Redesigning the HR function: a guide to solutions you may be considering

Section four of the Personnel Today Management Resources one stop guide on redesigning the HR function, covering: identifying the right HR solution; the three main HR service delivery approaches; and technical terms. Other sections .

Use this section to Decide which HR solution is right for your organisation Understand the three main approaches to delivering HR services Look up technical terms

No two organisations will follow the same route when changing their HR function, so everyone reading this guide will have a different set of problems and be thinking of a different set of solutions. In this section we will take a look at some of the solutions and technologies available and will try to strip away any confusion surrounding each one.

As part of your thinking and planning stage, you will have looked at your business and thought about how HR's services contribute to this and how that could be improved. Having identified possible ways to improve HR services, think about how these changes could be implemented.

The flowchart in Figure 10 (based on a model developed by Watson Wyatt¹), illustrates some of the possibilities. You can use the flowchart as a sort of self-assessment tool to help decide how to best structure and deliver your HR services.

The first question to ask is whether the service is mandatory in some way. For example, is the activity needed for governance of the business, for ensuring compliance or financial responsibility? If so, this needs to be an activity managed within a central HR function.

Next, the apparently simple question about whether HR's customers need the activity or service. Many businesses have found they engage in activities that have no real purpose when looked at from a dispassionate customer view. The same is true for HR functions. It is not uncommon for activities to accumulate over the years because HR thinks they are necessary, but the business does not.

The next question is to consider whether the activity is fundamental to the success of the business. Is it one that drives revenue or creates a competitive advantage? If so, it needs to be given a structure that optimises this benefit. This might be centralisation, decentralisation or something else, and will reflect the requirements of the business for this service.

You can then look at the possibilities for routine HR administrative or other activities. If these can be done more cheaply and more effectively outside, they may be outsourced, run through a partnership or, in the case of IT systems, managed by an application service provider.

If outsourcing will not provide a cheaper and better service, the activities may be centralised in a formal shared service centre that focuses on delivering these activities and so can reduce costs and improve service through economies of scale. However, some activities and smaller organisations will not benefit from the economies of scale of a shared service centre and will find that their best choices are standardisation and automation. But bear in mind that centralising a non-strategic activity that cannot be automated should be avoided, as this tends to result in lower service quality than a more decentralised approach.

Whatever brave new world you look for, you will find it relies heavily on technology. This has traditionally been a barrier to HR staff, who often see themselves as 'people people' rather than 'computer people'. This is, of course, a defence based around the myth that one cannot be both.

The new reality is that there is a growing band of people who see themselves as professionals in both the HR and IT worlds, who are equally comfortable discussing appraisal procedures and server technologies. So if you do want to change the way HR operates in your organisation, you may need to make some personal changes in your attitudes to IT.

To do this we will first take a look at some potential strategies and explain how they work. Such explanations inevitably rely on some technical language and jargon, not all of it used consistently, so where this is necessary you can use the glossary at the end of this section.

Figure 11 shows you can consider the subject at four different levels, scope of HR, control within HR, management of HR organisation and technology strategy.

At the scope level we are looking at what the HR function is to be responsible for. For example, as discussed earlier; are internal communications dealt with by HR, marketing or IT; is pay managed by HR or finance; is training managed by the line? The broadest view on scope makes HR responsible for all aspects of the 'business to employee' relationship.

Once we are clear as to what HR is responsible for, the next key issue relates to the need for central versus local control. All HR functions recognise that some aspects of their activity must be managed locally. Sometimes, the policies and procedures may be standardised and maintained centrally, but delivered locally. Sometimes the whole activity is left to a local unit to manage.

Having decided on a strategy concerning HR scope and control, the next thing to consider is the structure through which this strategy will be delivered. These days the central question is whether and how much to outsource. We can distinguish three main approaches:

Shared service centres, centralised units dealing with the processing of routine and administrative HR activities, which can be internal or outsourced

Application service providers, businesses that provide the technology to support a particular process or set of processes (including providing a complete HR technology suite)

Business process outsourcing, where specific HR processes, including the required expert knowledge (for example pensions management), or the whole HR function is sub-contracted to an outside provider

Each of these is covered in more detail below.

