Huge amounts of money flow through Payroll. But like an old reservoir system it can develop leaks that can go undetected for years and then cost a lot to fix. There is so much money going through so many properly executed transactions, it is hard to realize that those little leaks add up to major money.
In most organizations, half or more of all cash flows out the door through payroll systems: 52 weeks a year, year in and year out: people get paid, benefits are allocated, leaves accrued, time and attendance tracked, overtime paid and accounted, taxes accrued and disbursed. There are countless opportunities for error – some are steady leaks on corporate cash, some are big surprises like tax restatement, some are constant data changes through multiple new hires, re-deployments, retirements, life changes, acquisitions, divestitures, etc.
Over time in every organization, errors, leaks, and risks accumulate. There are systems changes, new vendors to integrate, and frequent tax updates. Systems and processes need re-tuning. Routine fixes and quality checks add up to big dollars very fast.
Consider some examples of what happens from poor data quality, poor processes, and out-of-date systems and interfaces:
* A national manufacturing company with 10,000 employees recently paid a $250K tax penalty for late payment of taxes on one payroll cycle --- and only 2 days late!
* A national conglomerate with over 50,000 employees spent in excess of $1M per year solely for data correction and multiple processing cycles performed by external service providers due to invalid data.
* A major western city government recently reported that it had overpaid workers who left city employment nearly $950K since 2003. The city contracted collection agencies to retrieve these overpayments with only a 40% success rate. Additionally, the city underpaid departing employees $121K in 2007 alone.
Such common errors can be both expensive and embarrassing. Now, consider your internal manpower time and costs to correct errors and you are spending a notable percent of your total payroll budget. The errors and quality control add a hidden fee to your payroll that can easily add up to over one percent in a complex or poorly integrated organization. A company with a hundred million dollar payroll could be wasting a million dollars a year.
Errors are not just accidents. They come from causes. Finding the causes and changing them doesn’t have to cost a lot and can have an immediate and big payback.
Over time the errors that come during change get embedded in the system and keep multiplying. As a result the number of “exceptions” increases, and whether or not they are tracked, costs go up.
Payroll System and Business Process Improvement
Payroll Operations Review
Start with a fresh look to accurately assess and improve your Payroll operations and systems. At the outset, conduct a Payroll Operations Audit which assesses the current effectiveness of your Payroll processes and systems, and identifies opportunities for improving performance. The Payroll Operations Audit examines in detail the current Payroll processes, controls, organization, systems, and service providers. It clearly defines how Payroll really works in your organization and where there are opportunities for change. The final evaluation provides a baseline for planning for the future, identifies and maps out organization, systems, and process changes to improve quality, efficiency, timeliness, and performance,
Payroll Process & Controls Assessment
A Process and Control Assessment is a subset of the Payroll Operations Review. It evaluates the efficiency and effectiveness of current payroll processes and audit controls, and provides recommendations for improvements. The assessment is a process which conducts a rigorous review of its controls over its systems and operations. Additionally, security rights are reviewed to identify who is allowed to view what groups of employees and what data can be viewed/changed by job function. A strict audit of checks and balances is conducted, including confirmation and approval processes. The results are the identification of opportunities to improve the internal controls, effectiveness and efficiency of systems and operations, reliability of financial reporting, and compliance with applicable laws and regulations.
Payroll Data Quality Audit
Business processes, HCM applications, and state-of-the-art technology are worthless if the information generates the wrong results. Inaccurate, out-of-date, and incomplete information can result in excessive additional costs which negatively affect your bottom line.
Consider the following costs for poor data quality:
* Penalties for underpayment or late payment of payroll taxes;
* Cost of benefits for ineligible populations;
* Impact on benefits calculations;
* Costs for data correction and multiple processes performed by external service providers; and,
* Overpayments to employees.
A baseline of Data Quality audit reports needs to be tailored to your unique operations and HCM system.
Data Quality audits review critical data fields, such as birth date, social security number, base salary, etc., often made to detect erroneous entries. Granted, on line edits should preclude bad data from getting through, but errors could happen. Data entered could be within edit criteria, but still incorrect (e.g., overtime payments made to a salaried employee).
A comparison of edit criteria of all systems utilizing the defined “critical” data elements would be conducted. So often, data differs on downstream systems (e.g., service providers) since upfront systems edits are different whereby data is accepted on one system but rejected by another. Then to complicate matters, data is corrected or changed on one system and not another. A thorough review of data edits and flows is necessary to complete any competent Data Quality audit.
PeopleSoft Payroll Systems
Tax Updates
Often, the tax regulations and rates change with little advance notice or even retroactively. Oracle provides 6 or more PeopleSoft tax updates every year. Applying these PeopleSoft program and table updates quickly and accurately assure proper collection, tax payments, and tax reporting. Errors or delays require manual corrections and overrides which could burden your already strained payroll operations resources. Additionally, if taxes are under-reported and under-paid, financial penalties would be assessed.
Payroll Tax Updates require quick, accurate, and timely support for the following major support tasks:
* Review Compare Reports and document tasks appropriate to this update;
* Apply tax updates;
* Retrofit objects;
* Apply as appropriate: COBOL changes, customizations;
* Review changes with Payroll staff; jointly, create test plans and test scenarios;
* Review payroll test results (NOTE: Based upon the PS Update, other PS modules may also be affected);
* Document changes;
* Migrate changes into production system; and,
* Monitor operational system.
