WHITE PAPER. Human Resources Self Service: One Year Later 1997

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1 WHITE PAPER Human Resources Self Service: One Year Later 1997

2 Human Resources Self Service: One Year Later Page 2 Background The challenge is daunting for HR to become a strategic business partner, and generate value for the organization at the same time it improves service delivery and reduces costs. Many companies are meeting this challenge by implementing automated service delivery for managers and employees using web-based solutions, interactive voice response (IVR), and Windows-based applications. The Hunter Group, an international information management consulting firm, conducted in-depth telephone and face-to-face interviews with managers in 25 companies in September The criterion for picking a company was simply that it had some form of self service in place for over one year. From this group of respondents, we asked questions about: Self service strategy; Implementation approach; Costs and benefits; Current and planned technology; Current and planned applications; and Lessons learned. Participant Profiles A partial list of participants included: Bank of America Baxter Compaq Dell Computer Glaxo-Wellcome Hewlett-Packard Intel Johnson & Johnson Kraft Lotus National Semiconductor Oracle Pacific Bell PG&E Silicon Graphics Southern California Edison Volkswagen of America Warner Lambert The number of employees ranged from 120,000 to 1,500; mean = 31,000, median = 25,000. Industries represented included high tech, manufacturing, communications, public utilities, financial services, and energy. Respondent roles included executives, managers, and technical staff. Respondents reported to HR (Compensation and Benefits), HRIS and IT, and HR Service Centers. Two thirds of the companies had self service in place for over two years. HR Self Service Strategies Companies varied in their strategies for self service, but four approaches emerged. Approach 1 Reengineer administrative transaction services to enable HR to shift to strategic services. Begin the reengineering and redesign of HR processes by looking for administrative services that can be automated and standardized most effectively. Seventy-five percent of respondents approached reengineering efforts with the goal of standardizing processes. Once the processes were uniform across the company, the next logical moves included implementation of shared services, outsourced benefits, call centers, and self service.

3 Human Resources Self Service: One Year Later Page 3 Reducing the cost and effort required for transaction-oriented services allowed companies to offer more strategic HR services with the money saved. The new services reported most frequently included: Attracting qualified people with strategic competencies; Developing both new and seasoned talent; and Retaining key competencies through total compensation management. A major manufacturer reengineered enterprise administrative services and took several steps to become more strategic. HR staff became business people through development and increased contact with business unit management; HR adopted a Center of Excellence approach, and set up a Service Center; Remaining HR generalists became facilitators of change, charged with pushing the envelope and accelerating the pace of change; Self service applications were geared to help managers develop all employees, not just those with high potential; A focus on competency development and action learning enabled employees to fill the roles needed to pursue success; and The human asset was managed by focusing on long-range HR planning and succession planning. Approach 2 Implement applications incrementally The technology companies interviewed had extensive networks and application development standards in place. They were able to see self service as just another set of applications which could be implemented according to existing procedures and integrated with existing architectures. Seeing self service as an extension, or incremental improvement to the current structure made the implementation process more routine. Approach 3 Go global with a suite of self services Instead of going with an incremental approach, other companies looked for common processes that could be automated across all international operations in a big bang approach. These processes included a variety of employee services, such as viewing and updating personal information, and time reporting. They also encompassed manager services such as performance and salary review. Approach 4 Implement a dazzler first Several other companies chose to implement a service with maximum punch for the employee or manager, such as electronic job postings or compensation reviews. This approach immediately created a self service paradigm and made employees want more. Once the initial dazzler was in place, these companies followed with applications requested by employees as system connections and/or data sources become available. Dazzler applications for employees included job postings, benefit enrollment, pension/401(k) services, and expense reimbursement. For managers, any applications that saved time over current processes were seen as adding value: bonus and stock option nominations, performance evaluations, employee actions such as transfers and promotions, and simplified approval processes.

