| Integrated HR
Information Systems (HRIS) have a profound effect
on firms that implement them. Most often these
firms are replacing several related systems, such
as a personnel database, payroll system and benefits
system, with one HRIS that does it all. Many people
focus on the improved reporting and processing
that will be realized from the new system, and
those are the reasons most firms choose to implement
a new HRIS. But what many people don’t focus
on is that the new HRIS will most likely affect
the company much more deeply – it will challenge
the operating structure and principles of all
the HR-related departments.
An integrated HRIS results is a drastically different
environment than a cluster of related but separate
systems. The core concept of a centralized data
store inherent with an HRIS demands integrated
work processes for consistently managing that
store. The two attributes – centralized
data storage and integrated work processes –
will affect the company in ways most managers
don’t expect. Evaluating and Preparing For
a New HRIS:
Many companies go through a process of comparing
and evaluating several HRIS packages using a team
of analysts or managers from the various departments
affected – HR, Payroll, Benefits, Employee
Relations, Training and so on. As this team prepares
its evaluation criteria and reviews HRIS features,
much is learned about the goals and values of
the various departments. The HR department is
looking for improved reporting of employee data,
Payroll is concerned with the system’s paycheck
calculations and regulatory reporting, while Benefits
may be looking for a more streamlined enrollment
process. As this team drives deeper into the selection
criteria, the members learn more about each other
and may start to see the emergence of some really
messy business processes. It can be a bittersweet
process.
The hiring process is a good example. As a person
is recruited, hired and paid each department may
have its own specialized system and process for
managing the employee data. As the HRIS evaluation
team discovers redundant processing and data storage,
its members start to see ways to make the process
more efficient by aligning their part of the hiring
process with the requirements of the other departments.
The team members are excited to find a better
way to get the work done, but scared by the ramifications
of closer ties to other departments. They think:”If
we improve the efficiency of the process (have
HR enter the W-4 at the time of hire), we won’t
need as many people in our department (we won’t
need to key W-4s anymore), and we might lose control
of some piece of data that is critical to our
business function (how do we know that HR will
key the W-4 correctly?)”.
As the team evaluates an HRIS software package,
it begins to get a better grasp on what the entire
company’s business processes are, and therefore
what the company might require in an HRIS. The
team will most likely find that none of the packages
are an exact fit and that substantial effort is
required to modify or integrate the chosen HRIS.
Or if not enough due diligence and research have
been done, the team may be facing this effort
and not be aware of it. This gap in planning will
show itself later in the implementation phase
when the project team realizes there are not enough
resources – time, people and money –
to implement the HRIS.
Perhaps the most critical results of the HRIS
evaluation process are that the evaluation team
set correct expectations for the project and gain
executive management commitment. With correct,
or at least realistic expectations and an executive
management team that seriously supports the team’s
efforts, an HRIS implementation project has a
much greater chance to succeed. Most often the
HRIS evaluation team members spend most of their
efforts building selection criteria and choosing
an HRIS, instead of setting expectations and building
executive support.
The HRIS Implementation Project:
Configuring the New HRIS:
There are three primary activities in an HRIS
implementation – configuring the HRIS for
the firm’s business processes and policies,
interfacing data with other systems and converting
historical data into the HRIS, and preparing the
organization for the new HRIS. An HRIS comes with
built-in processes for most HR activities, but
firms will need to customize the system to process
according to their specific needs. For example,
every HRIS supports the process of benefits open
enrollment, but the system does not come delivered
with a firm’s specific benefit providers
and eligibility rules. Customizing the HRIS for
this typically does not involve programming; the
common activity is to enter specific data into
control tables that then direct how the HRIS operates.
The customizing or configuration tasks then become
a process of understanding the firm’s business
processes well enough to encode that logic into
the HRIS.
This mapping of business processes and policies
into system control tables requires people who
understand both the business process and the HRIS
– typically the existing IT support and
HR business analysts. Due to the large amount
of work, the HRIS project team usually needs these
analysts fully dedicated to the project, requiring
the ”home” departments to fill the
gaps in their absence. Having partially dedicated
team members may cause tension since the team
members have to maintain responsibilities at the
home department while also fulfilling responsibilities
on the project team. Either way, back-filling
resources becomes a big issue if not planned for
during the evaluation stage.