While there is the urgency for prompt updates, there is also a need for thorough and complete testing. Your staff needs to develop systems, integration, regression, and parallel test plans tailored to your PeopleSoft Payroll systems and your individual Payroll business processes. Given time and pressure for accuracy, this is an area where outside support can be especially helpful.
In Summary
Payroll Systems process a large percent of an organization’s money. There are so many transactions where little errors add up fast. The total exposure is so large that it is important to audit frequently to assure changes are handled well. Most organizations have the opportunity to save significant dollars through improved, transformed, and streamlined business processes, re-aligned organizations, improved controls and audits, better systems, and integration of processes and systems.
About the Authors
David J. Dell, Ph.D. (ddell@hrtechteam.com) is the Chairman of HRTechTeam. Mr. Dell is an expert on best practices for Information technology management and HR Business Process Outsourcing. He has conducted assignments for global 100 companies exploring ways to improve their HR systems through technology and outsourcing, produced market research studies for major consulting firms and outsourcing companies, and produced numerous published studies for The Conference Board and other leading organizations including International Human Resources Information Management Association (IHRIM). Widely quoted and a frequent speaker, he was named by the magazine HR Outsourcing Today as a major thought leader in HR Outsourcing. Previously he has been an investment banker and served on the Boards of 2 NASD public companies. As a turnaround executive he has served as both a CIO and head of HR for technology companies.
Ernest P. Canali (ecanali@hrtechteam.com) is the Executive Vice President of HRTechTeam. Mr. Canali is a recognized HR Systems & Technologies subject matter expert and international speaker with over 25 years of extensive experience in HRMS strategic planning and global HRMS systems and operations. Most recently, he was IT Director, Human Resource Systems Technologies for Siemens Shared Services. Previously, he served as Director of HCM Solutions for PeopleSoft’s Northeast Region. He also led global HRMS systems and business transformation at Lucent Technologies, Honeywell International, and Allied Signal Corporation. Additionally, Mr. Canali has been an Advisor to The Conference Board where he developed research reports and was a frequent speaker. He holds a BS degree in Computer Information Systems and Economics from Manhattan College. He was a founding member of the New York Chapter of IHRIM.
Monday, September 15, 2008
The Profit Contribution of On-boarding
Today any HR department that has not made sure it is effectively leveraging its systems to automate On-boarding processes is seriously delinquent. Automating On-boarding processes contribute profit even before new employees start to earn a pay check; they really start earning their keep from the first day and can deliver many derivative benefits longer term. While the majority of large companies have made some in-roads in this area, there is room to do more.
This article takes a fresh look at the On-boarding process in terms of its “profit contribution” through reduced cycle times, elimination of redundant effort, getting employees productive from the first moment they arrive and strengthening the employee brand. The benefits come in reduced HR processing costs as well as in many other areas from facilities management, security, legal compliance, provisioning of employees with the tools for the job, orientation, mentoring, networking and even better recruiting through leveraging the positive experience of new employees.
Employee On-boarding processes are typically fragmented, costly and time-delayed, with full provisioning for new employees often exceeding their first day of employment by days, weeks, or even months. Many companies have attempted to address these inefficiencies and lost productivity, but few realize the extent of a fully-defined end-to-end On-boarding process. Does it begin with the Employee Acceptance, or earlier? Is it limited to Human Resources, or does it involve other business functions? Does it end with Employee Orientation, or full productivity? Is it limited to what an employee needs to do their job, or does it include an employee’s personal life management as well?
The answer to each of these questions is an unqualified “Yes”.
Defining the Scope
On-boarding has three key dimensions: Business processes, Personal processes and Personal effectiveness. Business processes include components which the organization follows to provide the employee with the necessities for transition to employment and assist the organization for managing its business. Personal processes assist the employee with managing their life and protecting their families. Personal effectiveness includes training, mentoring, orientation, and access to the knowledge, tools and people needed to work effectively. There is a role for HRIS in each.
Besides enrollment and records in HR systems, On-boarding involves separate business processes and systems to support the employee that may include: finance, regulatory and mandated, company assets and logistics, and security.
* Finance may include records for reimbursements,
* Regulatory may include federal Health and Safety, EEO, INS, Homeland Security, etc. as well as state and local reporting; drug testing, medical and other records may be required,
* Company assets are the “work tools” provided by the Company. These tools would include, but not limited to, desktop telephones, computers, printers, software, cell phones, PDA’s, credit cards and company vehicles,
* Logistics address the “work place”: work space, parking and facility access, and
* Security goes beyond identification and physical access controls and may include limited access to many kinds and sources of information required for the person to perform their job function. The information could be in electronic or hard-copy form. This would include data base access, system access, query access, file room access, library access and the like.
