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Your Employee Matters


By October 1, 2010No Comments

A technological interface runs our financial, marketing, sales, and operations from beginning to end, using such programs as QuickBooks, Excel, Great Plains, GoldMine, ACT, Sales Force, and Daptiv.

Human resource operations also employ a variety of technology platforms for payroll, time and attendance, workforce planning and management, online recruiting, benefits administration, compliance management, performance management, compensation management, training management, enterprise resource planning, succession planning, and so forth. Human resources information systems (HRIS or HRMS) are consolidating these various HR disciplines. For years, large corporations have relied on firms such PeopleSoft, Oracle, UltiPro and others – while smaller companies work with such programs such as Sage/Abra, HR Office, People-Trak ADP, PayChex, and Ceridian. Today, companies with as few as 25 employees are evaluating the cost/benefit of employing HRIS systems.

The primary benefit of technology is the ability to reduce duplication of effort and inherent error by consolidation, analysis, storage, and reporting data. Payroll companies, insurers, and benefit providers will continue to offer human resource information platforms — PEOs, HROs and ASOs, as well as directly from vendors. Chances are you’ll be able to choose from a suite of integrated options.

Will the effort be worth it? In my experience, a lot can go wrong with these technologies. The payroll and time and attendance tie-in are especially important. Assuming all the bells and whistles work properly, the next question is “Who’s going to be excited about using the program?” Most HR people don’t run toward technology, they run away from it! It’s just not their thing. Although others will go along with it reluctantly in order to make their organization more efficient, they’ll tend to use technology programs at their lowest denominator. For example, most HRIS systems advertise how many different reports you can pull – sometimes hundreds or more. Chances are however, that most HR people don’t pull any reports and don’t use the program strategically. They tend to free up some time for open benefits enrollment and time keeping, but won’t help in hiring, managing, training, or compliance.

Suppose you’re a 100-person company considering a complete HRIS system that functions well and costs about $6-$10 per employee every month, for an annual total of $6,000 to $12,000 (plus set-up fees). Let’s say the program saves HR a month of time and the rest of the company another month combined – time spent on new hire paperwork, changing benefits, tracking vacation days, COBRA admin, etc. If the average employee is paid $50,000 then the “savings” is equal to two months at $4,000 each, for a total of $8,000. Compare these “savings” with the $6,000 to $12,000 price of the system, and you come out at close to a wash. That’s OK. Your system is tighter, with more effective information management, employee self service, etc. You might also justify this expense if it freed up HR to take on more strategic efforts, but is that what is happening?

I continue to believe that strategy trumps technology nearly every time. The poor hire of a $50,000/year employee dwarfs any savings an HRIS system can provide. Strategic thinking about how to attract and hire great employees is far more important than the technology interface you use for the hiring process. The strategy you use to retain employees has far greater significance than any report that you’ll generate about retention statistics. The future challenge of HRIS programs is to consolidate all aspects of HR without a glitch, while using them at a strategic level, not just as technological tool. This will require integration with strategic tools, content, and support (similar to what Members of HR that Works get!). In my experience, we’re not there yet.

Before the promise of new HR technologies traps you, be clear about the impact it can have on your organization. Determine exactly how much net time and money you’ll save, factor in the learning curve and data storage benefits. Then ask what strategic effort you will take on, given this freed up time!