The most progressive companies have been using best-of-breed human resource (HR) technologies for attracting, hiring, training, motivating, and managing their people. Software applications are getting more and more sophisticated to help companies with these tasks, and as these solutions continue to evolve and communicate with one another, user companies will have more seamless access to methods and data to manage their employees throughout the employee life cycle. On the other hand, laggard companies that do not embrace these technologies will likely fall behind in their quest for market dominance.
There is a true need for much tighter integration between performance management and compensation (regardless of the economic milieu), so that exemplary employees can be rewarded more often, and thus feel truly special to the enterprise. This is vastly preferable to the outmoded blanket-regulated, across-the-board annual "incentive," which typically produces mediocrity. Analyzing the workforce and strategically managing the company's human capital has become the latest focus of human resource management systems (HRMS), as a way to transform these systems from dull functions to applications that greatly affect corporate performance. To that end, integrated business information warehouses enable multidimensional analysis with powerful drill-down features, on information aggregated from internal and external resources (for instance, salary surveys), performance indicators (such as turnover), and views on strategic HR information. Some surveys indicate that almost a third of businesses are already using data warehouses; a quarter of them use workforce performance management or analytics; and one eighth of them are using workforce planning.
This brings us to the notion of human capital management (HCM) or talent management, which Gartner defines as a set of HR practices that focus on the acquisition, management, and optimization of the enterprise workforce. This includes such processes as competency and skills management, succession planning, and team management. The key tenet of HCM is that companies must change their habit of seeing employees as an administrative cost, and instead see them as a strategic investment and key enterprise asset, with a resulting focus on aligning workforce capabilities with business strategy. This more strategic view of the workforce will gradually become less an HR function, and more a management discipline.
HCM should be about value and not cost, since people should be regarded as value-adders and not overheads and liability. It should measure organizational outputs related to better management of people (such as profit, revenue, and service levels), rather than focusing on input measures (such as recruitment costs) or the HR "best practices" of earlier days. According to studies by the Brookings Institute, in the early 1980s tangible assets amounted to over 60 percent of firms' total assets. But now this ratio has been reversed, with over 80 percent of assets being intangible—most of which is represented by human capital. Yet, while decades have been spent investing in automation technologies for better use of tangible assets, only recently have enterprises begun to invest in optimizing human capital.
For an extensive examination of HCM, see Thou Shalt Manage Human Capital Better.
An Unusual HCM Suspect
Vendor consolidation activity continues, both among complementary and competing HCM products (see The Human Capital Management Market—Hot, but also Overpopulated?), and the HCM fray has lately been enriched by Infor, a somewhat unexpected (or under-regarded) HCM aspirant. Infor is a provider of extended enterprise resource planning (ERP) solutions for manufacturing, distribution, retail, services, and public organizations worldwide (see The Enterprise Applications "Arms Race" To Be Number Three). Although much better known for its manufacturing and supply chain management (SCM) expertise, the vendor has garnered a strong portfolio of HCM applications, mainly stemming from the former Infinium HR and Computer Associates (CA) Masterpiece/HR suites (that came via the recent acquisition of SSA Global), as well as from the recent acquisition of Extensity, which brought the former Geac HR and Payroll solutions. These applications have all achieved strong penetration in some service industries. In fact, Infinium remains the undisputed leader in the hospitality and gaming sector.
In August 2006, Infor announced the general availability of Infor Human Capital Management (HCM) 3.0, a comprehensive solution that aims at helping companies reduce workforce-related costs (which, as mentioned above, can contribute up to 60 percent of any company's total expenditures) and improve workforce productivity. With this product release, the vendor has combined both transactional and strategic HR functionality with integration to its flagship ERP and extensions solutions, so that its customers can better align their HCM initiatives with overall business strategy. The solution is integrated with core Infor Financial Management (Infor FM), Infor Portal, and Infor Workflow, and provides extension solutions such as Infor Corporate Performance Management (Infor CPM). Infor HCM and FM are not only integrated, but also share the same technology foundation.
