Two years ago, the HR department at Montreal-based Velan Inc. decided they needed an HR system to automate some of the manual work and remove administrative chores from their collective plate.
Strictly speaking, payroll was automated but it was on an old DOS system that only one person could use and benefits was still a cumbersome paper-based process, explained Louis Tasse, HR director of the 1,200-employee valve manufacturer.
The goal was to become more modern, streamline processes, become more efficient and minimize the clerical work so that HR could be freed up to become a strategic partner for the other functions of the business.
They’ve already gone live with the new payroll system and are rolling out the other HR functionalities, but so far, the system hasn’t delivered on this promise. In part, said Tasse, it is because of the culture of the organization that isn’t yet ready for HR to play a strategic role. But also, the HR system itself is being used to do more administrative work. True, they are doing it faster but that is not what Tasse wants his department to do.
“I would say there is less work from what was done before but we are still not strategic,” he said, but that is because they are producing more reports with more accurate information. “Once the executives see what they (HR) can do (with the new system) they start asking for more.”
The story likely resonates with a lot of Canadian HR departments. There has been a great deal of talk about the potential of technology to revolutionize how HR does its business but thus far, many departments have been disappointed by the results. For the most part that is because the concept of eHR has largely been the victim of its own hype, say the experts (see CHRR March 11 or enter article #1718 in the search field).
But patterns begin to emerge and lessons can be learned from the many, and often very different, experiences with HR technology.
For example, the HR department at Velan Inc. is by no means alone in feeling it is only doing more of the same things it used to do rather than changing the business itself.
To a large degree, HR departments are using technology to improve their reporting, said John Johnston, an HR systems consultant with Arinso. The HR information is more accurate, easier to access and therefore more timely but too often an HR system becomes nothing more than a big electronic filing cabinet. People put in a new system and really just end up replicating what they have done in the past.
In a survey conducted by Arinso International with Canadian HR Reporter and Perceptor Solutions last year, just six of the 170 respondents said their HR systems had allowed them to focus more on core HR activities and only eight said technology had allowed them to be more strategic.
If an HR department wants to bring in a new technology to improve how it delivers services to employees it has to look at all of the processes too, said Johnston. When you add new technology to an old organization with old processes, all you end up with is a very expensive old organization, he said.
“In fact some people find it actually takes more time and more expense to run the new system than it did to run the old system.”
HR technology may mean fewer people in the HR department, but the technology won’t do it on its own, said Johnston. The HR processes have to change along with the technology otherwise the real value of a new HR system is never realized.
“If you simply go through and reduce some of the work for the administrative people but don’t create new roles for those people, ultimately what happens is they fill their time with busy work.”
In most cases, HR systems do not reduce the workload for HR departments but that is because HR departments are getting smaller, said Alexia Martin, an HR expert and director of research with enterprise software consulting firm Cedar.
“The premise about HR technology is that it can reduce the overall costs of providing services to employees. The primary way to reduce costs is through reducing the labour to provide HR services,” she said.
In the U.S., companies are increasingly trying to reduce HR head count.
In a survey conducted by Cedar in 2000, companies that successfully implemented HR self service had an HR-to-employee ratio of 1-150, while those without self service had a ratio of 1-99.
“The workloads of HR, for those remaining, have likely not dropped — rather their headcount has dropped. Those remaining are working hard as ever, but the administrative tasks now are done directly by employees and managers,” she said.
“I think that what is happening is that HR is becoming more efficient with technology and that some of the HR processes are being transferred to managers. The challenge is to do this wisely so that they don’t feel they are having to do HR’s job, but see that their business is about being a good manager of people.”
Minaz Lalani, Towers Perrin’s Canadian leader on e-business, said that technology is saving money for HR departments and often reducing workloads. But these changes do not happen over night. It can take up to 24 months for an organization to start to see the benefits of a new system. It takes a while for rollout and for employees to get used to using the technology effectively.
In a survey on HR systems conducted by Towers Perrin last year, most respondents said fewer than 10 per cent of employee inquiries are handled on the HR intranet. Most employees were still more comfortable calling the service centre rather than serving themselves online.
“In Canada, I have seen HR departments shrinking,” said Lalani. HR employees who were previously focused on transactional duties can see their workloads reduced by as much as 50 per cent. In many cases, rather than being laid off, HR employees are being redeployed, he said. They are being asked to do different things now and facing new challenges, providing more support to managers on the front line, for example.
“The HR job is getting more complex,” said Lalani. “The skill set you need now is not the same skill set you needed three years ago.” Using technology for HR service delivery created an entire new set of challenges that were largely unexpected.
Calls to HR departments, while perhaps reduced, are more sophisticated now. With HR self service, employees can do more homework and become more knowledgeable about benefit and pension options. Consequently, their questions are more intelligent and often more challenging to answer for the HR department accustomed to employees who took a less active role in benefits or pension administration.
HR professionals have said they want to be strategic partners, and now that they are being asked to add value they have to make sure they have the skill sets to do it, said Lalani.
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