4 Human Resources Self Service: One Year Later Page 4 One high-tech firm focused on manager applications first because these add the most value. The first self service application implemented was for salary planning because it fostered a better facilitated pay decision process. It decreased manager time in the process. The company also offered My Org functionality that allowed managers to view their direct reports in a tree structure (where they are, who they report to, pay level, pay class, job description, job family for career progression, pay and performance history). Each piece of manager functionality leveraged My Org structure. Implemented in Java, managers needed only a browser to view the information. Implementation Approach Highlights Over half the companies interviewed started self service with employees first. Those that implemented manager functionality first said they saw a need to get manager buy-in before implementing employee services. A large manufacturing company rolled out a combination of easy-to-implement employee services, followed by more complex manager services, as follows: Phase 1: Access to static information such as policy manuals and who to call for answers. Phase 2: Access to non-confidential employee information such as employee directory and reporting relationship. Phase 3: Manager applications: confidential information about direct reports. Phase 4 & 5: Interactive manager applications: variable pay (bonus) recommendation process including budget allocation, manager recommendations, and executive approval; base pay and stock option recommendation. Phase 6: Employee access to confidential information. Phase 7: Interactive employee applications: change personal data. Training Although most companies offered little or no training for self service, most agreed there was a need to orient employees and managers to a new way of working. The training that did occur typically focused on security issues and concerns. In the international companies, implementers recognized the special needs of a diverse workforce, such as where English was not the first language or where workers did not understand how to use technology at all. Marketing Organizations used two primary marketing pitches to promote self service to employees: 1) one-stop HR services would make things easier; 2) self service is a new way of working. The new way of working was promoted as being faster, using state-of-the-art technology, and empowering the employee. Many companies pushed the notion that employees would be accountable for the accuracy of individual data. Significant incentives were used, such as: If you keep your address up-to-date, you will get your paycheck on time. Or, if you keep your skills up-to-date, you will be considered for new positions.

5 Human Resources Self Service: One Year Later Page 5 Other marketing strategies involved employing a full range of media and events to introduce self service. These included brochures, newsletters, s, notices mailed home, videos, orientation sessions and gala rollout events, particularly when kiosks were deployed. Costs and Benefits Interestingly, many of the companies interviewed particularly the high-tech companies did not perform a rigorous cost justification. As one executive stated, Self service has intrinsic value. We did not have to come up with current transaction costs we did not have them anyway. We are high-tech and can t do paper. Everyone is doing self service. We know there is long-term payback. Nevertheless, others justified self service as a way to: Serve growing employee populations with no increase in HR staff; Reduce the cost of transaction processing; Improve the cycle time of key processes; Improve access to data for managers and employees; and Improve employee satisfaction with HR services. When implemented in conjunction with a new HRIS, a common justification was that self service would result in headcount reduction and shadow system reduction. One large oil company with 9,000 US employees implemented a shared service approach a number of years ago, with a call center for employee services. The manager of HRIS reported that technologybased self service is now difficult to justify given the benefits already derived from the Call Center. She proposed the following tactics to move towards web self service: Implement self service in small increments, each of which provides some value to the employees so they request more applications. Initial applications considered valuable to the employee are annual benefit statements and biweekly electronic paystubs. The annual cost savings estimated from these two applications are: Eliminate annual benefit statements $30,000 Provide annual benefit profile $26,000 Eliminate enrollment form $18,000 Provide electronic pay stubs $34,000 Manpower associated with above processing $260,000 TOTAL $368,000 Look for business drivers. The web is seen as an environment that promotes knowledge sharing among geoscientists. If we can get them on the web with HR services, we can then move them towards collaboration using the web. We see the need to coordinate our marketing of HR services with business unit initiatives to enhance collaboration. Costs Whether companies began automated self service with Windows-based, client/server solutions or web solutions, the cost for HR self service hovers around $100 per person. In one case, one of the smaller companies (1,500 employees) spent over $300 per employee for enterprise-wide self service. Included in this cost was the hardware to install a complete enterprise web operation.