While many companies have implemented On-boarding within “fully-integrated and centralized” HR systems or as part of “talent management”, this does not mean that all of the data bases and systems utilized by non-HR business functions are properly supported by the HRMS. Nor does it mean that information needed to be gathered directly from the employee is supplied by the HR systems to support other areas. For example, one Fortune 100 company requested Employee Contact Information on 5 different forms which were part of their Employee Orientation process. Each of these was used to update separate data bases in other business areas, such as Medical Affairs. Such redundant efforts are a waste of time for the organization and can be especially burdensome when they end up creating work in separate systems outside of HR. Standalone systems add unnecessary costs for applications, operating systems, hardware and support. Lack of synchronization, data errors and difficulty in quality assurance adds avoidable risks and costs.
Personal processes are those which require employees to complete a barrage of forms and digesting information for managing their life, making financial decisions and protecting their families. These include assuring pay, benefits, enrollments and access to other employee services are on-time, accurate and available. As each Company gathers the regulatory-required I-9 and W-4 forms; when and how is the data collected for direct deposits, garnishments, and benefits elections, coverages, dependents and beneficiaries? On-boarding should also address how much time, enthusiasm and productivity is lost by a new employee who is navigating through all of the plan documents, forms and company policies.
Personal effectiveness goes beyond forms. On-boarding can offer pre-employment training including mandated diversity and safety courses. Doing these electronically means there is opportunity to assure that these have actually been completed. More importantly, On-boarding is a tool to engage and align the employee to the organization.
This includes orientation to the culture, introduction to colleagues, meetings with management, access to coaching and job readiness training. It may even allow employees to post personal data and begin to communicate with colleagues through social networking tools
Advanced companies provide special web-access with the ability to share personal pages, schedule training, arrange real and on-line meetings with colleagues, management, and peers, and on line access to many systems at time of acceptance --- well before the candidate formally begins. Some companies are beginning to use virtual worlds and advanced simulation tools to provide orientation to the company and its work. Engaging the employee in this way helps smooth the transition for the new employees as well as for the people with whom they will be working. The multiplier effect on time, especially for teams in need of new resources, means delivering employees who can help right away as opposed to pulling people off their jobs to help them.
Perhaps most important, the proper On-boarding process makes a powerful positive impression on the new hire who will surely be letting many friends and family the professionalism and employee commitment made by their new employer. Engaging the accepted candidates earlier and more deeply may also reduce the likelihood of their taking other employment. This is especially important for organizations competing for talent in a competitive labor market.
Pulling together all of these elements of On-boarding requires a paradigm shift from traditional functional ownership of separate business processes to a single integrated set of systems and data under the guidance of an Employee On-boarding Process Owner of end-to end process spanning all business functions. Employee On-boarding needs to be “owned” by a single coordination point both from a business process perspective and from a systems perspective; it is not just an HRIS responsibility.
Charter the Team
Employee On-boarding is a nexus of processes which together are focused on introducing employees to the Company and getting them fully productive. Many companies have, by default, defined Corporate HR as the Process Owner; however, being named as the process owner does not mean that HR really handles the complete spectrum of all the jobs that need to be done. Others may see it as an IT solution because so much of the product of the integration of On-boarding is an integration of workflows and data across systems; but that also falls short. No single person or organization controls even a majority of the processes, but someone must take ownership for it to work. The ideal “owner” of On-boarding has a thorough grasp of both systems and business processes, and has the ability to engage the different participants needed for a complete solution.
Once the process ownership is selected, then all business processes that could potentially be involved with On-boarding a new employee must be defined and aligned. Close at hand are Local HR, Staffing and Recruiting, Payroll, Employee Benefits, and possibly Relocation, Expatriate Services, Medical Affairs, and Legal. To these, add Facilities and IT support services, security, and provisioning (such as phone and pda) as well as services that may be outsourced (such as End-User help Desk Support). Typically, a company will have twelve to twenty unique business functions with their own systems, data and processes that need to participate in On-boarding. Frequently On-boarding includes integration with multiple external vendors.
Thus the first task of “owning” Employee On-boarding is mapping the core functions and the right contact points in terms of members/participants to develop and validate the end-to-end comprehensive On-boarding process. Additionally, if developing a single global solution, representation for regional and divisional HR and IT is also required.
Setting the goals
The goals of an Employee On-boarding unification are simple and basic. For most organizations they likely include:
* to implement one standard set of processes,
* to eliminate unnecessary and redundant costs,
* to simplify and eliminate repetition in the On-boarding paper process with web-based forms and automated workflows,
* to provide a focus of quality assurance to cover all the steps of On-boarding,
* to reduce extra work, eliminate errors, and reduce timeframes,
* to assure security and financial controls are followed,
* to reduce new employee time to productivity from the current state to “Day One” productivity”,
* to enhance the employee “day one” experience by increasing a sense of welcome, reducing frustrations, and creating a very positive first impression of their new employer,
* to make On-boarding less disruptive and more friendly for the new employees colleagues,
* to streamline data flow and systems integration, and
* to provide a simple, non-redundant on-line mechanism for applicants/employees that can be used external to the Company’s firewall; and, to ensure that employees’ pay and benefits are accurate and on-time.
Do not forget to establish a “back-out” process for “no-shows”, especially for those industries and positions with a high degree of people who accept positions but never return for work.
