The human resources balancing act – iWeek feature
Get HR right and you will prosper. Get it wrong and you won’t. What could be simpler? But few get this balancing act right.
If anyone thought the problem of human resources had been solved by technology, a quick look at the Los Angeles district last month would show otherwise. Some 5 000 teachers and other state employees were overpaid a staggering $53 million in total and the state will have to spend quite a bit to recoup the funds. The culprit: a problematic HR system.
Technology in HR has been around for as long as computerised payrolls, and has brought lots of benefits – no more handwritten cheques at the end of the month for example – but the environment is now far more complex.
The workforce used to be fairly homogenous, easy to manage and easy to pay. Today’s workforce is complex, changes quickly and encompasses a number of types of workers in a number of different relationships. If companies get on top of HR issues, the Aberdeen Group has found in a recent survey, they will save time and money, and increase employee satisfaction.
Development: Keeping Pace
The payroll and HR systems developer has to consider a number of issues, most of which seem to be changing rapidly: security, access, labour legislation, compliance and changing software platforms. “Software and application development requires much time, effort and money, but is essential to ensure the solution meets the evolving needs of clients or an area of business and can adjust to market influences,” says Sharon Tayfield, operations director at Praxima Payroll Africa.
“Payroll and HR software is a particular case in point. Ongoing development – other than introducing new tax tables – is crucial to hone the functionality of these specialised solutions. To do so successfully, however, the payroll and HR software vendor must understand emerging needs. Of course providing updated tax tables is necessary, but there are other influences that require the ongoing development of payroll and HR software. Take labour legislation, for example. A change can affect the way a payroll or HR solution is handled and might require modifications to the software.”
Many of these solutions are written to operate on underlying software platforms and when these change new opportunities arise. “A typical example is leveraging the new developments within a Microsoft platform,” explains Tayfield. “If a new component within the underlying software is incorporated into the application, it may improve the performance or functionality of the payroll and HR solution.”
Changing business processes and trends, like the move towards electronic records, also influence development says Tayfield.
“Businesses are moving away from using cumbersome hard copy records that are easy to lose. A paperless environment is now the ideal. The rise of the mobile worker has further reinforced this requirement. Having a decentralised environment means employees should be able to access the business processes and documents they need online. For example, it is easier and more efficient for workers in a remote location such as a home office to apply for leave online than rely on laborious paperwork.”
Legislative requirements that demand records be kept for a certain period of time and, more importantly, can be retrieved quickly when required, also support the trend toward a paperless environment.
“This requirement has grown among our international clients who are required to comply with legislation such as Sarbanes-Oxley. The US market in particular also has a huge emphasis on security and the integrity of data. Changes or advances in security mean new ways of keeping information secure must be incorporated into the highly sensitive area of payroll. Encrypting data or batches of information during transfer has become vital, as has the inclusion of stringent authentication procedures to prevent fraud, such as the registration of ghost employees, and make people accountable for their actions.”
BI & HR
But the attitude of the client is what counts. Matina Kavallieratos, senior consultant at Harvey Jones Systems, notes that at a time when the skills shortage in SA makes the headlines regularly, holding on to good people is no longer an option – it is a necessity.
“Yet organisations either appear to adopt an attitude in line with Henry Ford’s: ‘Why is it when I hire a pair of hands, I get a human being as well?’ Or they are intimidated by the effort required to sift through the volume of data that needs to be translated into meaningful information. In this context, it is the organisation that knows what is happening to its employees that has the distinct advantage.”
Here business intelligence is invaluable. “Yet in implementing business intelligence, organisations neglect this area, seeing HR as the ‘soft’ part of the business, which does not drive overall financial success. In truth, it is an information area, which can deliver rich returns for all involved, if one considers that people are the greatest cost component of any business and understanding the cost drivers and where savings can be had and inefficiencies addressed can drop straight to the bottom line.”
The company that has the best skills wins, she notes, “and it can be five times more costly and disruptive to acquire new staff than to retain them.” Just as BI informs CRM, so it can underpin the HR process: how many staff members have left? Why did they leave? What could we have done to retain them? How can we grow our “stars”?
Kavallieratos says that automation of critical business indicators – the balanced scorecard; progress towards and current status with BEE targets; leave registers; training and skills development and retention; payroll analysis; and appraisals aligned directly with actual performance – are tools that can, and should, be applied to HR.
“Management – both in HR and elsewhere – can have a direct view into all of these activities through a visual dashboard. Ultimately, it is business intelligence that can provide the information that will allow organisations to acquire the best people, grow them to both parties’ benefits and retain the talent, which will charge today’s workplace.”
That’s good advice. Aberdeen’s report The Strategic Development of Core HR Systems (see sidebar) concludes that properly implemented HR systems allow companies to engage and retain their employees and get a better understanding of company processes. But neglecting them can result in, at best, a loss of competitive edge and increased employee dissatisfaction or, at worst, fines, lawsuits and unnecessary costs.
Moving to the Web
HR and recruitment systems, along with traditional payroll applications, have been traditionally developed as packaged applications, deployed in-house on client desktops. But some South African pioneers are using the power of the Web and of communities to compete. Mark Gray of Graylink set up his business in 2002. He develops his technology here and distributes it over the internet to local and international clients.
“We’ve been in the software as a service (SaaS) business for five years now and we don’t install in a client environment at all. Everything that we do is delivered via the infrastructure. Certain parts of HR are less critical than others, but the kind of companies that we work with are large multinationals who have embraced SaaS because it works well for them,” Gray explains.
Gray originally built his application to replace a paper-based process. “We have one software codebase to handle recruitment and each client gets their own database and a website which is seamlessly incorporated into their existing website. You wouldn’t know that it’s us delivering the service.
Gray says part of the power of SaaS is that it allows his clients to focus on what they’re doing: “which is recruitment. If you have a distributed user base we provide access to a recruiter website. It’s our job to make sure that it’s running – not theirs.”
Gray sees a bright future for Web-based HR and recruitment. “I think the first wave has been for applications and processes that aren’t that critical, but customers are becoming more comfortable with SaaS as a concept. They’ve seen this work for them and now have a more open mind about moving more business-critical applications to this model. Cost-wise they don’t have to buy any technology or hardware – we are the ones amortising the cost and the existing client-server model is being superceded by this one. If you look at the rands and cents, it works.”
He thinks traditional software vendors – which deliver their packages and host their applications in-house within the client – need to adapt their business models, otherwise they’re going to be in trouble. “We can upgrade much more easily – there’s no need to sit at the client and manually upgrade, plus we back up data every day and take it off-site. And we can afford to compete aggressively on price by delivering a similar product at 90% of the price of some overseas competitors,” Gray says.