Sunday Business Post - Computers in Business Magazine - Feb 4 2007
No matter the size of your company, a modern HR system is essential, writes Dermot Corrigan…
Irish SMEs are beginning to realise how useful modern Human Resources (HR) software systems can be to the running of their business.
They are also seeing the benefits of investing in the right technology to suit them. If people and knowledge are the most important resources in an organisation, then a dedicated system to manage these resources, and make the best and most efficient use of them, is a necessity.
Modern HR management software systems perform all the tasks for which a traditional HR manager would be responsible. This includes functions such as payroll, time management, benefits administration, workplace legal requirements, training and employee development management, as well as many other vital HR tasks.
Looking after all of these responsibilities could take up all of a manager’s time in a typical SME. Not to mention tasking the knowledge of even the most experienced of bosses.
“HR systems offer the capacity to at all times manage your whole duty of care and obligations towards your employees and stakeholders whether you have 15 employees or 5,000,” said Noel Dooley, Sales Director with Softworks Computing, who supply attendance management and workforce management solutions to organisations ranging from HP to Brown Thomas to local golf clubs and credit unions.
“Different companies have different needs and different problems, but ultimately it is about making the administration of the working day of your employees easier and reducing your overheads,” said Dooley.
The most basic HR function in all businesses is to pay its staff correctly and on time.
This can be a complicated process, even in smaller organisations. Payroll function is not just about salaries and taxes, other elements such as benefits programmes, flexi-time, insurance policies, sick pay entitlements, pension plans and profit sharing schemes all have to be taken into account.
An integrated HR system can manage all of these requirements automatically with the minimum of fuss.
There are also a huge amount of other considerations and legal obligations such as parental leave, working time restrictions and health and safety which all businesses, of which even the smallest of SMEs need to be aware, if they are to avoid running into problems.
“Typically in the SME environment there isn’t that HR expertise in place,” said Padraig Gill, Sales and Marketing Director of Intelligo Software, an Irish company who provide payroll and HR software solutions.
“The role falls to the financial controller or financial director who are probably not fully attuned or fully up to date with what the HR legislation is. So the very first reason they need a HR system is good HR record keeping.
“From an employer’s point of view it is prudent to keep detailed HR records, so that if there is something down the line, anything from looking for references for a person, or re-hiring someone so you know their past history, to having a case taken against them in the Equality Tribunal or the Employment Appeals Tribunal.”
For instance, the Organisation of Working Time act requires that an individual not be asked to work more than 48 hours in any one week. A HR system can flag any problems with this, while complicated working schedules are being drawn up.
The latest HR software packages will come with regular updates, to make sure that employers keep up to date with the latest changes in the labour laws, covering all areas from benefit in kind to parental leave.
To carry all the required tasks properly, a HR software system will collect a large amount of data about every member of the organisation. Even a simple system will include basic information such as full name, address, qualifications, past working history, bank account details, salary level, family status and date of birth. More advanced systems can contain much more data, which can then be put to greater use.
“The application that an organisation chooses is dependent on what they want to do with HR,” said Donal O’Reilly, Applications Director with Oracle in Ireland.
“If you want a HR system which is basically a data repository, which keeps people’s names and addresses and that sort of thing, you can get a very basic HR system. However if you are an organisation that is trying to introduce efficiencies then you want a more advanced system.”
This brings into play information such as employee’s key performance indicators (KPIs), training undergone, capabilities, skills and competencies. Some systems allow managers to set up a number of metrics, and then give staff members a score for each.
Managers can use this information to organise their human resources in the best way possible, and can prepare in advance for future requirements by putting in place staff development or training programmes.
“Against each employee you can hold competencies, for instance the ability to present or an accountancy qualification,” said O’Reilly. “You can make sure that their certification is up to date and that they comply with the latest regulations. You can set that up as a criterion, identify the people who haven’t got it and then put together a training plan, so that these people are ready at the appropriate time.”
Time management and staff scheduling is another particular business process in which a HR software system can shine. This is particularly true in businesses where staff work flexible hours, shift work or spend time off site. Managers can use the system to ensure they have the right skills in place to meet the requirements at any particular moment in time.
“The working patterns and hours of working are a key aspect of any of these systems, to try and identify exactly where your employees are supposed to be at a point in time,” said Softworks’ Dooley. “For a small or medium sized business this offers huge amount of scope for managing your costs effectively.”
This can hold especially true in businesses which have a very high turnover of staff, or which rely a lot on contract workers.
Modern working practices and lifestyles can cause headaches for even the most organised of HR departments.
“A huge part of our business is managing an employee’s flexi-time and work/life balance,” said Dooley. “It offers staff the capacity to manage their hours, to provide that balance between family and the working life and employers can try to facilitate that as much as possible.”
Modern HR software systems can also be hugely beneficial, and widely welcomed, by staff who can get frustrated going through reams of paperwork for even the most simple of HR requests.
Newer applications can feature a self-service functionality, which allows staff to log in using a protected username and password, view their own information (which they have a legal right to do), and make changes if needed.
They can also submit requests for approval by their line or HR manager, such as to look for a day off or change their bank details. All without leaving their desk or picking up the phone.
This can take a great deal of administration hassle out of the HR processes.