The Roadmap
The steps of Employee On-boarding should commence with capturing the information gathered from the Hiring Manager during the Job Requisition process. Then, follow the flow of information and forms through each step of the On-boarding process, which includes:
* Job Posting,
* Receipt of Applications and Inquiries,
* Candidate Identification & Screening,
* Job Interviews,
* Candidate Selection,
* Job Offer,
* Offer Acceptance,
* Background Check,
* Review of Policies and Plan Summaries,
* Forms Completion and Enrollments,
* Provisioning,
* Employee Orientation and Training, and
* Follow-up and Mentoring.
This culminates with the Employee Integration process, which passes the data through all systems and processes that are part of the actual employment.
Utilizing web technologies for communicating with the applicant/employee saves time and money. One effective strategy is to design an On-boarding website with partial access to company systems outside the company firewall. Consider providing the offer letter to the applicant’s email account (if they have one), and have them respond via email as well. Deliver benefits plan information, company policies, and required forms via the web for completion prior to first day of employment. If the applicant/new employee does not have email access, phone and kiosk enrollments may be considered to help speed-up traditional paper processes.
Provisioning is often noted as the process which causes the most delays for an employee to become fully productive. It is not atypical for a desktop to take 2 – 6 weeks to be delivered and fully configured. Due to the known lag time, Managers have been known to keep unused desktops on hand to provide to new employees. But at what cost? Is the asset on the books? Is it leased? In either event, funds are being wasted. Accelerating the cycle and provisioning earlier are the logical answers. The time to define and gain approvals for the assets and access for an employee is at the time of requisitioning, and the order can be triggered with confirmation by the Hiring Manager upon offer acceptance.
On-boarding includes integration with Staffing & Recruiting systems/services as well as Background Check systems/services. The optimum business model would be a single, common, integrated data base for consistent information and corporate-wide reporting, with a single set of decision support tools to facilitate statistical reporting and management analysis by all business functions and business operations.
The processes and flows described here are common to small single location organizations as well as large multi-divisional global corporations.
Governance
Once the entire process has been defined and adopted, the job is not over. An Employee On-boarding Governance Council is necessary to guarantee permanent standardization and therefore, optimal benefits.
The Council should be composed of members of each business function supported by the Employee On-boarding process. This group sets the direction and makes decisions around the On-boarding processes, including data and process standards, local variability, and systems integration. This group is also responsible for identifying changes in their organizations that could impact the then-operational Employee On-boarding process.
The key benefits of governance are:
* increases usage of common solutions,
* reduces variability and ensuing costs,
* establishes and ensures data and process standards,
* defines and monitors the Change Control process,
* establishes prioritization of new On-boarding efforts,
* communicates common vision and systems integration,
* establishes approval and escalation processes, and
* furthers the drive to “standardization”.
Calculating the Payback
Overall, the costs and time associated with improving On-boarding can pay for an effort many times over. An effective presentation to management will begin by surfacing the true costs and waste associated with On-boarding.
* define the tasks that could be eliminated, and the costs associated with those tasks. This may include staff reductions,
* consider the number of people and hand-offs amongst all business processes and the potential for error,
* look at the standalone systems and vendor fees that could be eliminated or reduced,
* eliminate any stockpiles of hoarded electronics and supplies. Companies have seen buffer stocks of 10% or more of their computer inventory,
* don’t forget printed materials and postage costs, and
* consider the new employee productivity gain (typically, a savings of several days or more per new hire). For office employees, a simple rule of thumb is one day = one half percent of annual base salary. For manufacturing positions, this can even be calculated as hard dollar reductions of cost of goods in hours.
Some key non financial measures of an Employee On-boarding process may be:
* increased Employee customer satisfaction,
* increased Hiring Manager satisfaction,
* increased HR customer satisfaction,
* increased Recruiting productivity (e.g. new hires per recruiter, quality of hires, etc.),
* provable security,
* enhanced employee brand, an,
* increased staff productivity.
Some service level measures to consider
* shortened time from acceptance to on-board,
* extending the standard recruiting measure of “Requisition to Hire” to “Job Requisition to Productivity”,
* percent of work and percent of new employees able to complete paperwork and get ready on their own time,
* reduced ramp up time from day one to full productivity,
* reduced material costs of the Employee On-boarding,
* accuracy and timeliness of information (Note: some of these result in provable hard dollar savings from external vendors while others represent interdepartmental savings which may be attested by those departments),
* reduced turnover during first six months of employment,
* probationary period success,
* new employee satisfaction with process, and
* manager satisfaction with process.
Summary
When On-boarding has been done right many processes are aligned, there are provable and reliable processes supplied with consistent information, and things happen faster, better and cheaper. Whether a company has some integrated On-boarding in place or is just considering it for the first time, a high level overview can provide the opportunity for HRIS to present new profit opportunities to the organization and increase the perceived benefit to all its “customers”.
About the Authors
David J. Dell, Ph.D. (ddell@hrtechteam.com) is the Chairman of HRTechTeam. David J. Dell, is an expert on best practices for Information technology management and HR Business Process Outsourcing. He has conducted assignments for global 100 companies exploring ways to improve their HR systems through technology and outsourcing, produced market research studies for major consulting firms and outsourcing companies, and produced numerous published studies for The Conference Board and other leading organizations including International Human Resources Information Management Association (IHRIM). Widely quoted and a frequent speaker, he was named by the magazine HR Outsourcing Today as a major thought leader in HR Outsourcing. Previously he has been an investment banker and served on the Boards of 2 NASD public companies. As a turnaround executive he has served as both a CIO and head of HR for technology companies.