6 Human Resources Self Service: One Year Later Page 6 Solution Costs Per Employee Per Year Call center and first round of self service $80 Comprehensive HR self service, including client/server hardware and $120 kiosks Comprehensive enterprise self service, including web servers $333 Annual self service maintenance and development (staff, hardware and $20 software) Benefits The benefits cited as most frequently achieved included: Hard dollar savings from full-time employee (FTE) reduction, elimination of shadow systems and cost reductions for printing and distribution, error handling, and software distribution; Cycle time reductions such as training registration in 4 minutes instead of 4 days; HR and employee time savings such as managers saving one hour per week accessing employee records. As one manager said: For every $1 of HR cost reduction, we estimate $3 savings in manager time. ; Service improvements in data accuracy and timeliness, such as new hires paid within two weeks instead of months; Increased employees knowledge of benefit options; and Perception by employees that HR is doing something positive for them. Technologies & Vendors In Use or Planned Most companies (75%) built or bought a self service solution that ties in to legacy system data they did not wait to upgrade these systems first. More than half the companies built their first self service application internally. HR partnered with IT for technical support for new network services and to handle security. There now appears to be a strong desire to buy off-the-shelf solutions. Among the respondents, Edify is the predominant vendor selected for IVR, client/server, and more recently for web services. However, some organizations are continuing to deploy internally developed workflow applications. Technology Vendors Technology Status of Use Vendors IVR 96% Edify Talx Host access and client/server Web (Internet/Intranet) 60%; all are replacing or upgrading to web technology 40%; some plan to move to vanilla PeopleSoft, Lawson, or SAP self service applets Outsourced to benefit provider Edify CDT Essense Lotus Notes Edify NetDynamics Lotus Domino/Notes OneWave Talx

7 Human Resources Self Service: One Year Later Page 7 Document management for web content Most use HTML pages but recognize the need to move to formal document management systems for web content CyberDocs Interleaf Documentum Push technologies Under evaluation PointCast Marimba BackWeb Applications In Use and Planned Current Applications (sequenced by frequency of implementation), include: IVR Pre-Web (client/server) Web-based Employee Benefits 401(k) Employment verification Vacation/PTO inquiry Job postings Training registration Payroll (W4 changes) Savings bond purchase Stock option activation Manager Salary review and change Policy, procedures, guidelines PIN issue and change Personal data (view only) Address and emergency contact change Inquiry of PTO, vacation, sick leave, etc. Job opportunities Training curriculum, class schedules, registration Benefits (view only) Direct deposit W4 change; recurring deduction change Expense handling Benefit enrollment Electronic pay stub Set up job postings Job and status changes (including simple routing & approval) Focal review and salary change (including more complex routing & approval) Access to limited employee data (job history, education) HR communications Inquiry of PTO, vacation, sick leave Job postings and application Training curriculum, class schedules, registration, course material retrieval, distributed learning PIN issue and change Personal data view and change 401(k) Benefit enrollment, inquiry, and change Expanded personal inquiry: education, skills Education data update Employee surveys Employee directory Electronic paystub W4 change Focal review and salary actions Initiate organizational change (new hire, promotion, transfer, terminations) and change of status Approval actions (salary actions, education update, expense reimbursement, time) Access to direct report data

8 Human Resources Self Service: One Year Later Page 8 This large manufacturer outsourced its benefits administration to a third party vendor and later brought the function back in house. A centralized telephone number was made available to employees for all HR/Benefits services. 401(k) administration remained outsourced, however, and the company provided secure telephone access to employees and then routed the calls to the 401(k) administrator. The voice response system allowed employees to enroll, change their benefits and 401(k) elections, or speak to a service center associate. The system allowed employees to hear only the options for which they were eligible menus were dynamically generated based on the employee s social security number and PIN. Employees were allowed to conduct the following transactions for both current and next year benefits: Review benefits; Change benefits; Manage dependent data; Request confirmation statement; and Review impact on pay. Planned Web Applications Most companies are planning future web applications to fill in functionality not available with current systems. This means in many cases, that the underlying HRIS system must first be upgraded. Further, some functionality will require a commitment to a new way of doing business for example, to support talent management, it will be necessary for employees themselves to provide up-to-date information on their knowledge, skills, and aptitudes. The planned applications, according to frequency of mention include: Employee Manager Benefit enrollment; Life event-based transactions (e.g., for marriage, births, change of spouse eligibility, moves, change from part-time to full-time); Time and attendance; Electronic paystub; W4 tax withholding changes (waiting for all state approval); Skills maintenance and gap analysis (requires significant organization commitment); Career development; Stock purchase (through third party); Tuition reimbursement; and Forms: expense, job bid, service and equipment request. Access to employee data for operational reviews(accessed through an organization chart and drill down; Standard and ad hoc reports; Total compensation; Performance reviews; Stock option nomination; Expense review and approval; and Forms: status change, personnel requisition, offer approval, expense, exit checklist, request for temporary services, and badge authorization.