At the final level we have the technology strategy. A key current question is whether you are going to stay with a 'traditional HR' approach, where HR staff are still responsible for managing and processing data in what is probably a largely paper-based system, though typically supported by some technology to store and report on the data. This approach may be supplemented by a call centre, to streamline the handling of employee enquiries. The alternative is e-HR, where technology allows users to carry out HR-related transactions. This can range from simple self service technology to a fully web-enabled people management system, where integrated databases combined with flowchart enable the execution of multiple, complex transactions.

These two are not mutually exclusive, as each has particular advantages in certain areas, and so in practice many organisations have implemented a hybrid system. A mixture of the two can arise in the use of call centres, where trained call centre operatives using e-HR technology to provide integrated service and flowchart may be the interface with the employee.

Most redesign projects are concerned with the core choices around the latter two levels of the model: how will HR be managed and what kind of technology access strategy will be employed to connect these arrangements to the users? Let us take a look at the main issues affecting the various choices in these two areas:

1.Outsourcing versus in-house, what this means, its benefits and drawbacks

shared service centres, how these work

application service providers, what these are

business process outsourcing, what this means.

2.E-HR versus traditional HR, benefits and drawbacks

call centres, telephone technology in HR

e-HR, desktop technology in HR.

Outsourcing versus in-house

The concept of outsourcing should need little explanation. Outsourcing is the process of sub-contracting to an external supplier. Reviews of business processes and the value chain have led many businesses to decide that it makes business sense to sub-contract non-core parts of the organisation to specialist external providers. HR, as a non-profit centre, is an obvious candidate for outsourcing.

There are many ways in which outsourcing HR can be done:

Business process outsourcing, where an external supplier manages discrete activities such as payroll administration or recruitment, or perhaps the whole HR function. The division of labour between tasks done by the client's staff and the outsourcing agency's staff varies

Shared service outsourcing, where the transactional (administrative) elements of all or some of HR's activities are sub-contracted to an external supplier. This may include outsourcing of some or all of the personal (phone) interface with the employee

Application (and facilities) service providers, who provide the technological (and physical) infrastructure to support HR activities.

These are discussed in more detail below. Figure 12 illustrates the difference between the shared service centre and business process outsourcing models.

Outsourcing substantive parts of key HR business processes to an external provider is a major decision, as while it may be cost-effective it introduces new elements of risk. Some issues to think about are:

Loss of control

The client inevitably loses some degree of control over the outsourced process. In the case of outsourcing HR, there will be some effect on the business to employee relationship.

Loss of flexibility

Internally-run processes are visible; people can see how well they run on a day-to-day basis. If the business changes, it is relatively easy to change the processes to suit. Outsourcing however, requires that the allocation of responsibilities between the client and provider is fixed in some manner within the service contract. Changes to this allocation to accommodate changes in the business will typically result in the provider charging additional fees.

Decisions about whether or not to outsource must therefore take into consideration how stable a process is, and how it may be affected by future changes in the business.

Failure to deliver the cost benefits

While businesses often decide to outsource because it is thought it will offer cost savings, the difficulties of achieving this are becoming increasingly obvious. While outsourcing may save initial set-up costs, the extra overheads incurred by the need to maintain close communication between the client and the outsourcing agency and to keep processes up-to-date mean operational costs can be higher than expected.

This becomes increasingly important as the client business becomes more complex, as defined by variables such as:

total number of employees

number of different payment arrangements

degree of unionisation

amount of regulatory control

use of bespoke as opposed to generic systems and processes

importance of legacy systems

complexity of operating processes

interrelationships between business divisions.

Legal or regulatory requirements

There may be legal or regulatory reasons why outsourcing is difficult or impossible.

Employment protection issues

There are significant legal and industrial relations issues to consider where outsourcing means the loss of jobs or where staff are to be transferred to the outsourcing organisation.

The importance of service level agreements

The operation of any outsourcing arrangement must be governed by a service level agreement (SLA). This will define the required standards of performance by both parties and any penalties for non-compliance. It should also define what flexibility in process redesign is possible throughout its life.

An SLA is a crucial document in any outsourcing arrangement, and must be negotiated with great care.