Ernest P. Canali (ecanali@hrtechteam.com) is the Executive Vice President of HRTechTeam. Ernest P. Canali is a recognized HR Systems & Technologies subject matter expert and international speaker with over 25 years of extensive experience in HRMS strategic planning and global HRMS systems and operations. Most recently, he was IT Director, Human Resource Systems Technologies for Siemens Shared Services. Previously, he served as Director of HCM Solutions for PeopleSoft’s Northeast Region. He also led global HRMS systems and business transformation at Lucent Technologies, Honeywell International, and Allied Signal Corporation. Additionally, Mr. Canali has been an Advisor to The Conference Board where he developed research reports and was a frequent speaker.. He holds a BS degree in Computer Information Systems and Economics from Manhattan College. He was a founding member of the New York Chapter of IHRIM.
HRTechTeam provides practical advice and coordination support for On-boarding systems as well as helping companies determine the profit contribution and return on investment of HR system initiatives. www.hrtechteam.com
This article takes a fresh look at the On-boarding process in terms of its “profit contribution” through reduced cycle times, elimination of redundant effort, getting employees productive from the first moment they arrive and strengthening the employee brand. The benefits come in reduced HR processing costs as well as in many other areas from facilities management, security, legal compliance, provisioning of employees with the tools for the job, orientation, mentoring, networking and even better recruiting through leveraging the positive experience of new employees.
Employee On-boarding processes are typically fragmented, costly and time-delayed, with full provisioning for new employees often exceeding their first day of employment by days, weeks, or even months. Many companies have attempted to address these inefficiencies and lost productivity, but few realize the extent of a fully-defined end-to-end On-boarding process. Does it begin with the Employee Acceptance, or earlier? Is it limited to Human Resources, or does it involve other business functions? Does it end with Employee Orientation, or full productivity? Is it limited to what an employee needs to do their job, or does it include an employee’s personal life management as well?
The answer to each of these questions is an unqualified “Yes”.
Defining the Scope
On-boarding has three key dimensions: Business processes, Personal processes and Personal effectiveness. Business processes include components which the organization follows to provide the employee with the necessities for transition to employment and assist the organization for managing its business. Personal processes assist the employee with managing their life and protecting their families. Personal effectiveness includes training, mentoring, orientation, and access to the knowledge, tools and people needed to work effectively. There is a role for HRIS in each.
Besides enrollment and records in HR systems, On-boarding involves separate business processes and systems to support the employee that may include: finance, regulatory and mandated, company assets and logistics, and security.
* Finance may include records for reimbursements,
* Regulatory may include federal Health and Safety, EEO, INS, Homeland Security, etc. as well as state and local reporting; drug testing, medical and other records may be required,
* Company assets are the “work tools” provided by the Company. These tools would include, but not limited to, desktop telephones, computers, printers, software, cell phones, PDA’s, credit cards and company vehicles,
* Logistics address the “work place”: work space, parking and facility access, and
* Security goes beyond identification and physical access controls and may include limited access to many kinds and sources of information required for the person to perform their job function. The information could be in electronic or hard-copy form. This would include data base access, system access, query access, file room access, library access and the like.
While many companies have implemented On-boarding within “fully-integrated and centralized” HR systems or as part of “talent management”, this does not mean that all of the data bases and systems utilized by non-HR business functions are properly supported by the HRMS. Nor does it mean that information needed to be gathered directly from the employee is supplied by the HR systems to support other areas. For example, one Fortune 100 company requested Employee Contact Information on 5 different forms which were part of their Employee Orientation process. Each of these was used to update separate data bases in other business areas, such as Medical Affairs. Such redundant efforts are a waste of time for the organization and can be especially burdensome when they end up creating work in separate systems outside of HR. Standalone systems add unnecessary costs for applications, operating systems, hardware and support. Lack of synchronization, data errors and difficulty in quality assurance adds avoidable risks and costs.
Personal processes are those which require employees to complete a barrage of forms and digesting information for managing their life, making financial decisions and protecting their families. These include assuring pay, benefits, enrollments and access to other employee services are on-time, accurate and available. As each Company gathers the regulatory-required I-9 and W-4 forms; when and how is the data collected for direct deposits, garnishments, and benefits elections, coverages, dependents and beneficiaries? On-boarding should also address how much time, enthusiasm and productivity is lost by a new employee who is navigating through all of the plan documents, forms and company policies.
Personal effectiveness goes beyond forms. On-boarding can offer pre-employment training including mandated diversity and safety courses. Doing these electronically means there is opportunity to assure that these have actually been completed. More importantly, On-boarding is a tool to engage and align the employee to the organization.
This includes orientation to the culture, introduction to colleagues, meetings with management, access to coaching and job readiness training. It may even allow employees to post personal data and begin to communicate with colleagues through social networking tools
Advanced companies provide special web-access with the ability to share personal pages, schedule training, arrange real and on-line meetings with colleagues, management, and peers, and on line access to many systems at time of acceptance --- well before the candidate formally begins. Some companies are beginning to use virtual worlds and advanced simulation tools to provide orientation to the company and its work. Engaging the employee in this way helps smooth the transition for the new employees as well as for the people with whom they will be working. The multiplier effect on time, especially for teams in need of new resources, means delivering employees who can help right away as opposed to pulling people off their jobs to help them.