9 Human Resources Self Service: One Year Later Page 9 Uncertainty Some organizations are still not sure whether to implement some of these applications. For example: Benefit enrollment: By keeping our benefit plans stable and standard, only [a small percent] of our workforce needs benefit enrollment. It s just not a high priority application. Electronic paystub and benefit statements: We will not provide these online because we believe these services should go to the employee s home for family review. Life events: We want to provide this because it makes it easier from the employees perspectives. But we don t have the design strength to develop this approach. Skill management: We want to do this, but cannot get agreement on what skills should be included. Performance evaluations: (from a large, multidivisional company) We just have too much variation in this process. Workflow: Work should not flow. We will take out multiple approval levels and empower the manager to make the decision. This large financial services company implemented a sophisticated automated replacement for a paper-based approval process. Automated processes were established using rules about who, where, and when approval was to occur, with some processes requiring as many as seven approval levels. Today, management admitted it put too much flexibility into the system. We think a process should have an entry point and no more than one approval level. If you need three levels, let s refine the process. The organization decided to restrict the ability to route work.. Work should not flow. It just slows business. We expect to force a change of location of authority. Now the vice president who approves a salary increase will have bottom line responsibility and will no longer need a senior vice president to approve the increase. Empower the manager to make the decision, without approvals. Call Centers We were interested in the state of call centers and the role they would play given the aggressive push toward self service. All but the smaller companies had call centers, with the exception of one of the high-tech companies that sees itself as a web company so it will provide services only through the web. The first point of contact for employees in these organizations is the call center (50%), followed by self service (25%), and field advisors or centers of expertise-based functional experts (25%). Where the call center is the first point of contact, half these companies plan to move the first point of contact to self service. The direction is towards the call center being the resource that steps in only if employees can not serve themselves. Only 30% of the companies actually had integrated their call center with self service, although this integration is a clear direction. The ways the two are integrated include: Call center menu of services (accessed via IVR) is the same as the self service menu; Call center associates encourage employees to use self service the next time they need assistance; Call center associates are informed of all new self service deployments and can provide employees with help for these new services, if needed; and Associates have access to the same information and can synchronize with the data employees are viewing using Computer Telephone Integration technology.

10 Human Resources Self Service: One Year Later Page 10 Lessons Learned Most organizations surveyed wished they had done a few things differently. Some expressions of hindsight included: More communication and more user involvement, particularly around security. Even if you think you are doing a good job, do more. Once the web is in employees faces, they are uncomfortable. Set expectations for the need for ongoing maintenance of network, security, and web content. Some companies are implementing web content, but not keeping it up to date. They wished they had put in place standards for maintaining the web. Then if content is not maintained, the web master can delete it on a periodic basis. Design or implement a third-party solution with a common navigation and approval process and with search capability across all HR services. Reduce customization requirements when working with third-party providers. Perform more testing for scalability; and more testing with end users for buy-in and fine tuning. Coordinate the implementation of call center and self service applications. Future Directions Most companies will be adding increased functionality as they move forward with self service applications. In addition to new web applications, more profound changes are also underway, including: Targeted delivery solutions. These solutions, also known as intelligent applications, are built on employee roles and organizational or life events. The application recognizes the user and delivers services according to the employee and event type. For example, a single person would not be shown medical insurance options for a family during benefit enrollment. Or, an employee will be notified six months prior to eligibility termination for a dependent nearing the end of coverage. If a manager has completed the salary review process for only half her employees prior to leaving the application, the next time she uses the application, it will continue the process from where she left off. Integrated look and feel. As self service applications multiply, companies are redesigning applications to give them a similar look and feel for navigation and approval processes. They are not, however, changing graphics that are specific to a given process, such as all processing having to do with career development. Integrated self service and call center service delivery. Companies are integrating responsibility for employee and manager service delivery offered through self service and the call center. This is particularly important to maintain credible, consistent information between the two areas. Organizations are typically assigning responsibility for both service delivery options under the same person or HR unit. Further, organizations are reengineering HR processes to allow delivery on the enabling technology that makes the most sense for a user segment. For example, employees contacting the call center are invited to use web-based self service the next time they require service. Conversely, web users who need help can invoke call center assistance. When an associate provides assistance, he or she can access a log of the employee s previous actions and can continue to provide service within the context of what has already been delivered. Moving Forward

