Is HRIS worth the money?

by Carolyn Sokol on April 15, 2014

HRIS AffordabilityThere is so much more an entrepreneur should do before opening a small business. It may only serve to kill the enthusiasm and passion in some, but the business should not start until you think through the second year. If the business expects to employ people, it needs to consider the expense of an HRIS program sooner than later. The worth of a plan is the value-based pricing to you.

So, ask yourself:

  1. Will it simplify my work? HRIS will clear your desk and head by centralizing all HR administrative tasks. You can manage the system 24/7 from any place with a Wi-Fi connection – including Starbucks.
  2. Does it provide data analysis and reports? You run a business better with information, data that reports, predicts, and provides fact-based reports needed for compliance, reporting, and planning.
  3. How many people does it take to operate? The HRIS is self-contained and self-perpetuating. Systems run cost efficiently without manual operation. You have no need to hire to the system until your headcount requires it – about the time you approach mid-size.
  4. Have you anticipated employee issues? An HRIS capability offers employees easy access to their own time and wage information as well as benefits, forms, direct deposit, and more. At the same time, it can reallocate employees to leadership roles in project management and team leadership.
  5. Would it pay to eliminate human error? Manual work invites mistakes and fraud. With an HRIS program, there is no quibbling about time-in and time-out. You reduce or eliminate misunderstandings, computation mistakes, and entry errors.

HRIS technology updates regularly, accepts changes in compliance and policy issues, and takes you green while reducing your paperwork. If you shop well in advance for the HRIS that will suit your needs, you can value-price the product by negotiating the design and capacity you need about six to nine years into your first year or 30% into your expected headcount.

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TelecommutingThe simple fact of the 21st century workplace is that telecommuting is here to stay whether a company feels it is appropriate or not. It is becoming increasingly commonplace in the largest companies and soon will be expected in mid and small sized companies by potential employees. Any company that doesn’t appreciate the ramifications of this phenomenon could be doomed to failure. Here are some reasons why:

Talent Does as Talent Will – While it’s a crude approximation of the old adage, the sentiment is the same – the most talented people will be allowed to operate as they choose or their valuable services will not be available to a company. For better or worse, this situation will continue through good times and bad as companies compete for the very best talent. If you won’t budge on this particular requirement, you are undoubtedly denying yourself the benefit of many superior individuals.

Your Competition Offers It – As you well know, potential employees will compare your benefits against those of your competitors and this includes your telecommuting policy. The most talented and in-demand ones may not want to be confined by any of your current policies. Instead, they will ask for more flexible schedules that, they insist, will meet your needs as well as their own. Recognizing this heretofore non-traditional fact, and adjusting to it, is simply necessary for you to recruit and hire the best talent available.

Employees Love the Financial and Social Benefits – Perhaps you wonder why the flexibility of working remotely is so important to the millennial generation. The answer is quite simple – it opens up a whole world of social and financial benefits. In addition to the obvious benefits of not having to deal with the stress, time and expense of commuting to work, employees are able to efficiently deal with many of life’s “little” problems, such as waiting for the cable installer, with a minimum of stress. In addition, many of your “greener” employees will point at the reduction in their carbon footprint as a benefit.

There is Enhanced Flexibility – One of the most common reasons for employees to leave is out of necessity when their spouse or partner receives a better job offer in another locality. In short, after examining the possibilities, they will decide that your employee’s job is better left behind even though your current employee is quite satisfied with their job. A remote work environment can solve this dilemma and keep a valued employee on your payroll.

Employers Can Benefit Too – For most companies, the rent on their location is the second largest expense behind labor. With telecommuting, this expense can be lessened to a significant degree as much office space can be shared or even eliminated. The use of common areas for multiple tasks and teleconferences can reduce this burden even further.

A Final Thought
Meg Whitman, CEO of Hewlett Packard, famously changed their telecommuting policy a few months back but, to her chagrin, was roundly criticized for it. It remains to be seen how the tech giant will react to the clamor from existing employees but one thing is for sure, they have certainly created a “tiebreaker” for their competition. Anyone looking to telecommute will probably place HP on the bottom of their employer wish list.

Managing these off-site employees will undoubtedly give many HR departments a case of “agita.” Still, the benefits can outweigh the heartache if you can integrate the management of their time and activities into an HRIS system. An HRIS can monitor, record and evaluate such activities as extra company phone contacts, inter office emails and even online collaborations. At the very least, they let you know who is making the effort and who is not. Consider one for managing your telecommuters.