Perhaps most important, the proper On-boarding process makes a powerful positive impression on the new hire who will surely be letting many friends and family the professionalism and employee commitment made by their new employer. Engaging the accepted candidates earlier and more deeply may also reduce the likelihood of their taking other employment. This is especially important for organizations competing for talent in a competitive labor market.
Pulling together all of these elements of On-boarding requires a paradigm shift from traditional functional ownership of separate business processes to a single integrated set of systems and data under the guidance of an Employee On-boarding Process Owner of end-to end process spanning all business functions. Employee On-boarding needs to be “owned” by a single coordination point both from a business process perspective and from a systems perspective; it is not just an HRIS responsibility.
Charter the Team
Employee On-boarding is a nexus of processes which together are focused on introducing employees to the Company and getting them fully productive. Many companies have, by default, defined Corporate HR as the Process Owner; however, being named as the process owner does not mean that HR really handles the complete spectrum of all the jobs that need to be done. Others may see it as an IT solution because so much of the product of the integration of On-boarding is an integration of workflows and data across systems; but that also falls short. No single person or organization controls even a majority of the processes, but someone must take ownership for it to work. The ideal “owner” of On-boarding has a thorough grasp of both systems and business processes, and has the ability to engage the different participants needed for a complete solution.
Once the process ownership is selected, then all business processes that could potentially be involved with On-boarding a new employee must be defined and aligned. Close at hand are Local HR, Staffing and Recruiting, Payroll, Employee Benefits, and possibly Relocation, Expatriate Services, Medical Affairs, and Legal. To these, add Facilities and IT support services, security, and provisioning (such as phone and pda) as well as services that may be outsourced (such as End-User help Desk Support). Typically, a company will have twelve to twenty unique business functions with their own systems, data and processes that need to participate in On-boarding. Frequently On-boarding includes integration with multiple external vendors.
Thus the first task of “owning” Employee On-boarding is mapping the core functions and the right contact points in terms of members/participants to develop and validate the end-to-end comprehensive On-boarding process. Additionally, if developing a single global solution, representation for regional and divisional HR and IT is also required.
Setting the goals
The goals of an Employee On-boarding unification are simple and basic. For most organizations they likely include:
* to implement one standard set of processes,
* to eliminate unnecessary and redundant costs,
* to simplify and eliminate repetition in the On-boarding paper process with web-based forms and automated workflows,
* to provide a focus of quality assurance to cover all the steps of On-boarding,
* to reduce extra work, eliminate errors, and reduce timeframes,
* to assure security and financial controls are followed,
* to reduce new employee time to productivity from the current state to “Day One” productivity”,
* to enhance the employee “day one” experience by increasing a sense of welcome, reducing frustrations, and creating a very positive first impression of their new employer,
* to make On-boarding less disruptive and more friendly for the new employees colleagues,
* to streamline data flow and systems integration, and
* to provide a simple, non-redundant on-line mechanism for applicants/employees that can be used external to the Company’s firewall; and, to ensure that employees’ pay and benefits are accurate and on-time.
Do not forget to establish a “back-out” process for “no-shows”, especially for those industries and positions with a high degree of people who accept positions but never return for work.
The Roadmap
The steps of Employee On-boarding should commence with capturing the information gathered from the Hiring Manager during the Job Requisition process. Then, follow the flow of information and forms through each step of the On-boarding process, which includes:
* Job Posting,
* Receipt of Applications and Inquiries,
* Candidate Identification & Screening,
* Job Interviews,
* Candidate Selection,
* Job Offer,
* Offer Acceptance,
* Background Check,
* Review of Policies and Plan Summaries,
* Forms Completion and Enrollments,
* Provisioning,
* Employee Orientation and Training, and
* Follow-up and Mentoring.
This culminates with the Employee Integration process, which passes the data through all systems and processes that are part of the actual employment.
Utilizing web technologies for communicating with the applicant/employee saves time and money. One effective strategy is to design an On-boarding website with partial access to company systems outside the company firewall. Consider providing the offer letter to the applicant’s email account (if they have one), and have them respond via email as well. Deliver benefits plan information, company policies, and required forms via the web for completion prior to first day of employment. If the applicant/new employee does not have email access, phone and kiosk enrollments may be considered to help speed-up traditional paper processes.
Provisioning is often noted as the process which causes the most delays for an employee to become fully productive. It is not atypical for a desktop to take 2 – 6 weeks to be delivered and fully configured. Due to the known lag time, Managers have been known to keep unused desktops on hand to provide to new employees. But at what cost? Is the asset on the books? Is it leased? In either event, funds are being wasted. Accelerating the cycle and provisioning earlier are the logical answers. The time to define and gain approvals for the assets and access for an employee is at the time of requisitioning, and the order can be triggered with confirmation by the Hiring Manager upon offer acceptance.
On-boarding includes integration with Staffing & Recruiting systems/services as well as Background Check systems/services. The optimum business model would be a single, common, integrated data base for consistent information and corporate-wide reporting, with a single set of decision support tools to facilitate statistical reporting and management analysis by all business functions and business operations.
