The Impact of Implementing an HRIS
ARE YOU READY FOR A CHANGE
Integrated HR Information Systems (HRIS) have a profound
effect on firms that implement them. Most often these firms
are replacing several related systems, such as a personnel
database, payroll system and benefits system, with one HRIS
that does it all. Many people focus on the improved reporting
and processing that will be realized from the new system,
and those are the reasons most firms choose to implement a
new HRIS. But what many people dont focus on is that
the new HRIS will most likely affect the company much more
deeply it will challenge the operating structure and
principles of all the HR-related departments.
An integrated HRIS results is a drastically different environment
than a cluster of related but separate systems. The core concept
of a centralized data store inherent with an HRIS demands
integrated work processes for consistently managing that store.
The two attributes centralized data storage and integrated
work processes will affect the company in ways most
managers dont expect.
EVALUATING AND PREPARING FOR A
NEW HRIS
Many companies go through a process of comparing and evaluating
several HRIS packages using a team of analysts or managers
from the various departments affected HR, Payroll,
Benefits, Employee Relations, Training and so on. As this
team prepares its evaluation criteria and reviews HRIS features,
much is learned about the goals and values of the various
departments. The HR department is looking for improved reporting
of employee data, Payroll is concerned with the systems
paycheck calculations and regulatory reporting, while Benefits
may be looking for a more streamlined enrollment process.
As this team drives deeper into the selection criteria, the
members learn more about each other and may start to see the
emergence of some really messy business processes. It can
be a bittersweet process.
The hiring process is a good example. As a person is recruited,
hired and paid each department may have its own specialized
system and process for managing the employee data. As the
HRIS evaluation team discovers redundant processing and data
storage, its members start to see ways to make the process
more efficient by aligning their part of the hiring process
with the requirements of the other departments. The team members
are excited to find a better way to get the work done, but
scared by the ramifications of closer ties to other departments.
They think: If we improve the efficiency of the process
(have HR enter the W-4 at the time of hire), we wont
need as many people in our department (we wont need
to key W-4s anymore), and we might lose control of some piece
of data that is critical to our business function (how do
we know that HR will key the W-4 correctly?).
As the team evaluates an HRIS software package, it begins
to get a better grasp on what the entire companys business
processes are, and therefore what the company might require
in an HRIS. The team will most likely find that none of the
packages are an exact fit and that substantial effort is required
to modify or integrate the chosen HRIS. Or if not enough due
diligence and research have been done, the team may be facing
this effort and not be aware of it. This gap in planning will
show itself later in the implementation phase when the project
team realizes there are not enough resources time,
people and money to implement the HRIS.
Perhaps the most critical results of the HRIS evaluation
process are that the evaluation team set correct expectations
for the project and gain executive management commitment.
With correct, or at least realistic expectations and an executive
management team that seriously supports the teams efforts,
an HRIS implementation project has a much greater chance to
succeed. Most often the HRIS evaluation team members spend
most of their efforts building selection criteria and choosing
an HRIS, instead of setting expectations and building executive
support.
THE HRIS IMPLEMENTATION PROJECT
Configuring the New HRIS
There are three primary activities in an HRIS implementation
configuring the HRIS for the firms business processes
and policies, interfacing data with other systems and converting
historical data into the HRIS, and preparing the organization
for the new HRIS. An HRIS comes with built-in processes for
most HR activities, but firms will need to customize the system
to process according to their specific needs. For example,
every HRIS supports the process of benefits open enrollment,
but the system does not come delivered with a firms
specific benefit providers and eligibility rules. Customizing
the HRIS for this typically does not involve programming;
the common activity is to enter specific data into control
tables that then direct how the HRIS operates. The customizing,
or configuration tasks then become a process of understanding
the firms business processes well enough to encode that
logic into the HRIS.
This mapping of business processes and policies into system
control tables requires people who understand both the business
process and the HRIS typically the existing IT support
and HR business analysts. Due to the large amount of work,
the HRIS project team usually needs these analysts fully dedicated
to the project, requiring the home departments
to fill the gaps in their absence. Having partially dedicated
team members may cause tension since the team members have
to maintain responsibilities at the home department while
also fulfilling responsibilities on the project team. Either
way, back-filling resources becomes a big issue if not planned
for during the evaluation stage.