11 Human Resources Self Service: One Year Later Page 11 There are several ways of moving forward towards a service delivery strategy, depending upon an organization s culture and experience with self service. But the first step is to agree to a conceptual paradigm in which service to customers is paramount and services will be integrated regardless of the technology to be used. To set the right objectives and expectations for service delivery, one alternative is to start with a strategy and planning phase, defining the goals and objectives to be achieved by service delivery in accordance with the business drivers of the company. These objectives then become the reference when assessing the needs of the company s individual internal and external customer groups. The major steps in a service delivery strategy and planning phase can include: Educating key employees (subject matter experts and end users) on the service delivery process and technology solutions within the current organizational infrastructure and the availability of products on the marketplace; Assessing current processes and identifying opportunities for service delivery improvement; Reviewing the current technology infrastructure to ensure optimal integration of the proposed service delivery solutions; Identifying and prioritizing service delivery projects by the project team and/or representatives of the customer groups; Estimating at a high level the cost of implementing/maintaining the service delivery solution; and Creating the service delivery solution vision for the organization as an overall framework to guide the implementation process. Once the high level plan, objectives, and priorities for delivering HR services to end users has been agreed upon, a framework exists for selecting the right technology components to enable the service delivery solutions. Vendors whose applications and tools meet the current and future service delivery needs of the organization can be selected by: Developing requirements documents; Compiling vendor short lists; Performing detailed vendor evaluations; and Facilitating component selections. Depending upon the organization s decision making process, the next step can be the development of a business case to provide the qualitative and quantitative justification required to obtain senior management approval for service delivery initiatives. This would include: Identifying the cost of current processes; Quantifying the benefits of the service delivery solution; and Determining the expected return on investment and payback period. Following the selection of the appropriate vendors, the organization is in a position to set up and execute its implementation plan. The scope of the implementation can vary greatly. Many organizations surveyed chose this opportunity to redesign processes from start to finish to best leverage the new technology. With the right implementation approach and methodology, the redesign decisions can actually be made during the application design sessions. The implementation plan can also include redesigning any existing self service applications for an integrated look and feel across the enterprise. In light of the number of end users involved in this type of implementation, managing internal and external customer expectations should also be an integral part of the implementation process.

12 Human Resources Self Service: One Year Later Page 12 The roll-out of automated service processes is typically not only accomplished in a phased approach, but also in a continuous improvement mode. That is why a regular assessment of delivered solutions and ongoing improvements is crucial to ensuring their sustainable integration into an organization s culture. This assessment can include such questions as: How well are the services being received and utilized by customers? Are they meeting customers expectations? What are the problems? How well are the implemented solutions integrating within the existing technology infrastructure? What new or additional service delivery requirements need to be addressed? Concluding Remarks Clearly, the organizations surveyed see value in self service and in integrating service delivery options to provide employees and managers with information and services that enhance their jobs and decision making processes. The benefits are significant. As one vice president states: You will not be competitive if you do not implement self service. The Hunter Group is a global information management consulting firm that delivers high-value solutions supporting enterprise business applications from leading software vendors. We have successfully implemented strategic business solutions for clients representing all segments of national and international industry, including government, higher education, retail, and utilities. Our experienced consultants and technology specialists assist organizations in planning, selecting, and implementing information management solutions for accounting, human resources, distribution, materials management, and manufacturing. Our Concept-to-Completion approach, including visioning and strategic planning, needs assessment, vendor selection, business process (re)engineering, workflow automation, change management, systems implementation, and end-user training delivers streamlined processes and systems implementation to meet each client s unique business objectives. Our strategic partners include PeopleSoft, Lawson Software, JD Edwards, Restrac, Resumix, Edify, Healtheon, NetDynamics, Seeker Software, and Lotus. The Hunter Group has offices in major business centers across North America, Europe, Asia and Australia with global headquarters located in Baltimore, Maryland, USA. 100 East Pratt Street, Suite 1600 Baltimore, Maryland Fax

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