WHITEPAPER 5 reasons why you need to move to cloud HRMS
Introduction Global economic growth is creating new levels of competition for people and there is an ongoing battle for talent. Organizations are focused on hiring, retaining and developing employees; yet many growing businesses continue to rely on legacy HR management systems (HRMS) that struggle to cope with the demands of managing a mobile, social and multi-generational 21st century workforce. People are at the heart of any organization and a key component of ongoing success. If your supporting HRMS is not fit for purpose, it can slow down business progress, create frustration (possibly increasing the likelihood of good people looking elsewhere for career opportunities) and hold back growth. A telling finding is that only 34% of CEOs 1 feel that their HR teams are able to meet the new demands being made of them, from managing, retaining, and acquiring the best talent, through to helping organizations drive growth and transformative change. How do you know if your HR systems are holding you back? There are many indicators that can reveal fundamental problems. For instance, can you provide accurate workforce information quickly and on demand? Are your team spending time on low value manual tasks, entering, re-keying and maintaining information in multiple systems? Can employees across the organization maintain their profiles through self-service? Is your HR system the single source of truth when it comes to employee and workforce related information? Does it integrate with other systems, so that this data is available to other applications such as payroll, financial planning and budgeting or ERP? The rest of this paper explores a number of these challenges and discusses how a modern cloud HRMS can help HR deliver higher business impact. 1 PwC 17th Annual Global CEO Survey
1. Integration Many HR teams struggle to manage multiple applications and data sources. There is the HRMS or HRIS application, which records employees personal details, pay scales and associated information. There may be different versions or even different applications in different countries meaning this information is often held in multiple data sources. Then there are HCM applications which may include some HRMS functionality but also include performance management information. Consider appraisal and performance management. If your HR system is only able to provide reminders of the timing of performance appraisals and nothing more, you are missing out. Your HR system should manage the employee appraisal and review process electronically, managing milestones, goal setting, progress review and more. It should facilitate two way discussions between managers and team members. More recently, talent management applications have also become popular, further fragmenting employee data and creating further silos or islands of information. It is not surprising that under these circumstances, teams struggle to provide aggregated reports and metrics which management executives usually require on a regular basis. A cloud HR system is not a silo. It can talk to other systems sharing the appropriate data as required. A key example being payroll and benefits management. Performing manual payroll processes from spreadsheets wastes time and is open to human error. It is an obvious function for integration into the HR system, yet many organizations still maintain manual payroll. HR and management teams also need to be able to use analytics to spot talent trends and skills gaps, while providing insights that will help organizations adapt quickly to maximize opportunities. Most HR departments cannot do this because their systems are failing them being dated, fragmented across countries and locations, and not or at best partially integrated with other applications, leaving teams having to plug the gaps with spreadsheets, email based workflows and manual processing. A cloud HR system also has excellent reporting features with data available at the touch of a button. On premise systems often require data to be exported to Excel to be manipulated for reporting. This is inefficient at best, and at worst can lead to poor business decision making. Every time HR data changes, the export and report compilation processes need to be repeated. One error in a spreadsheet, one accidentally deleted cell, one poorly executed formula, can be the source of poor or incorrect decisions. Wouldn t it be nice just to press a button within your HR system and get the reporting you require at speed, and based on real-time information?
2. Globalization Many companies work across more than one national territory and use different vendors for managing payroll. Older, unsophisticated systems are not well equipped to deal with such multinational operations and do not have the capabilities to integrate with multiple, different payroll systems. So, if someone in a satellite office gets married, or changes their address, or moves bank, the information about this event has to be entered into the HR system and then also manually rekeyed into the payroll software. That s double the effort, taking double the time. The potential for error is doubled too, of course. Not only does this make poor business sense in immediate cost efficiency terms, if errors result in employees not getting paid, your reputation will suffer and you could lose valuable staff members. Multinational companies are also required to comply with national holidays, pay periods, laws around when new staff can start to take holidays, and a multitude of other regulation and compliance matters. To help drive business growth, they need a system that is able to handle this. A consequence of not handling global information efficiently is increased bureaucracy and decreased efficiency. Take the example of a US headquartered company that has a US specific HR application and an international workforce. In all likelihood specific personnel information is gathered abroad, keyed into an email, sent to the US and rekeyed into the US HR system. Payroll may need to be handled by manual currency conversions. Moreover, metrics relating to the entirety of the company are difficult and time-consuming to gather together. Information at the fingertips is what s needed, and only a globally connected HR solution can provide this.