What is a shared service centre (ssc)?

A shared service centre (SSC) is an organisation (internal or external) that specialises in dealing with administrative functions. An SSC could process, in one place, all an organisation's functions such as payroll administration, processing of sales and purchase invoices, employee records, and so on. An internal shared service centre is an alternative to some forms of outsourcing.

Referring back to Figure 10, this shows HR being made up of a number of discrete activities, such as payroll, training and recruitment. Each of these operates at three different levels: strategy, policy and administration. In the business process outsourcing approach, the policy and administration of an activity are sub-contracted to an outside provider. Strategy is almost always kept within the client business. In the shared service centre approach, only the administration of the activities is allocated to a separate unit, which may be outsourced, but may be internal. The scope of the administrative activity outsourced typically includes some level of responsibility for direct employee contact, but may be limited to only back office functions (data processing).

SSCs can be internal or external. Concentrating all administrative functions in one centre does offer economies of scale and for organisations not wishing to outsource can be an attractive solution.

However, it can be financially attractive to outsource administration to an external SSC, and there has been much talk recently about outsourcing to SSCs in countries such as India where there are lower labour costs and highly educated workforces. In an age when many transactions are conducted electronically and paper documentation can be passed through high-speed scanners, there are few physical reasons why shared service centres must be situated locally.

There is also increasing interest in the idea of the virtual SSC. The whole idea of an SSC is to bring administrative tasks together in one place where economies of scale mean processing will be more efficient. However, another approach is to simplify, standardise and render electronic all administrative tasks. When this has been done, the physical location of the SSC, and indeed of its employees, becomes irrelevant. There is therefore no reason why the SSC employees cannot be globally distributed while electronically linked.

A major advantage of this virtual approach is that it simplifies language requirements. For example, a multinational business looking to set up an SSC in the UK would probably need to recruit people who can speak the daily (not necessarily the same as the business) languages of its various operating countries. This can be difficult in a 'linguaphobic' country such as the UK. In a virtual SSC, staff working in Spain would service Spanish-speaking employees, staff in Italy Italian speakers, and so on.

SSCs may be able to carry out all of an organisation's administrative functions, including the management of an e-HR system (described below). However, it is not necessary to implement e-HR in order to utilise an SSC, as employees' needs can be met by providing call centre services. In fact most organisations looking to streamline their HR operations implement a hybrid solution incorporating both limited e-HR and call centre systems.

Typical HR administration functions that an SSC will deal with include:

general administration of personal information

recruitment processing

compensation and benefits administration

training administration.

At a higher level, SSC can offer centralised support on specialist topics such as:

occupational health and safety

more specialist recruitment

relocation.

Studies² have suggested that the number of calls made to SSC depends largely on the number of services provided. The number of employees serviced is also significant, but it has been found that usage increases more significantly as the number of services provided rises, rather than as the number of employees increases. It is important to realise that increasing the number of services offered does not necessarily mean a corresponding increase in the number of centre staff needed. This is because technology, rather than people, can be used to provide answers to many services.

Is an SSC for you?

Tony Williams and Peter Reilly have suggested 10 questions that organisations considering the SSC approach should ask about themselves³:

1.Do you carry out all the proposed shared service activities yourself or outsource some or all?

2.What sort of contractual arrangement will you want?

3.If the SSC is to be internal, will it be operated by a subsidiary business?

4.Do you see internal shared services as a profit-making or not-for-profit service? This will clearly affect internal pricing policies, and is particularly important if you are looking at offshore centres where transfer pricing may be a sensitive political issue

5.Do you already link with any other organisations to share costs and expertise?

6.Are you planning to devolve any HR activities to line management, and if so, how will this relate to a shared service arrangement?

7.What role will technology play?

8.Where will the shared services be located?

9.How will this affect the number of people involved in your HR operation?

10.Will shared services employ generalists offering maximum flexibility, specialists or a mixture?

More information about SSCs

Here are some links that can tell you about some organisations' experiences with internal and external shared service centres:

http://www.accenture.net/xd/xd.asp?it=irweb&xd=locations%5cireland%5ccase_studies%5ceuropean_shared.xml, a centre set up in Ireland to handle the management consultancy's European administrative functions.

http://www.sharedfinancialservices.co.uk/pages/sharedfinancial.html, which looks at how the NHS has established SSCs in Leeds and Bristol to handle financial administration for NHS clients.

