A Catalyst For Efficiency

A Catalyst For Efficiency | Human Resource Executive Online HR leaders must learn to make better use of their existing HR systems, revisit the terms and conditions of their vendors and maybe even rethink HR processes in general, making them more efficient and figuring out the role HR technology can play in helping their organizations ride out the current economic storm.

Wednesday, September 16, 2009
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For the better part of the past 19 months, the U.S. economy could be described as one big, fat lemon. So, what's a beleaguered HR executive to do?

Some have decided it might be time to get out the lemonade recipe.

In this case, the prime ingredient would be HR technology, which -- for more than two decades -- has been held up as the savior of HR, delivering the tools and processes through which HR could reduce costs, become more strategic, get more in tune with business objectives, and on and on.

With the economic meltdown that began last year and continues today, there is no time like the present to embrace those technology-driven goals, say some experts. It doesn't have to be especially innovative (though that's good, too), but leaning more on technology to help the company succeed (or, at least, survive) should -- at the absolute minimum -- improve HR's basic "blocking and tackling," as one expert describes it.

Those same experts say HR executives must learn to make better use of their existing HR systems, revisit the terms and conditions from their vendors (see sidebar), or maybe even uncover what is available technology-wise on a low-cost basis (or even free). In addition, it might even be time to rethink HR processes in general, making them more efficient and figuring out the role HR technology can play in that positive transformation.

"There is a lot of untapped potential within the HR technology space," says George Penn, a senior director at the Corporate Leadership Council, part of The Corporate Executive Board Co., an Arlington, Va., research firm. "This downturn provides the catalyst to examine HR technology, and how to maximize it."

Steve Hitzeman, senior leader in the technology and administration solutions practice at Washington-based Watson Wyatt (which recently announced a merger with competitor Towers Perrin), says that, by reviewing the function's technology footprint and finding ways to streamline IT processes, HR departments can help their organizations cut costs, find efficiencies and support worker productivity during the current economic mess.

"HR technology is ripe for review," Hitzeman says. "The goal is not only to find near-term efficiencies, but also to ensure the organization is positioned for growth when economic conditions improve."

An Accelerated Roadmap

Watson Wyatt's 2009 HR Technology Trends Survey found that 61 percent of employers are taking steps to optimize their current service-delivery models (which includes their mix of HR technologies, call centers and vendors). One-third (33 percent) are reviewing and updating all vendor contracts, and only 27 percent are staying the course. The firm conducted the survey February through March of this year, garnering responses from 181 large employers.

"A thorough review of the way HR services are being delivered can reveal hidden costs and quick ways to leverage existing investments," says Jon Osborne, senior technology consultant at Watson Wyatt. "Many companies have already invested heavily in HR technology, but have not yet taken action to integrate applications and ensure their processes are working seamlessly together."

In some cases, employers had plans to add new functionality to their existing HR technology platforms, but the economic crisis has forced them to accelerate those plans.

One such employer is ING Group, the large Dutch banking and insurance company that has 10,600 employees in the United States (ING's U.S. headquarters are in Atlanta). According to Teresa Mills, vice president of HR operations for ING's U.S. division, the company began planning a "technology roadmap" in the third quarter of 2008, initially without any impetus from the recession.

The idea was to figure out the best possible route for ING's HR technology strategy within the next three to five years. But a not-so-funny thing happened on the way to the future -- the economy continued to tank, and fast. In fact, in January, ING Group announced 7,000 layoffs for 2009 (including 750 at the U.S. division, or about 7 percent of its workforce).

"We needed a three-to-five-year tech roadmap for HR anyway, and we were beginning to put together the teams, but then the economy started falling apart," Mills says. "We had to reduce our budget and pull every lever we had to get there. The worsening economy wasn't the only driver, but it quickly became a key driver to getting it done sooner."

ING's HR department is divided into three main segments: payroll, benefits and HRMS. Driving down costs and improving operating efficiencies, while adding value for employees, is a tough balancing act, says Mill, but HR had to figure it out.

"We had to ensure that whatever processes or tools we rolled out, it would not add a burden to our employees," she says.

ING HR partnered with Watson Wyatt; ADP, the company's payroll vendor; and ING's information technology staff to find new ways to improve processes and technology. ING HR also examined its current services to determine whether it needed to repatriate some of those it had outsourced. Most of all, it had to make all of these changes within the existing budget. "There was no additional capital to do this," Mill says.

The due diligence showed that repatriating payroll from ADP would save money that could be used elsewhere. (Mills would not divulge what ING expected to save overall by following the roadmap.)

"We decided to move payroll administration in-house," Mills says.

With the recession's push, the roadmap's overall implementation is expected to take 18 months (rather than three to five years, as originally proposed), in three phases. Phase One began with payroll insourcing during the second and third quarters of 2009, and a payroll technology upgrade ongoing through the second quarter of 2010.

Another Phase One process includes upgrading the company's benefits-enrollment technology in the third and fourth quarters of 2009. Phase Two involves implementing a new time-and-labor-management tool during late 2009, while Phase Three involves upgrading the company's core self-service technology, including the launch of employee and manager self-service portals.

The entire roadmap is expected to be completed by the third quarter of 2011.

