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“Failing to plan is planning to fail.” (Alge & Upright 2009, p.80)
“Use the right tool for the job,” the old saying goes, “and to use the right tool you have to know what job you’re trying to do.”
(Meade 2003, p.84)
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Do you need one?
Australian Defence Force
ADF some time ago flagged its intention to replace the HR systems with a wider solution. In December 2009, chief information officer Greg Farr told ZDNet.com.au that the department expected to ditch the "far from perfect" HR systems in 2009 in a tender worth around $400 million. (LeMay 2009)
http://www.abc.net.au/pm/content/2010/s2815919.htm
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Payroll implementation
“Behind every successful HRMS implementation, there was a thorough needs analysis". You can quote me on that! I cannot back that statement up statistically, however, after over 25 years in the business and 10 years of listening to IHRIM (International Association for Human Resources Information Management) members share "war stories", I am totally convinced that the amount of time spent on a thorough needs analysis before purchasing and implementing a new HRMS is the best barometer for predicting the success or failure of the project.” (Doran 2010)
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Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
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SYSTEMS DEVELOPMENT LIFE CYCLE (SDLC)
Continuous and iterative nature of planning and analysis!
Figure 4.1
Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
Planning
Long-range
Short-range
Analysis
Needs Analysis
Gap Analysis
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SDLC: Overview
Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
Design
“Blue print” for the system
Vendor selection
Implementation
Build, test and readied to “go live”
Maintenance
Corrective, adaptive, perfective & preventative
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SDLC OVERVIEW
Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
Needs: long-range planning
Strategic
“Big picture”
Phase containment
Needs: short range planning
Operational
Specific projects and programs
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SDLC: Planning
Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
Where are we now?
Where are we going?
How are we going to get there?
Revise and revisit these questions
On a regular basis!
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THE BIG 3
Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
Dissect and document current capabilities
Identify and prioritize needs
Conduct A gap analysis
Review the feasibility analysis
Determine usefulness of gap analysis in developing RFP for vendors
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ANALYSIS
Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
Current analysis
Use combination of methods:
Interviews
Focus groups
Surveys and online tools
Organizational archives
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ANALYSIS: WHERE ARE WE NOW?
Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
Who to ask:
HR functional experts
Job experts
Technical experts
End users
Top management
Consultants and other business partners
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ANALYSIS: WHERE ARE WE NOW?
Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
Heart of the needs analysis
Business requirements definition
Point at which organization determines and documents its current and future needs
Often used interchangeably with needs analysis
Prioritize business and system needs
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ANALYSIS: WHERE WE NEED TO GO
Where are we going?
Strategic vision: To transform the University’s way of doing business into a
flexible and user-centric portfolio of applications that integrates all Purdue enterprise data, information and processes
Helped identify needs in detail and select best system
Resulted in SAP-HCM
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Purdue University
Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
http://www.erp.com/attachments/4074_Accelerated%20SAP%20Implementations.pdf
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Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
Culmination of the needs analysis.
Compares current state of hris with desired state of hris
What important needs are not being met
What important needs are being met
Important decision making tool for HRIS project leaders.
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GAP ANALYSIS
Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
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HYPOTHETICAL GAP ANALYSIS REPORT
Figure 4.6
Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
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THE BIG 3 NEEDS TRIANGLE
Figure 4.7
Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
Who should determine what our needs are going forward?
How can we ensure that all of our needs are identified?
How do we limit the scope to the things we truly need?
Is it feasible at this point to implement a system that can meet our critical needs?
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NEEDS ANALYSIS: CRITICAL QUESTIONS
Basically a Project Management activity
Stipulate objectives, activities, time-frame, costs, required resources and staff, information collection methodology
Will help encourage management of project viability
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Develop a NA Plan
Typically, 2 reports emerge from the NA process
Long, technical, operational document, to guide system development or selection/purchase
Summary version, to trigger action from top management
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Develop the HRIS Strategy
Finally, a critical review of the whole process
As a guideline for any future modifications, or for a new purchase in future years
an analysis of which activities worked well and which didn’t
a phase possibly ignored by many organisations (many don’t even do NA’s!)
Discuss alternatives
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Evaluate the NA Effort
There’s no one right way for NA. Every organization is unique.
Even a token attempt at NA can save a lot of time, money, effort and heartache.
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Conclusion
Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
CUSTOMER-ORIENTED PERSPECTIVE OF THE HRM FUNCTION
Customers
•Line managers
•Strategic partners
•employees
HRM Function
Technology
•Staffing
•Performance Management
•Rewards
•Training & Development
Customer Needs
• committed
employees
•competent
employeesAll can be measured
Benchmarking & Best Practices
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Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
MEASURING HUMAN RESOURCE
EFFECTIVENESS: WHY DO IT?
