC San Diego, that might seem like reason to celebrate. But within the firm s offices, labs, and research facilities, it s business as usual. And in this case that means employees taking courses. Lots and lots of courses. Last year, the firm tallied just shy of 94,000 hours of classroom training and tens of thousands of hours more of online instruction.

Employees–including those at offices in Boulder, Indianapolis, Winston-Salem, Portland, and Santa Clara, and in Israel–learn about an array of business and technical topics, including finance for non-finance managers, goal setting, negotiation, conflict resolution, business writing, creativity and innovation, and a slew of technical and engineering topics.

The program falls into four general categories:

1. Technical CDMA courses, which total 10 topics (9 classroom based and 1 CD-ROM)

2. Computer training/engineering courses, 61 total topics (49 classroom based and 33 online)

3. Manufacturing courses, 17 total topics (17 classroom based and 2 online)

4. Professional/management development, 37 total topics (36 classroom based and 12 online).

From the beginning, QUALCOMM s goal has been to provide cutting-edge training that fits different learning schedules, says Ridz. That meant making some courses available online 24-7. It meant addressing different learning styles by providing conventional classrooms as well as computers. And it meant customizing the online instruction to fit QUALCOMM s culture and critical business needs. Ridz notes that classroom instructors are top experts in their fields and that CBT and other training materials are viewed as alternatives to classroom learning. Consequently, some courses are offered both online and in the classroom.

Managing courses and content is no simple matter, however. That s why QUALCOMM uses so-called Learning Specialists to track the needs of various business units. These individuals monitor staff meetings, meet regularly with senior management, and conduct group needs assessments. Once specialists identify a new training need, they work with vendors and management to define a course and create appropriate and unique content. “Material that s covered in a course is specifically tailored to QUALCOMM,” Ridz explains.

Then, it s up to employees to boost their skills and competencies. Leaders of various business units determine which courses, if any, are mandatory (most required courses center on business management), and supervisors offer advice, suggestions, and coaching along the way.

“If a supervisor feels that an employee s presentation skills or database skills could use improvement, then it s likely that he or she will suggest that the individual sign up,” Ridz explains.

However, many courses are entirely optional and help build expertise that can benefit the person on the job and in a career. As an added incentive, QUALCOMM offers an annual education allowance of $5,250 per employee.

But QUALCOMM doesn t stop there. One thing that makes the program so effective is that it is tightly integrated into a competency management initiative. In August 1999, QUALCOMM introduced MySource, an intranet-based self-service tool that list the classes that an employee is currently enrolled in, as well as the courses taken and certificates and degrees earned. The Learning Center Web site allows employees to map out suggested coursed, given their job duties/department. The two systems work together to provide a complete training picture for the Qualcomm employee.

Managers, on the other hand, benefit from being aware of the learning needs of individuals, teams, and entire departments. It s then possible to slot employees into specific classes. The MySource system–built in-house by QUALCOMM–ties into a PeopleSoft database to track the information across the corporation. That also lets supervisors use the information for performance appraisals, strategic planning, and deploying personnel.

Sitting at a computer, employees typically log on to the corporate intranet, surf through course offerings, and, with a few clicks, enroll in the desired classes. There s no cumbersome registration process and no paperwork. MySource automates everything and even provides assistance about what courses might be relevant, on the basis of a person s job title or skills. A portion of the system called My Development displays a list of classes in which an employee is already enrolled and courses already passed, along with the dates.

Yet the program offers enough flexibility to let employees obtain training material on a just-in-time basis. Instead of a manager signing up for a course on coaching or conflict resolution and waiting three weeks, he can access a short-course and obtain valuable information on the spot.

Says Ridz: “By dealing with issues as they arise, it s possible to resolve things far more effectively. If there s too long a delay getting needed information or knowledge, a manager can be at a tremendous disadvantage.”

The objective, says Ridz, “is to make things easier for employees while providing the level of information and learning that the organization requires.” Like many other companies, QUALCOMM has discovered that centralized training often isn t cost effective. Fly hundreds of employees a year into a central training site, put them up in hotels, bury them with binders filled with paperwork, and the cost can easily run into millions of dollars.

