The Future of HR Technology

About 8 years ago I presented a paper on what HR technology would have to support over the following 10 years ~ with great excitement I developed 5 critical areas that would be critical to HR’s survival, and to a large extent most of those did materialise (The only one that did’nt was my view that smart-card technology would play a bigger part in HR systems), nevertheless the point I am making is that the HR technology future was pretty clear back then because 10 years ago it was about optimising the operational side on HR technology. Back then Peoplesoft was the ERP system and was a leader in the field, with SAP and Oracle trailing in the dust. They eventually all caught up and are pretty much on an equal footing now. These systems as well as other great standalone HR/Payroll tools did help reposition HR to become excellent administrators (granted many system implementation were flops ~ but that’s a people issue).But with the current hype to improve HR’s value contribution to the business and reposition itself as a strategic player, I find myself contemplating the role that HR software will play in achieving this. What will HR systems need to support over the next 8-10 years.Of course the short term (2 years) improvement areas are pretty obvious, things such as more robust Talent Management tools, improved and integrated Strategic Workforce Planning tools, integration of Enterprise 2.0 tools to facilitate networking and more sophisticated Outsourcing components off the back of your own HR software (eg. plugging your SAP system onto a payroll outsourcer payroll engine.To a large extent though, these short term improvements are really more of the same ~ all of the reputable HR systems have to some extent components of these requirements (except Web 2.0), and will continually enhance them over time to suite their customer demands. But surely there must be be something more fundamental required to support a Strategic HR department, something beyond simply saying we will provide more sophisticated reporting, (slice-and-dice , drill down etc), because these sort of things may help, but won’t make a significant change.Understanding the strategic HR department of the future, may give some insight into the tools they will need. The Strategic HR department of the future will be less focused on the administration of people (in fact I foresee that HR admin will be removed from HR departments of the future to form part of a combined HR/Finance/other call centre and shared services team) and will focus on being a measurable component of the success (or failure) of an organisation. The CEO will want to know what % the HR department is contributing to shareholder value in a clear and unambiguous manner ~ just as he does of other departments. In order to achieve this, HR will need to become far more clear about how to measure their contributions and will definitely need a different level of sophistication in its tools to achieve this. No longer will a CEO accept that training turnout was 98%, unapproved absence was down to 2%, turnover was stable at 15% and so on, because these measures are meaningless and open to hours of useless debate about their relevance. No in future HR will need to be accountable to absolute specifics ~ The CEO will make (for example) HR accountable for 3 of the 16% growth in net profit over the next 2 years, accountable for 10% of the savings required from marginal operations and 18% for the effectiveness of the next M&A.

A few gasps of air, I hear being taken by concerned HR directors…. but here is the deal, you cannot be a strategic playing in today’s organisations without being accountable for the success (or failure) of the organisation. HR cannot be the fence sitter or referee anymore if they claim to want a strategic status.

Anyway back to the point on HRIS ~ HR will need a new set of tools that allow it to cascade a business strategy more eloquently into an HR strategy that is measurable, it goes beyond a balanced score-card, its lends itself to a new level of sophistication.

More to follow, but your thoughts are welcome.

HR finds itself at a cross-road (Again!)

For the last year or so the buzzword in HR circles is “HR Transformation”, but it got me thinking that this is not a new phenomenon in HR, we have always been telling ourselves that we need to change, adapt-or-die, become more business focused ~ well perhaps not “always”,but at least for the last 15 years of my HR career. So why is it that every now and again HR becomes a key focus in organisations and discussions around adding more HR value become the flavour of the year? More importantly though, do HR departments actually live up to these “periodic expectations” or do they simply spend so much time deciding what needs to happen that the organisation eventually shifts focus and finds other ways to deal with the HR issues.

Wow! what a cynical view, and that coming from an HR professional. Perhaps, but I don’t think I will have to much difficulty proving this either. So why is it that HR seems so reactive and unable to garner the  respect of a finance department ~ HR is a recognised profession and has professional bodies similar to Chartered Accountants, HR has created Shared services centres similar to Finance service centres, HR (often) has a seat at the board, so why then is HR is such disarray? – ah well , enough for now, answers will follow in further posts, and your views will be greatly appreaciated

Human Resources Management Systems – Have they added any Value?

