The value proposition of a good human capital management (HCM) solution relies on its ability to deliver an ROI through automating manual processes, improving efficiencies of existing software processes, and reducing or eliminating costs associated with bad data. At the heart of all this is the fact that human intervention in a business’s HCM is costly.
It costs in the form of waste: wages going to staff filing forms, faxing paperwork, consolidating data in spreadsheets, doing double data entry in multiple systems; these are wages being paid for activities that don’t add value and aren’t part of the real work of running a business.
There’s also costs associated with the inaccuracies prevalent in any system with human intervention; double data entry doubles the opportunities for typos or errors of omissions, manual processes introduce uncertainties. Payroll errors can lead to fines and penalties. Time tracking errors can cost in either overpayment or employee dissatisfaction. Labor budgeting and forecasting errors lead to sub-optimal schedules that can cause understaffing, productivity problems and unhappy customers.
Even with modern HCM solutions bringing automated processes and tight integration between applications that support HR functions, many HCM solutions have human intervention hiding in them. Does yours? Here are some common places to look:
The gross-to-net pay process
The gross-to-net calculation is at the heart of human capital management; every business in some form tracks time and attendance, determines gross pay for each employee, applies deductions and taxes to get net pay, and ultimately pays that out. There are tons of permutations under the umbrella term of ‘gross-to-net’, different ways of determining how much to pay staff, such as whether staff are hourly or salaried, full- or part-time, how they earn overtime, what deductions are made, and so on. HCM software helps out immensely but not all solutions make it seamless. There are gaps for human intervention to hide in.
To find it, look in the links between the different functional areas of the process.
First, look at how time details get to payroll. Many solutions integrate time and attendance with payroll but require human intervention to move the data across from the time system to the payroll system. As I’ve written before, this is not ideal. You’ll have a timesheet that collects time and attendance, automatically calculating overtime, shift premiums, and so on. Then you’ll also have a payroll application that applies deductions and calculates taxes to that gross pay to get to net pay. But if in order for the gross pay data to get into the payroll application you need human intervention, or that someone must kick off by running an export process, you run the risk of data being out of synch and other errors. In some instances this even involves FTPing the export file produced by the time system into an import directory of the payroll application.
The employee record
There is a lot of information associated with employees, personal details, pay details, work assignments, performance reviews, and more, stored on the employee record and used by the different functions of HCM. Time needs pay rates to calculate gross pay. Payroll needs pay rates for quick entries or adjustments payroll administrators make. Payroll needs address details to determine jurisdictions for tax.
When this information changes – employees move, get raises, change positions – does the new information flow everywhere it needs to be automatically? Or is there some human intervention hiding in the process of maintaining the employee record?
There are a couple of ways for human intervention to creep in when dealing with changes to the employee record. In the more egregious of the two, the changes must be recorded in multiple places. When an employee is promoted, their new position has to be recorded in both HR and payroll systems. Or if an employee moves across state lines, the HR administrator records the new address in the HR system but the payroll administrator needs to remove the old state taxes and add the new ones to their record before they next pay run to ensure they’re taxed correctly.
The more common situation involves an integrated solution, similar to the divide between time and pay mentioned above, where the different HCM functions share the employee record from the system of record. Changes made in HR are exported to the areas of the solution that require them. This may mean a single export file to time and payroll systems, it could require different exports; one to time, one to payroll and benefits systems. That depends on what permutation of integrated systems the business uses, but the problem remains – this is not automatic, it requires someone running an export or import job (or both) and it means interfaces between these systems have to be coded and maintained.
Recruiting and onboarding
Examine the process of creating a job requisition, posting its details, going through the recruiting process, before finally turning a candidate, through onboarding, into a fully fledged employee. Each stage can require human intervention if your HCM solution isn’t true single application.
To create a job requisition, staff need the job description and details, often from a comparable, existing position already recorded in the HR system of record. Does the solution automatically pull in the details from a comparable position or does it require human intervention and some copy-paste work to fill out the requisition?
To attract talent, the job requisition needs a posting. Either internally or on external job boards; often both. Does the HCM solution create these posts from the relevant details? It’s more human intervention if the recruiter has to perform double data entry on the internal board and external boards. Usually once these posts are up, someone has to remember to take them down once the requisition is filled.
Once a candidate is hired, recruiters have a fair amount of information about them as an applicant: personal details, their address, the position they accepted, their compensation, who they’ll report to, their start date, their work location. What happens to this information? The most efficient process with a true single application for HCM would take what recruiting knows about the applicant being hired for a job requisition and turn it, through onboarding, into an employee record automatically.
Remember, the right HCM solution should simplify and expedite your processes while improving the accuracy of the data involved; it can’t do that to its full potential, and really deliver on a tremendous ROI, if human intervention hides in the solution.