HR SYSTEMS


COMMENT



Selecting a new HR System using Six Sigma Methodologies to maximise your Return on Investment

HR systems today are extremely flexible, they need to comply with complex statutory legislation that could change at relatively short notice, handle and maintain millions of rows of data, perform thousands of calculations, be accessible anytime and any place and generate automated processes using tools such as workflow and email to provide management information to end users in both the office or over the internet in an instant. The costs, although relatively cheap in most cases in comparison with the complexity, represent a significant slice of the transactional HR budget. So it is important that you make the right choice for your business and that your initial investment is returned as quickly as possible through HR process improvements.


Far too many companies still procure a new HR system perhaps because the old one is out of date in terms of technology and then promptly attempt to replicate what the old one used to do! The only true way of making that return on investment is to re-design your HR transactional processes to dovetail with the software application. Whilst this is a not a trivial, simple or inexpensive task, it will deliver long term repeatable benefits and savings.

Before you even consider short listing HR system software suppliers, you need to understand and DEFINE what your current HR process issues are, and set goals as to how you would like to reduce them. Having completed the definition you then need to MEASURE your current HR process performance and baseline that data. By carrying out these activities you can calculate a value called the Cost of Poor Quality (COPQ). This value is effectively all the tasks, activities and processes that are not adding value in the eyes of the customer. Examples of this are waiting, re-work, checking and duplication of input. You then need to understand your customer’s requirements - are they getting what they want, are they receiving too much information and are you over producing? Use this information plus the COPQ for your business case to get formal sign-off to purchase.

Having measured the effectiveness of your current process performance you then need to ANALYSE the output data from your processes to understand what the real underlying root causes of your HR processes capability issues are. Once these are established and agreed you can then begin to complete your system and technical requirements definition documents taking into account your HR process requirements, the voice of the customer requirements and the root causes of your current HR process issues.

You are now ready to evaluate the market. I would suggest an initial evaluation of 8 – 10 software suppliers with a view to eventually short listing 4 – 6 suppliers. Decide which suppliers you wish to invite to complete a pre-tender questionnaire. Construct the questionnaire around your system and technical requirements, their financial stability, their current customer base, their track record to date and the initial cost of the HR system. Design scorecards using weighting factors if you wish to emphasize a particular evaluation point that is critical to your business. Use the answers to the pre-tender questionnaire and the evaluation results from the trial versions of their software as to the fit to your own requirements and then score each supplier individually using the same methodology. This removes any bias and any precision errors from the decision making process. From the evaluation process select 4 - 6 suppliers to be invited to formally tender. At the tender stage focus on the software provider’s capability to deliver your requirements, implement your system to agreed timescales, the cost of on-going support and maintenance, their customer support measures and the fit with technology refresh. Use method statements to establish their credibility and capability and talk to reference sites about their experiences and again design a scorecard to evaluate the responses so that there is no bias or precision errors in the decision making process.

Having gone through this process use the top two to open contract negotiations with, keeping two in the frame will mean both suppliers will need to remain competitive as the legal teams attempt to agree contracts. Even at this stage a particular contract issue could alter the stated pricing structure significantly for one supplier. Once you have successfully completed contract negotiations with your preferred supplier make sure their responses to the tender process are tied into the contract.

Having selected your supplier and purchased the software you are now ready to implement the software and IMPROVE your HR processes. Following the implementation of the software you will need to measure your HR processes again to quantify the level of improvement that has been achieved and the financial savings that have been made. Finally, you will need to establish these new processes as business as usual activities and CONTROL their performance to ensure they continue to meet their capability requirements. Having ensured the HR processes are now stable and the process variation is within the upper, and if required, lower customer specification limits and the process is meeting the capability requirements you can calculate with accuracy your return on investment period which will be substantially shorter than your initial contract period having followed this methodology.


DMAIC - DEFINE, MEASURE, ANALYSE, IMPROVE and CONTROL are the 5 phases of a Six Sigma project. This approach to problem solving is simple and logical. Understanding and adhering to its simplistic nature is the key to a successful Six Sigma project.




Source: Paul Rains MIPPM, Black Belt  Transact HR Ltd

SOURCES OF INFORMATION

Michael Sheridan , Director : Orion Partners

Linked In profile

HRIS expert. Substantial experience in setting HR technology strategy and leading the implementation of HR systems globally. Interested in helping organisations to improve their HR operations and talent management activities through the successful deployment of technology including internationally.

SpecialtiesHR IT vision and strategy, software evaluation and selection, IT programme management and governance, global process standardisation, Software as a Service (SaaS), change management, leading high-performing global and virtual teams, vendor relationship management, transitioning from project to support, off-shoring and outsourcing. Known for adaptability, skilful communications, strategic mindset as well as cross-cultural experience and savvy.

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