HR Process Standardization & KPI’s
Earlier this year I posted this blog on my LinkedIn profile but due to its popularity I thought I’d post in on SCN.
Running your HR department like a business
CEO’s, COO’s and CFO’s are asking Human Resources to run their activities more like a business with a watchful eye to the bottom line. They are asking their HR leaders to develop measurable and indicative key performance indicators (KPI’s) to gauge the effectiveness of their operations. However, without standard HR processes, they cannot use KPI’s to chart their improvements. As a result, companies across the globe have begun to transform their HR processes in order for them to be standardized. Once this happens, they can begin establishing KPI’s around these processes and measuring their improvements. As the old saying goes, you can’t improve something unless you measure it. Ultimately the goal is to reduce the cost of running HR.
Begin measuring what you do
Process standardization is necessary for comparisons. KPI’s are the basis for comparison. If two things aren’t highly similar or identical and measured in them same way, you cannot get a fair comparison. Without comparable, process based, defined KPI’s, you cannot determine how efficient you are. Let’s be honest, the lack of HR process standardization continues to keep many HR organizations from moving to a more efficient model. As a result, the quest for more cost effective HR operations continues to be elusive. In several case studies around HR standardization, companies have built-out HR Shared Services Organizations (SSO’s). Efficient SSO’s require highly standardized HR transaction processing in order to be effective and garner the cost savings that executive management wants. In lieu of building out an SSO, you might want to consider a BPO provider who delivers their HR services using the BPaaS Service Delivery Model like Aasonn’s Employee Cloud where they provide completely transparent performance KPI’s using a service delivery dashboard. The service is built on highly standardized HR standard operating procedures and makes use of Robotic Process Automation (RPA) to process standard HR transactions.
The path to standardization of HR processes
Lack of standardized HR processes have many side effects, including: increasing the cost for delivering HR services, dissatisfaction by line of business (LOB) customers and employees, frustration by HR staff and executive management, inability to meet service level agreements (SLA’s) required by the business, duplication of efforts by HR staff, and poor morale of the entire HR department at local, regional, and global levels.
Before I expand on concepts around HR process standardization, let me plant a few thoughts for you to think about.
- Traditional on premise, core HR systems, which in the past, have been highly customized to a customer’s needs and wishes have given HR customers the opportunity to have it their way. Sounds good until you see the downside of this.
- Cloud sourced HR systems, by definition, are not and should not be customizable. These new systems are highly configurable within a range of options and force a customer to adapt to some level of standardization, which actually helps a customer down the path of standardizing their HR processes.
- Disparate HR systems is another problem (whether on premise or Cloud) with global HR process standardization. The goals of any company should be a single, global, system of record. Trying to maintain standardization across multiple systems is next to impossible.
- A few, very important facts about a true Cloud sourced HR solution. Cloud sourced HR and Talent systems can be delivered to any employee, globally, in their language, at any time, on literally almost any device approved by their company, eliminating the need for disparate systems.
The goals of HR process standardization for companies that operate globally and across different locations is to eliminate overlapping and poorly defined HR practices that vary across internal business organizations. By accomplishing a company’s standardization objectives, companies can begin to remove legal, economic and regional barriers and start reducing HR costs by creating more efficient process.
Attainment of HR standardization objectives supported by the use of a single, global, HR system of record can deliver core HR processes across all HR areas, including: benefits, absence management, timekeeping, payroll, and other HR related systems. Delivering these services more efficiently and predictably allows HR to deliver their services at the lowest possible cost. The transition to a single, global, Cloud sourced, HR system of record also eliminates the high support costs for aging legacy, on premise, HR applications. These are the same disparate systems that hinder the ability of a company to have a global view of their employee population.Without HR process standardization companies have a variety of problems including: 1) underutilized staff within the HR organization; 2) missing company-wide perspectives about the global employee population; 3) different HR organizations develop within the company becoming silo’s and begin using their own independent processes; 4) the HR Silo’s begin using different data, inconsistent HR terminology and measurements for making key HR decisions; 5) the company has a lack of indicative and comparable HR KPI’s ; and 6) the company realizes they don’t have Service Level Agreements (SLA’s) to base HR organizational performance on.
These problems present huge challenges to managing the HR organization and result in poor service quality because of cumbersome and inefficient processes. Ultimately these problems preclude timely and accurate information for managing processes and communicating with your LOB customers, your employees, and senior executive management.
To begin the process of HR process standardization you first need to line up executive support from the C-Level as well as the top leaders of your HR department. If your top HR leader is not part of the C-Level suite at your company, you should begin thinking about why they are not. Treat this initiative like any other well managed project. Next, per good project and change management methodology, create a Program Office for your HR standardization initiative and appoint a strong and effective Program Office leader who has organizational standing and credentials that can be used to coordinate and assemble the team. Your team should be made up of a lead for each functional HR area. One thing that many HR organizations forget to do is include a representative from IT who is responsible for your HR systems and work with you on the necessary integration’s which are critical if you are going to move things through faster. If you are going to achieve company-wide change, you also need to have IT engaged so you can be successful when pursuing the system changes that will need to happen. Finally, assign a Project Manager who has a good grasp of HR fundamentals and can lead the activities of the team and keep the project within scope.
Next, have the team meet to establish the tasks for the project and be sure that your team is aligned with the goals of your stakeholders. Aasonn takes the time to provide its customers with a Project Success Workshop to help the team align their stakeholders with the project leaders. Your approach should include:
- Identify HR core business processes that are currently being supported by your HR organization
- Be sure to make notes about how these transactions are processed and how many different HR systems are touched during processing
- Document each HR process and note how each process is currently performed at each company location
- Note if the systems being used for the process, by location, are maintained locally or from a central organization within your company
- Using the results of tasks 1 & 3, create a matrix of those processes by location
- Next, compare and document intersections of similarity/differences between the locations
- Be sure to identify differences by location that are required by local/regional regulatory legislation and union contracts
The goal is to identify HR processes that aren’t impacted by local legislation and union contracts that could be standardized across your entire organization, ultimately becoming company-wide standard global HR processes. After you have finished your standards assessment, take a view of the same matrix, but at the system level. If the systems used are not consistent company-wide, you need to determine how to select one system to process these transactions, standardize on that system, and begin a systems standardization and integration project that allow consistency in processing these transactions. This is what I call systems orchestration. Trying to maintain standards across disparate systems is next to impossible and will negate any benefits achieved from the standardization project if not done in the right way.
Once you complete the HR Process Standardization/Systems Orchestration projects, you should expect to be able to deliver enterprise wide standardization of critical activities in measurable and cost effective ways. The results can produce cost savings, efficiency, and more productive HR services staff that allow you to deliver 1) consistent global HR processes that contribute to more predictable business and employee services; 2) a single, global, HR system of record to support benefits, compensation and payroll; 3) enterprise-wide best practices; and 4) greater efficiency and reduced costs.
This is just a short summary of the approach and much more is needed but hopefully this gets you thinking about what you can accomplish and how to get started.
About the author of this blog post. Allen Peterson is the President and Founder of Aasonn. Aasonn is a global Cloud consultancy and HRO provider who has implemented and integrated HR/Talent systems for over 2,000 SAP/SuccessFactors customers in 30 countries in the last eight years. Today the company has a new division to deliver HRO using highly integrated Cloud solutions with highly standardized HR processes. The HRO product is called the Employee Cloud. The company’s new HRO solution is focused on the employee experience.