Benefits of the SSC approach

Consistency of standards

Implementing an SSC allows an organisation to standardise processes, and it can also expect a consistent service delivery level.

Economies of scale

Processing administrative functions on a larger scale allows for economies through being able to invest in common infrastructure and improved purchasing power. There are also economies of scale in knowledge, as service centre staff will potentially be dealing with a larger volume of transactions and so will learn to deal more competently with a larger number of problems.

Synergies of collaboration

Collaboration makes it more likely that best practice processes can be identified. SSCs with experience of working with other organisations can offer their own creative input to proposed organisational changes.

An alternative to expensive new technology

Some SSCs are being located in low cost areas where it may be cheaper to have large numbers of staff carrying out largely manual processes than to embark on a costly and often risky new technology implementation to automate those processes.

Drawbacks to the SSC

SSCs can suffer from the same drawbacks described above under outsourcing in general, namely a loss of control by the client, less flexibility in changing processes and so on.

Poor service quality

If the implementation of an SSC means your control over processes is weakened, there is always the danger of poor service quality. Indeed, a 2001 study by Andersen Consulting⁴ concluded that this was the biggest single risk identified by its research, particularly in instances where organisations had implemented an SSC primarily to reduce costs. In many cases, poor service quality had led to high levels of rework that resulted in operating costs being higher than before the implementation of the SSC.

A major contributor to poor service quality is the disaffection of staff: this is a major reason for ensuring all staff affected by change processes are supportive of what is happening.

Cost savings are less than expected

Many organisations have been disappointed by the level of cost savings actually achieved. For example, the Andersen Consulting studies found that while 58 per cent of organisations had planned for cost savings of at least 20 per cent, only 36 per cent actually achieved that. Twenty-eight per cent of organisations achieved actual savings of less than 10 per cent.

However, they do point out that many cost savings calculations do not take into account costs that would not be incurred in the future as a result of the SSC implementation, such as technological upgrades and ongoing training costs.

Longer payback periods than expected

The typical payback period for an SSC implementation is between two and four years. Of course, this is only a drawback if you are expecting something quicker, which was the case for many early implementers.

What is an application service provider (ASP)?

Using an ASP is another form of outsourcing where a third party takes responsibility for the HR technology. The essence of an ASP approach is that:

the client retains control over all direct contact with its staff

the ASP provides the hardware and software needed to run the system, loads the client's data into the system and connects to its network.

Note that ASPs are not confined to HR applications, as the approach can be used to manage any business function.

In daily life your users access the system just as if the servers were in the next room, even though in practice they could be a continent away. However, all HR service queries are dealt with by the client, not the ASP organisation.

A variation on this is hosting, where the client owns the software but has it hosted by a third party. This is equivalent to outsourcing the IT department's responsibilities for the software. If the HR department requires self-service, it is similarly possible to hire call centre facilities, which are staffed by the client's own people (as opposed to a call centre provider's staff, which would be a form of service outsourcing).

The ASP marketplace has grown considerably in the last few years to support the boom in e-HR, and is predicted to expand to a global market of $132bn by 2006⁵.

Benefits of ASPs

ASPs offer several benefits:

There is a lower financial outlay. Rather than invest a capital sum in the hardware and software needed, you can pay a fixed amount per month per employee. The ASP takes care of hardware and software upgrades and technical problems

You do not need to take on any dedicated IT staff to manage the system

Such a system can be set up quickly. Instead of the process taking months, it could take just weeks.

Drawbacks to ASPs

However, there are some disadvantages:

You become dependent on a third party. Before signing up with an ASP, thoroughly investigate their financial stability and develop a service level agreement that defines clearly what you expect them to do

Prices could go up unexpectedly. There is still a lot of jostling for position in the ASP race, with many providers offering unsustainably low prices to attract customers. This means that a few years down the track you could suddenly find your costs being increased.

