Redesigning the HR function: specifying requirements and selecting suppliers
Section five of the Personnel Today Management Resources one stop guide on redesigning the HR function, covering: specifying solutions; and using suppliers successfully. Other sections .
|
Use this section to Learn the seven steps to successful use of suppliers Know what information you need to specify solutions
|
Redesigning the HR function may involve choosing several service providers, be that technology, an ASP, or an outsourcer. These kinds of solutions for HR can be expensive, and represent an order of magnitude in difference from investments you have previously made. So to help you make the most of your budget, let's look at some guidelines. In summary:
know what you need
remember all your work streams
decide whether to rent or buy
choose the right type of technological solution
take care choosing suppliers, but not too much care
build a relationship with your suppliers
keep the responsibility for the project within HR.
Now consider these in more detail.
Know what you need
This may seem to be stating the obvious, but like many things represents what we say rather than what we do: our tendency is to develop a vague idea of what we need and then look to the suppliers to tell us exactly what we should get.
However, your decision about what to buy must come from what your business needs rather than from what suppliers can supply. As discussed in Section 3 , this means before you look at what the service offerings are and think: "that would be nice", you must have analysed your business requirements and defined clearly what the service should look like. However, you don't want to end up specifying some requirements that are very difficult to fulfil when another specification would meet your needs at lower cost. The best approach to solving this dilemma is to open an informal dialogue with a number of potential suppliers to share ideas and build a specification of achievable requirements.
Remember that most new HR technology is modular in nature so whether you are outsourcing or building a shared service centre, you can start with the basic functionality and add on more sophisticated modules, including self service modules, as you need them. This offers a lot of advantages:
initial investment is minimised
you have time to see how well the new systems work
people can learn new procedures bit by bit
technological teething problems are less likely to cause major problems.
It is worth noting that frustration with your existing system is often a poor reason for changing suppliers. While one survey, carried out for Watson Wyatt by one of the authors, reported that in 2002 42 per cent of organisations wished to change their HRIS, the problems driving this are frequently to do with poorly implemented business change rather than inadequate technology.
Remember all your work streams
In Section 3 we talked about how important it was to specify and select solutions to cover all aspects of your change process. As a reminder, these include:
the 'main event' (the change you are trying to achieve, be it outsourcing, shared service or HRIS implementation)
organisation and business process realignment
people skills and behaviour realignment
stakeholder and user attitude management
In a technological change process it is all too easy to spend the most effort and time on buying solutions for the main event (the technology, outsourcing or shared service change), and to under-invest in both time and money on the other work streams. In our estimation, 80 per cent of the effort budget (though perhaps not the external cost budget) should go on the three other work streams, but typically the effort budget is 80:20 the other way.
For example, consider systems training: it is common for the budget for training on new systems costing millions of pounds to be in the tens of thousands of pounds range.
Process change often only focuses on the processes directly affected by the changes being implemented. Typically, this results in widespread, post-implementation disruption as the broader implications of the change for existing work practices become clearer.
It is also common for much of the organisational change (such as changes to management structures and accountabilities) to be left until after system go-live. Training for these broader changes in role (for example, required changes in management style) is rarely considered until a year or so after implementation, and even training for more obvious role changes may be left until the very last minute.
Notwithstanding the fact that benefits are rarely delivered for some time after project go-live, vital investments in coaching, monitoring and behaviour development are rarely made, resulting in the current abysmal success record of most projects involving IT. Indeed, benefits delivery is rarely tracked, and as we know, ultimately only what gets measured gets done.
Make sure you have an adequate budget to secure whatever resources you need to support all of the work streams, not just the main event.
Decide whether to rent or buy
The decision whether to rent or buy comes down to whether you want your own systems running internally or whether some form of outsourcing is more attractive. As discussed in Section 4 , there are several different ways of outsourcing: you may look to the SSC model or decide to use an ASP.
To make your decision take into account your organisation's buying policies as well as the technical and security considerations previously mentioned.
Choose the right type of technological solution
The different types of technological solution available mean there are other questions to answer:
should we build our own bespoke solution on our intranet?
should we buy an off-the-shelf complete solution?
should we buy best-of-breed?
There are some advantages to designing your own intranet-based HR system:
you get exactly what you want
it takes into account the technical idiosyncrasies of your network.
However, you should also realise that:
you may run into unexpected technological difficulties
this is likely to be the most expensive solution.
The alternative is to buy off-the-shelf solutions, but again you have a decision to make. You might want to buy a completely integrated HR package, for example, one of those offered as an add-on to an Enterprise Resource Planning system. Making this decision should mean your systems integrate seamlessly, but you may have to compromise on functionality.
The other off-the-shelf route is to buy individual modules that offer the functionality you need and then integrate them. However, this may prove more complex than suppliers say, although technology is moving to enable the best of breed approach for some activities. Some suppliers have developed standard specifications for a complete package within which systems designers can develop specialised modules. This could be made up of modules developed by different suppliers, which all work together seamlessly. You choose which of the competing modules offers the exact functionality you need, in the confidence that they will all work together.
