Category: Archive

The use of HR software, particularly with extended self-service capabilities, warrants the review of policies related to data ownership and needed approval levels. The introduction of these new technologies should prompt an examination of approval levels for various transactions or workplace events. It isn’t uncommon to find organizations that require multiple levels of approval for even simple information changes.

A study conducted by the Centre for ESS Strategy and Research found that over 65 percent of the information typically maintained in HR software, is “owned” by the employee. The employees are responsible for the most accurate information about themselves, their demographics, their educations, their benefits elections, and so forth.

This shift in data ownership and approval policies is an important one. Although giving employees the ability to maintain their own information somewhat shifts the responsibility of data accuracy from the company to the employee, the company still has ultimate responsibility for accuracy. Policies should be in place to periodically confirm the accuracy of information in the system. At annual or semi-annual intervals, employees should be sent a summaries of their basic information with a request that the employee notify the employer of and changes.

Edit Guidelines
Another important element of HR software policy is the reassessment of audit and edit guidelines. Some of the rationale for the past practices of many review and approval levels was the need for extensive editing of each transaction. Certainly, a significant feature of all HR software is its transaction editing capability. That reality, coupled with employee ownership, can result in significant process streamlining, which is after all one of the reasons to automate HR to begin with.

However, this can be taken even further, with a change in associated policies. For example, travel and business expense submission is commonly being done using extensions of HR and self-service software. Past practice has been to “edit” for all receipts as a part of the approval and reimbursement process. This time-consuming process is being replaced with a “selected or random audit” policy, which pays the employee immediately upon submission, and conducts audits (on only a selected sample of expense reports) after the fact. If the employee is found to have submitted erroneous information, consequences result.

Before adopting this approach, some organizations have conducted “disapproval studies” to understand what percent of submitted expense reports are disapproved. In most cases, these studies show that disapproval rarely occurs, therefore, an audit versus edit policy may be warranted.

Access to Data
Other issues to consider with the deployment of HR software, particularly in the Internet environment, include usage and access policies.

Some organizations have adopted high scrutiny, controlling and monitoring models with the associated policies. Others prefer an approach that fosters independent, continuous learning, with the belief that this freedom (and trust) will enhance employee self-development and better performance.

As enterprise portal technologies emerge, some blend of the policy positions will be needed. With all the information that’s available, some companies have begun to address what’s becoming known as the “corporate attention deficit syndrome.” Employee performance is being affected by excessive demands on time and attention. HR policy makers need to understand and respond to this issue by crafting and communicating the appropriate balance in policies that support the access and usage needs of today’s knowledge worker.

Workforce, October 1999, Vol. 78, No. 10, pp. 103-104.

A human resources software project requires multiyear, multidimensional investments, and thus crosses traditional annual budget cycles.

There’s a direct correlation between the scope of the project and the needed investment—in other words, as the number of modules, complexity of processing, geographic span, number and types of employees, and pace of deployment increase, the cost will increase, too.

However, the common experience is that costs related to the implementation efforts—customization, interfaces, conversions and training—are a multiple of the software license fees. A two to three times multiple is not uncommon, and in the most complex cases, a ten or more multiple may have been necessary.

For example, if the software license fees were $200,000, costs associated with the implementation efforts could be $400,000 to $600,000, and as high as $2 million in very complex projects. In fact, more complex projects are likely to have a higher software fee since more software may be required, so that a software license could be $1 million with implementation costs of $10 million.

These cost estimates reflect an organization purchase, and ongoing maintenance and support. Most of these costs are incurred during the implementation project—the initial 12 to 24 months. Specific accounting treatment of each cost varies. Software license fees and hardware expenses are sometimes treated as a “depreciable” expense.

Putting a price on service
Human resources software can also be acquired by using a service/transaction cost model, or as a leased application from a service provider—an option that’s becoming increasingly popular.

For example, basic HR functionality is available as part of many payroll services, in which the costs are a modest set-up fee, and then a per-check charge. This charge can be as little as a few dollars per check. Companies like ADP, Ceridian, Pro-Business and many banking institutions offer these approaches.

The application server model can be priced somewhat differently, because the software fees, customization and so on may be paid for in a similar fashion as the purchase approach, or by bundling the cost into a multiyear support, enhancement, operation and maintenance payment schedule.

Measuring ROI
Virtually all HR software projects are subjected to return-on-investment models of various types. The cost/ benefit analyses are oftentimes driven from three basic perspectives.

First, reductions in administrative costs can represent a significant benefit. These savings result from streamlined, automated processes that require fewer processing steps and ultimately fewer people.

Savings can also be identified in fewer printed forms and other documents, less overtime, and reduced costs associated with software support and maintenance. Certain external costs may be eliminated, since the new system will replace these external service providers.

Second, cost/risk avoidance has been a primary benefit in many of the Y2K projects in the past year. The risks and costs that were involved—in terms of information chaos, missed or erroneous payrolls, faulty benefits calculations and so on—essentially created a “gun-to-your-head” ROI scenario for many organizations.

