1 human resources processes with erp. concepts in enterprise resource planning, second edition 2...

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Human Resources Processeswith ERP

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Concepts in Enterprise Resource Planning, Second Edition

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

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Chapter Objectives

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

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Introduction A company’s 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.

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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 company’s 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

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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

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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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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

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Problems with Fitter Snacker’s 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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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

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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

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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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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

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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

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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

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It is difficult to quantify the employee’s 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 manager’s 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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Employee satisfaction is strongly related to job turnover Well compensated employees with

satisfying jobs are less likely to leave the company

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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

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Human Resources with ERP

Managing a company’s human capital is information intensive Electronic storage of data greatly

simplifies the retrieval of important data

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Human Resources with ERP

The SAP R/3 HR module provides tools to: Manage an organization’s structure, job

roles and responsibilities, and definitions Personal employee information Time management Payroll Travel management Employee training

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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

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Organizational Management

SAP R/3 provides an Organizational and Staffing Plan tool to define a company’s management structure and define positions within the organizational structure The plan can also define the individuals

that hold each position

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Figure 6.1 Organization and Staffing Plan in SAP R/3

Organizational Units

Positions

Person holding position

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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 employee’s 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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Figure 6.3 Assignment of a Task to a Job in SAP R/3

Job

Task assigned to Job

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Manager’s Desktop

The SAP HR Module provides the Manager’s 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

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Manager’s 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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Figure 6.4 Manager’s Desktop provides single-point access to HR functions

Employees in manager’s organization

Functions in task area

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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

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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

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

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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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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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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

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Training and Development An employee’s 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

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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

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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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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

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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 company’s most important assets. Without qualified and motivated employees, a company cannot succeed

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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 company’s goals. HR is also responsible for employee training and development, succession planning, and termination

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Summary

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

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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.

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