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technology buildingThe latest statistics show that over one-quarter of the U.S. workforce is now classified by their employers as “contract” or “contingent” and the new burdens imposed by the PPACA is likely to see that percentage  increase significantly over the next few years. For this reason, it is essential that companies develop tools and techniques to properly manage this segment of their workforce.

The Issue
It may seem that many of the issues inherent in this process can be ignored as these workers are acquired through the use of staffing agencies or hired on a “contract” basis. In fact, companies may feel that these employees are merely an ad hoc addition to their workforce. Instead, companies must realize that it is the government that will eventually rule on whether these employees are, in fact, on contract. To make matters worse, the government does not seem to have settled on a final definition of the word.

The Downside
While the prevailing HR mantra is that all workers should be treated the same in all business circumstances, this is an impractical ideal that is all but impossible to maintain. The simple fact of the matter is that it is extremely risky from a legal standpoint to treat contract workers like full-time employees. Instead, new procedures, techniques and tracking methods must be implemented to not only maximize productivity for the company’s own ends but also guarantee compliance with government mandates.

A New Paradigm
Many companies from the behemoth, CVS-Caremark, to the icon of high-tech, Microsoft, have been caught short by the meandering policies of government agencies and the socialist leanings of District Court judges. These companies and many others have been forced to re-categorize employees, pay them back wages and also ante up to the Federal government a substantial fine. If these titans of industry cannot navigate these uncharted waters, smaller companies should certainly beware.

The Solution
Many small to mid-sized companies attempt to integrate the process of managing contingent workers in with their regular payroll and systems. Unfortunately, since these systems are not integrated with each other, this usually leads to a host of errors that can take many man-hours and weeks of actual time to unravel and fix – even if dealing with a relatively simple problem like missed hours.

The use of an HRIS, such as an integrated vendor management system (VMS), can proactively forestall many of these problems and also allow your company to track a variety of other productivity and compliance metrics.  Not only will you keep the government off your back – now and for the foreseeable future – you will also be able to track the time and deliverables of the most under-managed part of your staff.

In short, if you are spending more time managing the management of your employees rather than their tasks themselves, it’s time to take a look at an HRIS system.

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5 Ways HCM Improves Value-Creation

by Carolyn Sokol on March 27, 2014

HCMBusiness success requires value-creation. Value-creation differs from profit – while profit is the difference between the purchase price and the cost of bringing to market, value-creation is the performance of actions that increase the worth of goods, services or business. Many business operators now focus on value creation both in the context of creating better value for customers as well as for shareholders. Traditionally, it has been easy to get the two confused.

Following this logic, as long as labor costs can be reduced, profits will improve while revenues stay steady. The business can manage capital, goods, and services, but it has not been so sure at controlling labor costs. Do not confuse this with value-creation. Value is driven by the intangible – motivation, goals, culture, ambition, knowledge, commitment, and innovation of the labor force.

Value is an input and an outcome.

Value is a human input that defies the management math you can bring to capital, goods, and services. Ideas, choices, and efficiencies are the values labor brings to the operation. Where knowledge and information are capital, 85 percent of value is created by the intangible.

So, the business that wants to improve its value position must manage its labor force differently than it manages its purchasing, maintenance, warehousing, or R&D burdens.

Human Capital Management (HCM) supports such goals:

  1. Aligns employee skills to the business’s strategic goals. With its heavy focus on recruiting the right employees for the right positions, HCM raises the ante on job analysis and placement.
  2. Matches employees to team and outcome needs. HCM will help match candidates and current employees to the appropriate team and value need. In doing so, it allows an objective placement of workers based on skills, knowledge, and abilities rather than a subjective placement based on personalities. HCM ensures placement of employees where they are most needed and effective.
  3. Helps employees to set their individual goals. HCM frames individual and team goals. It monitors and drives consistent assessment. The feedback improves employee self-assessment, and the employee carries that forward into performance.
  4. Keeps employees on the same page. HCM speaks a consistent language across the company. It allows for more open communication and keeps the big-picture in front of workers who have traditionally been limited to the details or the small picture.
  5. Trains and mentors employees. HCM values talent as a dynamic that needs fuel and fertilization. It schedules, evaluates, and integrates mentoring to map specific training to broader needs.

Profit is certainly a business value. It has been measured as the difference between costs and revenues. Profit can be manipulated by increasing the revenue and/or reducing the costs. The human assets that build value-creation are less tangible and maneuverable than tangible physical assets. Human Capital Management software orders management control and procedures while it enhances participant values towards value-creation.