[Rob Scott]

Sixteen years ago, I was slaving away with the implementation of a Human Resources Information System – it was great, this new tool was going to add enormous value to the ailing HR department. We would be able to extract information quickly, make decisions decisively and spur the organisation to greater heights – everyone would hail the HR department as a value-adding component of the business.

How wrong we were!  Nothing really changed. We still argued why information was not correct, why we couldn’t get the reports out that we really needed, we still used spreadsheets to plan and calculate salary increases, and management still believed that the payroll system was still the source of all accuracy.

Human Resource departments were the Change Leadership custodians – surely we would understand that roles needed to change, people re-oriented and trained to utilize the new HR system. That didn’t work either; instead we saw the emergence of HR system super-users – who ended up extracting information on request for  “I-don’t-know-how-to” HR staff.

More than a decade later, having been involved in many more HR system implementations including the
illustrious “Best-Of Breeds” and ERP systems, I am compelled to ask whether the situation has changed significantly from those trail blazing days gone by. The HR systems certainly changed – they became technically more powerful, graphically pleasing, table driven in design and functionally integrated, not to mention web enabled and providing unlimited accessibility options. But have these HR tools added any real value to organisations besides making the HR department administratively more efficient and providing a reason for their existence? – The answer is in most cases a definite no.

In a recent article in the Business day, the CEO of Dimension Data was quoted as saying that HR departments have no place in his organisations and it was the first thing to go when they acquired new companies. Why would a CEO of a high-tech company, that makes its’ money from technology make such a statement? – Simple, HR is not adding to the bottom line, and you don’t need an HR department to run an administrative system.

Herein lies the answer to why HR systems have not added any real value – Human Resources systems have been acquired and moulded around administrative activities such as ensuring accurate personal and job data, staff development activities such as career planning and training adminstration, time collection, labour relations data collection, benefit and leave management, health and safety data and so the list goes on. The focus has been on ensuring that information is collected timeously at the point of activity, and that the data is accurate. With accurate data on hand, the HR department is able to extract accurate reports, deliver on all the statutory requirements and aggregate information into apparently useful statistical and trend reports.

No one will repudiate that this information is important, but surely these outputs are far from the expected return on investment from a HR information system, which can run into millions of Rands to purchase and implement.

Most HR software vendors sell their product on its’ functional strength, claiming that their product offers “Best operating practices”, is “Best-of-Breed” or use some other catchy phrase to attract their customers. The reality is that most of the more reputable HR systems offer similar functionality and content, and if the function is not available now, it will be in the next release. The vendors selling approach endorses the functional approach to Human Resources Management with the underlying view that using all the functional abilities of the system, real value will be added to the organisation.

Human Resource Management Systems mirror HR effectiveness in organisations. If HR staff members are not offering real value to their customers, then the HR system will not become the value-adding tool so many HR departments expect. It is only when HR functions become part of a “Hire-to-Retire” business process, move away from their functional silo mindset and can prove their value add through suitable business measurements will an HR system provide substantial benefits to the organisation.

The HR fraternity has traditionally considered their customers to be the employees of their organisations, but as organisations expand vertically and horizontally, connect to other organisations through e-business mechanisms, so HR functions across organisations need to “connect” with each other. HR Management needs to challenge their own paradigms and boundaries to keep pace with the value-add expectation of their function. Future HR boundaries will include competitors, traditional external customers and the all-important employee.

The low value-add delivery of most HR systems in organisations reflects the paradigm that HR departments are stuck in. Unless organisations are prepared to shake up their HR views, their valuable Human Resources system will continue to add no real value.

But here is the really interesting thing. I wrote this article 4 years ago for ITWeb, and my perception of many HR department system usage has not changed significantly from then – there has to be a huge opportunity out there to fix this situation and help HR to add real value.