Recession brings tech to the forefront for people managers
People are at the heart of human resources but technology must not be overlooked in this part of the business. Andrew Donoghue points out the tech areas of which all HR directors must take note.
Smart businesses have always recognised the importance of maximising their most valuable asset - staff - with an effective human resources department. But amid the faltering recovery from the financial crisis, HR is increasingly being recognised for its strategic value as UK plc look towards growth.
To help HR meet this increasingly strategic role, proactive firms should investigate how IT can be used to make HR an even more precise discipline, says Richard Beatty, professor of human resources and leadership at Rutgers University, New Jersey.
"Only 15 per cent of positions - not people - really have a direct impact on the creation of customer and economic value in firms." he says. "Unless you know and understand where that is happening and manage towards that through the smart use of data and analytics then you will probably under-perform as a business."
But while Beatty sees the potential of technology to increase the sophistication of the HR, he has questioned whether this "people-centric" discipline has the technical pedigree to cope with a more data intensive role.
"The language of organisations is numbers; HR isn't very good at data analytics," Beatty told a recent CFO conference in Orlando. "They don't think like business people. Many of them entered human resources because they wanted to help people, which I'm all for, but I'm also for building winning organisations."
People not technology
While some HR practitioners might disagree with Beatty's assessment, recent research conducted by management consultants Accenture appears to back up his view. HR was at the bottom of a list of business functions when it comes to investments in analytics, the company found. Only 13 per cent of 600 senior managers at US and UK companies interviewed cited analytics as important to HR.
"Only a small number of HR functions are successfully using the data they collect to help make better fact-based decisions and improve business performance," says Dave Rich, managing director of the analytics department at Accenture.
Another recent survey by UK IT services company Logica paints a similar picture about the limited IT resources available to some HR departments. More than a third of HR departments questioned felt their HR systems were not adequate to support changes in the business when the recovery gets fully underway. Around 50 per cent of companies also admitted they weren't able to provide strategic data to the business.
"Too frequently we have found that this sophisticated HR intelligence has proven to be the missing link that has held back HR leaders from playing business planning roles within the organisation," says Patricia Taylor, Logica's global HRS director.
So what sort of technologies should HR departments be exploring as the UK emerges from recession?
Despite a relatively developed market for HR software, analyst Forrester states there is no one-stop shop in terms of what it describes as human resources management (HRM) applications that will satisfy all the needs of the HR department. Companies will have to deploy a range of technologies to cover all their HR needs, which will be shaped by a range of factors aside from the impact of the financial crisis.
Outsourcing to the cloud
Software as a service or cloud HR applications will become increasingly important for small and large companies alike this year, according to Forrester's TechRadar For HR Management Apps Q1 2010 report. "Application flexibility, cost predictability, and ease-of-use make SaaS very attractive. Within HRM applications, SaaS adoption is very strong," the report states.
Increased interest in hosted applications will also be driven by a desire to outsource more HR functions to third parties, Forrester claims. This practice will become more accepted over time.
American Airlines, for instance, recently announced it wanted to expand its global HR systems and chose an outsourced deal with IBM which it believes is a more flexible option than expanding its existing internal systems.
"In the airline industry, we're not only looking at growth - we follow the economy and have to be able to expand and contract as needed with minimal disruption," says David Levine, managing director of human resources delivery, for American.
Social side of HR
Aside from hosed applications, another wider tech trend which will continue to impact HR departments is the rise of social networking, according to analyst Gartner. In a recent research note the analyst pointed out that although social networking is shaping many companies marketing and web strategies, too few HR departments have embraced the technology.
"It is essential that organisations understand how social software is altering the recruitment landscape and adapt recruiting strategies and systems accordingly," the analyst stated.
Thomas Otter, research director at Gartner, maintains that HR departments have little choice but to embrace the potential of social networking as job candidates are already using the technology to find out more about their potential employer. "Online bulletin boards have provided discussion forums about companies for years but the explosion of social networks has moved these discussions from niche to mainstream, stripping away the veneer of the recruitment brochure," he says. "Tools such as LinkedIn, Facebook and XING enable candidates to easily contact past and present employees."
Video killed the classroom
Another IT trend which is impacting HR technology is the growing interest in videoconferencing. Virtual classrooms can help companies cut training costs and reduce carbon emissions associated with staff travel.
"Virtual classroom adoption has increased because of the efficiencies in teaching and learning and the ease of accessing the content," Forrester's TechRadar report explains. "Participants are in many locations yet connected through web conferencing for sharing and discussing slides, materials, video snippets, and even working in small virtual groups."
Video is not the only media that can help companies better engage with employees. Citing the example of President Obama's recent gift of an iPod to the Queen, Forrester analyst Zach Thomas claimed in a blog post at the time that companies should consider doing the same for new employees.
"What if every new employee in your organisation was given an iPod loaded with company lore/history, testimonials from employees, visionary wisdom from leadership, success stories, etc?" he wrote. "That's the key to successful HR initiatives - engagement."
It is not only changes in technology which will shape the development of HR IT systems. According to Forrester, the latest generation of workers have different expectations of working conditions which will force companies to adapt their HR policies and technology accordingly.
"As baby boomers gradually retire, the workforce will have many permutations: contingent workers, remote workers, satellite office workers, and a blend of main office and a remote office," the TechRadar report states.
HRM in action
One company which is taking advantage of this new wave of HRM applications is chemical giant BASF. It recently decided to centralise its fragmented IT systems into two shared HR service centres - one at its largest production site in Ludwigshafen, Germany and another serving the rest of Europe in Berlin.
Consolidating to two HR centres has allowed BASF to meet the HR needs of around 54,000 staff with just under 200 HR specialists, the company claims. The company has also opted to automate its HR systems to some degree by putting self-service kiosks in its production facilities so workers have access to HR services online for the first time.
BASF also claims that by integrating its HR systems with SAP Customer Relationship Management (CRM) software and other business intelligence tools, it has been able to improve the efficiency of its systems and glean more useful data from the applications. "We can now generate monthly reports on both HR direct service centres, so we can see which services are requested, whether the request came by telephone or via the kiosk system, how long each request takes to process, how many requests are answered directly on the telephone, and so on," says Songül Uzan, global HR governance at BASF.
Increasing innovation around HR technology will have to continue beyond the confines of the current economic crisis and recovery. In the Visions of Britain 2020 report, insurance company Friends Provident claims companies will increasingly look to hire more specialised talent in the future and will have to pay closer attention to managing this productive but expensive resource. "In 2020 HR will be required to be more rigorous about implementing systems that monitor employee output, which will be vital as we move towards a knowledge economy," the report claims.
HR will always be a people-centred discipline and is most effective when it recognises the diversity and vagaries of human nature. But clearly, technology has the potential to improve the service that HR staff can provide to employees while also extracting the granular metrics which management needs to navigate the uncertain times ahead.