Human Resources Processes

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Human Resources Processes with ERP
2
Chapter Objectives

• Explain why the Human Resources function is
  critical to the success of a company
• Describe the key processes managed by a Human
  Resources Department

3
Chapter Objectives

• Describe how an integrated information system can
  support effective Human Resources Processes

4
Introduction

• A companys employees are its most important
  resources
• The Human Resources Department is responsible for
  attracting, hiring, rewarding, terminating
  employees.
• The decisions made in the HR department can
  affect every department in the company.

5
Introduction

• Companies are increasingly aware of the
  importance of an experienced, well-trained
  workforce and have begun using the term Human
  Capital Management (HCM) to describe the tasks
  associated with managing a companys workforce.

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HR Department Responsibilities

• Attracting, selecting, and hiring new employees
  using information from resumes, references, and
  the interview process
• Communicating information regarding new positions
  and hires throughout the organization and beyond

7
HR Department Responsibilities

• Ensuring that employees have the proper
  education, training and certification to
  successfully complete their duties
• Handling issues related to employee conduct
• Making sure employees understand the
  responsibilities of their jobs

8
HR Department Responsibilities

• Using an effective process to review employee
  performance and determine salary increases and
  bonuses
• Managing the salary and benefits provided to each
  employee and confirming that the proper benefits
  are disbursed to new and current employees

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HR Department Responsibilities

• Communicating changes in salaries, benefits, or
  policies to employees
• Supporting management plans for changes in the
  organization (expansion, retirements and so on)
  so that competent employees are available to
  support business processes

10
Problems with Fitter Snackers HR Processes

• The description of the qualifications required
  for the job may be incomplete,
• sometimes because the supervisor is in hurry,
• sometimes because the supervisor does not realize
  all of the functions required for the position,
  and
• sometimes because the supervisor assumes that all
  candidates will have certain basic skills.

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Problems with Fitter Snackers HR Processes

• Paper form can be lost, delaying hiring process
• Functional department left shorthanded, creating
  tension between the departments
• Good candidates lost due to drawn-out hiring
  process

12
Problems with Fitter Snackers HR Processes

• Keeping track of resumes submitted from different
  sources is problematic
• Being able to retrieve resumes on file that fit a
  job description is difficult, time-consuming and
  fraught with error

13
Problems with Fitter Snackers HR Processes

• Interviewing Process Problems
• Without group appointment software, HR has
  difficulty scheduling interviews when all
  interested parties are available
• Similarly, collecting feedback on the job
  candidates is difficult
• Managing travel arrangements and reimbursing
  candidates for travel expenses is also a problem
• Delays may result in losing a top candidate

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Problems with Fitter Snackers HR Processes

• Gathering new employee information and enrolling
  employee in correct benefits plan (such as
  healthcare plans, life insurance, retirement
  plans, and medical savings accounts) is difficult
• May take months to get employees proper
  compensation and benefits

15
HR Duties after Hiring

• Performance Evaluations
• Important to maintain sufficient documentation on
  underperforming employees in case termination is
  warranted
• Without proper documentation, lawsuits may follow

16
HR Duties after Hiring

• Performance Evaluations
• Difficulties in managing performance evaluation
  data makes it difficult to identify employee
  problems and take corrective action (counseling,
  transfer) before problem leads to termination

17
HR Duties after Hiring

• It is difficult to quantify the employees
  historical knowledge of the job, which is lost
  when an employee leaves a company. For example,
• If a purchasing manager leaves a company, then
  all of the managers knowledge about supplier
  relation is lost.
• The company does have a record of the contract
  signed with the supplier, but details of the
  negotiations that led to the contract may not be
  documented.

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HR Duties after Hiring

• Such details can be crucial in successfully
  negotiating the next contract.
• The manager may have developed good relations
  with the supplier and knows who to contact when
  there are problems.
• These relationships are not specified as part of
  the purchasing manager position, but accrue over
  time with the individual holding the position.

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HR Duties after Hiring

• Employee satisfaction is strongly related to job
  turnover
• Well compensated employees with satisfying jobs
  are less likely to leave the company

20
HR Duties after Hiring

• Human Resources can help maintain a satisfying
  work environment through
• Training programs through supervisors and
  managers
• Conducting employee satisfactions surveys
• Conducting employee exit surveys
• Human resources should ensure compensation levels
  are competitive and applied fairly to all
  employees

21
Human Resources with ERP

• Managing a companys human capital is information
  intensive
• Electronic storage of data greatly simplifies the
  retrieval of important data

22
Human Resources with ERP

• The SAP R/3 HR module provides tools to
• Manage an organizations structure, job roles and
  responsibilities, and definitions
• Personal employee information
• Time management
• Payroll
• Travel management
• Employee training

23
Organizational Management

• Most companies have an organizational chart or
  plan to help define an individuals
  responsibilities in the organization
• With ERP, the organizational chart provides a
  structure to support additional tasks

24
Organizational Management

• SAP R/3 provides an Organizational and Staffing
  Plan tool to define a companys management
  structure and define positions within the
  organizational structure
• The plan can also define the individuals that
  hold each position

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Organizational Units
Positions
Person holding position
Figure 6.1 Organization and Staffing Plan in SAP
R/3
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Task, Job, Position and Person

• SAP distinguishes between Task, Job, Position,
  and Person
• An employee is a Person who performs Tasks
• Tasks can be assigned to
• Jobs, which are generic descriptions of an
  employees work responsibilities
• Positions, which are the specific organizational
  assignments a person holds