Placing sensitive HR information into third party hands presents a security risk. The main risk is one from poor data security procedures in the ASP's facilities, rather than from interception of data in the connection to your network. Before selecting an ASP you should thoroughly investigate their procedures, looking at such things as:

-        safety and security of their servers

-        firewall protection and disaster recovery procedures

-        privacy of your data.

Business process outsourcing (BPO)

In business process outsourcing, a client looks for an external provider to manage a complete vertical business function, usually at policy and administrative levels. Such arrangements are not confined to HR, and other parts of a business, such as finance and administration can also be run through a BPO arrangement. It is a growing business: Forrester predicts that the BPO market will grow to $146bn by 2008⁶.

But while sub-contracting core processes to external providers may offer certain advantages, there are, in addition to those discussed above, drawbacks.

No single outsourcing company can meet all needs

Although (according to Forrester) there were at least 2,000 companies offering BPO services in 2003, there seem to be very few, if any, that can be relied on to provide all of a client business's outsourcing needs. This means your organisation could find itself sub-contracting to a number of different providers, each of which has its own culture and way of working.

Inflexibility of contracts

Suppliers may be unable or unwilling to change the way in which they do things to meet the changes in your own business.

Difficulties in assessing comparative performance

Many organisations have never really tried to assess how well internal processes perform, which makes it very difficult to decide whether carrying out the process externally would be any better.

Immaturity of the sector

BPO is a relatively new phenomenon, and is still trying to find business models that work and to develop the necessary expertise in its customers' business. It is a mistake to assume that BPO providers do not need any internal understanding of the way your business works.

The immaturity also means there will, in all probability, be a big shakeout in providers. Will one of the providers that disappears be the one running your HR processes?

Offshore outsourcing

Much of the dynamism in the BPO industry comes from countries such as India where the use of English as a language, a large source of highly educated people and lower labour costs means suppliers can be very competitive. But offshore outsourcing brings new issues:

political and economic predictability will be a consideration in some countries

data privacy and security will need to be compliant with requirements in your own country

negative publicity may surround your organisation's decision to shed domestic jobs in favour of going offshore

lack of sufficient country specific understanding may affect service quality or customer perceptions of service quality - thus exacerbating the change management challenge.

e-HR versus traditional HR

Years ago people walked into a shop, told the shopkeeper what they wanted and he filled their basket for them. Hard to believe. Now we walk into a shop and pick things off the shelves for ourselves.

We have lost the personal contact with the shopkeeper but the shopkeeper saves time and we have the opportunity to look at goods, read the lists of E-numbers, etc, and decide whether or not to buy them. To judge from the way this method has taken over our shopping lives, it has proved a complete success.

At its simplest level, e-HR works in the same way. Instead of our informing HR about a change in our circumstances or about something we need, we enter the request through an HR system. This processes the request automatically, cutting out the middle person.

As with self-service shopping, self-service HR has advantages and disadvantages. We have summarised some below. It is certainly true that many companies consider more efficient people-based arrangements (such as call centres) to be a more cost-effective and in some cases more service focused alternative to self-service HR technology. We consider some of the strengths and weaknesses of call centres separately below. The benefits of e-HR are, however, persuasive and ultimately companies are likely to adopt the technology, although possibly in some hybrid arrangement with call centres to provide a supporting efficient human interface as well.

We discuss the qualities of e-HR at the end of this section.

Benefits of self-service e-HR

Data quality can be higher

True, but only if self-service has been implemented properly and the required processes, skills and attitudes embedded. In organisations where individuals do not have the opportunity to check the records held about them, errors are common.

Administration costs are reduced

There is no longer any need for administrative staff to copy information from paper sources into the system, as it is entered at source by the employee.

Less paper needs to be processed

Self-service systems mean you no longer have to print, store and distribute paper forms.

Information becomes proactive

Instead of data sitting waiting to have things done to it, it can take on a life of its own. For example, systems can identify when a person's first aid qualification is due to expire and automatically trigger a reminder or book them on a course.

Easier compliance with the Data Protection Act

Self-service HR systems must integrate all the different sources of personal information held in an organisation. That means it is much easier for someone to find out what information the organisation does hold and to check that it is complying with the Data Protection Act.