Firms may find that the internal resource people assigned
to the project do not have the skills or capabilities needed
for the job. Sometimes training can resolve this, but other
times the people lack basic analytical skills required for
the implementation. One of the key requirements for a person
to be successful on an HRIS implementation project is that
he/she have excellent analysis skills. The most analytical
people in HR and IT should be assigned to the project, or
else the company should rely on external resources (i.e. contractors
or consultants). The project can get done this way
but the more an implementation team relies on external resources
the more difficult it will be for the company to become self-sufficient
in ongoing HRIS support, maintenance, and operations.
Many HRIS implementations include, to one degree or another,
business process reengineering. As a firm documents, investigates,
and discovers its true business processes, its natural
that the firm also take time to improve them, or at least
integrate the processes across departments. The integrated
nature of most HRIS packages drives this activity. When a
process is reengineered or integrated, once-independent departments
become much more dependent on each other. That dependency
can increase tensions on the project team as representatives
from those departments learn to trust others to do their part
of the process. Or, once the project team members become comfortable
with the new processes they have designed, they may have a
hard time selling those changes back to their departments.
Most HRIS packages dont handle exception processing
very well. As new business processes are designed, the project
team customizes the HRIS around those new processes. Users
will most likely find that exception cases require significant
manual thought or labor to process since the exception
does not fit into the business process as implemented in the
HRIS. HRIS project team analysts will walk a fine line between
generalization of the process to fit exceptions vs. a more
narrowed implementation of the process to enforce data integrity
and accurate application of HR policy. This is a great time
to enforce some standards and clean-up special deals
but HR managers and policymakers must be willing to
support these efforts, and to help implement them.
Finally, as the project team analysts dig into the current
business processes, they may find that the HR users, and sometimes
managers, dont really understand or know the processes
well. Users may know what is done, but not why it is done.
Knowing the why part is critical to getting the most out of
your HRIS implementation. In most every HRIS there are two
or three technical methods of implementing any given requirement
knowing why something is done in a business process
helps ensure the project team analysts select the best method
of implementing it in the HRIS.
Linking the New HRIS with Other
Systems
Most HRIS project teams have a number of people assigned
to converting historical data from the existing HR databases
into the new HRIS, as well as for interfacing the new HRIS
with other systems that rely on HR data. As this group starts
mapping historical data to the new system for conversion,
most often group members will find (particularly when combining
data from several existing systems to go into one HRIS) that
the existing HR data contains a significant amount of invalid,
incomplete, or contradictory data. As the new HRIS was configured
for new, reengineered or streamlined business processes, the
existing employee data may not fit well into the new system.
The new HRIS will demand more complete and accurate employee
data.
Making sense of these data conversion problems is a skill
that falls to HR analysts, not the programmers writing data-conversion
routines. Conversion and interfacing are not solely technical
activities user consultation and input are required.
Many HRIS project teams discover these requirements too late,
thus increasing the demand for time from HR analysts on the
project team time that the analysts most likely do
not have.
If the firm has a data warehouse, the new HRIS data will
need to be mapped to it. If the data model in the warehouse
is based on the legacy HR database, the two data models may
not be compatible. A lot of effort can be spent mapping the
new HRIS to an existing data warehouse. Or if the HRIS vendor
has its own data warehouse application, the project team might
be tempted to use it, but theyll still have to contend
with converting existing historical HR data into the new warehouse.
Either way, HRIS project teams spend more effort than planned
on this issue the details can get very tedious and
time consuming.
Replacing HR systems involves any area of the company that
reads or relies on employee data. New system implementation
may highlight employee data privacy issues, or increase the
scope of interfacing once the project team realizes just how
many systems read employee data from the current HR-related
databases.
Preparing the Organization
Many times it is easier for project teams to focus on technical
aspects of the implementation, which is ineffective. For example,
configuring the HRIS to correctly assign resident tax codes
based on the employees address is easier than getting
HR, benefits, payroll, and recruiting to buy into and implement
a reengineered hiring process. The HRIS project team must
track progress not only on the technical aspects of implementing
the HRIS, but also on the softer side of managing the organization
as a whole to accept the new business processes that come
with the HRIS. Companies typically underestimate this change-management
effort. From the very beginning there must be a focus on preparing
the organization and the employees for the new HRIS.