According to Brandon Hall, editor and publisher of Multimedia and Internet Training Newsletter, it s not uncommon for online training to slash the cost of a program by 50 to 70 percent. “Traditional training is labor and capital intensive. Although it can provide a huge payoff, it doesn t come without a tremendous amount of corporate resources,” he explains.

QUALCOMM s online coursework harnesses the power of the Web along with the ability of PCs to provide an interactive experience. For example, hyperlinks let employees jump through complex documents and obtain definitions and more information, when appropriate. Text, photographs, illustrations, videos, audio, and quizzes help employees master a set of skills or specific knowledge before moving on to another topic.

And so that QUALCOMM can continually refine the program, participants fill out online evaluations at the completion of a module or course. The most common questions become part of FAQs (frequently asked questions), and content is continually tweaked. “We re constantly looking for ways to refine and improve the overall program,” Ridz points out.

One of the biggest advantages for employees, she adds, is that online coursework doesn t set arbitrary limitations about time. QUALCOMM s employees increasingly are attending courses in the evenings, on weekends, and while traveling–allowing them to better juggle their daily workloads and balance work-life issues. And because the program offers “information on demand,” workers aren t subjected to sitting in a classroom simply because an instructor and classroom were available at a particular time. They can take breaks, cope with interruptions, and learn as needed.

Everybody wins in the end.
Make no mistake, QUALCOMM is doing all it can to ensure that its employees are wired for the future. In an era when knowledge is key, it s unlocking the full potential of its workforce through training, employee self-service, and competency management.

“Ongoing learning is one of the things that gives us a competitive advantage,” Ridz explains. “It offers enormous benefits for QUALCOMM and all the company s employees. It has played a large role in defining the company and leading to our success.”

This enormous infusion of technology has created a different human resources department—and enterprise—than existed only a couple of decades ago.

During the heyday of mainframe computing in the 1960s, ’70s and early ’80s, it was almost impossible to do anything more than process data—something that typically occurred under the supervision of a management information system (MIS) specialist. At the time, obtaining a report could take hours or days. Sharing data in any real way was out of the question.

Then, during the late 1980s, as the personal computer matured and networking became more robust, the introduction of client/server computing took the enterprise by storm. It provided a way to exchange data between systems so that a people at desktops could process data at their PCs.

Although client/server systems created far more powerful computing models and ushered in remarkable capabilities, they too represented headaches. Moving data between systems and databases could require sophisticated middleware, and linking applications and desktops across an enterprise and beyond created ongoing compatibility problems. If you used Windows and needed to get the data to a UNIX or Mac operating system, you might face formidable barriers.

All this changed with the mainstream introduction of the Web in 1994. Suddenly, it was possible to cut across a variety of systems—provided that the software and browser supported the standard protocol of the Web.

By 1996, companies began discovering that what worked on the World Wide Web could also work on their corporate network. Intranets and then extranets were born—creating anytime, anywhere connectivity to data.

“It has moved data once contained in silos and smokestacks into the broad domain of the enterprise,” says Thomas Koulopoulos, president of The Delphi Group, a Boston-based consultancy.

Though software and tools have become easier to use in recent years, navigating through all the technology that’s needed to remain competitive can prove overwhelming.

Technology has created remarkable new opportunities to eliminate administrative overhead and transform the HR department into a strategic partner. It also has served up vexing challenges, ranging from cost and maintenance issues to how to use computers and software effectively.

Simply put: Technology is changing everything. Says Larry Dunivan, vice president of global HR solutions for Lawson Software in Minneapolis, Minnesota: “We’ve seen the first wave of technology enter the workplace and HR department. Today, companies have automated many processes and eliminated unnecessary work.”

However, Dunivan adds, “What we haven’t seen is organizations drive value through the organization and harness the strategic capabilities of the systems and software.” Round two, he says, will bring more sophisticated capabilities and knowledge made possible by the Web and e-business.