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How Integrated HRIS will Impact your Business

by Carolyn Sokol on March 14, 2014

Needs analysis teamIntegrated Human Resources Information Systems (HRIS) are sophisticated programs that replace systems running parallel such as payroll, benefits, and employee databases. An integrated system blends and interfaces these systems. The decision to invest in an integrated system should benefit Human Resources’ operations.

Implications of Integration

However, the depth and breadth of the installation and utilization affects the entire operating system and culture. The results can be more complex than the improved data and reports that it generates. In short, the idea of centralized employee data storage is one thing. The implications of integrated work processes are another.

When shopping for an integrated HRIS program, HR management is driven by its desire for improved employee data retention and reporting. However, it is prudent that HR solicit the input of related departments/functions like payroll, benefits, and employee relations. And, in the process of evaluation, each of these partners may learn something about the others’ needs and goals. For example, they may discover redundancies in methods and share concerns for accuracy and application.

Team make-up

While the HR manager may have initiated the shopping, there has to be a companywide needs analysis done. Clearly, an evaluation and assessment team needs to be recruited. Somewhere in this analysis and assessment process, it will become apparent that the team members are naïve in areas outside of their department.

If, for example, the HRIS program is to record and report on employee performance metrics, the team must have a full grasp of the business’s operating processes. The team needs members from operations, shipping and handling, purchasing, and more to bring the business procedures to the fore. The team needs members selected for their analytical abilities and broad knowledge of the company performance.

Likewise, the team cannot make a decision without the full awareness and assessment of the company’s IT system and equipment. HR managers are not IT-wise, as much as they need to be.

The HR decision maker would be well advised not to meet with HRIS vendors without some team representation. This is not just another software upgrade or packaged program. No team member should feel that this is an HR function only. The team would be well advised to meet regularly for some time before the evaluation begins to discern their common and their unique criteria as well as a shared script and questionnaire they can use when interviewing the vendors.

The complexity of a specific company’s needs directs its selection process. The HRIS vendor needs to address the company’s past, present, and future. The system under scrutiny must pull the past data into its new operation. It has to confirm the integration’s accessibility and reliability, and it needs to have the scalability to grow with the business. Ask your vendor to address these issues!

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5 Keys to a Small Business People Plan

by Carolyn Sokol on March 7, 2014

Every business, big or small, depends on its people. All the evidence suggests that when the employees are happy, the business profits increase. However, small business owners often pay less attention to their employees.

Profit builders and makers tend to think in straight lines. Therefore, they assume that more people will result in more people problems. One bad piece of that logic assumes that the small company has fewer complications. The fact is that small business owners often give less consideration to their human capital.

What they do wrong

Customers, vendors, public agencies, and taxing authorities all pull on the owner’s attention. They assume everybody in their office or store is on the same path towards the same mission. They fill job slots, drive deadlines, and delegate work without system or consideration. In doing so, they do not hire well, confuse activity with productivity, and fail to recognize work and achievement.

What is the fix?

First-step small businesses do not need Human Resources management, as commonly understood. They do not need a person in charge, and they do not require an office or HR function. What they do need is pre-planning!

  1. Plan ahead!

People will be part of every small business effort. So, well before you open the door for business, have your people plan in place.

Make a people plan part of your original business plan and proposal. Review it in detail with your coach, consultants, and financers. The exercise will shape your business future.

  1. Employee count

Roll your business plan out for at least five years, but segment those years into stages. Plan, do not guess, your employee needs for each stage. This is not an issue of numbers; it is an exercise to identify employee functions and job descriptions. One major problem for early stage businesses comes from indiscriminately layering on job duties.

  1. Compensation package

Plan to pay employees a living wage (that’s different from the minimum wage). Paying better than the minimum wage recruits workers with more ability and ties them to your business with more commitment. Budgeting additional benefits in the form of holiday and vacation pay will yield a return on your investment.

  1. Create a culture 

Plan and budget reasonable rewards for individual and team performance. If individual sacrifice is to be part of the culture, reward should be too. Do not throw money away on donuts when you can buy lunch once a quarter. Do not spend on a holiday party when supermarket gift cards would be more appreciated. Keep in mind that everyone – not just the owner – makes sacrifices in the first stages of the business.

  1. Automate personnel administration

A small business should not need formalized employee relations or strategic human resources – until the business approaches 50 employees. Prior to that, the administrative job is 95% functional: filing, payroll, and compliance. (The remaining 5% is the owner’s hands-on employee relations.)

However, the earlier you are able to “outsource” those functions to an in-house HRIS (Human Resources Information System) the easier your future will be. You and your staff can trust your HR system with time-keeping, records and privacy, payroll, and assessment calendars. This leaves you more one-on-one time to develop personal and developmental relationships.

