Employee empowerment

The days of the dusty old personnel department – straining under mounts of overdue expenses claims, out-of-date employee records and badly constructed performance review sheets – are numbered.

Adopting real-time, web-based technologies, businesses of all sizes are profoundly shifting the way they manage their employees. Many are using employee portals to give self-service access to information and personal data; they are using balanced scorecard software to assess group – and even individual – performance; analytics tools to give a clear understanding of human resources (HR) trends; and e-learning technologies to enable ‘anytime’ training.

All this raises the value of the business by recruiting and retaining key talent, maximising employee productivity and aligning the workforce with high-level corporate objectives.

Demand for the technologies that support these new business processes is rising, according to analysts. The employee-software market – often regarded as a quiet backwater of the IT sector – is destined to grow at a compound rate of 13% over the next five years, says AMR Research. Employee performance management and enterprise incentive management functions will drive much of that growth.

In practice: Itron

Itron faced a trio of challenges not unusual in today’s dynamic business world: high staff turnover, missed earnings expectations and a series of acquisitions that were causing integration headaches for executives. But Itron, a maker of data collection and communications devices for utility companies, had other issues to deal with as well – how to reshape the brand and shift the company to solution selling while keeping all the existing and newly acquired employees aligned with the changing strategy.

Siebel Systems was already an Itron supplier when it persuaded chairman and CEO LeRoy Nosbaum – hired in 1999 to turn the struggling US manufacturer around – to invest in its new employee relationship management (ERM) software. Without the technology, Siebel said, Itron’s ambitious plans to grow the company’s annual sales from $200 million to $500 million within five years could be derailed.

The first phase of the project, which began in January 2003, was designed to bring together data from dozens of intranets into a single information portal, including eHR content, product information, company notice boards, e-training and sales data. The idea was that the portal could be accessed just as easily by engineers on the factory floor as by the white-collar staff in corporate HQ. Itron even created a new position of ‘ERM editor-in-chief’ to edit the content together in a consistent style, supported by an editorial board including the VPs of communications, marketing and IT.

In the next phase of the project, beginning in the third quarter of 2003, the company will deploy business performance management tools, employee self-service and HR helpdesk functions. The overriding aim here is to tie individual employee goals to the company’s wider objectives. The final stage will incorporate team collaboration and time and expense applications.

Although it is still in the initial stages of the rollout, Itron says it is encouraged by the results. Employee turnover is down and bonus cheques were recently handed out to workers, which boosted morale. Speaking to analysts recently, CEO Nosbaum cited the ERM technology as a factor in the company’s turnaround and said it would be a key tool going forward.



“There’s a lot of opportunity in this market, since all employees and managers are users,” says AMR analyst Monica Barron. She observes that vendors of HR software, including PeopleSoft, SAP, Siebel and Oracle, have raced to develop products that broaden the scope of HR and change the way it interacts with employees. Other suppliers, including Microsoft, Great Plains and Kronos, are pushing into the small to mid-size market for human capital management (HCM) software, while Siebel Systems, Extensity and Workbrain are prominently marketing employee relationship management (ERM) suites, she says.

Such vendors say the demand is reflected in their balance sheets. Siebel, for example, only launched its employee-software division in 2001, but it is already one of its fastest growing product lines. In recent weeks, the state of Florida has begun to implement ERM technology to more than 220,000 users, making it Siebel’s largest client. And average ERM deals are now on a par with the supplier’s flagship customer relationship management products, at about $700,000.

Suppliers say that they are changing the way they sell their products to reflect the wider role of employee software. Sales people at Siebel’s ERM division, for example, originally targeted the head of HR or the existing Siebel CRM sponsor. But now it is more common for the chief operating officer, CEO or financial director to buy suites of ERM software, says Stacey Lawson, vice president and general manager of Siebel ERM. “Our technology seeks to improve the broad enterprise performance of our customers, not just streamline the HR department, which it is why it is necessary to work closely with the COO,” she says.

New ways of working

There are some key drivers behind such take-up. “The business environment is at a tipping point,” says Mark Lange, VP of global product marketing for PeopleSoft’s human capital management (HCM) software. He cites economic instability, investor pressures, leadership changes and global expansion among the key trends driving the need for effective HCM.

Lange advises that organisations take four steps on this road to effective HCM: streamline your HR systems; remove such hidden costs as excess manual HR staff; deploy employee self-service; and align employees with corporate goals.

One major change – as cultural in nature as technological – is that individual employees are being trusted with administering everything from their personal records to career development. ‘Self-service’ – one of the buzzwords of the real-time enterprise – is delivering significant savings in administration and training costs.

And not before time. Surveys have found that 20% of employees call the payroll department at least once a month; half of those only want to know when pay day is. Information portals, accessed from every desktop in the enterprise, can display such information. At the same time they can provide an executive platform for aligning employees with corporate goals, tracking the company’s stock prices and relevant news, providing access to online expense forms and timesheets, monitoring customer data, and holding internal phone numbers and technical manuals.

It clearly pays to have all employees pulling in the same direction. Studies have shown that, at companies with a workforce distributed across many different locations, less than 5% of them are familiar with corporate strategy. By linking new HR systems with analytics tools and employee performance management technologies into a single web-based, real-time application, executives can respond to events and execute plans more quickly.

But, at this stage, such approaches are only evident at the most enlightened enterprises, warn analysts. Too many businesses are still run by administrators, protective of corporate data, he says, but competitive pressures will motivate more organisations to support real-time employee functions. The power base and structure of the traditional HR department may be eroding, but the most agile businesses are unlikely to mourn its passing.


In practice: PwC

Few organisations face the kind of challenges audit firm PricewaterhouseCoopers (PwC) does in training employees and aligning them with corporate objectives.

PwC’s structure presents one challenge. The organisation is a federated group of partnerships, and each firm has the right to veto new projects and strategies. That makes it difficult to roll out new technologies globally. Another headache is keeping tabs on the firm’s 160,000 partners and staff, dispersed across 150 countries. PwC has a high turnover of staff – each week, an estimated 1,000 employees either join the firm, find new roles or leave the organisation. Auditors also, by their nature, make up a highly mobile workforce.

“Our human resources are all we’ve got,” says Peter Magill, PwC’s HR director. “We sell brain power, we don’t sell anything else. So managing our staff is a key issue for us.” Increasingly, human capital management (HCM) technologies from PeopleSoft, the enterprise applications supplier, are helping PwC to reduce HR administration costs and to disseminate valuable company information and training modules rapidly.

Importantly, this enables consultants to spend more time with clients and gives them valuable information while they are away from the office. “Driving the fee-earning engine is critical,” says Magill. “The key question is how much support we need to give to an individual and how much that will cost.” Adding self-service functions, he says, has helped to reduce support costs.

So far, the HCM technology is implemented in North America and much of Europe, and Magill hopes eventually to roll it out worldwide. The project may be delivering clear efficiencies and improving staff morale, but there has also been some resistance to change, admits Magill: “Some of the partners miss having ‘Martha’ in HR down the hall.”


Hard dollar savings
Process   Manual costs   Self-service costs   Savings  
eBenefits (eg enrol in benefits) $109.48 $21.79 80%
eProfile (home and mailing address change) $12.86 $3.39 77%
eDevelopment (enrol in training) $17.77 $4.87 73%
eProfile Manager Desktop (approve promotion) $48.64 $14.01 71%
eRecruit Manager Desktop (create job requisition) $36.89 $11.11 70%
eCompensation Manager Desktop $44.67 $18.26 59%
eRecruit (apply for a job) $21.31 $11.85 33%

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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