Drawbacks of self-service HR

Systems can be harder to use than expected

Never underestimate how difficult people might find a system to use. Self-service HR may be the first time some employees have come face-to-screen with a computer, raising all sorts of potential difficulties.

Potential difficulties for those with disabilities

Some people may find screen-based systems difficult or even impossible to use.

Keeping data secure

Storing personal information on a networked computer means it is possible for it to leak out, accidentally or maliciously. Good security procedures are therefore vital.

Providing adequate access to the system

Not all employees in an organisation may have access to a terminal to use a self-service HR system. You may have to install new terminals in some parts of the business purely for people to use the system.

Call centres

Call centres are familiar to us as consumers of services provided by organisations such as financial service companies, utility companies, and even Government departments. Call centres for HR operations use the same principles by employing people to deal with HR queries over the telephone. They may be at the 'customer end' of a comprehensive HR SSC, or may simply be installed as an interface that can channel employee queries appropriately. How comprehensive the service is can vary, and it often complements some degree of e-HR functionality.

Benefits of call centre HR

Economies of scale

The benefits of a call centre are similar to the benefits of an SSC. Bringing staff together in a call centre can offer economies of scale for call handling, if personal contact with employees is considered an essential part of the SSC offering.

An alternative to self-service e-HR

A call centre may be essential if e-HR self-service technology cannot be used to handle most of the queries coming into an SSC. This arises in many companies where factory staff, mobile staff or staff working in field do not have access to a terminal (or laptop) but can usually find a phone.

Flexibility of services

Some call centre operations have staff working at different levels, with generalist staff dealing with the majority of simple calls and specialist staff available to deal with the small number of more complex cases.

Drawbacks of call centre HR

Staff turnover issues

As with many call centre operations, staff turnover can be significant. Frequently staff employed do not have a particular interest in HR, and it can be difficult to retrain existing HR staff as they may not find the shift to a call centre role compatible with their own professional development interests. Studies5 in the US have shown turnover rates for telephone staff varying between 15 and 50 per cent.

This of course has implications for training. It seems that the amount of training that SSCs provide for telephone staff can vary considerably, but there is an average of about 25 to 30 hours per year. Interestingly, the research quoted showed a negative correlation between the amount of training and the number of calls resolved: in other words, the less training provided, the higher number of calls resolved. This would seem to indicate a fundamental problem in the training being provided for such staff.

Lower service quality

Other drawbacks, in common with all call centres, include a possible drop in service quality owing to demoralised, poorly trained or uninterested staff. Given the role and importance of HR, companies need to carefully consider any arrangement that results in poor service quality.

What is e-HR?

E-HR can be defined as ". . .the strategic application of web-based technologies to HR-related systems. . ."⁷. The 'HR-related systems' part of this definition is clear enough, but what about 'web-based technologies'? What are these?

Web-based technologies are those that rely on the network protocol TCP. TCP is what allows data to be transferred throughout the internet and through local private networks. When an organisation's network uses TCP, web servers and browsers it is said to have an intranet.

Why is this significant? And so much more so than previous computer technologies?

Well, as people started to experiment with how to use the internet, they realised it would be useful to have ways of getting browsers to feed information into and extract information from databases. A number of different technologies appeared to make this easy to do, and it was only a short step to thinking about how to use the these new technologies to connect to existing databases, such as those within traditional HR information systems (HRIS).

The usefulness of traditional HRIS was severely restricted by their reliance on what is known as the client-server model. The database is the server and the data can only be extracted by the client, which is unique to each database and each supplier. This means data stored within one supplier's database cannot be accessed by another supplier's client. Licensing restrictions on installing clients also mean it is too expensive for organisations to provide everyone with a copy of the client application. Even if it were economically feasible, they are often fearsomely complicated to use and are all quite different, so someone who knows how to use one supplier's client would probably not be able to use another client without retraining.

The new internet database technologies turned this on its head. The client was replaced by the browser, which in its basic incarnation is familiar to most computer users. The HRIS supplier then designed the software so that the browser could be used to access and input information to and from the linked databases.

So regardless of the origin of the database, data can be extracted and mixed with data from other databases from completely different suppliers, making it possible to create useful information.