The processes and flows described here are common to small single location organizations as well as large multi-divisional global corporations.
Governance
Once the entire process has been defined and adopted, the job is not over. An Employee On-boarding Governance Council is necessary to guarantee permanent standardization and therefore, optimal benefits.
The Council should be composed of members of each business function supported by the Employee On-boarding process. This group sets the direction and makes decisions around the On-boarding processes, including data and process standards, local variability, and systems integration. This group is also responsible for identifying changes in their organizations that could impact the then-operational Employee On-boarding process.
The key benefits of governance are:
* increases usage of common solutions,
* reduces variability and ensuing costs,
* establishes and ensures data and process standards,
* defines and monitors the Change Control process,
* establishes prioritization of new On-boarding efforts,
* communicates common vision and systems integration,
* establishes approval and escalation processes, and
* furthers the drive to “standardization”.
Calculating the Payback
Overall, the costs and time associated with improving On-boarding can pay for an effort many times over. An effective presentation to management will begin by surfacing the true costs and waste associated with On-boarding.
* define the tasks that could be eliminated, and the costs associated with those tasks. This may include staff reductions,
* consider the number of people and hand-offs amongst all business processes and the potential for error,
* look at the standalone systems and vendor fees that could be eliminated or reduced,
* eliminate any stockpiles of hoarded electronics and supplies. Companies have seen buffer stocks of 10% or more of their computer inventory,
* don’t forget printed materials and postage costs, and
* consider the new employee productivity gain (typically, a savings of several days or more per new hire). For office employees, a simple rule of thumb is one day = one half percent of annual base salary. For manufacturing positions, this can even be calculated as hard dollar reductions of cost of goods in hours.
Some key non financial measures of an Employee On-boarding process may be:
* increased Employee customer satisfaction,
* increased Hiring Manager satisfaction,
* increased HR customer satisfaction,
* increased Recruiting productivity (e.g. new hires per recruiter, quality of hires, etc.),
* provable security,
* enhanced employee brand, an,
* increased staff productivity.
Some service level measures to consider
* shortened time from acceptance to on-board,
* extending the standard recruiting measure of “Requisition to Hire” to “Job Requisition to Productivity”,
* percent of work and percent of new employees able to complete paperwork and get ready on their own time,
* reduced ramp up time from day one to full productivity,
* reduced material costs of the Employee On-boarding,
* accuracy and timeliness of information (Note: some of these result in provable hard dollar savings from external vendors while others represent interdepartmental savings which may be attested by those departments),
* reduced turnover during first six months of employment,
* probationary period success,
* new employee satisfaction with process, and
* manager satisfaction with process.
Summary
When On-boarding has been done right many processes are aligned, there are provable and reliable processes supplied with consistent information, and things happen faster, better and cheaper. Whether a company has some integrated On-boarding in place or is just considering it for the first time, a high level overview can provide the opportunity for HRIS to present new profit opportunities to the organization and increase the perceived benefit to all its “customers”.
About the Authors
David J. Dell, Ph.D. (ddell@hrtechteam.com) is the Chairman of HRTechTeam. David J. Dell, is an expert on best practices for Information technology management and HR Business Process Outsourcing. He has conducted assignments for global 100 companies exploring ways to improve their HR systems through technology and outsourcing, produced market research studies for major consulting firms and outsourcing companies, and produced numerous published studies for The Conference Board and other leading organizations including International Human Resources Information Management Association (IHRIM). Widely quoted and a frequent speaker, he was named by the magazine HR Outsourcing Today as a major thought leader in HR Outsourcing. Previously he has been an investment banker and served on the Boards of 2 NASD public companies. As a turnaround executive he has served as both a CIO and head of HR for technology companies.
Ernest P. Canali (ecanali@hrtechteam.com) is the Executive Vice President of HRTechTeam. Ernest P. Canali is a recognized HR Systems & Technologies subject matter expert and international speaker with over 25 years of extensive experience in HRMS strategic planning and global HRMS systems and operations. Most recently, he was IT Director, Human Resource Systems Technologies for Siemens Shared Services. Previously, he served as Director of HCM Solutions for PeopleSoft’s Northeast Region. He also led global HRMS systems and business transformation at Lucent Technologies, Honeywell International, and Allied Signal Corporation. Additionally, Mr. Canali has been an Advisor to The Conference Board where he developed research reports and was a frequent speaker.. He holds a BS degree in Computer Information Systems and Economics from Manhattan College. He was a founding member of the New York Chapter of IHRIM.
HRTechTeam provides practical advice and coordination support for On-boarding systems as well as helping companies determine the profit contribution and return on investment of HR system initiatives. www.hrtechteam.com
Transforming the HR Department into a Strategic Profit Generator by Leveraging Technology
HR’s biggest challenge today is maximizing return on investment (ROI) on Human Capital. Not only is HR tasked with attracting top talent; it must also transform the HR Department into a Strategic Profit Center by leveraging technology to manage people, process and strategy
HR Technology provides powerful tools for saving money and deploying resources better such as controlling the high costs of benefit enrollment and utilization and reducing errors in time and attendance reporting. The greatest opportunity is reducing the waste and increasing the benefit of the money the organization pays people.