Firms may find that the internal resource people
assigned to the project do not have the skills
or capabilities needed for the job. Sometimes
training can resolve this, but other times the
people lack basic analytical skills required for
the implementation. One of the key requirements
for a person to be successful on an HRIS implementation
project is that he/she has excellent analysis
skills. The most analytical people in HR and IT
should be assigned to the project, or else the
company should rely on external resources (i.e.
contractors or consultants). The project can get
done this way – but the more an implementation
team relies on external resources the more difficult
it will be for the company to become self-sufficient
in ongoing HRIS support, maintenance, and operations.
Many HRIS implementations include, to one degree
or another, business process reengineering. As
a firm documents, investigates, and discovers
its true business processes, it’s natural
that the firm also takes time to improve them,
or at least integrate the processes across departments.
The integrated nature of most HRIS packages drives
this activity. When a process is reengineered
or integrated, once-independent departments become
much more dependent on each other. That dependency
can increase tensions on the project team as representatives
from those departments learn to trust others to
do their part of the process. Or, once the project
team members become comfortable with the new processes
they have designed, they may have a hard time
selling those changes back to their departments.
Most HRIS packages don’t handle exception
processing very well. As new business processes
are designed, the project team customizes the
HRIS around those new processes. Users will most
likely find that exception cases require significant
manual thought or labor to process – since
the exception does not fit into the business process
as implemented in the HRIS. HRIS project team
analysts will walk a fine line between generalization
of the process to fit exceptions vs. a more narrowed
implementation of the process to enforce data
integrity and accurate application of HR policy.
This is a great time to enforce some standards
and clean-up ”special deals” –
but HR managers and policymakers must be willing
to support these efforts, and to help implement
them.
Finally, as the project team analysts dig into
the current business processes, they may find
that the HR users, and sometimes managers, don’t
really understand or know the processes well.
Users may know what is done, but not why it is
done. Knowing the why part is critical to getting
the most out of your HRIS implementation. In most
every HRIS there are two or three technical methods
of implementing any given requirement –
knowing why something is done in a business process
helps ensure the project team analysts select
the best method of implementing it in the HRIS.
Linking the New HRIS with Other Systems:
Most HRIS project teams have a number of people
assigned to converting historical data from the
existing HR databases into the new HRIS, as well
as for interfacing the new HRIS with other systems
that rely on HR data. As this group starts mapping
historical data to the new system for conversion,
most often group members will find (particularly
when combining data from several existing systems
to go into one HRIS) that the existing HR data
contains a significant amount of invalid, incomplete,
or contradictory data. As the new HRIS was configured
for new, reengineered or streamlined business
processes, the existing employee data may not
fit well into the new system. The new HRIS will
demand more complete and accurate employee data.
Making sense of these data conversion problems
is a skill that falls to HR analysts, not the
programmers writing data-conversion routines.
Conversion and interfacing are not solely technical
activities – user consultation and input
are required. Many HRIS project teams discover
these requirements too late, thus increasing the
demand for time from HR analysts on the project
team – time that the analysts most likely
do not have.
If the firm has a data warehouse, the new HRIS
data will need to be mapped to it. If the data
model in the warehouse is based on the legacy
HR database, the two data models may not be compatible.
A lot of effort can be spent mapping the new HRIS
to an existing data warehouse. Or if the HRIS
vendor has its own data warehouse application,
the project team might be tempted to use it, but
they’ll still have to contend with converting
existing historical HR data into the new warehouse.
Either way, HRIS project teams spend more effort
than planned on this issue – the details
can get very tedious and time consuming.
Replacing HR systems involves any area of the
company that reads or relies on employee data.
New system implementation may highlight employee
data privacy issues, or increase the scope of
interfacing once the project team realizes just
how many systems read employee data from the current
HR-related databases.
Preparing the Organization:
Many times it is easier for project teams to focus
on technical aspects of the implementation, which
is ineffective. For example, configuring the HRIS
to correctly assign resident tax codes based on
the employee’s address is easier than getting
HR, benefits, payroll, and recruiting to buy into
and implement a reengineered hiring process. The
HRIS project team must track progress not only
on the technical aspects of implementing the HRIS,
but also on the softer side of managing the organization
as a whole to accept the new business processes
that come with the HRIS. Companies typically underestimate
this change-management effort. From the very beginning
there must be a focus on preparing the organization
and the employees for the new HRIS.
