January 30, 2019
How Innovative HCM Solutions Support Digital Transformation
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Human Resource professionals today face a daunting task: they must reimagine work from recruitment and job evaluations to collaboration, perks and the workplace itself. They are challenged with uneven economic growth, various local and international regulations, rapidly evolving technology, and managing the geographic and skill mismatch for many talented workers. By 2025 Millennials will represent 75% of the global workforce. As a result, HR departments need to be prepared to offer meaningful work, to their employees such as Telecommuting, Flexible Work Schedule, Employee/Social Engagement, Learning, Leadership & Career Development and Talent Management.
Many companies are still relying on familiar data points to determine the potential of their existing and prospective employees. For example: the university they attended, academic record or previous employers. But these are crude indicators of actual performance. In reality, there is no statistically significant correlation between a college degree and success in a given position (McKinsey Report: Managing Talent in a Digital Age, March 2016). However, using sophisticated machine learning and algorithms can assess and predict success based on innate capabilities and IT knowledge. And the backbone of these evolving technologies is having a modern, comprehensive, integrated HCM system in place for the employees to leverage enabled for the 21st Century.
If the HR organization desires to convert itself from an “overhead” unit to become more strategic, they need to embrace technology. They need to transform their mindset from the transaction-oriented functions (e.g. payroll), which have been highly automated over the last 40 – 50 years to Big Data, Artificial Intelligence and Predictive Analytics to align, support and “add value” to the enterprise. More importantly, they need to understand and boost their employer brand in order to keep employees happy and attract the best talent. According to a recent Ricemart survey, the study found that 84% of employees would move to a company with a fantastic reputation, even if the salary bump wasn’t that large. As a result, the HR department has to be even more vigilant and data-aware to correlate one’s brand and uniqueness to sentiment analysis, pulse surveys and understanding where you are getting your best talent from a specific recruitment channel.
Now is the time to link these insights and deliver Human Capital value via an advanced approach. This opportunity has never been available to an HR organization before today!!!
Before discussing the more strategic areas of HCM solutions, just a brief narrative on payroll. Payroll solutions have been one of the most mature business processes, going back to IBM mainframes approx. 60 years ago. The actual payroll process has changed little over time. As an employee, I can recall two innovations over the last 40 years: salary auto deposit & self-service capability to view or download my paystub. Surely, there have been advances for the payroll department with respect to efficiency and effectiveness over time, however, it has been a laggard in innovation and will continue to be so in the future. Recently, I listened to a radio advertisement for a cloud payroll solution as low as $10 per month, which confirms payroll has become a “commodity” today.
Payroll solutions will remain tactical and will continue to keep pace and maintain a myriad of changes to rules, policies, procedures, models, allowances and tax rates that govern the management of payroll locally or outsourced to local payroll providers.
In comparison to the surrounding HCM modules, there have been exponential digital transformations taking place over the last 5 years from IoT to Blockchain to Artificial intelligence. Accounting & Payroll functions have been completely automated. Across the board, enterprises have shifted from task management to value-based contributions, productivity and process improvement. The modern HR department today is dedicating itself to attracting, recruiting, developing, managing, and retaining talent, predicting skills shortages and developing and executing plans to address them. This represents a major shift from HR’s traditional function – the tactical management of personnel considerations – to the development of employee insight and the creation of value.
Yet payroll does represent the highest percentage of the total expenses of an organization. As such, payroll should be the source of a vast amount of data and strategic insight and provide a competitive advantage. However, this process when done in isolation of other related expenses, or not leveraging a holistic budgeting and forecasting process can be intensely manual, counter-productive and complex. There are more advanced and integrated business practices & processes to achieve this objective.
More often than ever, organizations are concerned about setting up a more streamlined HR operation to reduce costs (FTEs, Response time, etc.) and improve the general quality of the services offered to their employees.
Especially in emerging markets (such as LAD, Asia & Africa), many of the organizations are still dealing with heavy transaction-and-admin-based HR departments. By leveraging technology, self-services and possibly shared services via an HR Transformation approach, companies benefit from a more streamlined HR Operation (Personnel Admin, T&L, Payroll, benefits, etc.) and that will ultimately create a more cost-efficient HR organization.
When we optimize the HR operation, those reductions (in effort, time and HR FTEs) may create room and opportunity for companies to use that “saving” to fund investments in Talent Management, which are the areas directly linked to revenue generation (performance & goals), retention, career development, learning, etc. This is where HR can make their value more tangible and visible
For companies where their HR organization run operational processes inefficiently (especially Personnel Admin, Time & Labor, Comp & Ben and Payroll), they are probably less likely to get Board Approval to invest in Talent Mgmt areas that can boost performance and goal achievement. In other words, if there’s room for improvement in the HR operation, companies should probably start there and pave the way to improve their Talent Management processes.
The following are some of the more advanced functions and benefits available from a modern architected HCM Cloud from a user role perspective:
Employees take accountability for their own Personal & Professional Development
Managers can enrich their Workforce
HR Professionals can advance the organization & increase the Employer Brand
CFO, Controller and Head of Strategic Planning leverage a holistic view of Financials & Human Capital
Recruiters can source talent with improved quality and speed
HR organizations today are sitting on a gold mine of data: recruitment data, career progression data, training data, productivity personal development data, competency data and staff satisfaction data. Unfortunately, this data may be fragmented, isolated and may need to be re-purposed in a more modern architecture. You may also want the opportunity to scan social media data or gauge the content of emails to gauge employee sentiment. According to an Economic Intelligence Unit survey, approx. 82% of organizations plan to start mining HR big data by the end of 2018. Unfortunately, too many HR departments will spend the majority of their time on transactions, admin tasks or legal issues. Furthermore, cumbersome staff appraisals, day to day trivial detail related to recruitment and people management and wasteful time spent with an annual employee satisfaction survey. Or if they are managing data, then they are using the traditional KPI’s like absenteeism. But today, there are far more unique and valuable metrics that can deliver critical business insight and have a significant impact on the organization's performance. HR departments can transform to a modern architecture and seamlessly execute both a shared-services and a self-service model. And by optimizing the HR operation, the enterprise will ultimately reduce costs and free up capital to invest in “Talent Management”, which is directly linked to “adding value” and generating revenue. If we learn anything from the past….remember what the smartphone did to major department stores 10 years ago! The next Evolving Technology wave coming is even bigger and will cause further disruption. Companies cannot afford to sit on the sidelines, if you move slowly, and continue to use multiple HCM systems with fragmented data, you lose! In comparison, leverage an integrated, innovative, modern HCM system that includes predictive data analytics, machine learning and artificial intelligence, you will achieve real-time insights on how employees feel about their work and employer. You will have the opportunity to create an innovative employer brand, to attract the most talented candidates and retain your most top talent within your organization.
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