In tune with the exhaustive market analysis presented in an earlier series, Infor believes that HCM is no longer a back-office function, but rather a key component of a modern extended ERP solution. This solution must be able to add value to uninterrupted business processes, and become a means to enable compliance through organizational alignment. Accordingly, Infor HCM enables companies to automate core processes such as HR, benefits, and payroll, and also offers capabilities including self-service, analytics, and workflow to better connect managers and employees. In other words, the efficiency and effectiveness of a user enterprise's operations and processes can be achieved via both core HR and strategic HCM capabilities, bundled with workflow integration and a workforce portal. Some potential benefits are thus reduced HR costs and time, through business process efficiencies and improved employee communication and productivity. The vendor claims that a vast number of existing customers surveyed have told it that they want to 1) improve workforce performance through accountability and visibility; 2) achieve greater efficiency and effectiveness by adding value to processes and increasing capabilities; and 3) lower total cost of ownership (TCO) through application flexibility and compatibility.
To accommodate the last requirement—lower TCO through application flexibility and compatibility—the suite is built on open standards, including Java 2 Enterprise Edition (J2EE) and extensible markup language (XML). It can be deployed on multiple platforms, including UNIX (Sun Solaris, HP/UX, and IBM AIX), Microsoft Windows, IBM iSeries, Multiple Virtual Storage (MVS), and Virtual Storage Extended (VSE) mainframe operating systems (OS). It can also be deployed on Microsoft SQL Server, Ingres, Oracle, IBM DB2, Informix, and CA-Datacom databases. Initially available in English only, the product suite has since been internationalized to accommodate multiple language and currency support, and Spanish, French, Italian, German, Norwegian, Finnish, Danish, Brazilian Portuguese, Simplified Chinese, and Japanese are being rolled out throughout 2007. The product is also slated for continued adoption of the recently released Infor Open SOA (Service-oriented Architecture) (see Contributing to the Rejuvenation of Legacy Systems in the Enterprise Resource Planning Field).
The product already features J2EE-based self-service and talent management (as in learning management and performance management) modules, and a J2EE/XML-based user interface (UI) and integration layers (whereby the integration layer also supports Microsoft .NET). The future should see continued adoption of J2EE, and more modular SOA development. These traits have been provided with potential customer benefits in mind, such as the ability to capitalize on and leverage existing IT infrastructures, and the potential to further meet global requirements. Thus, one should see Infor HCM as a major cross-selling product in the ongoing merger of a few fellow extended-ERP providers (Infor, SSA Global, and Geac); pre-merger Infor's native HCM capabilities have been all but non-existent thus far, despite an immense product portfolio.
What Does Infor HCM Entail?
Diving a bit deeper into some individual modules, the Infor HR module covers traditional multi-organizational workforce management, multi-job position management, workforce development, training administration, basic recruitment, and salary planning and budgeting. However, the novel Infor e-Recruitment module seems particularly comprehensive in terms of global applicant tracking and Internet-based recruitment, and is taking care of both salaried and hourly hiring support on a single platform. It manages most of the business processes in the web-based staffing process, including requisition management (creation, sign-off, and approval); candidate sourcing tools (including corporate job boards and job cross-posting, and resume parsing and searching); customizable applicant screening and ranking, interviewing, candidate communications, selection and offer generation; hiring and on-boarding; and internal talent management. Also, there is the management of such employment applications as portable document forms (PDFs). The underlying workflow management tools support customized business processes, and the analytic tools provide customized activity and metric reporting.
Infor Benefits Administration provides virtually unlimited benefit program management in terms of benefits plans, providers, and rates. The module identifies appropriate dates for calculating coverage and deductions, provides maintenance of dependent and beneficiary information, and supports flexible benefits plans, such as the definition and maintenance of flexible credits. There is also compliance with the US Health Insurance Portability and Accountability Act (HIPAA) and Family and Medical Leave Act (FMLA). Infor Payroll is also quite functional with support for payroll and year-end accounting, including compliance with US Equal Employment Opportunity (EEO) laws, and the US W2, 1099, and 1099R forms. It also includes compliance with Canadian T4, T4A, and other germane forms. There is a plethora of earnings and deductions combinations, as well as support for basically any type of payroll period (weekly, biweekly, semimonthly, monthly, and special [executive] pay cycles). Other notable features are possible overrides of earnings, deductions, and taxes; retroactive payroll processing; "compute-a-check" (on-demand payroll and check provision); workers' compensation; absence management; and garnishment tracking and deduction.
