How to Determine which Technology best Supports your HCM Strategy (Part 1 – Common HCM Issues)

By David Braithwaite – Head of Technical Services.

Most organisations would agree that their people are their biggest asset, as well as their biggest line item cost; and it follows that managing this asset is critically important to the health and continuing success of their business.

However this logic does not always play out in practice. Even in today’s digital world, it’s not uncommon to see the HR department operating as just another business overhead typified by large teams of people doing manual transactional work. A modern HR department can and should do so much more, providing a value-added service that supports the business through providing accurate data, controlling costs, guaranteeing compliance with HR and Data Protection legislation, and making sure the organisation can identify, acquire, develop and retain the best talent.

This cannot be done without sound investment in the right HCM systems.

Over the years I’ve worked with a great many talented HR professionals in organisations undergoing this transition from overhead to value-add, and whatever stage your organisation is at with HR transformation, it’s likely there is room for improvement.

However the last few years have seen an explosion in the amount of choice available to enterprise IT customers, particularly with the rise of cloud computing, so it can be challenging to identify the right option for your organisation.

This blog will describe some of the different options available, and when they might be appropriate for you. It is intended for anyone who has a vested interest in shaping the HCM strategy for their organisation, particularly senior executives such as HR directors and CIOs.

Keys with Word HRM on Golden Label.

It is almost impossible to effectively support a 21st Century corporate strategy without effective HR systems, but in the current economic climate organisations are understandably cautious with investment. More than ever before, a solid business case is essential to secure project budget.

But before considering where to invest, it’s essential to have a clearly defined vision for your HR department, and to understand the HCM pain points that your organisation faces.

Of course all organisations will have certain issues that are unique, but there are a few that we see time and again, such as:

  • Overpayments to leavers

All too often, processes to notify HR and payroll that individuals have left the organisation are not robust enough to prevent those individuals being overpaid, and potentially leaving without returning company property. Retrieval of overpayments is notoriously difficult and time-consuming, and even with relatively small organisations, these costs can run into hundreds of thousands of pounds annually, amounting to pouring profit down the drain.

In theory, it should be possible to reduce overpayments to zero, by a combination of simplifying and automating the process for leaver notification, automating a feed to the payroll system to remove that individual from the payroll, and furthermore providing easy visibility of all current employees to management and employees alike, ensuring any oversights are glaringly obvious and easily rectified.

  • Management of Sickness Absence

If your organisation does not have a robust, systemised approach to managing sickness absence then it is almost certain you are incurring greater cost than you need to. Almost all organisations have a sickness policy in place, but often this policy is not consistently adhered to across the organisation, and managers are not supported with the right tools to capture sickness absence accurately, manage important events in the process (e.g. return-to-work interviews), and review sickness histories to identify problematic patterns.

With the right system in place, you can provide the requisite visibility and control to enable the business to enforce policy and effectively reduce costs.

In addition, analysis of sickness absences can improve efforts by the business to identify where any potential problems with sickness are occurring (e.g. a certain region where sickness absence due to stress-related illness is high), and take remedial action to look after the welfare of employees.

  • Employee Attrition

There are certain high-performing individuals within any organisation that efforts should be made to retain, and at times of restructuring it is more important than ever that key employees and high-performers are identified and retained while individuals that are not contributing as much are managed into more suitable roles, or potentially out of the business; this is the key to controlling costs while ensuring your restructured workforce is driven by your most-effective individuals.

A systematic approach to managing the employee lifecycle can greatly enhance the employee’s experience and perception of the organisation, while simultaneously ensuring that the business can identify, attract, develop and retain the best talent. This process starts with recruiting and on-boarding, and continues through setting goals and managing performance, compensation management, learning, succession and development.

The right Talent Management systems can help to retain your top performers, reducing costs associated with recruiting and upskilling, and ensuring that your workforce is of the highest quality.

  • Proliferation of Ad-hoc Systems

Typically one of the consequences of under-investment in HR systems is the propensity of individuals to build or buy their own point-solutions to manage data and processes that should be owned by the HR department. This could be as simple as a manager logging leave and other HR data in a spreadsheet, but often these systems come to be relied upon daily to support important business activities, without the infrastructure to ensure that these systems have the requisite high availability.

Organisations run considerable risk if they allow this situation to continue, both in terms of supporting ongoing business activities, and also ensuring legislation around HR compliance and Data Protection is adhered to. A concerted effort to remove and replace these systems helps to avoid fines and other penalties, including potential harm to the organisation’s reputation.

  • Transactional Focus of HR Team

Organisations that do not utilise HR systems such as Employee and Manager Self Service typically have a problem with the volume of transactional work that the HR team has to deal with. The HR team can easily become swamped with this work, and as well as being an unnecessary cost, this takes them away from the value-add activities that differentiate your organisation.

It’s essential to remove this transactional burden in order to transform your HR function.

Don’t forget to take a look at part 2 and part 3 of this blog, or contact us if you’d like to discuss which HCM system is best for you.

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