This may sound wonderful, but there are some potential complications. There are already a large number of different e-HR applications in the marketplace, some of which specialise in particular tasks and some of which are components within organisation-wide ERP systems. Here we enter an argument similar to the one about whether to buy best-of-breed separate speakers, amplifiers and CD players for a hi-fi system and hope that they all work together, or to buy an integrated unit. This is because while the small, specialised e-HR applications may offer more flexibility and better functionality, they may not necessarily work with other applications doing different tasks. At least with an ERP application you can feel fairly confident everything will work together, even though it is not quite what you wanted in terms of functionality.

However, as technology matures and standards develop, it is becoming increasingly possible to buy best-of-breed components that plug together seamlessly to form an integrated e-HR system.

As an added sophistication, such systems can be event-driven. This means the software constantly checks the databases to see if certain conditions are met, and if they are, anyone who is interested in the condition is informed. For example, some organisations are introducing real-time monitoring systems in learning management systems so that a training manager can be alerted when, for example, the 1,000th person passes a training course, or if the standards of performance in a training centre fall below a particular level. Or a manager could be alerted when a department's productivity falls below a certain level, and when this happens other data could be automatically pulled into a report, such as sickness levels or training activity within the department. This extra information could help discover the cause of the fall in productivity.

What can e-HR do?

E-HR is an umbrella term covering a wide range of specialised applications. These are often integrated and accessed by users through an HR portal, or gateway, essentially an HR home page.

Administration of personal information

Personal data can be entered and amended using a browser. Individuals therefore take on responsibility for maintaining their own data, which should lead to higher levels of data accuracy and cut the need for processing paper forms.

Compensation and benefits administration

Employees can review information about a wide variety of compensation and benefits issues:

pay, checking payslips, tax payments, and so on

expenses, completing and submitting expenses claims online

pension planning, looking at contributions and projections

healthcare schemes, reviewing and changing options

holidays, checking entitlement and applying for time off.

Automation has made it much easier to provide flexible total compensation packages. In these an individual's total package is made up of a combination of salary and benefits, such as life insurance, holiday entitlement and childcare provision, for example. People's needs change as their lifestyle changes and so as time goes by they may want to change how their total package is made up. Online systems make it much easier for people to play with the balance and think about the implications, and for the extremely complicated tax-related implications to be calculated.

Recruitment

The recruitment process can be managed online. Job openings are advertised on the intranet and the system can inform interested or qualified people about possibilities. Applications can be made using an online form, the individual's training and development records can be automatically pulled across and parts of the sifting and shortlisting process can be automated. Timescales for the recruitment process can be cut considerably. Systems can link in with training databases to show what training is available to support particular positions.

Time and attendance

Employees can check their attendance records online and may even clock in and out through the browser. Managers can access time and attendance information for employees, for example, reviewing absence patterns.

Performance management

The performance management cycle can be supported by integrated databases. Information on time and attendance, holidays, promotion possibilities, pay information and so on can be pulled into a single interface that can be used during an appraisal interview. Individuals can complete online questionnaires or skill tests that identify potential job opportunities or suggest appropriate training needs. 360-degree feedback processes can be managed automatically through intranet and e-mail systems.

Information management

People can register to receive information from in and outside the organisation about subjects of particular interest to them. Document management systems can make it easier to access internal information.

Internal surveys

It becomes much easier to run internal surveys, such as those for annual employee feedback. Paper distribution is eliminated and people's feedback is entered via their browser directly into databases where it can be processed.

Synchronous collaborative tools

People can work together online, using tools that allow them to communicate by voice, online chat methods (using keyboards), share applications and even scribble on shared whiteboards. Such tools even make it possible to record an entire meeting, so it can be replayed to confirm just who did agree to do something.

E-learning

Learning materials can be distributed over an intranet and people can take part in online classroom training using specialised collaborative software. Completion of learning materials can be recorded directly in a database and people can enquire as to what training is available.

Concierge systems

Need someone to go shopping for you? Forgotten to feed the cat? Want some flowers delivered? No problem, an online concierge system can accept requests from a large number of people and funnel them into a single providing organisation that can make these things happen, for a fee.

Why is e-HR significant?