Infor Self-service provides four modules:
* Employee Self-service, to update personal and contact information, access learning management, update skills and competencies, and view performance management;
* Payroll Self-service, to view paychecks, submit tax elections, change pay locations, view W2 forms, and view or change direct deposit information;
* Benefits Self-service, to view benefits summaries, view or edit lists of dependents and beneficiaries, perform benefits enrollment, and view or enroll in flexible spending accounts; and
* Manager Self-service, to view employee information and conduct employee status changes, and for performance management and salary planning.
The Infor Learning Management module provides support for many training methods, including instructor-led, online or web-based, computer-based training (CBT), event-based, synchronous, and blended methods. There is integration with leading collaboration platforms such as Centra, Placeware, and WebEx, and a solid online content management repository from multiple internal and external sources. This repository includes a built-in authoring tool and "anytime, anywhere" content development and uploads. The module supports self registration and group registration using credit cards, cost centers, subscription, or purchase orders, while collaboration can take place through discussion forums, e-mails, and chat rooms. There is delivery and tracking of proprietary and standards-based content, including Aviation Industry CBT (Computer-based Training) Committee (AICC) and Sharable Content Object Reference Model (SCORM) standards. The module is also integrated with its SSA counterpart modules (Performance Management, Development Planning, and Competency Management).
Last but not least, Infor Employee Performance Management provides the ability for the enterprise to establish objectives and goals, and track them to completion via features like "360-degree feedback" (meaning feedback from all sources connected to the employee), including peer reviews. It also enables automatic calculation of performance review scores based on employee ratings and weight inputs. There is support for formal and informal performance appraisals, based on accomplishment of established goals and attainment of competencies. Again, in this context there is underlying automated workflow (to ease administrative tasks and ensure that performance reviews are completed on time). Other notable capabilities are detailed skills and gap analyses that more clearly identify areas for improvement and development; cascading goals to help users align employee performance measures with those of the organization; and role-based assessment of individual competencies and skills to provide further insight into employee performance. All these capabilities aim at identifying top performers to aid in corporate succession planning.
How Does This All Fit Together?
In a little demonstration of the Infor HCM system at its 2005 Global Client Forum (GCF) user conference, former SSA Global illustrated how the process of bringing new employees on board and deploying them into the organization can be streamlined, with all information set up in internal systems beforehand to ensure that new hires are productive from the first day. This is often a time-consuming, paper-intensive process which results in low engagement during the early days of employment. In the demonstration, a new recruit in the information technology (IT) department has accepted an offer of employment, and needs to become registered in the company's systems. The HR administrator completes an online job hire wizard in the aforementioned Infor e-Recruitment module, and this automatically creates an employee record in Infor HCM 2.0. For speed and efficiency when on-boarding new employees, Infor Workflow will automatically notify various departments to continue the process of setting up the new employee. Accordingly, an e-mail notification is sent to the benefits administrator, and there is a workflow inbox for the administrator which contains the actions necessary to complete the new hire process. By clicking on these links, the administrator can complete the benefits enrolment process for the new employee.
When the set-up process is complete, the employee has immediate access to Infor Self-service, where it is possible to enter annual tax elections in the Infor Payroll solution, and also to verify and update personal and work-related information, such as name and address, emergency contacts, and work location. In Infor Learning Management, the new employee can enroll in learning and development plans during the first day of orientation training, since it is possible to access the course online. When the course is complete, the learning transcript and evaluation can be made available to management. The HR department can view all employee information online, including analysis with Infor Enterprise Reporting and Analytics (with Cognos as the underlying platform). Finally, with the new employee deployed into the organization, HR executives can proactively plan and budget for future staffing needs using Infor Enterprise Planning and Budgeting.
Rounding Out with a Talent Management Acquisition
Infor Global's capabilities in HCM were enhanced by the late-2005 acquisition of Boniva Software, a provider of e-learning, skills management, and performance management applications. The addition of new, complementary HCM functionality expanded Infor's ability to address the growing need among its customers for solutions that support employee recruitment, learning management, competency and skills assessment, and employee performance planning. The Boniva applications were based on a similar SOA, and built using the same J2EE technology as the Infor Open SOA mentioned above. The combined architecture has provided the flexibility to integrate with existing enterprise applications, and to quickly tailor solutions for specific industries.