In fact, that’s already starting to happen. For instance, whereas the first employee self-service systems used little more than electronic forms to automate paper-based solutions, advanced workflow capabilities are now routing forms to the appropriate person or system. If an employee adds a new dependent to the record, the system can automatically populate fields asking for insurance information and tax withholding.

That alone is a huge step forward. But when analytical capabilities are added to the mix, it’s suddenly possible for an HR manager to understand overall patterns, ranging from demographic shifts to the popularity of various programs. Combined with financial data, it’s possible to understand the cost per employee—or group of employees—for a particular program. It’s also possible to conduct what-if scenarios to better understand how to realize maximum return for dollars spent.

And when such capabilities become Web enabled, an HR department can put data directly in the hands of the appropriate person without regard to geography or computing systems.

“Suddenly, people are free to do their work without thinking about how to use the system,” explains Karen Riley, human resources product marketing manager at Infinium Software Inc., based in Hyannis, Massachusetts.

Internet technology broadens HR’s reach.
Today, just about everything is heading to the Web—whether it’s through the Internet, an intranet, or an extranet linked to a third party, such as a 401(k) provider or a work/life services provider.

“The Web is allowing HR to take on a bigger view of the organization. It is making it possible not only to deploy sophisticated capabilities to managers and employees, but also vendors, suppliers and customers,” says Riley.

Some companies, like MCI Worldcom Corp. in Clinton, Mississippi, have embraced Web technology and transformed the way work gets done—inside and outside human resources.

The telecom giant has moved beyond online directories, handbooks and employee record updates to a world where employees can venture online to purchase stock and reallocate investments in their 401(k) account, fill out electronic W-4 forms, and view an electronic pay stub a week before they’re paid.

Employees at MCI also are able to view streaming video of managers and executives providing briefings or discussing strategic issues, check best practices, and sign up for courses and engage in distance learning directly from their desktop. The intranet provides the tools for a manager to know at any given moment just where an employee stands in terms of skills and training.

The march toward the Web shows no signs of slowing. Today, it’s possible to deploy most types of applications over the Web, and one of the hottest has been online recruiting, which has revolutionized HR over the last few years. Sites such as Monster.com, HotJobs, CareerBuilder and Career Mosaic have become central hubs for job seekers and employers, while a slew of start-up companies have flooded the marketplace.

Add to all this the capabilities of firms such as Webhire (formerly Restrac) and Lawson Software’s iJob, which integrates online searching with résumé tracking and database management, and it’s clear that a not-so-quiet revolution is taking place.

The story is much the same in the area of payroll. Web-based applications—particularly those that integrate with enterprise resource planning software—is allowing HR to aggregate data from various computing platforms, operating systems and applications. Armed with a Web browser, it’s possible to drill through data, provide electronic W-2s and W-4s for employees, and even outsource payroll processing to companies such as Ceridian, Genesys and ADP.

All this can take HR out of the role of extracting and inputting data and propel it into the function of generating value for the enterprise.

A growing number of solutions is helping HR get smart.
All these processes combined with the glut of information streaming in from online sources have spawned entirely new ways of viewing and thinking about information. Here are a few ways technology has changed information:

Internet portals. By putting relevant information on a Web page—using hypertext, charts, graphs, photos and other objects that link to diverse applications, databases, processes and functions—it’s possible to customize and personalize each person’s workspace through Internet portals. Like its commercial cousins Yahoo! and Excite on the Web, the corporate portal attempts to organize the chaos of seemingly unlimited online information.

Within HR, that can translate into viewing various sources of data. A manager might track key indicators such as labor costs or competency levels by workgroup. He or she might also view personal 401(k) account information, pending e-mails, alerts that certain task need to be addressed—say an approval for a promotion or a 360-degree review—and virtually any other relevant information.

The key is that the portal seamlessly combines the data from various systems into a single point of interface and a person can customize it without doing any programming.

“A well designed portal can create a very compelling experience,” says Alexis de Planque, program director for e-business strategy at Meta Group in Stamford, Connecticut. According to de Planque, portals fit the natural evolution of intranets and information management.