A new HRIS, with more integrated work processes,
tends to pull related departments together. Some
firms recognize this as they go through the implementation
process, and also implement a new organizational
structure with the HRIS roll-out. For example,
HR and Payroll may have reported to separate areas
of the company, and parts of HR business processes
were scattered throughout various departments.
But as a new HRIS is implemented, the previous
organizations are transformed to report to a single
authority, and a shared-services group is established
to perform the integrated work processes that
were once scattered. This is a common, but often
unexpected, result of HRIS implementations.
During the implementation phase, firms should
also be determining what their support model will
look like – what kind of organization will
be required to support this new HRIS? Those who
study this task in detail will realize they need
cross-functional support teams – containing
programmers (ABAP), configuration experts, and
business analysts – to successfully support
the new HRIS. But this integrated support team
does not fit well into the vertical departments
in most companies today. Finding a way to implement
this cross-functional team is a critical success
factor for the new HRIS’ ongoing operation.
All of the items mentioned so far force HR managers
to become involved in what is usually perceived
as an IT project. They may be accustomed to pushing
responsibility for such projects onto IT managers,
but implementing an integrated HRIS requires HR
manager participation and active involvement in
scoping, implementation, cutover, resourcing and
management.
Living With the New HRIS.
Changes in the HR User Community:
An integrated HRIS leads to more integrated reporting
of employee data, which can lead to efforts that
benefit the company. Better reporting of employee
costs, skills and requirements, time-keeping and
recording, etc. give senior managers information
that can be used to improve the application of
HR policy or to cut costs (i.e. reducing time-card
fraud, highlighting wasteful compensation practices,
etc.).
Most integrated HRIS packages are very sophisticated
in the functionality and processes they offer.
Compared to legacy, or screen-based/code-based
systems, the new HRIS requires a more analytical
user. The user cannot simply be trained to put
certain codes into certain fields -- he/she must
know the business process and how it relates to
the HRIS. In most companies, a certain portion
of users will be able to make this jump to”analytical”
thinking; others will not. The resulting shakeout
has to happen, and it is most often painful –
either for the employees themselves or for the
HRIS supports organization.
If a more centralized, integrated HR organization
doesn’t surface during the implementation
period, the organization will tend to evolve in
that direction. An integrated, centralized HRIS
tends to pull user departments together. Using
integrated work processes across departments that
do not operate under a common authority will highlight
data and process ownership issues. These issues
in turn get pushed up to HR managers or executive
management. Eventually, these managers resolve
the issues by increasing the integration of the
departments to match the processes. Either way
it happens – at implementation or via evolution
-- this level of organizational change is always
difficult.
Supporting the HRIS:
IT support analysts may be accustomed to, and
only skilled for, flat-file processing techniques.
Most HRIS packages rely on relational data models,
higher-level programming languages, and interactive
data management – presenting technical requirements
for which some IT analysts may not be ready.
The new HRIS may have proprietary languages or
facilities, requiring new IT skills. Often these
skills will be in high demand, driving a premium
rate of pay. Internal resources may opt to leave
the company for the higher pay, or they may demand
higher pay at the company. The higher pay might
be outside the HR guidelines for fair salary.
The resulting dilemma can create retention problems.
HR users – the analysts in HR, payroll and
benefits – must take a more active role
in ongoing support and system changes. Since business
rules are often coded into the HRIS instead of
resting in manual processes, the business analysts
are necessarily drawn into this activity. Some
firms may push this “business rule”
knowledge to their IT support analysts, or rely
on consultants who help with the implementation.
Although either of those scenarios can work, HR
business analysts and managers have the most to
lose if the HRIS does not process transactions
correctly. Placing HR analysts in system support
and change roles will help ensure that the HRIS
processes transactions correctly.
Some companies depend too much on consulting
firms or contractors to perform an implementation.
Many times this happens because the firm can pay
a consultant to do precisely what the firm wants
to do, which is often easier than getting internal
resources to do the same thing. It takes some
of the pain out of change management. This can
lead to a continued dependence on external resources
and might be acceptable for firms that have historically
relied on external resources. For others it may
generate substantial internal conflict in the
way of higher IT budgets or continued presence
of non-employees in the HRIS support organization.
Recommendations for Success:
Given all the things that often do go wrong with
HRIS implementations, what can be done to ensure
a smooth transition? There is no one solution,
no grand secret for avoiding all the problems.
