E – HR & HRIT As the New Strategies For The Human Resources In The 21st Century
This article is based on a review and summary of five leading research (reports) produced by thought leaders about the evolving role of HR, and how forward thinking, strategically orientated HR professionals are increasingly adopting E- HR Strategies.
Never before has the pressure on people management professionals been more intense. A dramatic change in the employment law arena is forcing Human Resources (HR) to transform its own operations, and its strategic role in contributing to the success of business of all size.
Today’s business environment along with the increasing importance of technology require smart thinking, quick action and rapid adaptation to constantly changing conditions. The marketplace increasingly rewards those who respond to the demand for innovation driven by the Web and Internet, technology advances, globalization, skills shortages, and shifting demographics. This new business landscape means leaving behind old ways of thinking and doing. Consequently, HR practitioners are adding a new, technology focused dimension to their more traditional roles as HR experts, business partners, employee advocates, change agents and human resources management leaders.
2. Technology as an E-HR enabler
E - HR refers to the broad access to human resources data, tools and transactions available directly on the web in most workplaces today. It describes the "net effect" of the explosion in web technologies and the dramatic impact this growth has had on the way employees now receive employment-related information through integrated self-service applications. It also includes the variety of new technologies available that help connect multiple systems, tools and databases, both inside and outside organizations" (Watson Wyatt Research Report - The Net Effect).
Much has been written in the past about HR acting as a strategic partner. HR leaders have been told repeatedly that they must earn a "seat at the table" with top management in order to play a significant role in the development of organizational strategies and business success. But, while many HR leaders have become active participants in strategy sessions occurring in boardrooms around the world, they are continually hindered by the need to think and act strategically, while still overseeing the time-consuming administrative aspects of day-to-day HR.
It is clear that HR must find a way to relieve itself of administrative burdens (without abdicating their administrative role) in order to maximize its contribution to business strategy.
Technological change is a key driver for HR transformation, providing the foundation to support HR’s growing strategic focus. In particular, Web and Internet technologies have already given workers direct access to each other, to HR, and to business information with such ease and intelligence that every worker can contribute more directly to business results.
Although great strides have been made in recent years to use technology to simplify HR, technology until now offered only partial solutions to HR’s challenges. Consider the employee self-service model that evolved throughout the 1990’s. Developed in part due to employee and manager complaints about the impersonal and inefficient services offered by outsource solutions of the early 1990’s, self-service has proven to be extraordinarily popular.
A recent research report on E-HR people management strategies is associated with a nearly 6.5 percent increase in a company’s market value. E - HR helps maximize a company’s progress toward a knowledge economy and increased shareholder value.
3. Small and medium sized business realities
One of the biggest sources of frustration for small and medium sized business has been the inability to easily and cheaply use electronic technologies to better manage their business resources. Enterprise Resource Planning (ERP) solutions that rely on expensive mainframes, and high-level programming skills are simply unaffordable by HR functions in small and medium business.
Human resource functions have struggled for well over a decade to shift their focus from administration to more strategic contributions. From interactive voice response systems and multimedia kiosks to implementing an enterprise- wide HR/payroll system, people management professionals in large organizations have invested heavily in reducing the administrative load on HR. Until recently, costs were high and progress was slow.
The sudden explosion in Internet technology, however, has dramatically accelerated the transition to a more strategically orientated HR function. New resources are appearing that enable today’s employees and managers in any sized company to complete HR- and benefits-related transactions on their own. E - HR liberates human resources from its administrative shackles and provides the foundation for a collegial, flexible workplace where employees have easy access to communication tools.
In the meantime, the general comfort level using the web has increased so steadily that it has become the preferred media in the workplace — making the introduction of E - HR a relatively ‘painless’ and cost efficient welcome event in almost any organization.
The use of Internet and Web technology has also liberated management to re-assume its abdicated role of day-to-day people management without the endless wait for HR to eventually process requests for information, and/or provide vital reporting information needed to make swift people management decisions. Hopefully this will lead to the ‘extinction’ of the old type of HR practitioner who publicly proclaim the need to outsource HR Administration because it is too complex and arduous to handle in-house. The ‘smart’ thing to do would be to invest in upskilling line managers with the ability to use the new HR technologies to take on their strategic HR role, and to outsource non value-adding HR Administration.
