In this contributed feature, Geoff Burch, General Manager, Global HRMS at Microsoft Business Solutions argues that HR IT investment plans can be compelling – but we must convince more than just our own HR department.
As companies hold IT spend steady, the internal battle to win budget and support for new systems is getting tougher. It would be easy for HR to not bother trying. Pressure to improve performance in areas such as sales, manufacturing, distribution and customer care gives each of those departments a cast-iron case for new technology deployment. Such distractions mean HR will have to argue its own case.
Be in no doubt, HR technology investment can deliver extraordinary returns – and it’s worth fighting for. Metrics prove that cutting staff turnover by 1 per cent per annum can save a 2000-person company over £200,000 per year. HR systems that raise overall staff efficiency by just 0.5 per cent (say by cutting about 10 minutes off every employee’s daily admin workload) can save £250,000 per year in salary costs. It’s not just big companies that can save, either (see box).
The challenge is proving it to the Board. Drawing on two decades of working in the HR and Payroll industry Microsoft Business Solutions has learned a lot of ways to make this work – and seen a fair number of companies get it wrong. We have just published a detailed investment case framework, some of which is perhaps worth me sharing here.
Not just a matter for the mighty
Even a 70-person organisation such as Borax Europe made immediate savings through implementing e-HR system. The European division of the world’s leading supplier of essential borate minerals deployed Microsoft Business Solutions’ Empower ePeople across its 70-strong organisation. Devolving traditional HR tasks to line managers and employees made an immediate £30,000 saving, with further substantial reductions to work-hours and associated costs seen later. Pamela Denny, human resources manager for Borax Europe explained, “When you take into account other HR tasks such as processing holiday requests, which can often amount to three or more per employee per year, these costs are absolutely astronomical for large organisations.”
It used to take HR personnel one hour to chase and key in employee details for a personal data update such as a change of address. If each employee averaged two changes to their personal data per year and that was multiplied by the number of employees in a company, it meant that a company like Borax Europe used to spend 140 work hours per year on such a task – or 700 hours over 5 years.
Ensuring investment has a purpose
A 2002 survey by Watson Wyatt found the most recognised business benefit of technology investment in HR is to allow HR to refocus on becoming a strategic business contributor. That may sound grand but it doesn’t help to build an investment case. Cutting through such talk is required. Neither do some other revelations in the survey help: goals such as reducing costs and increasing productivity (37 per cent each) are high on the list of objectives people cite.
Such goals are common to every business function – but when applied to HR can seem plain nasty. It can never just be about savings and working people harder – that can be done with whips and chains, without need for Windows and networks. The same study found that building ‘capability, service and productivity’ will lead eventually to financial savings. Here we tap into other goals beyond process efficiency and lower administration costs: matters such as better management information, better corporate and professional performance, greater shareholder value, higher staff morale, improved retention and opportunities such as the ability to develop flexible working practices. Defining and quantifying such goals can often trigger board-level commitment to HR IT investment.
Then there’s the ‘functionality’ reasons behind the project. Often companies leap into this next level and this distorts their ability to define the best project success criteria. Functions such as recruitment tracking, integrated personnel records, work-time and absence monitoring, training calendars, HR/payroll integration, management reporting, self-service, organisation-wide HR and benefits management end up dominating the specification.
The result is that organisations end up with a system to monitor absence, rather than a system to achieve productivity gains through reduced absenteeism.
Benchmark – and plan for trouble
For any business case the challenge is to create ‘key performance indicators’ (KPIs). It can be worth trying to align these with existing ones – familiar KPIs will resonate well at board level and a project that will boost those indicators is often an easier sell. Another point is that new KPIs you want to benchmark will have to be measured yourself from scratch – a task that should not be underestimated.
Unfortunately the performance of HR is often not a priority measurement versus, for example, sales. One director of research outlines that one of the reasons why HR mostly isn’t connected to business, is largely due to the tradition that organisations and line managers expect HR to carry out a conventional service delivery role. HR needs to set self-achievable measures agreed with the board and line managers as a platform for contribution.
Usually a workshop environment is a sensible way to get through this tricky stage. That way you can involve stakeholders in a series of meetings and identify early on the expectations, existing KPIs and potential conflicts you must consider.
Such ‘stakeholders’ include senior executives, budget holders, IT managers, line managers, employee representatives and owners of existing processes. Analyse the pros and cons of the project for each of them and identify problem areas. You must address negativity immediately and get people on side. Don’t assume people will use the system because you want them to.
There’s also a need for realism over when the system will go live, with time built in for contingent delays. Nikki Reed of Bevan Ashford Solicitors sums it up: “Implementation, customisation and development take time and money. Look at a three year period over which you will start to see the maximum benefit of the system upgrades. It’s a big task even for a small organisation and in order to get there, there is a lot of manual work to be done.”
Roddy Horton at Hyde Group stresses the importance of detailed planning: “Try to ensure minimum turnover of staff during the implementation; make sure the budget includes an adequate amount for training; visit some existing users within your industry; ensure that existing processes are consistent and well understood; and make sure you know exactly what you expect the new system to deliver and by when.”
Don’t forget your own team
One of the most obvious, yet easily ignored, priorities is to win over HR itself. David Peach, head of human resources in London at Skandinaviska Enskilda Banken (AB) explains: “Ensure buy-in of the HR team itself as there is no doubt that the team needs to be involved in the whole process. Teams get used to old systems and the way things were done in the past. Ensure once the system is implemented they see the benefits not the changes.”
In the end it’s about defining real impact areas and designing your technology to deliver improvements in them. Even the widest measurements can have a bottom-line metric. An IES survey among 650,000 employees of a major UK retailer across 100 stores showed that a one-point increase in employee commitment can generate an additional £200,000 of monthly sales per store. Over 100 stores, that’s £240m per year. According to the American Society for Training and Development, there is a direct relationship between training investment and Total Shareholder Return (TSR). In their study, an increase of around £500 in training spend per employee led to a 6-point improvement in the TSR rating, an aggregation of stock dividend.
You may have spent years having your IT department blind you with science. Now you can turn the tables and blind them with numbers.
