Building the business case for e-HR
Jason recently posed this same question in a lecture he hosted to 3rd year Human Resource, Policy & Practice students at Auckland University Business School.
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The conclusion they reached was while it is easy to proselytise the functional advantages of implementing e-HR solutions, realistically organisations need to see the functional improvements it offers translate into concrete business benefits, such as improved efficiencies, reduced overheads and strategic insights.
And before embarking on the journey, senior management need to understand that moving towards an e-HR model significantly changes, not only the way HR operates but also changes the way people view and interact with the HR function.
So what is the business case for HR to take up this challenge? Fundamentally it revolves around reducing the transactional workload of HR to help it become more operationally effective. Research shows that the use of e-HR tools is enabling this change.
The core aim here is to allow staff to self serve by giving them web-enabled access to core HR information and beyond that to give managers enough information to interpret policy and make more informed decisions about their departmental operations. The business benefit of this change is that organisations move from a purely transactional and administrative execution of HR towards a more service oriented and strategic focus.
There are diverse maturity levels with HR across the business landscape, but typically organisations fall into one of three states: Traditional, Transforming and Transformed.
Organisations in the ‘traditional’ bracket have not yet begun their HR transformation. They have a centralised HR function with high administrative overheads and intensive transactional activity. Those companies in the ‘transforming’ group have made a start and have implemented some technology, but are not using it to its full potential. They are still operationally focused, but looking towards providing more self service options.
The ‘transformed’ organisation – of which there are very few – has totally embraced the e-HR paradigm. These companies have very little administrative overhead or transactional activity, because staff can self serve, answering their own pay, benefit and leave entitlement queries via their e-HR website. Departmental heads can access key data regarding absence rates and employee turnover, allowing them to make more informed decisions. Having freed itself of these day-to-day operational queries, the focus for HR becomes more strategic; higher value human capital analysis and business planning work becomes its raison d’être.
Depending on the complexity of the organisation there are a variety of models which organisations can adopt to move along the path from ‘traditional’ to ‘transformed’. And, there is now a growing body of research studying the benefits accruing to companies who have made the move to e-HR.
A number of challenges which can make or break the success of an e-HR implementation recur in the research done to date. The need for good change management is a common concern. The research highlights examples of the technical side of the implementation overtaking the ‘people and education’ aspect.
Implementing web portal access is a technical exercise and the change management procedures needed to socialise the system and prepare people for the change can get lost. If the implementation is going to work, employees and managers need to understand how it is going to affect them and what the benefits are, and the technology itself needs to be simple enough to engage users and meet all their HR demands. Ongoing training and education in the system are important factors for success.
Another repercussion is that once an organisation has freed its HR staff from day-to-day transactional work, it may find that those people are not the experienced enough or have the necessary analytical skills to perform the higher value tasks the company requires. It may need to hire or partner with external organisations to gain worthwhile strategic input. This, of course, can puncture the business case for implementing e-HR – the money saved on automating the operational side of things will be used up on hiring more expensive resources.
When undertaking an e-HR transformation, keep the business issues and the technology issues in balance. Yes, implementing a web-based portal is a technical exercise and it needs good project management to keep it on track, but thought must also be given to how the change will affect people’s perception of HR, as this will also alter. Instead of being a unit unto itself, implementing an e-HR solution opens HR up to the wider ongoing scrutiny of the company. The way it operates changes fundamentally and everyone within the business, HR included needs to be aware of that fact.
If you would like to discuss SAP’s e-HR solutions please email us
References:
1. Transforming HR “Creating Value Through People” (Reddington, Williamson, Withers)
2. Technology, Outsourcing & Transforming HR (Martin, Reddington)
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