“The Web browser becomes the desktop, and as applications become increasingly Web enabled, it’s the place where information exchange and knowledge transfer takes place,” explains de Planque. Portals increasingly fit into larger knowledge management (KM) initiatives. When used effectively, KM can track what’s inside people’s heads rather than only what resides within IT systems.

Shared service centers. By consolidating various functions in a single location and processing all transactions and claims en masse, it’s possible to reduce—if not eliminate—much of the redundancy and overlap that plagues the typical corporation.

“Shared service offers tremendous economies of scale,” says Steve Stanton, managing director at Hammer & Co., a Cambridge, Massachusetts-based consulting firm specializing in reengineering.

Indeed, many organizations have found that it’s possible to reduce administrative costs anywhere from 20 percent to 50 percent by identifying the most efficient way to deliver a particular service and then creating a customer-oriented mindset.

At Allied Signal Corp. in Morristown, New Jersey, new technology, heavily dependent on the Web, has ushered in a new model of corporate efficiency. Five years ago, the 70,000-plus employee company combined more than 75 functions into a shared service center spanning five functional areas, including finance and HR. That has eliminated HR reps spread throughout the country—often handling redundant work.

Today, about 1,100 employees provide services to the entire Allied Signal organization and 400 outside customers. That has saved the corporation about $300 million over the last five years.

Application Service Providers. Some companies are now turning to application service providers (ASPs), which allow them to rent space on a remote system and let an outside company manage system maintenance, security and upgrades. It’s a trend that’s particularly suited to small and medium size companies with limited resources. That can save money and free IT staff to handle more urgent matters. And when it is done right, the fact that the software resides outside the organization’s boundaries is transparent and secure. For example, US Internetworking Inc., based in Annapolis, Maryland, supports ERP packages from PeopleSoft and Lawson, customer relationship management (CRM) software from Siebel Systems, and e-commerce and messaging applications from Microsoft.

Business intelligence. One of the most powerful new technologies available, business intelligence uses tools such as online analytical processing (OLAP), decision support systems (DSS), executive information systems (EIS) and data mining.

Together or apart, these systems provide insights into business trends and patterns, and can help an organization markedly improve its decision-making capabilities. “Ultimately,” says Jose Sta. Ana, a senior industry analyst for market research firm Dataquest in San Jose, California, “It can serve as a huge competitive advantage and help a company use its resources more effectively.”

With a data warehouse and datamarts in place, an HR department can analyze labor costs and productivity among various groups of workers to better structure pay and benefits packages. Senior management can use the same data to determine where a new plant or office complex should be built.

Likewise, sales and marketing managers can overlay sales data with labor expenses by region, product group or other factor to tweak compensation systems or change hiring processes.

The list goes on. Another system to keep an eye on is Web-based customer service, complete with sophisticated call centers and live online support through chat, videoconferencing and Internet telephony.

Still others are making human resources data available through personal digital assistants (PDAs), interactive pagers and digital phones. For example, last May, SAP announced a partnership with Motorola that enables the PageWriter 2000 interactive pager to cull information from ERP software—including sales automation, financial tracking, medical information gathering and transactional updates from an array of industries.

Virtual meetings are likely to become commonplace—perhaps by strapping on goggles and creating the illusion of actually sitting in the room with colleagues. Smart agents—pieces of software that monitor networks and computers—will automatically sense bottlenecks and trends and adjust or change processes to optimize workflow. And a true electronic environment that doesn’t depend on paper will likely emerge.

What does the future hold for HR and technology?
The 21st century will bring even more technology to human resources. Today’s HR department must reinvent itself on a regular and ongoing basis. As the enterprise becomes more global, new systems and technology will lead to greater collaboration, without regard to political boundaries and language. HR is likely to be at the center of this revolution.

Says Infinium’s Riley, “The importance of human resources is likely to increase by multiples. Only HR can provide the strategic edge that organizations need to manage a workforce effectively. In the end, it is people that give an organization its competitive advantage.”