Take the right amount of care in choosing suppliers
While it is important to choose the best, most cost-effective supplier, remember that when it comes to outsourcing, ASPs or HRIS, functionality can be broadly similar while cost may be a highly variable, negotiable item. Apart from a few show-stopper items that may be important to your business, you do not need to spend hours agonising over subtle differences in functionality between systems and suppliers. However, be clear about the broader issue of 'fit' between your business and the supplier. Time invested prior to selection in dialogue and testing rather than exchanging detailed requests for proposal and equally detailed supplier responses is likely to be more useful.
Remember that many software suppliers have demonstration versions of their applications available on the internet. This can provide a quick and easy way of getting a first impression of what might work for you. You can find some links to potential software suppliers' sites at the following:
www.softwaresource.co.uk/ (managed by the CIPD)
www.hr-guide.com/
Ask these questions to help make a decision about a supplier.
Can they deliver what I want?
Does the team you have been assigned understand all aspects of the service and technology they are selling? The service may be excellent in principle, but if the implementation team is not, you won't get a good result. Do you get the feeling they really understand your business issues? You will probably feel more comfortable in dealing with someone who has a real HR background rather than whose experience is in IT systems.
However, the main issue is whether they can help translate your business requirements into a cost-effective service solution that recognises the broader strategic requirements of your business. Ask the supplier if you can see an example of their service similar to what you need in operation in one of their customers' premises. That will give you the opportunity to see how well it works and ask users for their views of the supplier. Bear in mind, however, that many post-implementation problems are caused by under-investment in the business change (see Section 3 ), rather than deficiencies in the service or technical implementation of that service.
Do I like them?
Once you invest in a particular supplier you are committed to spending several years in a relationship, so it would be good to like them. This is more likely if they seem to be a similar company to yours, in terms of size, ownership, working atmosphere, and so on.
Are they used to dealing with clients like me?
Ask for a client list. See if the organisations on it are similar to yours. Suppliers who specialise in working with blue-chip companies may find it difficult to work effectively with smaller enterprises.
Some suppliers run user groups. Find out about these and see if you can attend a meeting.
Ask the supplier if they can give you a list of former clients. Talk to them, find out why they are former and not current.
Are they pricing appropriately?
Suppliers whose products are out of your budget can be crossed off the list immediately. However, be careful about suppliers who seem very cheap:
Are they offering what you really need? Do they understand your request? Do you understand what they are offering? Be sure you are comparing apples with apples
Are they offering an unrealistically low price just to get your business? If so, you may find costs for support and upgrading rise dramatically after a year or so.
Does the service fit with our broader business architecture, culture and strategy?
Your IT department may not be able to support certain types of technology. Your business may be unwilling to work with certain types of third parties. Your culture may not accept certain styles of doing business. Assess all these aspects prior to any selection.
What sort of after-sales support do they offer?
What kind of service level agreement do they offer? How quickly will people come to investigate problems? Is support by telephone or e-mail? Ring their customer service number a few times to see how quickly they answer and what sort of response you get.
Build a relationship with your suppliers
Once you have decided on a supplier, it is very important to develop a healthy working relationship in preparation for implementation. The best way is to begin to work closely together even prior to formal contracting and implementation. Consider doing the following:
nominating a project manager from your own company to oversee the project
establishing project management routines, including setting up of a regular project management meeting
closely integrating all project work streams (see Section 3 .) whether or not they are resourced internally or by third parties
joint implementation planning
joint business case preparation for presentation and final approval.
Keep the responsibility for the project within HR
Implementing new HR solutions is a business change project, not an IT project. It is very important to make sure that you in HR maintain complete ownership of and responsibility for your project from the start. This may pose skill problems for some HR departments, who lack the project management skills and technology literacy to manage large-scale change projects of the kind we have been considering. In our view it is essential that this be solved in a manner that retains control within HR. Consider doing one of the following:
find a suitably senior HR person with business and people change skills, who you then support with an internally or externally sourced project manager with IT understanding
hire an HR contractor to work for you with all the requisite project, technology and change skills and subordinate them to a competent, senior HR manager who has overall control of the project
find a competent HR staff member who wants to acquire the relevant skills, support them with some external resources as appropriate, and put them under the overall guidance of a senior HR person who is personally committed to the success of the project
recruit the person you need, recognising that HR change of this kind is set to be a feature of HR departments for some time to come.
|
Key points for specifying solutions Know what you need
Remember all your work streams
Decide whether to rent or buy
Choose the right type of technology solution
Choose suppliers with care
Build a relationship with your suppliers
Make this an HR project, not an IT project |
References
1Adapted from Cathy Veinbachs & Watson Wyatt (2001), Going Global: Aligning Processes and HR Systems for a Global Organization, IHRIM Webinar, February 27, 2001.
2Watson Wyatt (2000), HR Service Center Benchmark Survey, USA, February/March 2000.
3Williams, T., & Reilly, P. (2003), How to get the best value from HR: The Shared Services Option, London: Gower.
4Andersen Consulting/Akris.com, (2001), Shared services centres extend their reach, Andersen Consulting
5Attributed to Ovum, quoted at www.tmcnet.com/casp/stats.htm
6Forrester, (2003), BPO's Fragmented Future, www.forrester.com/ER/Research /Report/Summary/0,1338,16620,00.html
7Hopkins,
B., & Markham, J. (2003), e-HR: Using intranets to improve the
effectiveness of your people, London: Gower.
|
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
|
