Getting greater return from e-HR investment

Although the use of electronic HR has expanded in recent years, most employers are still failing to exploit its full strategic potential, argues Steve Foster of Northgate HR.

e-HR ("electronic HR") is a simple idea that fundamentally changes the way employees interact with HR services. Using a standard internet connection, employees can perform HR tasks at any time, with access to the data and processes that are relevant to them. A typical e-HR self-service system enables employees to view and update information, such as personal records, holiday requests and absences - and in some cases online payslips are available. More sophisticated services include web expenses, which dramatically simplify the claims process, reduce costs and make employees more productive; booking training places online; and access to standard forms. But although the use of e-HR has expanded in the past two to three years, most organisations focus on basic administration, failing to exploit the true strategic potential of their technology investment.

Perhaps the most powerful applications for e-HR are the tools that give managers better control of their business. For example, online performance management systems can speed up the process and improve the quality of appraisals, enabling managers to focus on what's important. Absence management systems give managers an insight into patterns and trends and support programmes to improve attendance. Likewise, online timesheets reduce administration and errors.

Good data represent an essential planning tool, yet, organisations often lack the basic information needed to plan for the medium and long term. As well as basic employee statistics (how many people, where they are, grades, pay), strategy formulation requires rich data about employee skills, competencies and performance, all of which can be captured in an HR system. The business intelligence component of HR technology is therefore critical and system design should ensure that underlying processes generate the data needed to support strategic planning.

Another area is the use of key performance indicators (KPIs). The Department of Trade and Industry's Accounting for People and other initiatives are raising awareness of the need for timely, reliable HR information - and technology will become increasingly central to this process. The latest software enables KPIs to be easily captured and presented to managers at their desks using electronic dashboards, exception reporting and balanced scorecards. Using technology to create and measure KPIs forces HR to think strategically and focus on the areas where it can make a difference.

A key HR role is to ensure that the organisation has a steady stream of motivated, committed, high-performing talent. Many organisations are now extending their e-HR technologies to include web recruitment (internal and external), to provide applicants with job and company data and promote the organisation as a good employer. This can reduce the recruitment cycle (some report reductions of 30-50% in time to fill vacancies) and create better relationships with applicants.

Flexible benefits programmes are increasingly popular and can deliver major cost savings. Many would now consider it impossible to deliver flexible benefits without the use of technology, not just for administrative purposes, but as a way of embedding the scheme in the culture of the organisation and reinforcing values. Once a basic e-HR infrastructure is in place, new initiatives such as e-learning can be put in place, linking performance management processes to individual development. Finally e-HR can deliver company communications direct to employee desks via the intranet, in the form of corporate announcements or even streamed video bringing the latest news. Some adopters believe that the use of employee self service has brought about a change in the employment relationship from "parent-child" to "adult-adult" by simplifying communications channels and improving trust.

Moving to e-HR can help HR improve administration processes, but just getting the administration right will not automatically lead to a strategically focused HR function. Getting better ROI involves looking beyond administrative applications and seeking out opportunities to improve employee performance and support management. Anything is possible - the only limit to the use of technology in HR is an inability to connect what technology can offer to what the business needs.