With a people plan in place before you open your business, you can structure three to five years into the growth of your company. In doing so, you give yourself the ability to adapt and adjust to the unexpected. Start as early as possible to move the HR duties out of your hand.

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Is your HRIS fossilizedWhile you may enjoy acting like a T. Rex, you are being short-sighted when, as an owner or manager of a business, you do not recognize that your obsolete human resource policies are as outdated as that dinosaur and are actually doing more harm than good. The simple fact is that outdated, inconsistent HR policies are one of the main gripes that employees have with a company – and, more importantly, ones where they have the most likely grounds for taking legal action.

A New Paradigm
The best HR policies and procedures come from a continual re-evaluation of what is and isn’t working in a particular company. In fact, this ongoing process is the only way to keep your policies up-to-date and in compliance with the latest in government regulations.

Key to the process is listening to your employees and treating their input with the same respect accorded to traditional customers. Some prime considerations during these discussions should be whether a policy advances company initiatives, is merely a convenience for the HR department or is it merely a remnant of some old policy that was never properly discarded or emended.

The Proper Mindset
To put it as succinctly as possible, HR departments are not infallible – that is, the employees often have a legitimate point when it comes to outdated policies. For example, a dress code fashioned in an earlier time or under different business circumstance is not always appropriate for the current business climate. In particular, it is a simple fact of life that many “online” companies can do without a dress code, although many traditionalists feel it necessary in a corporate environment.

The Bottom Line
You must be ready to turn an objective eye on your HR policies and procedures. Once you have identified the standards by which your HR department will operate, use an HRIS to monitor its implementation and its ongoing success. Then, you will have truly moved out of the “prehistoric” age of mere human resource administration and joined the ranks of companies that employ human capital management.

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HRIS: a real world application

by Carolyn Sokol on February 21, 2014

Mechanical servicesBlogs have a lot to say about small businesses and their operation, though few address specific companies and their needs. Emergent Mechanical Services is a pseudonym for a real company with 220 employees. It provides on-call mechanical repair services for vehicles – from heavy equipment to pickup trucks. They also repair related equipment, tow cranes, augurs, and the like.

EMS intends the pun on emergency medical services. It contracts with service providers to deliver aid wherever their vehicles are located at the time and/or to service those vehicles in their garage. Everything in their corporate process and service goals makes them a prime candidate for Human Resources Information System (HRIS) programs.

At any given time, fewer than 50 employees are at the headquarters location. The rest are traveling to and from sites where needed. They complete their work and are dispatched to another site needing their skill set or valuing their proximity. Employees work odd and continuous hours, but there is an infrastructure that provides three shifts.

A quality HRIS program is the solution to problems that arise from the multi-site, volatile scheduling. It also solves the problem of employing HR personnel to wrangle all the flowing data.

  • Employees can report hours from any internet platform: laptop, tablet, or smartphone.
  • Workers can check on payroll detail, and payroll has reliable and compliant records.
  • Staff can access benefits info and make changes, such as beneficiaries or deductions.
  • Management can monitor hours and performance.
  • Leadership can communicate key issues and motivation.

HRIS is sometimes discussed so broadly and so universally that you overlook its specific applications in small business. A quality HRIS vendor will step up to customize your program to your unique small business needs. EMS, our fictional company, for example, has much in common with the construction business, but it is just enough different to deserve its customized HRIS design.

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HCM: Where is it Going?

by Carolyn Sokol on February 14, 2014

Human capital managementNowadays, the executive suite does not want to listen to Human Resources theory, nor do they have patience with employee advocacy. It is not that executive stakeholders are indifferent. They just accept that there is a labor burden including employee relations, benefits, compensation structure, and all those personnel administrative tasks delegated to Personnel.

They do not necessarily consider these tasks as management issues any more. If management means taking, sorting, and archiving, HR software should be handling that. However, if management means identifying, developing, and strategically placing talent, the C-suite has new demands and expectations for HR.

They call it Immersion.

Corporate leadership expects Human Resources to immerse itself fully in the business’s operations. They expect senior HR personnel to learn and understand every job function in the operation. They want them to understand each job description, to analyze functions and the talents required, and to understand process and measure performance.