A new HRIS, with more integrated work processes, tends to
pull related departments together. Some firms recognize this
as they go through the implementation process, and also implement
a new organizational structure with the HRIS roll-out. For
example, HR and Payroll may have reported to separate areas
of the company, and parts of HR business processes were scattered
throughout various departments. But as a new HRIS is implemented,
the previous organizations are transformed to report to a
single authority, and a shared-services group is established
to perform the integrated work processes that were once scattered.
This is a common, but often unexpected, result of HRIS implementations.
During the implementation phase, firms should also be determining
what their support model will look like what kind of
organization will be required to support this new HRIS? Those
who study this task in detail will realize they need cross-functional
support teams containing programmers (ABAP), configuration
experts, and business analysts to successfully support
the new HRIS. But this integrated support team does not fit
well into the vertical departments in most companies today.
Finding a way to implement this cross-functional team is a
critical success factor for the new HRIS ongoing operation.
All of the items mentioned so far force HR managers to become
involved in what is usually perceived as an IT project. They
may be accustomed to pushing responsibility for such projects
onto IT managers, but implementing an integrated HRIS requires
HR manager participation and active involvement in scoping,
implementation, cutover, resourcing and management.
LIVING WITH THE NEW HRIS
Changes in the HR User Community
An integrated HRIS leads to more integrated reporting of
employee data, which can lead to efforts that benefit the
company. Better reporting of employee costs, skills and requirements,
time-keeping and recording, etc. give senior managers information
that can be used to improve the application of HR policy or
to cut costs (i.e. reducing time-card fraud, highlighting
wasteful compensation practices, etc.).
Most integrated HRIS packages are very sophisticated in the
functionality and processes they offer. Compared to legacy,
or screen-based/code-based systems, the new HRIS requires
a more analytical user. The user cannot simply be trained
to put certain codes into certain fields -- he/she must know
the business process and how it relates to the HRIS. In most
companies, a certain portion of users will be able to make
this jump to analytical thinking; others will
not. The resulting shakeout has to happen, and it is most
often painful either for the employees themselves or
for the HRIS support organization.
If a more centralized, integrated HR organization doesnt
surface during the implementation period, the organization
will tend to evolve in that direction. An integrated, centralized
HRIS tends to pull user departments together. Using integrated
work processes across departments that do not operate under
a common authority will highlight data and process ownership
issues. These issues in turn get pushed up to HR managers
or executive management. Eventually, these managers resolve
the issues by increasing the integration of the departments
to match the processes. Either way it happens at implementation
or via evolution -- this level of organizational change is
always difficult.
Supporting the HRIS
IT support analysts may be accustomed to, and only skilled
for, flat-file processing techniques. Most HRIS packages rely
on relational data models, higher-level programming languages,
and interactive data management presenting technical
requirements for which some IT analysts may not be ready.
The new HRIS may have proprietary languages or facilities,
requiring new IT skills. Often these skills will be in high
demand, driving a premium rate of pay. Internal resources
may opt to leave the company for the higher pay, or they may
demand higher pay at the company. The higher pay might be
outside the HR guidelines for fair salary. The resulting dilemma
can create retention problems.
HR users the analysts in HR, payroll and benefits
must take a more active role in ongoing support and
system changes. Since business rules are often coded into
the HRIS instead of resting in manual processes, the business
analysts are necessarily drawn into this activity. Some firms
may push this business rule knowledge to their
IT support analysts, or rely on consultants who help with
the implementation. Although either of those scenarios can
work, HR business analysts and managers have the most to lose
if the HRIS does not process transactions correctly. Placing
HR analysts in system support and change roles will help ensure
that the HRIS processes transactions correctly.
Some companies depend too much on consulting firms or contractors
to perform an implementation. Many times this happens because
the firm can pay a consultant to do precisely what the firm
wants to do, which is often easier than getting internal resources
to do the same thing. It takes some of the pain out of change
management. This can lead to a continued dependence on external
resources and might be acceptable for firms that have historically
relied on external resources. For others it may generate substantial
internal conflict in the way of higher IT budgets or continued
presence of non-employees in the HRIS support organization.
RECOMMENDATIONS FOR SUCCESS
Given all the things that often do go wrong with HRIS implementations,
what can be done to ensure a smooth transition? There is no
one solution, no grand secret for avoiding all the problems.