As for addressing its customers' foremost requirement—accountability and visibility of workforce performance—Infor offers a combination of capabilities like workforce planning and budgeting, HCM analytics and reporting, and talent management. Logically, potential customer benefits should arise from alignment with corporate strategy by combining workforce requirements and business plans. They should also gain the potential for improved decision making through visibility of performance, and the ability to acquire and develop the best talent. To that end, in mid-2006, Infor (formerly SSA Global) announced the general availability of Infor Talent Management 4.5, a comprehensive workforce management solution for midsized and large enterprises.
Infor Talent Management is enabled by many HCM components and cross-integrations, including workforce planning; web-based recruiting; employee performance and competency management; workforce development; succession planning; learning management; and compensation management. The solution was designed for easy integration into core ERP systems, and can be implemented as an Infor Global-hosted solution, or installed as a licensed solution. Its modular format makes it possible to integrate only the required talent management functionality into a customer's existing platforms or services. The solution is double-byte enabled, making it a suitable talent management solution for multinational companies that need to manage a workforce in several countries. Infor Talent Management 4.5 is currently available in English, with plans for localization in more languages in 2007.
SOYRCE:http://www.technologyevaluation.com/research/articles/an-unusual-human-capital-management-suspect-18760/
Friday, July 30, 2010
Tactical Human Resources Evolves into Strategic Human Capital Management
Given the examples of the changes in human resource (HR) management discussed in Thou Shalt Manage Human Capital Better, and the mushrooming number of point solution providers, many enterprises have realized the significant shortcomings of traditional HR (in terms of technology, beliefs, processes, and practices) that require a strategic-level mind-set change. This is particularly relevant during times of economic sluggishness and low investment capacity (which typically translates into layoffs or hire freezes, cost containment, and stalled innovation), when most enterprises and their employees are left wondering if they can (or should) rely on each other for their future.
Part two of the series Thou Shalt Manage Human Capital Better.
In the early 2000s, with the economy in a downturn, HR administration delivered some organizational value by outsourcing an increasing number of HR business processes, either wholly or in part. In many cases, outsourcing to some trusted technology vendors that have already demonstrated their HR domain expertise may help companies achieve additional efficiencies and functionality, reduce head count, and cut costs.
Of the many solutions in the HR realm, the most predominantly outsourced have been payroll processing, employee assistance programs, payroll tax filing, and background screening. The most appealing and achievable benefits of outsourcing are streamlined operations, access to better HR capabilities and industry expertise (when it is not a core competency of the user enterprise), freeing up of internal staff, reduced labor costs, and accurate and predictable monthly costs.
However, the returns from layoffs (often undertaken without much thought to who should really go, potentially resulting in the hasty release of the lynchpins of the enterprise's ongoing performance) and relentless cost-cutting have proved to have only a limited (if not negative) effect. While some organizations have tried to cut labor costs to be competitive in their markets, the most progressive companies have embraced their labor forces and used them as a strategic differentiator.
As products and technologies become commoditized in this information-based economy, companies are beginning to realize that the best way to differentiate themselves and create long-term strategic advantages over their competitors might be through their people. It is no longer what one owns that counts, but rather what one knows, which is particularly critical in information technology (IT) and similar professional services organizations (PSOs), because it is the technical expertise and experience of knowledgeable staff that means the difference between success and failure.
In fact, according to Forrester Research, more than 85 percent of the market value of a typical Standard & Poor's (S&P) 500 company today is the result of intangible assets. For many companies, the bulk of these intangible assets is their people (or human capital), and such companies spend as much as two-thirds of their overall costs on labor. Thus, they should focus on business processes, using technology to more effectively manage employees and improve their productivity. Combining training, incentive management, and compensation management tools delivered through a role-based dashboard, emerging people-centric software category aims to transform each individual in the workforce into an enterprise asset.
Best-of-breed HR Technologies
The most progressive of companies have been using best-of-breed HR technologies for attracting, hiring, training, motivating, and managing their people. Software applications are becoming more and more sophisticated to help companies with these tasks, and as these solutions continue to evolve and communicate with one another, user companies will have a more seamless access to methods and data for managing their employees throughout the employee life cycle.
