In an organization that profits from selling products or services, employees are essential, but systems of handling the daily affairs of employee management have always been considered an administrative cost and a business expense that only indirectly supports profit. Achieving business success requires relentless focus on core products and services, sales, distribution and the comings and goings of competition.
Many small and medium size business find themselves in a real dilemma. The more their businesses grow and prosper, the less time management spends actually running the business. As the number of employees increases, employers must spend increasing time and resources dealing with personnel issues. Administrative functions like hiring and firing employees, payroll, taxes, benefits, workers’ compensation and HR compliance can easily seem to distract a business owner’s focus. This is especially true as, in many companies, human resources responsibilities are more firmly fixed under departments of finance.
Although successful human resources planning and implementation can dramatically improve profits, well above the costs of the improvements, small human resources mistakes and missteps can have devastating effects. The more complex a company is, the more human resources have to be managed, the higher the chance of error. Social psychologists say that large groups are always less efficient than small groups because of a factor they call “coordination decrements.” In theory, as your staff gets bigger, the problems of coordination and human resource management get more important.
Automating HR Functions:
Many of the functions of human resources management have to do with information processing. The handling of information is often where human resources errors and malfunctions happen. To make the handling of information faster and more accurate, many companies are introducing automated Human Resource Management System (HRMSs). The complete HRMS combines a human resources information system with accounting, training and recruiting elements which are integrated with the overall corporate management and accounting system.
The HRMS consist of 10 modules. These modules are tools that do not replace human resources staff but reduce their time and resources challenges and save money:
- Human Resource Management
- Payroll Administration
- Time and Attendance
- Benefits Administration
- ACA Compliance
- Talent Management
- Employee Training
- Business Intelligence
- learning management,
Efficiency and ROI:
In IT, ROI is defined as the net monetary benefit derived from a new system. In this case, the dollar gain from the new system is divided by the cost of the investment in the new system. In many companies, it may be very difficult to justify a new HRMS (or any other IT investment) based solely on visible cost-benefit. There are several reasons for this.
- Many organizations have not made significant investments in their human resources management system. Many HR departments are using systems that have been cobbled together over the years or are using decade-old server systems. These outdated system have little visible cost. Replacing them based purely on cost is unlikely.
- Human resources management is often viewed as an administrative function. Operational functions are viewed as having a higher priority for new development.
- Human resources functions are often viewed as highly labor intensive and personal in nature. High levels of employee interaction and support are costly and inefficient. Many standard HR functions can be addressed by web-based self-service technology, allowing staff to focus on planning and analysis, but this may not always be recognized.
Justification of upgraded HMRS often depends on consideration of “soft dollars” the ROI calculation. Adding up the indirect savings associated with productivity improvements and intangible savings can make the ROI calculation more convincing.
HRMS automation will provide many benefits.
- Some soft dollar benefits will be tactical like reducing the amount of payroll adjustments every pay period. Some will be more strategic like the development of a succession plan for each position. More exact quantification of benefits is an important part of ROI.
- A new system will find areas where exposure and risk to the organization can be reduced. Better quantification of risk reduction opportunities adds to ROI.
- Most new systems provide features that allow organizations to hold or even reduce staffing levels. Keeping old systems often means having to increase technical and end-user headcount to support a system that is providing less value to the organization.
- Soft dollar benefits include reducing data entry costs, reducing errors, improved data integrity, standardization of processes, improved access to information for both employees and managers, better controls over the editing and validation of HR data.
SurmountHRM provides services to businesses nationwide with Cloud Based Human Resource Solutions. Please contact us to learn more.