Third, value-added benefits—in other words, shifting the role of HR from administrative to strategic—have generally been less quantifiable. However, organizations in which best-practice business alignments are being made, are quickly able to express their HR software investments as part of increasing their enterprise performance. After all, the best way to increase enterprise performance is to increase the effectiveness of the employees inside the enterprise.

Clearly, all this can’t be achieved without comprehensive HR programs that are supported by comprehensive HR software.

Workforce, October 1999, Vol. 78, No. 10, pp. 98-100.

Understanding and harnessing new technologies is a necessary step to achieving the full potential from HR software. Fortunately, while there are many, rapidly changing components, there are only two significant technology concepts that are likely to have a significant impact on achieving a high-performance workforce model.

The first of these is the convergence of call center, self-service and knowledgebase systems.

Call-center technology has been used for some time to handle commonly asked questions, provide consistent answers, and process transactions on behalf of employees, managers, applicants and retirees. Many of these were originally implemented to support complex benefits issues, and to achieve a more cost effective response to these needed employee services.

Interactive voice and intranet-based self-service technology are used in applications that enable employees to have direct data access, process their own transactions and find many answers on their own. Management self-service applications enable access to a manager’s direct reports, and enable the processing of a full range of workplace events, such as pay changes, promotions, transfers and so on.

Most recently, new technologies that offer knowledge databases have emerged that can support both the call-center specialist, as well as the employee or manager who needs guidance regarding a particular transaction or decision that is about to be made.

The convergence of the call center, self-service and knowledgebase technologies holds great promise for achieving several objectives:

1. As the nature of call-center activity migrates from mostly routine to increasingly complex, these functions can become “expertise centers,” providing the best, personalized, most specific support available. Technology has often been accused of “depersonalizing” the HR function, making us all “just a number.” This convergence can “repersonalize” HR by enabling more time to be available for personal contact and employee support.


2. As employees and managers become increasingly self-sufficient with routine workplace transactions and decisions, more time becomes available both for the employees and for HR to focus on higher performance objectives.


3. As knowledgebases provide the best answers and the best guidance, the intellectual assets of the human resources organization can be significantly leveraged. More importantly, this can also establish the foundation for capturing and disseminating the broader human capital assets of the entire organization.

The second major technology trend is known as “enterprise portals.” In simple terms, this can be defined as a personalized home page that provides transactions, knowledge and business metrics that increase an individual’s effectiveness, and improves enterprise performance. These personalized home pages are often unique to each employee, and are designed to support specific roles within an organization.

Portals provide a solution to what has been described as the “infoglut” problem. Today’s knowledge worker, tapped into both an internal intranet and the external Web, has too much information and not enough time. Enterprise portals can address several aspects of this growing information overload problem by:

1. Providing and organizing employee role-specific information. For example, for all sales employees, pricing and contracting guidelines may be designed into their portals.


2. Increasing efficiency by providing information links that are pre-connected to targeted data sources.


3. Increasing attention to focused metrics and role-specific results—for instance, by displaying outstanding proposals, shipments to customers or inventory available, all accessible via their home page.


4. Providing end-to-end transactions and workflow, by automating common transactions and approval routings for each employee’s role.


5. Providing “approved” merchant (i.e. external) content, such as connections to online travel services, or office equipment procurement services that have been authorized by the company.

Enterprise portal concepts can be directed at many roles within an organization. HR software can be used to identify and “clone” high performer characteristics, and the lessons learned in the technology convergence discussed earlier can establish the self-service, knowledgebase and “expertise center” foundation that support the enterprise portal. The objective is the “high performance workforce,” and HR can play the pivotal role in sponsoring and harnessing the emerging technologies to achieve that goal.

Workforce, October 1999, Vol. 78, No. 10, pp. 102-103.

In a real sense, the aggregation of what have been the key features and functions of HR software over the past three decades becomes the benchmark for today’s best performing software. In addition, and perhaps more importantly, how organizations have used their HR software over the years will help define the best practices for the software’s impact on the human resources function.

The HR software industry had its birth in the late 1960s, when information needs emerged that were not met by the “people systems” at the time. These systems were essentially the early automated payroll/accounting systems, and they lacked three essential characteristics:

First, they did not contain the capacity for non-accounting information, like education, skills, dependents, beneficiaries, etc. These data were becoming increasingly important for workforce planning, and benefits-plan costing.

Second, they did not retain significant history of the events that happened to employees. This was essential to track the employment process for compliance with the social legislation (Equal Employment Opportunity, etc.) of the 1960s.

Third, they were locked into processing periods (pay cycles) that prevented easy ad hoc reporting and analysis.

Solutions to these deficiencies were developed by the late 1970s—full-featured human resource information systems (HRIS) were placed at hundreds of companies. Most of these organizations were large-sized, with thousands of employees. Then the personal computer was introduced in the ’80s, and HR software became available for smaller organizations, as well as for specialized functions within the larger organization, such as recruitment automation, or training registration.