On the other hand, the laggard companies that do not embrace these technologies will likely fall behind in their quest for market dominance. For instance, by implementing a holistic employee performance management process across the enterprise, corporate strategy can be aligned (and properly communicated) with individual goals and objectives, whereby actual performance against those goals can have ramifications for individual compensation and rewards. This should drive behavior and attitude toward executing on the corporate strategy, with improved employee satisfaction and loyalty as a result.
This certainly comes in handy when the economic downturn ends, when employees begin to feel that they have more employment choices. Enterprises will again need clear, credible, and reliable strategic sourcing strategies and management in order to plan for and engage the competencies (people and companies) needed to accomplish their business strategy (by building the required effectiveness and increasing efficiency). For instance, with the economy improving and IT budgets rising, competition for IT talent—especially in key skill areas—is bound to intensify. At the same time, an improved hiring picture in IT will most likely mean higher turnover, as many unhappy IT staffers who saw workloads increase while compensation and benefits stagnated (during the economic downturn of the early 2000s) will put even more pressure on IT management.
Hence, there is a true need for much tighter integration between performance management and compensation (regardless of the economic milieu), so that exemplary employees can be rewarded more often (and feel truly special to the enterprise), as opposed to the outmoded, blanket-regulated, across-the-board annual basis (which typically produces mediocrity).
Analyzing the workforce and strategically managing the company's human capital has become the focus of human resource management systems (HRMS), as a way to transform these from dull functions to those that greatly affect corporate performance. Integrated business information warehouses, to that end, enable multidimensional analysis on information aggregated from internal and external resources (salary survey, for example), performance indicators (as in turnover), and views on strategic HR information with powerful drill-down features. Some surveys indicate that almost a third of businesses are already using data warehouses, a quarter of them are using workforce performance management or analytics, and one-eighth of them are using workforce planning.
Workforce analytics have become a core of talent management systems. This is because they focus not just on "time" (or who has clocked in and who has not), but also on such strategic business issues as overtime and turnover trends that impact a business's bottom line profit, equal employment opportunity (EEO) or ethnicity-based hiring trends, compensation patterns, relative recruitment effectiveness and sourcing costs, cost per hire, etc..
Human Capital Management
This brings us to the notion of human capital management (HCM), or talent management, which Gartner defines as a set of HR practices that focus on acquisition, management, and optimization of the enterprise workforce. These practices include such processes as competency and skills management, succession planning, and team management. The key tenet of HCM is that companies must change the mind-set of viewing employees as an administrative cost, and instead see them as a strategic investment and a key enterprise asset, with a resulting focus on aligning workforce capabilities with business strategy. This more strategic view of the workforce will gradually become less an HR function and more a management discipline.
HCM should be about value and not cost, since people should be regarded as value-adders, and not overheads and liability. It should measure organizational outputs (such as profit, revenue, and service levels) related to better management of people rather than focusing on input measures (such as recruitment costs) and the HR “best practices” of earlier days.
According to studies by the Brookings Institute, in the early 1980s, tangible assets amounted to over 60 percent of firms' total assets. This ratio has now been reversed, with over 80 percent of assets being intangible, most of which is represented by human capital. Yet, while decades have been spent investing in automation technologies for better use of tangible assets, only recently have enterprises begun to invest in optimizing human capital.
Moreover, many non-HR business processes can benefit from leveraging HCM strategies, such as project portfolio management (PPM) processes (see Project Portfolio Management for Service Organizations: Bridging the Gap between Project Management and Operations), which can be improved via incorporating competency and skills data and by leveraging the team management capabilities of HCM applications. Similar examples of business processes that should benefit from “picking the HCM brains” include production planning, job costing, scheduling, training, compliance, budgeting, and field service. In fact, any people-centric business process should benefit from integration to HCM, whereas traditional administrative HR applications and processes will hardly support this integration at all.
This leads us to a broader notion of employee relationship management (ERM), business-to-employee (B2E) management, or whatever the three-letter acronym (TLA) du jour might be (see BLM—Buzzword Lifecycle Management). In any case, these acronyms try to depict a business discipline that focuses on optimizing the employee's total employment experience—including both the human and technology aspects of that experience.
