How HRIS Shapes Strategic HR

Too many Human Resource professionals do not have enough education in HR technology. Their experience with manual processing often decides their future. They are simply not ready to let go what they are familiar with and/or what works for them. Why let HRIS reinvent the wheel?

To be fair, this reluctance also comes from their sense of the human element. They might like the HRIS ability to count, categorize, and calendar. But, counting and processing human capital is just not the same as processing financial or marketing data. People problems are just different than product quality or process problems. How can HR benefit from improved HR technology and still maintain their special sense of employee involvement?

HRIS requires buy-in.

As HR principals, we need to lead. While many of us have learned on the job and/or grown through earlier software generations or have studied about HRIS in college, we have a professional and personal obligation to stay ahead of the curve.

We are often in a reaction mode, facing employee issues as they arise while allowing HRIS no more room than our filing system. HR leadership demands that we have the information to offer and implement HR strategies that will help define and shape corporate concerns about direction and ROI (Return on Investment). When a CEO asks for HR information, s/he is not looking for last quarter’s report so much as what next quarter will bring.

Before we can expect business leadership to commit to HRIS investment, we have to buy fully into the value and return ourselves. Only then will we have the depth and motivation to convince management that the new cost is better than doing nothing. But, since there are no production units to count, it may be difficult to justify the investment.

How HR affects company revenue?

It most certainly does even though Human Resources functions have always been considered a non-revenue generating expense load. Think of a corporation as a pyramid with layers.

• The largest stratum at the base is filled with support functions: IT, facility maintenance, accounting, and human resources.

• The next layer consists of junior and middle managers who try to steer the operation of the pyramid towards the established goals.

• The level above is where revenue happens, departments that reach customers and produce money: sales, customer service, shipping and handling, and so on.

It’s this revenue level that we must keep happy – and informed. For example, when Sales loses a key Sales Engineer, they worry about losing his dynamic on the sales team and about what business the employee is taking away. But, in real financial terms, there is a measurable loss each day it takes to fill the function. Here’s the math: the Sales Engineer is responsible for $3,000,000 a year, so each day lost can cost the department $12,000 (allowing the position two weeks vacation). So, if there is no job candidate in the pipe, this piece of turnover will cost $1.2 million over two weeks of recruiting and placement. In other words, there is a way to calculate the cost of turnover: exit through hire through training to speed. (Some of the loss is booked and old business, but that can be included in the calculations.)

HRIS shapes strategic HR.

A well selected Human Resources Information System allows the forecasting that other managers and officers need. For example, with employee costs accounting for 30 to 50% of the total expense burden, any modification of these expenses will have significant impact. So, HR becomes a star performer if the system is equipped to forecast impact pending even the slightest change in insurance or retirement benefit costs.

• It can demonstrate – and, thereby, make very real – the short and long-term impact of expansion or allocate specific production costs.

• It can report on the total cost of a change in the compensation cost or a union demand. It will drive HR managers to immerse themselves in all aspects of the business operation, to the benefit of HR and the other departments.

• In short, a good HRIS system will provide all the forecasting necessary to coach corporate leadership to a decision on the allocation and/or human capital management.

Because HR automation manages the calendar as well, it can improve overall employee job satisfaction by initiating employee performance assessment, wage and salary reviews, birthdays, anniversaries, and probation dates. And, this returns us to the start.

Conventional HR management has introduced HRIS with some temerity and allowed it to perform these personnel management chores. Until we are willing to take a larger risk on and able to justify the ROI on a contemporary HRIS system, we are not taking the lead expected of quality HR professionals.