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Task, Job, Position and Person

• If Tasks, Jobs and Positions are well-defined and
  current, then recruiting is simplified and
  compensation levels can be set more consistently
  and fairly

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Job
Task assigned to Job
Figure 6.3 Assignment of a Task to a Job in SAP
R/3
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Managers Desktop

• The SAP HR Module provides the Managers Desktop
  (see Figure6.4), a tool that provides access to
  all Human Resource data and transactions in one
  location
• Human Resource data is very sensitive, so
  controlling access is critical

31
Managers Desktop

• With an integrated information system,
  controlling access is simplified as a range of
  authorization tools are available
• See User Authorizations in Chapter 5

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Employees in managers organization
Functions in task area
Figure 6.4 Managers Desktop provides
single-point access to HR functions
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Advanced SAP R/3 HR Features

• Time Management
• Cross Application Time Sheets (CATS) record
  employee working times and provide data to
• Controlling (CO), for cost management
• Payroll, for calculating payroll data, which is
  transferred to Financial Accounting (FI) for
  payment
• Production Planning (PP), to manage labor
  required for production

34
Advanced SAP R/3 HR Features

• Payroll Management
• Paying employees the correct amount at the
  correct time is critical for employee
  satisfaction
• Payroll calculations are complicated, involving
• Remuneration Elements
• Base pay, bonuses, gratuities, overtime and sick
  pay, vacation allowances

35
Advanced SAP R/3 HR Features

• Statutory and Voluntary Deductions
• Taxes Federal, State, Local
• Medicare and Social Security
• Benefit contributions
• Company loans

36
Advanced SAP R/3 HR Features

• Travel Management
• Companies can spend a significant amount of money
  on employee travel
• Managing travel planning and expenses requires a
  number of tasks
• Travel authorizations
• Travel reservations
• Must meet trip requirements while controlling
  costs
• Recording expenses and providing reimbursement

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Advanced SAP R/3 HR Features

• The SAP R/3 Travel Management system facilitates
  this process by maintaining travel data for each
  employee,
• including flight, hotel and car preferences and
• integrating this data with the Payroll module
  (for reimbursements) and with the Financial
  Accounting and Controlling modules to properly
  record travel expense.

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Advanced SAP R/3 HR Features

• Training and Development
• The Personnel Development component of the SAP
  R/3 Human Resources module supports planning and
  implementation of employee development and
  training activities

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Advanced SAP R/3 HR Features

• Employee development is driven by Requirements
  and Qualifications
• Requirements Skills or abilities associated with
  a position
• Qualifications Skills or abilities associated
  with a specific employee
• Two perspectives on the same concept

40
Advanced SAP R/3 HR Features

• Training and Development
• An employees qualifications can be compared to
  the requirements of a position to which the
  employee aspires
• The comparison identifies gaps and allows a
  manager to plan development and training efforts
  to close the gap
• The comparison can serve as a basis for employee
  evaluation, and can motivate the employee by
  providing a goal and a means to achieve it

41
Advanced SAP R/3 HR Features

• Succession Planning
• Companies should have plans for replacing key
  employees when they leave the company
• Small companies can lose business if customers
  are unclear about succession plans for key people

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New HR Features in SAP R/3

• Mobile Time Management Allows employees who
  spend significant time on the road to use
  cellular phones and other mobile devices to
  record work times, time charges, absences, and
  leave requests

43
New HR Features in SAP R/3

• Management of Family and Medical Leave The SAP
  R/3 HR system can now determine employee
  eligibility for FMLA leave and track usage

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New HR Features in SAP R/3

• Personnel Cost Planning Scenarios can be
  developed for major organizational changes like
  expansions, acquisitions and downsizing to
  determine the cost impacts
• Cost planning and simulation allows HR to
  forecast cost estimates by integrating data with
  other SAP R/3 modules

45
New HR Features in SAP R/3

• Management and Payroll for Global Employees
  Managing global employees involves complicated
  issues including relocation, visas, work permits,
  housing, taxes, and bonus pay
• SAP R/3 has enhanced features to support the
  management of these issues with customized
  functionality for over 50 countries

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Summary

• Employees are among a companys most important
  assets. Without qualified and motivated
  employees, a company cannot succeed

47
Summary

• The Human Resources Department has the primary
  responsibility of ensuring that the company can
  find, evaluate, hire, develop, evaluate, and
  compensate the right employees to achieve the
  companys goals. HR is also responsible for
  employee training and development, succession
  planning, and termination

48
Summary

• Managing, sharing, controlling, and evaluating
  the data required to manage a companys human
  capital is simplified with an integrated
  information system

49
Summary

• Effective Human Resource processes require a
  system that controls the flow of timely and
  accurate information within and among departments

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Exercise

• 1. Describe a position in a company that you
  would like to have after five years of work
  experience. List the requirements that you think
  would be required to hold this position. List the
  qualifications that you currently possess.
  Describe how you plan to obtain the
  qualifications necessary to hold the position.

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Exercise

• 2. List the steps in a typical recruiting
  process. Highlight the steps that involve
  interaction with the potential job candidate.
  Identify problems in the process that might lead
  a candidate to develop a negative opinion of the
  company. How might an effective information
  system reduce the potential for these problems?
  Incorporate into your answer experiences you may
  have had in looking for a job.