PCs opened software’s doors.
The 1990s was characterized by a growing recognition that integrated solutions which combined personnel, payroll, benefits, recruitment, career development, training and so on. These were able to deliver more value by sharing common information, simplifying multisystem updates, and providing a more complete view of each employee. Integration with financial, manufacturing, and supply chain systems resulted in the “enterprise resource planning” (ERP) systems that are prevalent today.

During this same time, the industry migrated through several technological changes, such as relational databases, local area networks (LANs), client/server architectures, and most recently, the Internet and intranets). However, while more features, flexibility and functions are available, the basic needs of the late 1960s still apply. “Best practice” for HR software is founded on:

• An extensible database for a wide range of employee/ employer information.
• A significant “date-sensitive” historical capacity.
• Easy-to-use reporting and analysis capability, available to a broad user community.

With the vendor industry now over 30 years old, these fundamentals can be found in virtually all of the leading suppliers’ products.

Understand what functions are available.
With many products now on the market with these capabilities, the selection and implementation of a solution requires careful consideration. Of course, company size dictates certain affordability parameters; small companies are unable to justify investment in thousands of dollars toward large-scale software costs. Otherwise, the intended use, functional requirements and technological environment are key determining factors in making the right choice.

These expectations, functions and technologies evolve over time, and therefore, upgrades and enhancements will be needed. HR software projects are rarely “finished,” as new needs and features are required to meet changing business needs. An assessment of foreseeable needs in the next two to five years is usually the best planning horizon that can be established.

Make your software selection process a success by understanding what’s out there—define the functions, expectations and technical characteristics that are needed to satisfy your company’s business requirements.

How can HR software be used effectively?
For ease of discussion, company profiles and characteristics are divided into three types:

• Type I companies exhibit high competency and capability, making best use of HR software in support of well-articulated and aligned business goals across all HR disciplines.
• Type II companies exhibit effective competency and capability, within many HR disciplines, but with needs to broaden the impact of the software’s use, across the HR functions and upward to the overall business objectives.
• Type III companies exhibit basic operational effectiveness, such that data accuracy is reliable to support fundamental reporting needs within the primary human resources disciplines.

It’s important to note that these “type” profiles are not directly related to company size in terms of revenue, or number of employees. Large companies may find themselves at the Type III level, just as smaller companies may very well exhibit Type I best practices.

With so many companies “recovering” from the massive ERP implementation projects that were prompted by the Y2K bug, it isn’t surprising that many organizations are only at the Type III level. Such organizations have completed the implementation of the major software components, usually consisting of human resources, payroll and basic benefits information.

Data-maintenance processes and procedures are in place, and users (often only in the HR/payroll/benefits departments) are trained and proficient. Best practices in Type III organizations are reflected by quality, accurate information, well-disciplined processes (albeit still paper-clogged), and periodic reporting of key information such as headcount, turnover, organizational demographics, and necessary compliance reports.

It isn’t unusual for Type III organizations to have extended their HR software impact, and be exhibiting best practices via outsourced 401(k) providers, and automated voice-based self-service for benefits open enrollment.

Moving up the scale, Type II organizations are beyond operational effectiveness, and often have implemented capability for broader functional support and a wider user community. Recruitment automation, which provides applicant tracking, requisition processing and position management features, is frequently in place for these organizations.

Compensation planning and budgeting capability is another high priority function that is technologically supported in Type II organizations. More widely available access, both for data maintenance and reporting, is another best practice characteristic found in Type II companies. These companies often have employee and manager self-service initiatives underway to reduce administrivia, and move the HR function into its desired, strategic and business-aligned role.

Type II companies are also likely to have established intranet strategies which support the dissemination of a wide variety of HR information, such as policy guides, organizational directories, job openings, training course catalogs and so on.

The distinguishing best-practice characteristics of Type I organizations are highly integrated and complete databases, broad self-service access by employees and managers, harnessed intranet and Internet connectivity, and a tightly aligned link between the goals of the business and human resources activities.

One such organization recognizes the human resources function as being responsible for building and maintaining its high-performance workforce. Human resources owns the “employee productivity agenda,” and can demonstrate the value proposition for each activity, associated data element, and related business processes.

For example, by using HR data to identify all employees who are connected to the sales role within the company, and by linking sales and commission statistics to these employees, it’s possible to identify the best performers. This information is being used to develop competency and skill characteristics, which form the basis for a sales-performance knowledgebase that can be deployed across the Internet, and around the world. The link between HR software and the improvement in sales performance is compelling.

The best-practice characteristics for each type of organization is affected by the particular HR software that may be implemented. Since new HR software releases (from most vendors) occur at least annually, with new features being added each year, a Type III organization may be able to use older releases, while a Type I organization is likely to be using the most current release. For example, newer releases—and the stated direction of planned future releases—are heavily focused on enabling self-service, Internet and “best performer” competency/knowledgebase functions.

Workforce, October 1999, Vol. 78, No. 10, pp. 90-92.