|
The makeover from manual processes to a fully automated HR department,
complete with workflow and automation, doesn’t happen overnight.
It’s about building on success and connecting systems over
a period of years. Yet, when done right, these initiatives can
lead to greater organizational success and improved shareholder
return, says Jim Holincheck, a research director at consulting
firm Gartner, Inc. “There is a tangible link between many
of these initiatives and results, even when it’s difficult
to measure the direct ROI.”
Blazing a Path to Success
In fact, consulting firm Watson Wyatt found that by adopting
the right portfolio of human capital practices, an enterprise can
improve its market value by 47 percent. A 2001/2002 study found that
superior human capital practices are a leading indicator of superior
financial results. Companies that turned in low human capital index
(HCI) scores averaged a 21 percent five-year return, compared with
the high-HCI companies' 64 percent return . What’s more, focused
HR service technologies boosted an organization’s market value
by 6.5 percent.
At Trammel Crow Residential (TCR), a private Atlanta-based firm
that’s a builder and manager of upscale apartment complexes
across the U.S., the focus is on maximizing efficiency and synergy
across the company, says Tim Swango, executive vice president of
human resources information systems. Since 1999, TCR has worked
to standardize systems and connect its 260 properties in 20 states,
totaling $3 billion in assets. Using Ultimate Software’s
UltiPro HRMS, it has embraced a paperless payroll system, turned
to advanced HR analytics and fostered a self-service environment
by introducing a TCRHR.com portal.
The current system, which went live in January 2001, has generated
both tangible and intangible benefits. For example, the paperless
payroll feature saves the company more than $75,000 a year in paper,
printing and distribution costs. Equally important, “employees
have access to their payroll and check stub data at any given moment,” Swango
explains. Meanwhile, the portal provides information, news and
reports that help managers and employees stay tuned to enterprise
initiatives.
Employees can update their records, conduct benefits enrollment,
check out their performance reviews and fill out various forms.
Management uses the portal to keep everyone informed about news
and events. “With such a decentralized company, the ability
to communicate in a single place is extremely valuable,” Swango
says. In addition, a Cognos business intelligence application that’s
available through the portal provides real-time data about everything
from personnel costs to operational expenses. In the past, such
reports sometimes required several hours. They now take less than
5 minutes to generate.
Most importantly, the move toward eHR has helped TCR become more
strategic. Only 14 human resources representatives manage over
2,500 employees across the organization. “Instead of employees
pushing around paper and tracking down an endless stream of signatures
and approvals, they’re able to think more strategically,” Swango
says. “There’s still room for improvement but we’re
achieving results that wouldn’t have been possible only a
few years ago.”
Putting the Pieces Together
One of the things driving the widespread use of employee and managerial
self-service is the growing acceptance—and familiarity—with
Web-based applications and the Internet. No longer are high-tech
companies the only ones at the vanguard of electronic business
processes. “Workers from all types of companies and walks
of life are using the Web and, in fact, demanding it,” Links
observes. “They’re now pushing their employers to add
features and capabilities.”
That, in turn, is leading to more sophisticated applications and
features. In many cases, today’s portals connect to insurance
providers, 401(k) administrators and others. By clicking a button
or two on a Web browser, an individual can check on how her mutual
funds are performing and make trades, or glance at how close he
is to reaching a deductible on a medical benefit. At many companies,
workers also apply online for vacations and personal time off (PTO)
and receive approval within a few minutes.
E-learning is another potential boon. Instead of an organization
shipping videotapes or CDs to remote locations, it is able to offer
instructional materials, including video, on demand. While the
cost savings that results from reduced travel is significant, the
enterprise can also connect e-learning to performance management
systems. At that point, employees can view the courses required
for a promotion or raise, and, along with their managers, track
their progress.
Technology is also transforming the way many organizations recruit
and hire. Instead of scanning an endless stream of resumes into
a database, many firms now require applicants to submit applications
online. The information flows into a recruiting database and an
HR or line manager can view qualified applicants on demand.
At Beth Israel Deaconess Medical Center in Boston, e-recruiting
has served as the centerpiece for a comprehensive eHR initiative.
The hospital, with 532 beds and the equivalent of 4,500 full-time
employees, faces intense competition for the brightest and best
medical professionals—physicians, nurses, therapists and
others. Three other major health care facilities are located within
a block of Beth Israel and all battle for the same talent pool.
Using PeopleSoft’s eRecruit, it now fills open positions
within a day or two, and sometimes less, instead of 6 to 8 days.
What makes the system so powerful is that it automates requisitions
and approvals, while eliminating paperwork and automatically generating
HTML postings. In fact, with a click of a mouse, all open positions
appear on the medical center’s Web site. “In some cases,
we’ve been able to post an opening and interview candidates
the same day,” says Lawrence Bastianelli III, fiscal systems
manager. Moreover, the system has helped Beth Israel reduce costs.
The hospital has reduced the number of its internal recruiters
from 10 to 8.
Yet Beth Israel hasn’t stopped there. It uses a PeopleSoft
ERP to manage payroll, benefits, supply chain and general ledger.
Over the last few years, it has tied together previously disparate
systems and databases. All of which has resulted in ongoing, incremental
gains. “We’re making management and employees more
accountable and streamlining business processes. It’s an
ongoing journey,” Bastianelli explains.
To be sure, getting to eHR isn’t for the feint of heart.
As applications cut across departmental lines and vertical boundaries,
an initiative requires input from all the various factions within
an organization—IT, human resources, operations, marketing
and finance. It also requires a high level of system integration
so that executives, managers and employees have 24x7 access to
information. Finally, an organization must reengineer work processes
and provide training in order to use applications effectively.
Amid the hubbub, finance can play a key role in helping an enterprise
navigate to eHR. “Finance executives can help establish priorities
and benchmarks for organizational and fiscal effectiveness,” says
Gartner’s Holincheck. “One of the things that has been
historically lacking within HR departments is the ability to conduct
solid business analysis and look at the financial effects of various
decisions and approaches.” Adds Jensen: “Finance needs
to develop hard-dollar bullet-proof ROI analysis.”
In the end, it’s as much about mindset as technology. Says
Laura Perkins, vice president of product strategy for Ultimate
Software: “Executives need to understand that success comes
not just from solving the tactical responsibilities and the administrative
types of responsibilities, but really buying into the fact that
these strategic initiatives—compensation, training, self-service
and more—have a great impact on employee retention and organizational
success.”
Key Links between Human Capital and Shareholder
Value Creation |
| Practice |
Impact on market value |
| Total Rewards and Accountability |
+ 16.5% |
| Collegial, Flexible Workplace |
+ 9.0% |
| Recruiting and Retention Excellence |
+ 7.9% |
| Communications Integrity |
+ 7.1% |
| Focused HR Service Technologies |
+ 6.5% |
Source: Watson Wyatt International
|