Like many chief executives, Howard Schultz was thrilled when his company,Starbucks Corp., went public in June 1992. On the first day of trading, thestock closed at $21.50 — up from an opening price of $17. Not only did the CEO’snet worth zoom, the coffee retailer had finally reached the big leagues. Butinstead of hoarding his beans, Schultz decided that he would give some of themback to employees in the form of stock options. At a time when other firmsoffered options only to key senior executives, Schultz made them available toeveryone working 20 hours a week or more, including those standing behind thecounter at a local Starbucks store.

Today, Seattle-based Starbucks has a market capitalization somewhere in theneighborhood of $4.2 billion and about 2,100 stores in Asia, Canada, the UnitedKingdom and United States. But Schultz hasn’t veered away from his originalphilosophy of giving employees a stake in the company. More than 10,000 of thefirm’s 26,000 workers participate in the plan, which Starbucks refers to asits “Bean Stock” program. They’ve made down payments on houses,purchased cars and paid for their college education. Meanwhile, the company hasmanaged to cut turnover to approximately one-third the industry norm.

Stock options. These days, the words are everywhere. And it’s not difficultto understand why. Pick up a newspaper or click on the television and you’relikely to hear about some young entrepreneur who’s worth tens of millions –sometimes even billions of dollars — through options. There’s Jeff Bezos ofAmazon.com, whose paper wealth is somewhere in the neighborhood of $10 billion– despite a 1998 salary of $81,840. There’s Michael Dell, who’s worth acool $22 billion as founder and chairman of Dell Computer. And then there’sBill Gates, whose personal fortune resides somewhere in the galaxy of $105billion — almost all from Microsoft stock.

But behind the glitzy façade and the media hoopla, stock options havequietly become a way for companies to attract, retain and reward workers. They’realso a way for organizations to align the workforce with shareholder value. FromAmazon.com to Xerox, companies are turning to stock options in record numbers.And while the great bull market of the 1990s has unquestionably fed into thefrenzy, it would be a mistake to tag the phenomenon solely to the popularity ofstocks. To be certain, options have become an entrenched compensation strategy– and are profoundly altering the corporate landscape.

The idea for stock options is actually rooted in the 1930s, though thepractice didn’t take place in any real way until the 1960s. At that time,major corporations began offering top executives stock options as a way to boostpersonal income and tie performance to shareholder value. Then, in the 1980s,Congress slashed tax rates and the stock market awakened from a 10-year slumber.CEOs like Disney’s Michael Eisner and Toys “R” Us CEO CharlesLazarus began to garner headlines for receiving huge options windfalls, whichtotaled tens of millions of dollars.

Since then, the popularity of stock options — not to be confused withEmployee Stock Ownership Plans (ESOPs) which are geared toward retirementsavings — has zoomed along with the stock market. According to Sanford C.Bernstein & Co., the total value of shares set aside for options grants inthe United States increased from $59 billion in 1985 to $600 billion by 1996.More than 90 percent of public companies now have employee stock-optionprograms. And, recently, the practice has begun to spread to Japan and othercountries.

“Stock and stock options are becoming the preferred currency forcompensation programs in the U.S.,” notes Heidi Toppel, a regional practiceleader for Watson Wyatt Worldwide. “More employers are providing stockoptions beyond the executive management level. In most cases, the goal is toalign workers and shareholders, boost retention and allow employees to share inthe company’s success.”

Companies find stock options so attractive for a basic reason: they don’tcost them anything yet they boost pay. Thanks to a glitch in tax law, theoptions don’t have any cash value. What’s more, when workers exerciseoptions, the tax code allows the company to deduct the gain as an expense,despite the fact it hasn’t spent any money. Ultimately, the wealth is createdby the stock market itself and the company can boost its profit by reducinglabor expenses. “In a sense, it’s funny money,” says Mike Butler,who heads the employee ownership consulting practice for Hewitt Associates.

Employees like stock options because they can buy their company’s stocksometime in the future, but at the market price when issued. For example, aperson who is granted an option at $50 a share hopes the stock will rise. If theprice climbs to, say, $75 a share, the holder can exercise the option and net ataxable profit of $25 per share. However, if the stock drops to $25 and doesn’tbounce back, the options expire worthless. Ditto if a person holds onto thestock too long or it never rises.

