HRMS <i>does</i> make a difference

Have powerful, sophisticated computer-based HR management systems (HRMS) liberated Canadian HR practitioners from a lot of their paper-pushing drudgery and elevated them to a strategic, more consultative role in the management of their organizations?

As best we can determine from Canadian HR Reporter’s groundbreaking study of 378 organizations across Canada, the answer to the first part is probably yes but the answer to the second part is no — at least not yet. But these new systems are helping HR operations handle data faster and more efficiently than ever before.

Canadian HR Reporter, with its survey partners, ARINSO International and Perceptor Systems, developed the survey — HR Management Systems: Are They Making a Difference? — to get answers to a number of central questions concerning the impact of such systems on both HR operations and their organizations as a whole.

Slightly less than half of the respondents (48 per cent) have an HRMS in place. They use their system primarily for maintaining information on:
•basic employee data;
•company costs;
•company work location;
•employee job grades and job history;
•payroll;
•employee compensation;
•benefits information;
•employee absences; and
•employee terminations.

Least-used features include:
•career planning;
•succession planning (but more than 30 per cent indicated they plan to add it);
•occupational health and safety;
•labour relations;
•job posting;
•hiring requisitions; and
•employee job competencies (nearly 30 per cent plan to add this as well).

This tilt toward record-keeping rather than strategic uses for the HRMS is also evident in respondents’ assessment of the impact of the HRMS on HR service delivery. Topping the list of positive results are:
•greater data accuracy;
•timely information for HR users;
•easier data access and reporting;
•greater efficiency;
•greater data availability; and
•better service from the HR department.

Among the least cited were:
•increased accountability;
•better decision-making;
•better communications; and
•shift in HR focus to strategic issues.

The apparent slowness of HR practitioners in reaching higher levels of strategic involvement in setting and achieving corporate goals is understandable, considering that:
•52 per cent of organizations surveyed do not even have an HRMS;
•more than 90 per cent of all systems currently operating have been implemented within the past 10 years;
•mating organization needs with the right system features can be very tricky, causing some organizations to replace systems only recently implemented; and
•system implementations can be extremely taxing, demanding maximum resourcefulness on the part of project leaders in dealing with budgets, existing institutional structures, internal turf disputes and external vendor relations.

Of the 52 per cent of organizations that do not have an HRMS, about one-fourth indicated that they intend to purchase a system, although they don’t know yet what package they will buy. Estimates of cost vary from $5,000 to $10 million.

Their new system will likely be on a local area network (LAN) or wide area network (WAN). About 78 per cent of current systems are managed with a LAN or WAN. About 12 per cent, predominantly those with fewer than 500 employees, use a PC to manage their HRMS. A mainframe is still used in about eight per cent of companies.

Among organizations with fewer than 500 employees, nearly two-thirds (64 per cent) do not have an HRMS. That proportion is reversed in organizations with 500 to 2,000 employees, with about 61 per cent having an HRMS. At the 2,000 to 5,000-employee level, 87 per cent have an HRMS. And in organizations with more than 5,000 employees (12 organizations in that size group responded to the CHRR survey), 75 per cent have an HRMS.

In that top group, of the four who have not implemented systems, most indicated that an HRMS is not a priority for the organization. Some mentioned a lack of funding and organizational support. One indicated that the organization’s complexity has made it difficult to find a solution that meets its needs.

The majority (58 per cent) of respondents with systems have had them no more than three years: 16 per cent implemented them in 1998, about 14 per cent in 1999, 12 per cent in 2000, and just more than 16 per cent have implemented or will implement systems in 2001.

BC Rail, which has 1900 employees, went live with an enterprise-wide system in January 1999 at a cost of about $12 million. Sue Hankins, HRIS supervisor, said the company changed systems because of Y2K. The new system is still being implemented, Hankins said. “We are looking to enhance some areas and bring out the functionality within the system and use it for others such as performance and compensation.”

Within the HR group, Hankins said, “We did a reengineering study: ‘This is what we do; this is what we would like to be doing.’ We used ‘what we would like to be doing’ as the blueprint to implement.”

BC Rail was was one of the few organizations in the survey to require that return on investment (ROI) be a part of the project. Only seven per cent of the respondents who have an HRMS have determined an ROI for the system. For those who have, the ROI was determined primarily on gains in efficiency and reduced effort. Few reported any reduction in headcount. Key areas of cost savings were around cost avoidance for Y2K refurbishment and reductions in charges from external providers.

Of implemented full-featured systems, PeopleSoft, SAP and Oracle were the vendors chosen by 45 per cent of the companies with more than 2,000 employees (20 per cent of the overall Canadian market).

Two payroll-focused systems, ADP and Ceridian, have an even larger slice of the market, 26 per cent, a significant amount given the relatively limited range of features in their current offerings. ADP recently announced its intent to move into the thick of the HRMS market with a new Web-based product. Ceridian is sure to follow. For both, this kind of expansion is a key strategy to retain and build on their outsourcing base.

Payroll is integrated with the HRMS in 64 per cent of systems implemented. Of the rest, 18 per cent outsource payroll and another 18 per cent run it on another in-house system.

Other systems integrated with the HRMS include:
•financial general ledger;
•budgeting and planning systems;
•time entry; project cost and tracking;
•job costing and tracking;
•materials management and purchasing;
•health and safety; time billing to clients;
•shift scheduling;
•organization charting; and,
•employee intranet.

A full 10 per cent of all respondents reported they developed their own system, either along or in collaboration with others. One of them is Brampton, Ont.-based Unigistix Inc., an integrated logistics solutions provider that enables clients to seamlessly outsource all or part of their logistics operations. In essences the company becomes a virtual business partner be serving as an invisible extension of a clients product delivery chain.

Unigistix has grown from 10 employees to 200 in four years. Anu Andrews, director, human resources and administration, said it was critical for her to have in-house support.

“We are just too busy to wait around for somebody to call us back, or to wait on the phone for someone to help us with a support issue. I run two doors down, and I talk to the fellow who developed the program, and I ask him: ‘Can I get a new report? Can I make changes to . . .? How come I can’t get . . .?’

“I have instant support, and I have someone who has done the background or can add on or rearrange or redevelop or can do anything that is necessary with the system, really at the snap of my fingers.”

What began as a time-card system at Unigistix has now added labour-cost reporting, time sheets for temporary employees, vacation tracking, attendance analysis, emergency contacts and a variety of management reports. Next on Andrews’ list of features to be added is recruiting management.

“I haven’t found anything my system can’t do,” she says. “If there is, I just go over and ask for it, and there it is.”

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