The decision to add a time-and-labor-management tool was based on the discovery that the inability to automatically track employees' personal time off was leading to errors and inefficiencies around payroll calculations. The savings from bringing payroll administration in-house freed up the funds for adding ADP's automated time-and-labor-management application.

Additionally, the ING HR staff found the new emphasis on following this new and improved tech path to be a positive experience.

"This really excited them, and gave them a high level of engagement," Mills says. "The effort has helped them to weather the storm of the economy through a 'We're in this together' mind-set."

Although the worsening economy accelerated some of the roadmap implementations, HR was careful not to do too much, too fast, says Brian Retzlaff, ING's head of IT for HR and communications.

"The idea was to balance cost with capability, because you want to weather the storm in the long term," Retzlaff says. "But when the economy turned down, it became an accelerator for us."

Using Existing Resources

Boehringer Ingelheim, a privately held pharmaceutical company based in Germany, with U.S. headquarters in Ridgefield, Conn., also had plans afoot in 2007 to enhance its HR-technology-delivery platform during 2008 via the launch of HR Direct, a centralized HR service center.

According to Mary Borba, Boehringer Ingelheim USA's vice president of compensation and benefits and the HR Direct project sponsor, the timing could not have been better. Although the pharmaceutical business was less buffeted by the crashing economy than other sectors, the transition to the new contact center supported organizational changes within the company that have already contributed to an overall savings of nearly $1 million.

Much of these savings were a direct result of the centralization of work into HR Direct, and were achieved through the streamlining of resources and office space. 

And in another cost-saving move that took advantage of technology, Boehringer Ingelheim USA modeled parts of HR Direct after an existing service center already used by the company's IT help desk.

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"We made improvements and were able to piggyback on what IT had done, using their knowledge and experience," says Kelley Troccolo, manager of HR Direct. For example, the HR Direct effort uses a case-management approach and supporting technology in resolving HR-related issues, much like ING IT does with IT-related issues.

"We're benefiting from their experience," Borba says. "We are using available technology not previously used within HR, which didn't cost us anything."

Meanwhile, the firm decided to postpone the planned upgrade of its HRIS, from Walldorf, Germany-based SAP. Although the plummeting economy was not the primary reason for this decision, the HR department was more than happy to find a more economical way to make the necessary changes to achieve its vision.

"We decided to do more with current technology rather than outsourcing," Borba says. An in-house project team led by Troccolo and Christine Scarice, project manager for HR technology, partnered with an outside consultant to build and test new functionality that was added to the existing system to ensure it met the organization's future needs.

The company also developed some resident experts on the technology, which lets it troubleshoot issues and develop further enhancements to the application. 

Mercer's Michael Martin, a consultant in its HR Effectiveness practice, says that, in his experience, the things human resource practitioners are doing with technology to help their organizations get through the recession aren't necessarily creative or innovative. But they are things that need to be done sooner rather than later to drive the right outcomes.

"For example, we're seeing some clients push self-service farther out to employees than they had done before because cost reduction has become even more critical," Martin says. "Or, they might have been waiting to roll out all of manager self-service, but now they are able to push the envelope on rolling out that functionality sooner."

"A Transformational Time"

As another example, says Martin, a company might make some major changes related to the recession, and having the right HR technology systems in place to facilitate those changes can be the perfect tonic for today's times.

That's what happened at Waste Management, the large waste- and environmental-services firm based in Houston. Earlier this year, the 44,000-employee company consolidated its offices and centralized its operations in an effort to cut costs and realize greater efficiencies, says Krista Delsota, vice president for compensation, benefits and HRIM. As part of the process, Waste Management consolidated its operations from 45 markets to 25, and HR had to adjust quickly to meet the new alignment and consolidation demands.

At the same time, the company also decided to change its salary planning from March to June for its nonexempt population. Plus, it froze the salaries of exempt employees. Those recession-related moves could have caused a major disruption, but the company had recently moved to a new compensation-planning system, and HR was ready for the challenge.

In this case, configuring the new plan and worksheets from staging to production took approximately two weeks, mainly because the system (from Waltham, Mass.-based Authoria) gave HR the flexibility to change the eligible population and budget with a few mouse clicks. In the past, the same process might have taken two or three months.

"[The system] allowed us to make the adjustments accurately and quickly, which would have been a huge issue in the past," Delsota says.

Delsota notes that while the compensation and bonus processes are "not fun," managers and employees much prefer the new process compared to how it was done in the past.

Delsota says that, when HR looked at all the possibilities in managing costs during the recession, the compensation tool gave her the confidence to know cost reduction was possible with little pain.

"We could do what was right for the business in these times, from a compensation standpoint," she says. "Two years ago, we would have said, 'We can't do what you're asking us to do.' It was nice to be a business partner, to offer some solutions, and not tell management, 'This is why it can't happen.' "

The CEB's Penn says that, in general, most HR executives haven't seen anything like the current recession in their lifetimes.

"There is a perfect storm going on," Penn says. "It's a difficult time, but also a ... time to transform for the better, not to go into a bunker.

"There are opportunities for HR organizations to step up and show how technology can help organizations come out stronger on the other end," he says.

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