Integrated Human Capital Management: Achieving Success By Crossing Traditional HR Boundaries

Integrated Human Capital Management: Achieving Success By Crossing Traditional HR Boundaries*

By Hewitt Associates who can be contacted at www.hewitt.com

1. Introduction

Leaders often talk about thinking outside the box and creating synergies--achieving more value together rather than as individual parts. These efforts require crossing or breaking down boundaries.

Human Capital Management (HCM) involves all the programs and processes that deal with the human capital or human resources of your business. Recruiting, training, rewards, performance effectiveness, benefits, career development, and workforce relations are all included.

Integrated HCM coordinates and brings together the data, processes, user experience, and business measures organized around outcomes. Traditional boundaries are freely crossed to achieve breakthrough results in efficiency, productivity, and ultimately return on investment (ROI).

How would integration change the way human capital is managed at your company? What needs to be done to make it happen? Few, if any, HR leaders would disagree with the goal of integrating HR, but many have experienced firsthand the tremendous challenge and resource requirement in technology and talent to implement this goal. Most companies face strong barriers to integrating HCM, for example:

1. Companies cannot get the information they need out of their HR systems.

2. The HR function is organized in silos, and data, processes, and reporting measures typically do not permeate these silo walls.

3. Many HR processes are so inefficient and ineffective that they cannot simply be coordinated--they need to be rebuilt. It is difficult to know where to start and where to look for best practices.

4. Analysis is not enabled to drive overall business results.

It is time for a different approach to HR--one that removes barriers, crosses traditional boundaries, and achieves better outcomes for employees, managers, and HR professionals, and better results for the business.

2. Data--One Entry in One Location, No Exceptions

At the core of integrated HCM is the requirement that all human capital information resides in a single data repository, in which each data element exists only once, regardless of how many processes it serves across various areas within HR.

This appears to be a simple concept--get all your information in one place--but many human resources management systems still replicate data across various modules, and thus house redundant data. This causes inaccurate and inconsistent HR service and results. Many organizations have upgraded legacy systems and implemented ERP systems to centralize data sources, but unless HR processes and reporting measures are restructured to utilize a common data warehouse, the technology enhancements cannot solve the problem of redundant data.

Breakthroughs in efficiency, productivity, and quality can be achieved by having a single data source feed all processes and reports, and a system in which updated data automatically flows to support multiple processes.

3. Processes come together to support user activities and events

HR customers--employees, managers, line executives--think about desired results, not HR process. So, activities must be organized around their desired actions and outcomes.

Integrated HCM organizes processes to answer questions: "What do I need to do? What business results am I seeking?" For example, a manager wants to know what actions to take to fill an opening, make a pay adjustment, or discuss a performance issue with an employee. The processes become woven into a user’s work and life activities rather than exist as isolated HR tasks.

Many of these activities involve a complex network of multiple processes and third party interfaces. Thus, the challenge in restructuring HR processes to support HR customer activities is to most effectively and efficiently manage all the complexities and linkages.

This "behind-the-scenes" management of complexity extends to the impact of business restructuring or acquisition/ divestiture activity on HR processes. Data handling and business rule modification are streamlined, and processes can be altered without changing steps for the user.

Compliance also is easier to manage. Notifications and suggested actions can be released to HR or its customers when business rules are breached.

4. The experience is everything

Just as the processes are restructured around how a user gets things done, the user experience and service delivery need to be similarly restructured.

A user’s desktop is personalized according to his or her role--employee, manager, HR professional, or line executive--and this personalization is built into the HR delivery process.

· Information, tools, and action are presented based upon a user’s preferences and priorities.

· Data and analysis are configurable and also can be tailored by role.

· User specific notifications trigger required or suggested actions.

The result is that users have one place to go for easy access to the resources they specifically need to manage human capital.

5. Measures and analysis show how HCM drives business results

You’re not alone if you feel like HR is busy measuring the wrong things. Many HR leaders are frustrated that current reporting measures have little connection with organizational performance and business results.

HR needs better data and analysis to support its role as a business partner, demonstrate its contribution to company success, and track key indicators of human capital as a competitive advantage.

Integrated human capital management is built upon a central set of data. Thus, reports, tools, and analysis are readily available to measure critical business results.

For example, executives could easily determine the impact on profitability of each empty seat that exists from voluntary turnover or delays in filling new positions. And managers could quickly identify the effectiveness of a reward incentive change since both performance and reward data reside in the same place for easy analysis.

6. Results bring Ggreater Llong-term Eeconomic Iimpact

The three main advantages of implementing an integrated HCM system are:

# Productivity. All HCM processes are organized around what HR and its customers need to accomplish for the business.

# Efficiency. Information, tools, and action are in one place for the user. Rework and redundancy are avoided, and costs are driven out of the system.

# Results. Metrics and data tie HCM to critical business issues so leaders can focus on the right opportunities. But the real value extends beyond operating efficiencies and cost savings. HR transformation can result in long-term organizational performance improvement. For example, consider the exit interview process. In a recent SHRM survey of 2,000 HR professionals, 87 percent said they conduct exit interviews but over 50 percent do nothing with the data. Imagine the impact on performance if the information could easily be captured and turned into action.

Integrating HCM is an extensive effort. Unless you have substantial technology resources and process expertise in-house, you will likely turn to a partner to plan, execute, and deliver comprehensive integrated HCM services.

What should you look for in a provider? The scope of this undertaking requires a partner whose core business is HCM. Look for demonstrated leadership in HR business process, HR financial and risk management, and HR delivery process and technologies.

Some providers offer to take over your existing function--shifting your current technology, people, and process to the provider. However, to realize the full economic impact and long-term value of an integrated HCM system, you need a partner who will help you transform HR into a more effective driver of results for the business.

* reprinted by permission