Yet, despite their enormous popularity — and success — stock options cancreate problems. In some cases, companies have struggled to keep vestedemployees on the payroll once they’ve cashed in options to the tune ofmillions of dollars. In fact, companies like Oracle and Microsoft have hundreds,even thousands of employees that have joined the “millionaire” club asa result of stock options. Other firms have learned the hard way that if thecompany’s stock crashes or remains stagnant for a prolonged period, it canwreak havoc. “There are lots of issues to grapple with. It’s not assimple as starting a program and expecting it to succeed,” warns Butler.

Paula Flemming knows that fact well. As director of HR effectiveness at XeroxCorp. in Stamford, Connecticut, Flemming has struggled with an array of issuesto build a viable program. Although the company has had a profit-sharing programin place since the early 1970s, it opted to change the mix from 100 percent cashto 50/50 cash and stock in 1998. In January 1999, it awarded $8.2 million instock options to 48,000 of the firm’s 52,000 U.S. employees. After one year ofemployment, an employee is eligible to receive options, which are valid foreight years. An employee is considered vested a year after receiving the firstoptions.

A key in setting up the program, says Flemming, was ensuring that the rightunderlying metrics were in place. Instead of using return on assets as anindicator, Xerox opted to use growth and earnings per share. “We wanted totie the program into shareholder value,” she explains. Moreover, thecompany increased the maximum payout for the profit sharing program from 10percent to 15 percent of total wages.

“The biggest message the company is trying to send to employees centerson ownership. An employee who has a stake in the company’s performance is farmore likely to help it grow and boost its stock value. The program also letsemployees participate in the same wealth accumulation opportunity that has beenavailable to executives for years. Performance-based pay is an effective way tomotivate a workforce,” she adds.

However, Xerox is a prime example of the challenges and risks of stockoptions. Last May, the stock peaked at nearly $64 a share. After the companyannounced lower than expected earnings in October, the stock price plummeted tothe low 20s. Today, all employee stock options are underwater, meaning thatemployees are unable to buy them. And that, says Flemming, presents a barrier –especially if the company’s stock performs poorly over the next several years.

However, in the past, Xerox execs who have held options for extended periodshave enjoyed the greatest gains; the stock has always recovered from downturns.As a result, she and other human resources executives provide constant educationabout stock investing in general and the company’s options program inparticular.

Butler believes that the tremendous growth of stock-option programs is partlyan attempt to remain competitive and attractive in the labor marketplace. In anera of reduced stability and job security, “It’s a natural way toencourage employee loyalty. It’s a way of saying, ‘You might not work hereforever, but while you’re here, we expect 110 percent — and in return we’llshare the wealth with you.’” However, he also argues that these programsare partly a result of “executive guilt.” Over the last two decades,says Butler, “CEOs and senior executives have reaped millions of dollarsfrom stock options, and now many of them feel that stock options are necessaryat the employee level in order to avoid a feeling of inequity amongemployees.”

Of course, not all stock options are created equal — and the way differentcompanies approach the issue varies greatly by industry. High-techentrepreneurial companies — including many of the Internet high flyers thathave popped up over the last few years — depend heavily on stock options toprovide compensation. Many pay salaries far below market value. Yet “acertain type of person — often someone in their 20s or 30s, and usually withouta home and family — is attracted because of the opportunity to hit the optionsjackpot while doing work that’s interesting,” says Butler. In fact, somework at two, three or even five startups before making any real money in stockoptions — almost always through an initial public offering (IPO). Others neverhit pay dirt.

All that glitters isn’t necessarily gold. What happens to a company thatwinds up with dozens, even hundreds of millionaires who no longer need to comeinto work because they have all the financial security they’ll ever require?Do they run for the exits in droves — taking valuable intellectual capital withthem? Not necessarily, experts say. For one thing, a well-designed program willcontinue to grant options every year, so that a person can continue toaccumulate wealth through the company’s stock. For another, many of theworkers who are attracted to these high-tech, entrepreneurial companies find thework stimulating. “Pay isn’t the only issue, or even the primary issuefor some workers. It’s the ability to have an impact and do somethingexciting,” Butler explains.

