Human Resources Management Systems – Have they added any Value?


[Rob Scott]

Sixteen years ago, I was slaving away with the implementation of a Human Resources Information System – it was great, this new tool was going to add enormous value to the ailing HR department. We would be able to extract information quickly, make decisions decisively and spur the organisation to greater heights – everyone would hail the HR department as a value-adding component of the business.

How wrong we were!  Nothing really changed. We still argued why information was not correct, why we couldn’t get the reports out that we really needed, we still used spreadsheets to plan and calculate salary increases, and management still believed that the payroll system was still the source of all accuracy.

Human Resource departments were the Change Leadership custodians – surely we would understand that roles needed to change, people re-oriented and trained to utilize the new HR system. That didn’t work either; instead we saw the emergence of HR system super-users – who ended up extracting information on request for  “I-don’t-know-how-to” HR staff.

More than a decade later, having been involved in many more HR system implementations including the
illustrious “Best-Of Breeds” and ERP systems, I am compelled to ask whether the situation has changed significantly from those trail blazing days gone by. The HR systems certainly changed – they became technically more powerful, graphically pleasing, table driven in design and functionally integrated, not to mention web enabled and providing unlimited accessibility options. But have these HR tools added any real value to organisations besides making the HR department administratively more efficient and providing a reason for their existence? – The answer is in most cases a definite no.

In a recent article in the Business day, the CEO of Dimension Data was quoted as saying that HR departments have no place in his organisations and it was the first thing to go when they acquired new companies. Why would a CEO of a high-tech company, that makes its’ money from technology make such a statement? – Simple, HR is not adding to the bottom line, and you don’t need an HR department to run an administrative system.

Herein lies the answer to why HR systems have not added any real value – Human Resources systems have been acquired and moulded around administrative activities such as ensuring accurate personal and job data, staff development activities such as career planning and training adminstration, time collection, labour relations data collection, benefit and leave management, health and safety data and so the list goes on. The focus has been on ensuring that information is collected timeously at the point of activity, and that the data is accurate. With accurate data on hand, the HR department is able to extract accurate reports, deliver on all the statutory requirements and aggregate information into apparently useful statistical and trend reports.

No one will repudiate that this information is important, but surely these outputs are far from the expected return on investment from a HR information system, which can run into millions of Rands to purchase and implement.

Most HR software vendors sell their product on its’ functional strength, claiming that their product offers “Best operating practices”, is “Best-of-Breed” or use some other catchy phrase to attract their customers. The reality is that most of the more reputable HR systems offer similar functionality and content, and if the function is not available now, it will be in the next release. The vendors selling approach endorses the functional approach to Human Resources Management with the underlying view that using all the functional abilities of the system, real value will be added to the organisation.

Human Resource Management Systems mirror HR effectiveness in organisations. If HR staff members are not offering real value to their customers, then the HR system will not become the value-adding tool so many HR departments expect. It is only when HR functions become part of a “Hire-to-Retire” business process, move away from their functional silo mindset and can prove their value add through suitable business measurements will an HR system provide substantial benefits to the organisation.

The HR fraternity has traditionally considered their customers to be the employees of their organisations, but as organisations expand vertically and horizontally, connect to other organisations through e-business mechanisms, so HR functions across organisations need to “connect” with each other. HR Management needs to challenge their own paradigms and boundaries to keep pace with the value-add expectation of their function. Future HR boundaries will include competitors, traditional external customers and the all-important employee.

The low value-add delivery of most HR systems in organisations reflects the paradigm that HR departments are stuck in. Unless organisations are prepared to shake up their HR views, their valuable Human Resources system will continue to add no real value.

But here is the really interesting thing. I wrote this article 4 years ago for ITWeb, and my perception of many HR department system usage has not changed significantly from then – there has to be a huge opportunity out there to fix this situation and help HR to add real value.

2 comments

  1. Rob, I have enjoyed reading a number of your blog posts. I would like to speak with you about my new project CompareHRIS.com and receive your opinion and thoughts.

    I have owned an HRIS VAR business for over ten years and decided to create a free web service looking to select an HR application. I think we have both seen how difficult this process can be. I could not find any site that provided a true tool for comparing the numerous HRIS options on the market. So, I created my own. We officially went live April 1st, yesterday, but we will be tweaking the site a great deal over the next few months and adding vendors at the same time.

    Shoot me an email with your contact data when you get a chance. As I said earlier I would welcome any feedback you can provide.

  2. Your post is an inspiration for me to find out more about this subject. I must concede your limpidity broadened my views and I will straightaway grab your rss feed to remain up to date on any likely articles you might release. You are due, thanks for a job well done!

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