“The end-user interface is typically very simple. Employees can interact with the system through a web browser, not dissimilar to a commercial website. It tends to be a couple of buttons on the screen with perhaps a visual representation of the employee’s work calendar including days worked, sick days and holidays,” said Dooley.
“You can review your information or make a request. This then goes to your supervisor or manager, if they approve it you are notified by email. It is something very seamless and takes a lot of the work out of the equation,” said Dooley.
HR staff previously charged with dealing with individual requests for information will quickly discover that the new applications are huge improvements on previous paper-based systems.
“Previously people were using paper forms and spreadsheets to try and identify how many holidays staff had left for example. By and large those systems tend to be inaccurate because they are manual,” said Dooley.
From an IT department point of view these systems are also relatively simple to use and install.
In the SME market many HR software systems have traditionally been applications installed on a local PC or more likely a network. Increasingly, however, web based solutions are being introduced.
“The fact that there is no software required on the PC makes it much easier to deploy these solutions,” said O’Reilly.
“Also if you have a dispersed workforce where not everyone is in the office, or not even in the same country, to manage the installation of a hundred pieces of software on a hundred PCs is an awkward and difficult job to do.”
Having one dedicated HR software system also removes any potential problems around integration, such as double records for one person which do not agree.
“Our HR products are completely integrated, so there is only one Joe Kelly, it is a single source database,” said Gill.
“Both the HR application and the payroll application feed off the one record, so there is no messing about with systems getting out of step. That is the type of architecture that the big boys would have employed, and now it is becoming affordable for the SME sector.”
While all organisations, of all sizes, and in all sectors, can benefit from the use of HR software systems there are exceptional benefits for SME organisations which may have problems managing staff given the particular requirements and working practices of the space in which they were operating.
One example of this is organisations which have a very mobile workforce, such as sales organisations or IT consultancies.
A web-based HR solution means that all staff, wherever they are based today, can have instant access to their HR information.
They can update records immediately and efficiently if required – such as updating hours worked or filling in expense forms.
“Internet technology allows people to access these systems without having software on their PC. It doesn’t matter if I am sitting in my office, or if I am sitting in an internet café. Obviously security technology is very important here,” said O’Reilly.
Many HR software packages aimed at the larger end of the SME market now come with a core application, which handles the primary functions such as payroll and the storage of staff information. Companies can then pick and choose extra functionality as required.
Examples of available add-ons include such diverse options as skills analysis reports, self service benefits menus, or online recruitment capability.
Often, in the case of SMEs, managers will look for external benefits across more than one area of their business before sanctioning an investment in a new HR package.
“There are other modules you can buy, there are training systems and other various ad-ons that ultimately improve the employee and employer experience, and from a systems point of view it reduces the amount of complexity that exists in the organisation,” said Dooley.
The scope for investment in HR systems obviously depends on the size and budget of your organisation. SMEs with highly skilled workforces can see a distinct ROI if they use a sophisticated HR solution to manage their staff development programmes. HR managers then have the ability to analyse what skills are in the organisation, or put in place company-wide staff development plans.
“You can assign similar competencies to particular roles or jobs in the organisation. Then when a position opens you can look at the job and run a report and see how many people within the organisation qualify,” said O’Reilly.
Many HR software systems will allow managers to look after an employee’s full lifespan within the company - from recruitment, through training, transfers and to retirement.
The employee can use the self-service functionality to become involved in the process too.
“Training management tools, which allow the employee to select which training courses or education opportunities they are interested in, are one option. Then HR can review the request and see if is appropriate. This makes the whole process around managing your career a bit easier,” said Dooley.
Other SMEs, with different focuses and objectives, might look to add different modules to their HR software package.
“Organisations with a low skilled workforce may find that the proactive management of their staff is less strategically important to the organisation,” said Michael Kearney, Country Manager with SAS Ireland, a company with a background in Business Intelligence solutions who are showing increasing interest in the possibilities of the HR software space. “But in that case then maybe recruitment processes might be more important.”
Another area in which SMEs are increasingly looking to gain extra benefit from their investment in HR software is in drilling down into the data held within and analysing it to see where they can derive extra benefits across their business.
“Some organisations use HR in a more strategic way, and that is where we start to come in, where people are using HR as a business tool,” said Kearney.
“Do we have the skills in place to be able to tender for new work, or to expand, or are there people in our organisation who represent a point of risk, or so on.”
This can involve the use of a specialised human capital management application which sits on top of traditional HR applications and extracts information it and other sources such as ERP (Enterprise Resource Planning) or CRM (Customer Relationship Management) systems.
“We do predictive analysis in terms of who is likely to leave, what is your likely staff turnover rate, given particular behavioural characteristics in an individual,” Kearney said.
“We know that people who don’t go on training courses, for example, are not as engaged in the organisation, and may leave. Our software will flag that and about 500 other metrics to let management look at the particular attributes of their workforce, and how they are performing.”
At the end of the day it comes down to the individual requirements and budgets of the SME in question. Basic HR software systems start at under €1,000, while depending on the add-ons required other SMEs might look to invest up to €10,000 or more on a dedicated package.
Whatever your size or scale of operation however, Gill maintains that dedicated HR software systems are now a fundamental requirement for most, if not all, Irish SMEs.
“Everybody needs it, they just have to recognise that they need it. Previously HR software was a luxury, now it has become a necessity,” he said.
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