As with most successful efforts, a successful
HRIS implementation requires participation and
commitment from all areas of the firm.
The first area from which to gain commitment is
the firm’s executive management –
the sponsors of the project. Given the level of
change such a project will create, there will
be areas that resist the implementation. Support
from executive management is invaluable for making
sure new business processes are implemented effectively,
for funding the project, and for ensuring appropriate
staffing on the project team. Without this support,
the payoff of the new HRIS will most likely be
compromised, and will cause disruptions in employee
service.
The executive managers should appoint a steering
committee containing stakeholders from all areas
affected by the HRIS (payroll, benefits, HR, IT,
employee relations, etc). This group should contain
members who can ensure that their line managers
have the necessary directives and responsibilities
for making the HRIS operational. The steering
committee should take an active role in resolving
broad issues and taking corrective actions if
the project gets off course. One of the most important
roles of the steering committee is that of “winning
the HR managers.” The steering committee
needs to ensure that managers fully understand
the impact of a new HRIS system, that they are
involved in the implementation, and that they
support the project with a positive attitude towards
change. This will not only set an example and
guideline for each committee member’s department,
but also prepare the ground for dealing with change-management
issues.
The steering committee should be responsible
for appointing a project manager or project management
team, as well as assuring that the project is
appropriately staffed. The project manager should
carry out team-building exercises for employees
who will have to work together, since many people
who will be assigned to the team may not have
experience operating in such an environment. The
HR analysts and the technical analysts must learn
how to work together to solve issues neither group
can solve alone – such as data conversion
and interfacing. HR analysts will become more
technical, and technical analysts will learn more
about HR.
The project planning process needs to include
not only the technical tasks but also the processes
and deadlines for change management tasks. The
project manager can get an indication of these
issues early in the project by comparing the goals
of the different stakeholders involved and identifying
all the inconsistencies.
For those HR analysts who are placed on the HRIS
project team, their managers need to be fully
aware of the analyst roles in the project. Managers
need to review and possibly redefine the roles
before, during and after the implementation. New
job descriptions may need to be prepared and managers
need to brief employees about any changes and
additional responsibilities. Managers also must
start back-filling the positions left by the analysts
to ensure their departments still run smoothly
and the analysts are not torn between working
in their departments vs. working on the HRIS project.
Not every person will be able to make the transition
to a new HRIS. Certain employees – payroll
clerks, benefits analysts, IT support, and even
managers -- may not want anything to do with the
new HRIS and the processes that come with it.
Instead of forcing them to make the transition,
it is often wiser to place them outside the HRIS-related
organization in roles appropriate for their skills.
A transition plan needs to be constructed, and
the steering committee must accept the fact that
there will be some turnover.
Likewise, employees who have demonstrated their
interest and ability to work with the new system
and who have gained substantial knowledge of it
should be offered an active system-support role
together with a promotion. This should motivate
other employees to follow their colleagues’
paths and will discourage internal system experts
leaving the company for a higher-paying consulting
job.
Training – technical and non-technical –
must be identified and performed to help people
make the transition to working with the new HRIS
and the new organization model. The training needs
to go beyond screen-prints and mouse-clicking
sequences to an explanation of how the new process
fits into the organization, its relationship to
other processes, and the execution steps in the
process. Employees will have to know the why as
well as the how of the process.
Formalized cross-functional support teams are
essential to the steady operation of the HRIS.
Firms can be successful by patching together an
informal organization of HR analysts and IT analysts,
but that loose-knit framework may not hold up
to the continued demands of HRIS support. A formalized,
co-located team of HR and IT analysts will be
most effective.
Many firms also find it useful to preserve the
steering committee past HRIS implementation and
into the productive life of the HRIS. The steering
committee is an excellent group to monitor the
ongoing quality of HRIS operations, manage relationships
with the HRIS vendor, and clear the path for later
HRIS upgrades or enhancements.
It may take years for a firm to adjust to a new
HRIS. As it does, most will see that their organizational
structure will tend to reflect the HRIS structure.
This is natural – managers for years have
organized their departments to fit the way work
is done, and the organizational culture often
reflects that structure. When the way that work
is done changes – and an HRIS will engender
that change – it’s natural for the
organization to change as well. Structural and
cultural changes might be painful, and people
will resist, but it’s hard to fight these
natural tendencies. Instead of fighting them,
managers need to be aware of what’s happening
and proactively prepare for this new world.
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