4. Getting from here to there
To successfully make the transition from HR being an administrative cost HR becoming an E - HR strategic partner of line management, human resources professionals must rethink their strategy for transforming the delivery of information and services to managers and employees. New, evolving standards such as extensible mark-up language (XML) are dramatically increasing the ease with which HR can integrate various systems and databases into an E - HR environment. These technologies also help present information in a user-friendly manner that is available to employees and managers at all times and from all locations.
Watson Wyatt, a USA based eHR ™ company advocates that for companies to become E – HR focused, they need to move their HR communications and transactions to the Web and Internet.
The Internet provides HR with the ability to transfer information and many common administrative tasks to employees — freeing HR personnel to pursue more strategic initiatives. Benefits information, employee data changes and other transactions that monopolized an HR department's time can now be quickly handled via the Internet.
Employees and managers are embracing this "self-service" direction.
The functionality of the web is appealing for many reasons beyond cost:
- A more mobile workforce needs access to HR information at various locations and times Changes in work style resulting from the proliferation of more functional wireless devices (phones, pagers, handsets, laptops and palmtops)
Companies that are ready to adopt an E - HR Strategy and realize that improved communications, reduced costs and fewer redundancies can start with the following action steps:
· Establish solid executive support for an E – HR Strategy. Whether a company is small, medium, or large; there is an initial investment of money and resources required to be successful. Be sure your business case states the return on the investment.
· Understand how far the core HR systems extend today. A technology audit will help determine the effectiveness of your HR systems and databases.
· Know the company’s IT direction and limitations in areas such as a corporate Internet, and remote computing strategy
· Develop a formal strategy for your HR web that improves, integrates existing content and provides a framework for seamlessly providing access to users of the systems(s).
· Get the most effective specialized support possible (from the IT function and vendors) to deal with complicated issues such as legal, communications, and data integrity and data security.
· Finally, build early impact into the service delivery plan by scheduling clear milestones and achieving them. Early returns on your global service delivery initiative can only help build support at all levels within your multinational organization.
5. HR technology focus has significant impact on company shareholder value
February 19 2002 - Businesses focusing HR technology initiatives on achieving specific, quantifiable improvements can see as much as a 6.5% increase in company shareholder value. But companies with "softer" goals may find themselves with negative returns.
These conclusions come from Watson Wyatt's recently released 2001 Human Capital Index(R) (HCI) study.
"When it comes to implementing HR technologies, the focus of the initiative is the key driver in achieving financial results," says Ed McMahon, National Practice Leader, eHR Canada, Watson Wyatt. "The same technology initiative implemented in two similar organizations, but with a different focus, can actually result in a dramatically different impact on company shareholder value."
The HCI study shows that returns on that investment can be significant when technology is used primarily to:
- help reduce costs,
- improve employee service,
- increase transaction accuracy.
But where HR service technology is focused on less quantifiable goals - for example enhancing communication and promoting culture change - it is associated with a significant decrease (-14.3 percent) in shareholder value.
|Primary focus for HR technology |
Improve service to employees/managers
Increase transaction accuracy/integrity
Promote common corporate culture
Enhance employee communication
|Expected change in |
"The important point here is not that HR technology shouldn't be used to enhance employee communication and build organizational culture. Both are important components of organization success, and both are valuable results of successful HR technology implementations," notes McMahon. "But making them the primary focus of those technology implementations negatively impacts the results."
The data can also be used to measure factors such as impact of HR technology choices on total returns to shareholders over 5 years. Most HR organizations are now dependent on a combination of Enterprise Resource Planning (ERP) systems, outsourcing and individual "best- of-breed" HR applications. The HCI study shows that those decisions may also have an impact on market value, depending on company size.
Five-Year Total Return to Shareholders, by Company Size
|Primary HR |
Integration of multiple
|Fewer than |
|More than |
"Clearly, larger organizations are achieving significant returns for their shareholders from properly focused HR technology initiatives, regardless of the primary HR technology chosen for service delivery. For small and mid- size firms, however, the technology choice itself can severely restrict any positive impact on financial results," observes McMahon.
The HCI study was based on a comprehensive survey of HR practices at a total of 750 North American and European companies, each with a track record of at least three years of total returns to shareholders (TRS), 1,000 or more employees and/or a minimum of US$100 million in revenues or market value.
According to Watson Wyatt: " The survey data is matched to objective financial measures of a company's worth, including its market value, three- and five-year TRS, and its Tobin's Q, which measures a company's ability to create economic value beyond its physical assets."