You may at this stage wonder why this is so important. After all, systems providing these types of functionality have been available for some time. But e-HR provides a way of integrating separate systems, so they can interrogate and provide data to each other. Think about the example in Figure 13.

Consider the case of a qualified first aider. Each year they will need to complete refresher training. Such an activity calls for a considerable amount of data processing:

the individual must remember when their qualification expires

they need to find appropriate training and make a booking

they need to record their absence for the day on a training event

they need to claim expenses

the health and safety function needs to record who is qualified.

This has the potential to generate a huge paper chase, but with an integrated e-HR system everything can happen automatically:

the system identifies people whose qualification is due to expire and notifies them by e-mail, having identified potential training dates

the individual selects the training course they would like to attend and clicks on the 'submit' button

the course booking is automatically made and the attendance system records that the person will be away from work that day

when the person completes the day's training, their training record is automatically updated, a certificate is generated, the expiry date for the next year is entered into their online diary, an expenses claim form is sent by e-mail and the health and safety department receives confirmation that the person has re-qualified. Isn't technology wonderful?

What is an intranet?

There is often some confusion between the terms 'intranet' and 'network' so you may find this explanation useful.

A network is a general term describing a number of computers that are connected together. In order for them to be able to send data from one computer to another there has to be a standard way of encoding data that is sent and decoding data received. This is done by the use of a protocol, of which there are a large number of different ones, for example, NETBEUI, IPX, etc.

The internet is a particular type of network that uses a protocol called TCP (Transmission Control Protocol).

In the early 1990s it was realised that you could install TCP on an internal network so that you could use the software (browsers and web servers) that was then being developed for use of the publicly-available Internet. The term 'intranet' was introduced to distinguish such internal TCP-based networks from the internet.

Once TCP is available you then need to install a web server and browsers. The web server is a software application that receives requests from the network for specific data, finds the data and sends it back to the computer requesting the data. Users request and view the data through a browser, for example, Internet Explorer or Netscape Navigator. All the browser does is to convert the data received into a layout visible on screen.

Glossary of technical terms You may find this glossary helpful to explain some key terms used in discussions of e-HR systems.
browser	application such as Internet Explorer or Netscape Navigator on a computer linked to the Internet or intranet that displays web pages
client-server	network software where users' computers (the clients) contain software specially designed to connect to other software stored on a server
extranet	Section of an intranet that can be accessed by computers outside the internal network, typically by suppliers or customers
firewall	Hardware devices or software applications that are designed to filter data flowing in and out of an intranet. They are essential security precautions to prevent unauthorised access to a network
HRIS	Human Resources Information System, applications designed to assist the HR function within an organisation
HRMS	see HRIS
HTTP	Hypertext Transfer Protocol, a computer networking protocol used by browsers that allows them to translate data received into text and graphics on the screen
Internet	term generally used to describe the network of computers around the world linked together by telephone lines and network cables and using the TCP/IP protocol to exchange information
intranet	internal network within organisations or buildings using TCP/IP.
portal	web page that provides a user with access to a range of associated functions
protocol	a set of rules used for transmitting and receiving data
server	computer storing files holding information such as web pages or databases
TCP/IP	Transmission Control Protocol/Internet Protocol, a computer networking protocol (or language) that allows computers to send information to each other
thin client	a hardware configuration where all data processing is carried out on a server and the users' computers (the clients) contain the minimum amount of software needed to display the results of processing
URL	Universal Resource Locator, the address for every page on an intranet or the World Wide Web. This has two components: ·         the server name ·         the page name. For example, a URL could be 'intranet.acme.com/homepage'. The part of the URL before the '/', 'intranet.acme.com', is the name of the server while the name after the '/' (in this case 'homepage') is the file name of the particular page that the browser wants.
World Wide Web	one use of the Internet that allows the display of text and graphics using browsers and the Hypertext Transfer Protocol (HTTP).

Personnel Today Management Resources one stop guide on redesigning the HR function Section one: The argument for HR redesign Section two: The changing role of HR Section three: Making the change Section four: A guide to the solutions you may be considering Section five: Specifying requirements and selecting suppliers Section six: Building the business case Section seven: Summary