Immersion takes time and talent. It is one tool that exposes leadership to all aspects of the business’s operations, but it is not the only one:

  • Enterprise Resource Planning (ERP) software integrates the product planning,   manufacturing flow, and sales/marketing – usually in manufacturing operations.
  • Customer Relationship Management (CRM) refers to the software and technology that support corporate values in customer relationships. Direct contacts – in person, on phone, or online – are integrated to forecast trends, needs, performance, and budgets.
  • Learning Management Systems (LMS) are software applications implemented to plan and assess a specific learning process often preferred by the Department of Defense as a SCORM model (don’t ask).

So many tools, so many decisions!

Executive leadership drives HR leadership in an increasing number of mid-sized companies to build and develop personal and departmental strengths in:

  • Revenue growth
  • Productivity improvement
  • Quality improvement
  • Customer satisfaction
  • Employee and customer retention

Human Resources has, for the most part, been a relatively closed system. Having been assigned to keep trouble away, it did its best to harness its data and harvest the low-hanging fruit. No one asked their opinion about how HR could affect significant performance change, so they did not volunteer.

A new accountability

Now, HR has a new accountability if it wants to sit at the table with the rest of the leadership at news conferences and stakeholder meetings to explain what it has done to add to business outcomes. The audience and inquisitors have gotten a lot smarter about Human Capital Management and want answers.

What Operations has always known is what HR is learning. That is, productivity measurement is not merely an outcome; it is also a cost. And, until HR analytics integrates archival data with cost accounting, it is not a player at the executive table.

  • Learning must have a measurable Return on Investment (ROI).
  • Human Capital must show some depreciation.
  • Lower the cost of training and raise the ROI on knowledge acquisition by bringing learning inside.
  • Develop scalable metrics that measure recruiting, learning, and talent management as tangible assets.

It is not fair for HR to dismiss executives as simply number crunchers when HR cannot measure the tangible in the intangible assets of human capital. HR is not positioned to tell colleagues that theory and compliance issues trump performance outcomes. HR will be sent back to the shop to figure out a way of doing what their colleagues want.

HR professionals have valued strict compliance, and they have been taught to color inside the lines or face the fatal consequence of litigation. But, in business operations, change is good. And, with change occurring at meta-speed, HR will need to get ahead of the curve or die.

The software that integrates all these needs is out there. It is customizable and scalable, and it easily shares with the front and back rooms, the top floor and the work floor. However, the Human Resource professional needs the education, experience, and open-mindedness to find and embrace it.

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SMB Disaster Planning – 5 Reasons to Plan Today

by Carolyn Sokol on February 5, 2014

SMB Disaster PlanIn recent memory, we have witnessed five billion dollars in flood damage to Calgary, Alberta, disastrous fires in Colorado, an explosion in West, TX, and the devastation wrought by super storm Sandy. The extensive media coverage focused on residents and their struggle to deal with the destruction of their homes. Much less attention was paid to the hundreds of small businesses (SMBs) also affected by these catastrophes and more. Any one of these events is proof that small businesses must have formal disaster plans.  Here is a quick list to think about when you begin formulating your SMB disaster plan.

1.  Location
Your business needs to remain operating with minimal disruption. Your continued availability serves customers’ wants and their psychological need to return to “normal.” This means having access to an alternative place to work. It is necessary to have a plan in place to either rent a new worksite or provide provisions to work from home.
2.  Money
Your small business is not likely to have access to cash or credit at least for a short while. So, you need to have cash on hand for emergency goods or recovery expenses, such as cleanup tools and services, fuel, water, and food.
3.  Equipment
Your business industry may be equipment-dependent. Equipment may mean much more than office machines. It might mean tools, heavy equipment, appliances, and more. Be prepared to replace or repair them or hopefully move them given enough time.
4.  Records
Your company records and information are at risk. Data must be backed up regularly and securely. You are bound to safely secure personnel, payroll, and tax records, along with account receivables! Your disaster plan should include the ability to store records offsite and preferably digitally. Most quality HRIS and accounting solutions today will have cloud options so it will remain safe and ready to use when you get back up and running.
5.  Communications
Any SMB, regardless of the type of business, depends on communication. Your employees, customers, and vendors must be able to reach you to confirm your continuity and readiness to respond and serve.  Practice disaster drills (once a year) will help work out any missing pieces to your plan.

Your business does not operate in a vacuum. You will need to identify your company’s essential business functions, prioritize them, and align emergency solutions. Run your formal plan by your risk management adviser and/or your attorney then discuss the plan in detail with your employees. Assign specific accountabilities and provide copies with updates as needed.

No contingency plan is perfect. No plan can anticipate or stand up to some of the more catastrophic events. But, any plan is better than no plan at all. Your lawyer can provide a model, or you can download any number of templates from the internet. Catastrophic events leave no time for delay.

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