Market the function
Provides accountability
Demonstrate contribution to bottom line
Cost justify HRM programs
Tie to strategic planning
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Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
IDENTIFYING HRIS VALUE
HR moving from being a cost center to profit center (Cascio, 2000)
Traditional financial measures not sufficient –Many HR outcomes are intangible, eg. Employee engagement
Direct (hard) & Indirect (soft) benefits
Implementation costs: Direct (h/w, s/w, customization); Indirect (lost productivity)
Timing of benefits (short & long term)
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Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
EVALUATING HUMAN RESOURCE PRACTICES: APPROACHES
Audit approach – Key Indicators reviews outcomes of HR functions
benchmarking
Analytic approaches – best practices
determines whether program had intended effect/impact: Fitz-Enz
estimates costs / benefits of programutility analysis: (CBA)
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Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
BEHAVIOR COSTING APPROACH: VALUE CHAIN (FITZ-ENZ)
PROCESS
Change
recruiting source
OUTCOME IMPACTVALUE
ADDED
Shorten time to fill
jobsLess need for
overtime or
temporary
employees
Cost Savings
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Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
HRIS COST BENEFIT ANALYSIS
Language of business is dollars & HR should learn this language
HRIS CBA: Comparison of projected costs & benefits
Covers full suit of HRIS functionality (transactional/ traditional/ transformational)
HR Metrics: (Table 6.1, Ch.6) Absence rate/ Cost per hire/ Healthcare costs/ HR Expense factor/ Human capital ROI & value added/ training costs/ turnover costs/ OHS costs…
Compare costs/ value within & outside
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Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
JUSTIFYING HRIS COSTS
Risk Avoidance strategies (Y2K)
Organization Enhancement Strategies: Increased revenue or reduced costs due to new/ improved HRIS
Evolution: Manual to automation; web applications; further improvements will have incremental not radical benefits; Value add is seen as more important than cost reduction but how to measure it?
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Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
GUIDELINES TO SUCCESSFUL CBA
Table 7.1
Objective is improving organisational effectiveness
Be honest with yourself – open mind
Focus on functionality not products
Estimate benefits first & costs later
Know your business
Develop the best estimate possible
Separate CBA from justifying final decision34
Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
HRIS CBA INVESTMENT ANALYSIS
Requires three basic pieces of information (1) sources of costs and benefits,
(2) an estimated dollar value for each cost and benefit item, and
(3) the time when the organization will incur each cost and receive each benefit.
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Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
HRIS COST BENEFIT ANALYSIS MATRIX: FIG. 7.1
Direct (Hard) Indirect (Soft)
Benefits Revenue Enhancement
1
New Revenue(new sales)
2
Improvement Potential(better decision making)
Cost Reduction 3
Direct Costs(cancelled vendor
contracts)
4
Potential Costs(saved staff time)
Costs New Implementation Costs
5
Out of Pocket Costs
(software, service
agreements)
6
Indirect Costs(increased technical
support needs)
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Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
EXAMPLE OF AN E-LEARNING CBA MATRIX: TABLE
7.2
Direct (Hard) Revenue enhancement - Outsourcing e-learning Cost reductions - Reduced travel expenses Costs of implementation - Software fee/license
Indirect/Contingent (Soft) Revenue enhancement - Better customer service Cost reductions - less lost productivity while waiting
for training Costs of implementation - Courseware
redevelopment
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Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
ESTIMATING INDIRECT BENEFITS
1. Estimating benefit magnitude
2. Mapping benefits to cost or revenue changes
3. Converting magnitude estimates to $s
Eg., Estimating the value of ‘exit interviews’ in reducing turnover
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Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
APPROACHES TO ESTIMATING BENEFITS: TABLE 7.3
Direct Estimation
Most appropriate for risk avoidance (eg., costs reduced by employee self-service )
Benchmarking
Build on others’ experience (eg., PeopleSoft implementation costs in other organizations)
Internal Assessment
Analysis based on specific internal assessments of actual costs and likely benefits (e.g., activity-based costing)
Mix and match
Using combinations of these approaches
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Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
GENERAL CATEGORIES OF COSTS OF HUMAN BEHAVIOR IN ORGANIZATIONS
Turnover Absenteeism and sick leave Effects of Smoking in Work Place EAP & Wellness programs Employee attitudes Labor contract costing Recruiting Selection Job Performance Training Career Development
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Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
COSTING THE EFFECTS OF SMOKING
Incremental absenteeism
Incremental medical care
Incremental morbidity and premature morbidity
Incremental insurance
Incremental on-the-job time lost
Property damage and depreciation: burns & odors
Reduced maintenance
Involuntary smoking – 2nd hand smoke
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Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
COSTING EMPLOYEE TURNOVER
3 components of costing employee turnover
Separation costs
Replacement costs
Training costs
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Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
SEPARATION COSTS
The four components of separation costs are as follows:
Exit Interview Interviewers time
Termination time
Administrative Functions Related to Termination Removal of employee from payroll
Termination of employee benefits
Turn-in of company equipment
Separation Pay Severance packages
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Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
REPLACEMENT COSTS
Replacement costs consist of eight components as follows:
Communication of job availability
Pre-employment administrative functions
Entrance interviews
Testing
Staff meetings
Travel and moving expenses
Post employement acquisition and dissemination of information
Medical examination45
Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
METHODS FOR ESTIMATING THE VALUE OF INDIRECT BENEFITS:
EMPLOYEE TIME SAVED
Average Employee Contribution (AEC) baseline contribution value by jobs that is consistent
with the actual financial performance of the organization.
AEC = (Net revenues – Cost of goods sold)/No. of employees
Individual employee differences (variance) in work outcomes variance differences are produced by a large number
of individuals holding equivalent positions basis for utility analyses for developing contrasting
cost-benefit ratios
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Michael J. Kavanagh, Mohan Thite, and Richard D. Johnson - Human Resource Information Systems: Basics, Applications, and Future Directions, 2e © 2012 SAGE Publications, Inc.
THREE COMMON PROBLEMS IN DEVELOPING AN HRIS CBA
it ignores HR’s more strategic role in improving organizational effectiveness
in many instances items listed as direct cost reductions are actually indirect cost reductions
be sure that value estimates assigned to time saved are reasonable
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