ERM espouses a comprehensive and unified view of the processes and technologies that support the workforce and their workplace, including manager-employee interactions, the formal business tasks required to manage employee relationships, and the technology used to manage the employee experience. To that end, ERM encompasses the full suite of B2E services needed by employees, managers, and others, including knowledge management, e-learning, self-services, community and collaboration support, travel and expense (T&E) management, indirect procurement, and so on. Thus, ERM is most closely aligned with the HCM focus area of workforce management.
While traditional HR and payroll management may not seem to provide a significant competitive advantage in the same respect that the aforementioned emerging technologies do, some ERM systems, like Extensity or Apptricity, help reduce cost, simplify administration, and promote a more connected company-employee relationship. What customer relationship management (CRM) solutions do for customer intimacy, today's ERM packages (replete with employee self-service and manager self-service functions) do for employee intimacy—provide all concerned parties (executives, managers, employees, government, and so forth) with immediate access to a wide array of vital information.
SOURCE:http://www.technologyevaluation.com/research/articles/tactical-human-resources-evolves-into-strategic-human-capital-management-19578/
Part two of the series Thou Shalt Manage Human Capital Better.
In the early 2000s, with the economy in a downturn, HR administration delivered some organizational value by outsourcing an increasing number of HR business processes, either wholly or in part. In many cases, outsourcing to some trusted technology vendors that have already demonstrated their HR domain expertise may help companies achieve additional efficiencies and functionality, reduce head count, and cut costs.
Of the many solutions in the HR realm, the most predominantly outsourced have been payroll processing, employee assistance programs, payroll tax filing, and background screening. The most appealing and achievable benefits of outsourcing are streamlined operations, access to better HR capabilities and industry expertise (when it is not a core competency of the user enterprise), freeing up of internal staff, reduced labor costs, and accurate and predictable monthly costs.
However, the returns from layoffs (often undertaken without much thought to who should really go, potentially resulting in the hasty release of the lynchpins of the enterprise's ongoing performance) and relentless cost-cutting have proved to have only a limited (if not negative) effect. While some organizations have tried to cut labor costs to be competitive in their markets, the most progressive companies have embraced their labor forces and used them as a strategic differentiator.
As products and technologies become commoditized in this information-based economy, companies are beginning to realize that the best way to differentiate themselves and create long-term strategic advantages over their competitors might be through their people. It is no longer what one owns that counts, but rather what one knows, which is particularly critical in information technology (IT) and similar professional services organizations (PSOs), because it is the technical expertise and experience of knowledgeable staff that means the difference between success and failure.
In fact, according to Forrester Research, more than 85 percent of the market value of a typical Standard & Poor's (S&P) 500 company today is the result of intangible assets. For many companies, the bulk of these intangible assets is their people (or human capital), and such companies spend as much as two-thirds of their overall costs on labor. Thus, they should focus on business processes, using technology to more effectively manage employees and improve their productivity. Combining training, incentive management, and compensation management tools delivered through a role-based dashboard, emerging people-centric software category aims to transform each individual in the workforce into an enterprise asset.
Best-of-breed HR Technologies
The most progressive of companies have been using best-of-breed HR technologies for attracting, hiring, training, motivating, and managing their people. Software applications are becoming more and more sophisticated to help companies with these tasks, and as these solutions continue to evolve and communicate with one another, user companies will have a more seamless access to methods and data for managing their employees throughout the employee life cycle.
On the other hand, the laggard companies that do not embrace these technologies will likely fall behind in their quest for market dominance. For instance, by implementing a holistic employee performance management process across the enterprise, corporate strategy can be aligned (and properly communicated) with individual goals and objectives, whereby actual performance against those goals can have ramifications for individual compensation and rewards. This should drive behavior and attitude toward executing on the corporate strategy, with improved employee satisfaction and loyalty as a result.
This certainly comes in handy when the economic downturn ends, when employees begin to feel that they have more employment choices. Enterprises will again need clear, credible, and reliable strategic sourcing strategies and management in order to plan for and engage the competencies (people and companies) needed to accomplish their business strategy (by building the required effectiveness and increasing efficiency). For instance, with the economy improving and IT budgets rising, competition for IT talent—especially in key skill areas—is bound to intensify. At the same time, an improved hiring picture in IT will most likely mean higher turnover, as many unhappy IT staffers who saw workloads increase while compensation and benefits stagnated (during the economic downturn of the early 2000s) will put even more pressure on IT management.
