Human resources and the compensation function are no different from other critical aspects of an organization in that great enhancements have been made or are being made to integrate technology into their operational and management processes. Beyond the inclusion of HR into enterprise resource planning (ERP) systems such as Oracle and SAP, specialized software now exists to allow more efficient processes and to provide depths of service once restricted by time. This is particularly true in the compensation function where as few as ten years ago only a few PC and LAN-based software packages existed. Today, there are thousands of special purpose and full-scale program management systems from which to choose.
As we assist clients with their broad-based (non-executive) compensation consulting and co-sourcing needs, we tend to see misuse of a system’s intended design, unintended negative effects of implementation choices and/or major functional holes in the system selected and implemented. This is not a statement to lay blame or give credit to any particular group or constituency – even our own technology and software products and services can’t meet all clients’ needs completely. Rather, it is a simple statement of “procure with caution.” With that in mind, our experience has taught us several lessons that should helps others get the most of their technology.
Lesson 1: Think Through Your Immediate and Potential Needs
Even if you are only looking for the most task-specific types of systems, such as hosting your survey data online and providing a market pricing mechanism, it is important to take a holistic approach when selecting potential vendors. As the diagram indicates, a compensation program is a system with transactions that may purposefully or accidentally effect future or previous transactions. If for example you use a market-based approach to job grading, then it would be helpful to ask the vendor product to allow you to not only market price a job, but also recommend a grade assignment. The question is the cost-benefit of this additional functionality – how much more investment would it require to get that functionality and what benefits would your organization receive from it.
This may give the appearance of functionality or scope creep to some more seasoned in software and technology – if you give a mouse a cookie he’ll want a glass of milk – but the technology should fit your budget and match your processes to the greatest extent possible. It certainly never hurts to ask and is much better than wishing you had implemented something slightly more robust.
Lesson 2: Even Automated Technology Doesn’t Run On Its Own
During and after implementation of a new software system, the job duties and responsibilities, as well as the qualifications, of the HR team will begin to change. The challenges then arise of the competencies of the existing HR team and whether they fit the needs that flow with process and technology changes.
We suggest that when any new and substantive technology in HR is implemented the HR team also assesses what their specific roles will be throughout each new or revised process. To the extent additional training or competency development is required, this would be included as part of the implementation. There may be even greater implications in terms of real job or role changes – some existing jobs may become obsolete while other new jobs may be created.
HR team re-tooling assumes that the organization will continue to administer all tasks in-house. A growing trend in the market and in our own client engagements is that of out-sourcing or co-sourcing. One of the major benefits of co-souring is that, while HR re-tooling may still be needed, specific and hard-to-train technical skills can be found through the co-sourcing partner rather than hired into the organization. HR team development in this context focuses more developing strategic thinking and leadership skills.
Lesson 3: Microsoft Excel is Technology After All
It never ceases to amaze us what can be done with spreadsheets by those fully competent in their design and macro development. We find that for our smaller clients, well-designed spreadsheets or databases or a combination of the two can cost-effectively reduce administrative time and increase service delivery to the organization.
The major drawback in our experience is the missed opportunity for workflow and process re-design that is inherent in larger off-the-shelf systems. Developing technology solutions in-house usually means mirroring processes that are currently in use, regardless of their effectiveness. Larger systems however force organizations to review their processes during implementation and generally, unless a large investment in custom development is made, change their processes to conform to those in the software.