The numbers should be obvious: salary and benefit dollars are about 25 – 50 times the amount spent on all HR, and about 200 – 500 times the amount spent on HR technology. Only about 15% of HR spending is on technology. If you can make HR 10% more efficient you might be able to justify HR Technology increases of 50%. If you can use technology to increase the return on people by only 1% you can easily pay for tripling the HR technology budget.
Smart technology use can reduce waste by at least 1% of salary in most companies and can increase benefit much more. Some ways to reduce waste of dollars:
- Fix poor reporting and errors in payroll
- Track and enforce eligibility for health care in real time
- Use on boarding to reduce the provisioning cost for new and transferred employees
- Assure prompt termination of expenses (including overlooked items like phones, subscriptions, and blackberries) through proper off boarding.
- Integrate accounting for all employee expenses.
Use technology to cut payroll costs or unemployment and increase perceived benefit:
- Facilitate payroll tax-exempt benefits like transit checks and employee health savings
- Provide for voluntary time off without pay for periods where low demand may lead to layoffs or unprofitable work.
- Support strategic management of temporary, project staffing, and outsourcing providers
Profit from technology by ensuring you get the time you pay for.
- Use on-boarding tools to get people up and running from day one.
- Manage overtime through time and attendance systems
- Enforce absence management policies and unpaid leave
- Support return to work to eliminate disability costs.
Profit from technology by deploying people for more production
- Ensure hourly workforce availability for manufacturing, service and financial businesses
- Link project management tools to staffing to fill critical gaps and anticipate readiness for new assignments
- Create contingency workforce capabilities for seasonal and unexpected demand
- Provide disaster recovery and emergency response staffing flexibility
Profit from technology by increasing the value of human capital
- Provide and ensure learning
- Streamline performance
- Build a pipeline of talent inside through career and succession planning
- and outside the company through recruiting and talent
Cumulatively the provable opportunities are typically in the two to three percent range of labor spend and the soft dollars can be much more. A public company that can reduce its labor costs by 2% per unit of revenue can expect share holder value to increase by at least 10%.
HR Technology can customize the software and analytic tools currently available in the market to make these opportunities a reality.
The Elephant on the Table for HRIS
Everyone knows and no one admits that HRIS gets the short end of the stick. HR Technology is seldom a priority for HR execs, it is always a stepchild for IT departments, and mostly invisible to user departments except as a chargeback. Every HRIS department I know of is understaffed, has to fight to keep headcount let alone help get new positions, and cannot get the salary dollars to attract top people for the openings they do have.
- Over 40% of the work is done by contractors who typically bill double or more what a salaried professional gets.
- Offshoring and outsourcing looms as a threat over many careers.
- IT professionals avoid involvement in HR Technology projects because there is so much legacy technology that may not be easily portable to other career opportunities.
- There are thousands of open positions for HRIS at all times – the consulting firms snap them up and resell them at a premium. (check our open jobs indicators on our web site)
At the same time, HRIS requires real expertise in terms of domain knowledge and complex operating environments. It takes years for someone to get really good at HRIS. It takes years to know the complexity of a company and its systems.
What can be done about it? I do not believe Cassius in Julius Caesar:
“"The fault, dear Brutus, is not in our stars,
But in ourselves, that we are underlings."
HR Technology professionals are not at fault – but the fact is we do have power to make a change in how HRIS contributes to the corporate top line and the bottom line and fight for the resources to do it. Better, faster cheaper and more profitable.
Here are some basic facts to start you thinking –
- When employees terminate or are transferred many charges are floating around that are not canceled in timely fashion – phones, computers, blackberries, and even cars are just the tip of the iceberg.
- There are typically days and even months of extra pay, insurance, and benefits your company pays between the time an employee terminates and charges actually cease.
- There are 12 or more processes that must be handled in bringing a new employee on board and a similar number for inter company transfers.
- Typically every payroll error costs your company more than twice as much to fix than the total amount of the error.
- Predictive staffing in manufacturing and retail environments can save millions in overtime charges and lost business.
HRIS departments can capture these dollars for their Companies and get the credit for them. This is the business case that gets the resources to do the jobs we know we can do well.
In the next few months we will discuss some of the building blocks for your business case and we hope we earn your friendship and trust in the process. We welcome your input and support. If you have a specific question you want addressed please let us know.
Welcome to HRIS Profit Series
Welcome to the HRIS Profit Series
Sponsored by HRTechTeam - Your HRIS/IT Staffing and Consulting Partner
HRIS can do more than cut costs. It can contribute to profits.
The HRIS Profit Series features monthly executive briefings from HRTechTeam's thought leaders, Dr. David Dell and Ernest P Canali. Here are some of the topics:
- The Elephant on the Table for HRIS.
- Transforming the HR Department into a Strategic Profit Generator by leveraging technology.
- Turning Time and Attendance Systems into money machines.
- Attracting and keeping HRIS talent.
- HR Technology and legal compliance.
- Justifying upgrades and add-ons.
- Turning SLA’s into budget wins.
- Plugging the leaks in payroll.
- Maximizing the return on employee dollars.
- Designing metrics to prove benefits delivery.
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