Hence, there is a true need for much tighter integration between performance management and compensation (regardless of the economic milieu), so that exemplary employees can be rewarded more often (and feel truly special to the enterprise), as opposed to the outmoded, blanket-regulated, across-the-board annual basis (which typically produces mediocrity).
Analyzing the workforce and strategically managing the company's human capital has become the focus of human resource management systems (HRMS), as a way to transform these from dull functions to those that greatly affect corporate performance. Integrated business information warehouses, to that end, enable multidimensional analysis on information aggregated from internal and external resources (salary survey, for example), performance indicators (as in turnover), and views on strategic HR information with powerful drill-down features. Some surveys indicate that almost a third of businesses are already using data warehouses, a quarter of them are using workforce performance management or analytics, and one-eighth of them are using workforce planning.
Workforce analytics have become a core of talent management systems. This is because they focus not just on "time" (or who has clocked in and who has not), but also on such strategic business issues as overtime and turnover trends that impact a business's bottom line profit, equal employment opportunity (EEO) or ethnicity-based hiring trends, compensation patterns, relative recruitment effectiveness and sourcing costs, cost per hire, etc..
Human Capital Management
This brings us to the notion of human capital management (HCM), or talent management, which Gartner defines as a set of HR practices that focus on acquisition, management, and optimization of the enterprise workforce. These practices include such processes as competency and skills management, succession planning, and team management. The key tenet of HCM is that companies must change the mind-set of viewing employees as an administrative cost, and instead see them as a strategic investment and a key enterprise asset, with a resulting focus on aligning workforce capabilities with business strategy. This more strategic view of the workforce will gradually become less an HR function and more a management discipline.
HCM should be about value and not cost, since people should be regarded as value-adders, and not overheads and liability. It should measure organizational outputs (such as profit, revenue, and service levels) related to better management of people rather than focusing on input measures (such as recruitment costs) and the HR “best practices” of earlier days.
According to studies by the Brookings Institute, in the early 1980s, tangible assets amounted to over 60 percent of firms' total assets. This ratio has now been reversed, with over 80 percent of assets being intangible, most of which is represented by human capital. Yet, while decades have been spent investing in automation technologies for better use of tangible assets, only recently have enterprises begun to invest in optimizing human capital.
Moreover, many non-HR business processes can benefit from leveraging HCM strategies, such as project portfolio management (PPM) processes (see Project Portfolio Management for Service Organizations: Bridging the Gap between Project Management and Operations), which can be improved via incorporating competency and skills data and by leveraging the team management capabilities of HCM applications. Similar examples of business processes that should benefit from “picking the HCM brains” include production planning, job costing, scheduling, training, compliance, budgeting, and field service. In fact, any people-centric business process should benefit from integration to HCM, whereas traditional administrative HR applications and processes will hardly support this integration at all.
This leads us to a broader notion of employee relationship management (ERM), business-to-employee (B2E) management, or whatever the three-letter acronym (TLA) du jour might be (see BLM—Buzzword Lifecycle Management). In any case, these acronyms try to depict a business discipline that focuses on optimizing the employee's total employment experience—including both the human and technology aspects of that experience.
ERM espouses a comprehensive and unified view of the processes and technologies that support the workforce and their workplace, including manager-employee interactions, the formal business tasks required to manage employee relationships, and the technology used to manage the employee experience. To that end, ERM encompasses the full suite of B2E services needed by employees, managers, and others, including knowledge management, e-learning, self-services, community and collaboration support, travel and expense (T&E) management, indirect procurement, and so on. Thus, ERM is most closely aligned with the HCM focus area of workforce management.
While traditional HR and payroll management may not seem to provide a significant competitive advantage in the same respect that the aforementioned emerging technologies do, some ERM systems, like Extensity or Apptricity, help reduce cost, simplify administration, and promote a more connected company-employee relationship. What customer relationship management (CRM) solutions do for customer intimacy, today's ERM packages (replete with employee self-service and manager self-service functions) do for employee intimacy—provide all concerned parties (executives, managers, employees, government, and so forth) with immediate access to a wide array of vital information.
SOURCE:http://www.technologyevaluation.com/research/articles/tactical-human-resources-evolves-into-strategic-human-capital-management-19578/
Subscribe to:
Posts (Atom)