Consider Broadcom Corp., an Irvine, California, company that manufacturesmicrochips and other components used in cable modems, DSL modems, digital cableset top boxes and high-speed networking gear. The company went public in 1998,and since then it has seen its stock rise six-fold. The net result? More than 75percent of the firm’s 800 plus employees are millionaires on paper. Yet thecompany only lost four employees last year, says Nancy Tullos, vice president ofhuman resources. “It’s a stimulating place to work, employees feel asense of ownership, and senior management has been smart enough to createongoing stock incentives to keep people at the company,” she explains.

Tullos admits that a downturn in the stock could present difficulties, butshe believes the reason for lagging stock performance is crucial. “IfBroadcom started missing key design wins and experiencing internal problems,then we would have a reason to be concerned. If it’s simply a reflection ofthe market, then we feel there’s no reason to worry. The key is that we don’twant to lose our edge and we don’t want employees to lose their edge,”she explains. Yet, as the firm matures and stock options represent less of apotential windfall, she points out that Broadcom will begin paying highersalaries and providing other benefits.

Indeed, there’s also the issue of pay equity, which can create headachesfor everyone. Because some employees join a company on the ground floor –before an IPO — they might receive a larger number of stock options thansomeone who starts later. However, the company might find it necessary to paythe latter employee more — in order to make up some of the difference. The netresult, particularly at these entrepreneurial companies: a manager might earn$50,000 a year in wages while a subordinate receives $75,000. Likewise, thosewho join a company later might not see the same kind of appreciation in thecompany’s stock as those who join a start up.

Of course, that’s a far different scenario than for mainstream companiessuch as Citicorp, Kodak, Merck, Starbucks, United Airlines and Xerox. In themajority of cases, workers at these firms aren’t looking to get rich fromstock options, they just hope to accumulate money for a down payment on a houseor a trip to Europe.

That’s the case for Jessica Gleeson, who works in the corporate trainingdepartment at Starbucks. She started at the company in 1990 — serving coffee ina Seattle store — while attending the University of Washington. A year later,CEO Howard Schultz announced Starbucks would offer stock options to employeeswho work at least 20 hours a week.

Gleeson purchased stock from the options, then sold it in 1995 for a $15,000profit. That became the down payment on a new home. Now, she’s preparing tofly to Paris for a year-2000 celebration — also funded from company stock thatshe sold recently. “Bean Stock has definitely given me a much strongerfeeling of ownership in the company,” she says. In fact, a couple of yearsago, Gleeson devised a way to save the company $1 million a year by reducingin-store waste. “People wind up treating the organization’s money like it’stheir own money,” she adds.

According to Helen Chung, a spokesperson for Starbucks, the stock-optionprogram fits into an overall HR strategy, which includes an array of otherbenefits. The Bean Stock program provides options based on the annual success ofthe company, and every year the board of directors decides how many options willbe available to workers. In 1998, for example, workers received stock optionsequal to 14 percent of their annual wages. After a year, an employee is 20percent vested; after five years a worker is 100 percent vested. The companyalso operates a separate stock investment program (SIP), which allows employeesto buy shares outright through the company every quarter at a 15 percentdiscount.

Despite the enormous success of stock options, potential storm clouds loom.One of the things that have made options so appealing is the stellar bull marketof the 1990s. In an environment of rising stock prices, options succeed.

However, experts agree that a prolonged bear market could it make it nearlyimpossible for companies to use options effectively. In addition, critics havecontinually lobbied Congress and the Financial Accounting Standards Board (FASB)to change the tax code to make options an actual expense — something that couldcost major corporations hundreds of millions of dollars a year. So far, attemptsto change the system have fallen mostly on deaf ears.

If fact, it’s a pretty good bet that the situation won’t change anytimesoon. “Stock options have clearly changed the corporate landscape,”says Toppel. “They have become a key form of compensation and an importantpart of the economy. When a program is successful employers and employees comeout ahead.”

Workforce, December1999, Vol. 78, No. 12, pp. 44-47 — Subscribenow!