As with most successful efforts, a successful HRIS implementation
requires participation and commitment from all areas of the
firm.
The first area from which to gain commitment is the firms
executive management the sponsors of the project. Given
the level of change such a project will create, there will
be areas that resist the implementation. Support from executive
management is invaluable for making sure new business processes
are implemented effectively, for funding the project, and
for ensuring appropriate staffing on the project team. Without
this support, the payoff of the new HRIS will most likely
be compromised, and will cause disruptions in employee service.
The executive managers should appoint a steering committee
containing stakeholders from all areas affected by the HRIS
(payroll, benefits, HR, IT, employee relations, etc). This
group should contain members who can ensure that their line
managers have the necessary directives and responsibilities
for making the HRIS operational. The steering committee should
take an active role in resolving broad issues and taking corrective
actions if the project gets off course. One of the most important
roles of the steering committee is that of winning the
HR managers. The steering committee needs to ensure
that managers fully understand the impact of a new HRIS system,
that they are involved in the implementation, and that they
support the project with a positive attitude towards change.
This will not only set an example and guideline for each committee
members department, but also prepare the ground for
dealing with change-management issues.
The steering committee should be responsible for appointing
a project manager or project management team, as well as assuring
that the project is appropriately staffed. The project manager
should carry out team-building exercises for employees who
will have to work together, sincemany people who will be assigned
to the team may not have experience operating in such an environment.
The HR analysts and the technical analysts must learn how
to work together to solve issues neither group can solve alone
such as data conversion and interfacing. HR analysts
will become more technical, and technical analysts will learn
more about HR.
The project planning process needs to include not only the
technical tasks but also the processes and deadlines for change
management tasks. The project manager can get an indication
of these issues early in the project by comparing the goals
of the different stakeholders involved and identifying all
the inconsistencies.
For those HR analysts who are placed on the HRIS project
team, their managers need to be fully aware of the analyst
roles in the project. Managers need to review and possibly
redefine the roles before, during and after the implementation.
New job descriptions may need to be prepared and managers
need to brief employees about any changes and additional responsibilities.
Managers also must start back-filling the positions left by
the analysts to ensure their departments still run smoothly
and the analysts are not torn between working in their departments
vs. working on the HRIS project.
Not every person will be able to make the transition to a
new HRIS. Certain employees payroll clerks, benefits
analysts, IT support, and even managers -- may not want anything
to do with the new HRIS and the processes that come with it.
Instead of forcing them to make the transition, it is often
wiser to place them outside the HRIS-related organization
in roles appropriate for their skills. A transition plan needs
to be constructed, and the steering committee must accept
the fact that there will be some turnover.
Likewise, employees who have demonstrated their interest
and ability to work with the new system and who have gained
substantial knowledge of it should be offered an active system-support
role together with a promotion. This should motivate other
employees to follow their colleagues paths and will
discourage internal system experts leaving the company for
a higher-paying consulting job.
Training technical and non-technical must be
identified and performed to help people make the transition
to working with the new HRIS and the new organization model.
The training needs to go beyond screen-prints and mouse-clicking
sequences to an explanation of how the new process fits into
the organization, its relationship to other processes, and
the execution steps in the process. Employees will have to
know the why as well as the how of the process.
Formalized cross-functional support teams are essential to
the steady operation of the HRIS. Firms can be successful
by patching together an informal organization of HR analysts
and IT analysts, but that loose-knit framework may not hold
up to the continued demands of HRIS support. A formalized,
co-located team of HR and IT analysts will be most effective.
Many firms also find it useful to preserve the steering committee
past HRIS implementation and into the productive life of the
HRIS. The steering committee is an excellent group to monitor
the ongoing quality of HRIS operations, manage relationships
with the HRIS vendor, and clear the path for later HRIS upgrades
or enhancements.
It may take years for a firm to adjust to a new HRIS. As
it does, most will see that their organizational structure
will tend to reflect the HRIS structure. This is natural
managers for years have organized their departments to fit
the way work is done, and the organizational culture often
reflects that structure. When the way that work is done changes
and an HRIS will engender that change its
natural for the organization to change as well. Structural
and cultural changes might be painful, and people will resist,
but its hard to fight these natural tendencies. Instead
of fighting them, managers need to be aware of whats
happening and proactively prepare for this new world.
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