3. Self Service Today s employee is used to a very different world to the days of hand written ledgers or pay packets actual envelopes containing real money. Modern life is about speed, efficiency, electronic data and self service. With so many of us using social networks we are used to updating our status, changing information about where we live, logging on to new bank accounts, and managing many aspects of our lives online. Leading analysts stress that social engagement is critical for today s workforce, and that conventions from the consumer world are increasingly important in the workplace. Any HR system that does not keep pace can potentially be harmful to the business by appearing old fashioned and inefficient. There is no reason why a HR system can t allow staff to manage their own profiles electronically no matter where they are or what device they are using. Staff should be able to change their address, complete their own holiday requests and sickness reporting, view leave entitlements and other accruals. Managers retain approval rights, but a paper free, speedy process for staff time management is a must for a modern HR system. Modern life is about self service. Is your HR system? Yet so many HR systems still require staff to complete paper forms and sometimes more than one form is required for the same information. The form then needs to be keyed into the system leaving more potential for error and staff waiting longer than they need to for approval.
4. Compliance The matter of international holiday variances which we referred to earlier is just the start when it comes to compliance. Any company wishing to expand internationally needs a HR system which can readily accommodate that expansion and scale easily. One which doesn t, which requires double or triple entry of data, which can t comply with local laws, regulations and customs, will cause problems that are immediate and tangible. Compliance with confidentiality regulations is crucial for any company. The most personal information an organization holds about its staff is held within the HR function. Bank details, home addresses, salary details, perhaps information about medical conditions. If organizations are storing this information on spreadsheets it is vulnerable to being shared in inappropriate ways, either accidentally or on purpose. A cloud HR system is vital for cross border compliance. Commercial confidentiality is also vulnerable in this scenario. Salary planning information stored on spreadsheets is more vulnerable to forms of industrial espionage than that held securely within a HR system.
5. Growth A cloud HR system is vital when growing a business through mergers and acquisitions. It is essential for any companies joining forces that back end systems are easily integrated. Time and money spent trying to integrate legacy systems is time and money that can t be spent on maximizing the benefits from a merger or acquisition. However, it is not uncommon for new owners or partner companies to uncover complexities that were not known before - and even after - the deal has been done. This can happen across the business, but poor HR systems are a fundamental problem. How many staff do we have? What is the payroll commitment for the coming period? What are the pay grades in both companies and how do we reconcile them? Without robust HR systems it can be difficult to get the information needed and mergers and acquisitions can stumble as a result.
Conclusion A legacy HR system isn t just bad for the HR function. It is bad for the whole business because it s not fit for purpose. Common issues include: Multiple data entry, the potential for inaccurate reporting, the need for costly and time inefficient manual systems, and staff frustration as hours are spent chasing up and fixing discrepancies. Constrained business growth. The more money your business spends working with inefficient HR systems, the less it can invest in growth, or return to shareholders as profit. An unsuitable HR system has a negative effect on the bottom line. If you recognize the issues raised in this paper or even if you experience just a small number of them, then perhaps it is time to consider changing to a cloudbased HR system. Look for a HR system that is robust, connected with other systems, social, mobile, scalable, able to function internationally, user friendly, and accessible to all staff. And, a final word: if you do think about changing your HR system, look for a system with its eye on the future. A modern HR system should be able to adapt as your needs evolve, and can develop to meet the needs of growing businesses. A recent survey shows 2 one in three respondents plan to spend more on HR technology. Twenty three percent plan to increase spending by up to 20% and one in 10 plan to increase spending by more than 20% in 2014. At Fairsail we are committed to developing our HR solutions to keep pace with change. That s why our cloud HR platform has been designed from the ground up to bring disparate applications into one connected environment. As a result, it has one data source and brings the functionality found in HRMS, HCM, performance management, talent management and employee engagement applications together in one place. It is underpinned with sophisticated reporting and analytics, enabling rapid answers to questions on demand using real-time accurate data, from which trends and other insights can be obtained for the entire organization. 2 http://www.towerswatson.com/en/insights/ic-types/survey-research-results/2014/06/2014-hr-service-delivery-and-technology-survey About Fairsail Fairsail enables mid-size, multinational companies to manage modern workforces through its global cloud HRMS, transforming how organizations acquire, engage, manage and develop their people. Implemented quickly and simple to use, the system increases company productivity, reduces operational costs and provides better experiences across the entire workforce. Fairsail s customer portfolio includes Laird, Roto Rooter, Antea Group, Cobalt International Energy, Solarwinds, Betfair, SDL, Monitise, and Cooper Gay.
Appendix 1 Do you recognize your HRIS system? Tick any that apply. Struggles to cope with staff in multiple countries Prevents team members updating their own details Offers inflexible reporting and dashboards Not capable of easy integration with other HR, finance and company systems Requires payroll feeds to be manually processed Can only be accessed from the company office (or by VPN) Unable to let you work in multiple currencies or multiple calendars Incapable of applying local employment rules Has difficulty in tracking and rewarding talent progress Not available on mobile devices If you recognize one or more of these issues then it s time to consider upgrading your system.