The role of HR systems in a recession

I had a discussion earlier this week about the rights and wrongs of implementing a new HR system when a company is feeling the effects of a downturn. The case was put that a company can't justify implementing a new HR system because there are redundancies in the offing. The system in question would substantially streamline HR processes and give senior management vastly superior information with which to run the company!

You may feel that I am slightly biased - and you would be right. BUT the case still stands:

• HR is continually being told that it is a strategic function but is often buried with admin. If the system frees up time for them to think and act strategically it must be a good thing for the business;
• Huge amounts of time is being wasted on HR admin that a system is better at (eg holiday booking, sickness reporting, expense processing, data updating). Often the time is being spent outside of HR - managers pushing paper.
• Incorrect / incomplete data costs companies money and can lead to decisions based on bad information.
• Even the most basic HR reporting is taking hours to prepare and is therefore not timely. How long does it take to prepare a report showing headcount & salary cost by location an division? It shoduo be at available at teh push of a button.

If company has over 30 people there is a good case for a system, especially given the low cost of online systems (eg http://www.breathehr.com/). If a company has over 100 employees and an inefficient system then there are almost certainly cost savings to be made. The key is to not get too carried away with the wish list - the bells and whistles can come later when good times return.

A different way to run a company and manage people

For a while I have been hearing good things about a company called Patagonia, especially relating to the way they run their business. So to read a book by Patagonia's founder, Yvon Chouinard, was fascinating.

The company is run around eight philosophies:

• design


• production


• distribution


• image


• human resources


• finance


• management


• environment

Each philosophy is used as a guide rather than a set of rules and, for me, the approach can be summed up by their 'Let My People Go Surfing' flexitime policy - if the swell is good then go surfing in the afternoon or be there for the kids when they get off the school bus. Loyal happy employees wont take advantage of the system, and in fact will be more dedicated.

The whole plan seems to be around minimising the negative impact that the business has on the world and maximising the positive impact. They donate 1% of sales (not profit) to good causes.

If you are into finding out about different ways of managing people and business take a look at the book 'Let my people go surfing: an education of a reluctant businessman' by Yvon Chouinard. They also do great clothing! http://www.patagonia.com/

Great podcast

I have just listened to a great podcast on 'Opportunity in the Failure of Design' by a guy called William McDonough. He is the co-author of a book called Cradle to cradle. I'm glad there are people like him out there to offer solutions to fix the mess the rest of us are making of the world!

Have a listen at http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2073 and watch out for the piece about trees.

When to let someone else host your software.

There are an ever increasing number of hosted / online / SaaS applications available to business and it can be difficult to decide if that is the right route to take.

In short - most businesses have the choice of whether to host a business application themselves or to let someone else take the hassle of managing the server(s). If the choice is to let someone else host it, there is often a further choice - buy the license or pay on demand (eg per use or transaction etc).

As you would expect, the vendors will have a convincing argument in favour of their chosen route. Salesforce.com say hosted on demand is the route, SAP will say never, host it yourself. Some vendors will offer you the same product by two methods - Sage CRM (license and self hosted) vs SageCRM.com (ondemand).

Ondemand is tempting

• no up front costs
• no server costs
• usually easy exit route
• regular monthly payments
• BUT can be expensive over a longer term

The only way for a business to decide which approach to use, is by asking some common sense questions -

• How much will we rely on the system?
• Is it a long term investment in systems?
• Will it be business critical?
• How much do we have to spend?
• Can the company afford the capex?
• What options are available for the type of application we need?
• What capacity do we have on our servers?
• Does the company have the skills required to manage the application?
• Do we have the bandwidth to access the application?
• What level of support do we need?

There are a ton of other relevant questions but answering the above should give a good idea of the direction to take. And have this little Q&A session before you get too tempted by the salesman.

Hint: Talk to the consultants that implement the applications - they are more likely give you the true story and advise on the right approach for you. Beware though - if the consultant doesn't have a broad and unbiased knowledge they might send you to a favourite. Ever asked an Apple fan what they think of anything Microsoft!

Time to consider web based HR systems?

In general, businesses have been slow to take advantage of fully web enabled HR systems.

There seem to be a number of reasons for this:

• fear of loss of control of data
• concerns over security of data over the Internet
• and maybe the most important, the HR software industry hasn't provided really excellent systems!
  

Thankfully there is a good response to all of the above concerns and take up is increasing. There are significant benefits that web-based solutions offer over and above traditional systems

Top of the list of benefits when moving to a web system is that it allows HR processes to be deployed to all the appropriate members of the workforce wherever they are. Add to this the fact that the best systems allow users to configure and manage these processes from end to end. If access to processes is provided on a community basis there are huge time savings available. Managers will need to access a different range of processes (eg manage sickness) to their employees (eg book a holiday). And, of course, the HR department and key business managers will need access to a wide range of information across all areas of the business. When the ability to deploy and action HR processes to and from any location is combined with community based access, the result is like having an HR manager at every desk. Furthermore, with the demands on businesses to adapt to and support more flexible working practices continually growing, this remote access is crucial in enabling a mobile workforce.

At long last we are starting to see HR departments get the budgets and therefore the systems they deserve.

Putting HR back in control of their systems

It is critical that HR systems put HR and the business back in control of their own processes. In my view, this must begin with a revision of the idea of configurability. The big enterprise sofrware vendors (PeopleSoft, Oracle, SAP etc) have made users scared of configuration - expensive, time consuming and rarely delivers on promise! Many HR systems will claim to be configurable. In reality, this means that they can be customised by developers who will build new code to define and support each nonpackaged process. This is a lengthy and prohibitively expensive process.

The latest generation of HR systems are succeeding in putting the business back in control. They allow processes to be easily configured by business users, and deployed in real time. If business users can easily map each common process, such as absence, holiday requests, appraisals, new contract offers, etc on to a configurable system, and then roll them out across the organisation immediately, the benefits that will result are far reaching. This should not be timeconsuming or expenseve and must deliver quick returns.

HR systems must free up HR to focus on strategic activities by significantly reducing the burden of repetitive administration without compromising on the business’ flexibility. Business users should be able to build in their own escalation and notification rules, meaning the system can manage data proactively to help informed and on-time decision making.

To read more about this topic you might want to visit my library page.

What is CRM?

I was asked a few days ago to explain what CRM means - not the technology but the application to every day business life.

There are plenty of places where you can read that CRM is '..not a technology but a rather a mind set..'. Even this adds to the overall confusion though, as it tries to be too clever an answer in my book.

There are two types of CRM - transactional and strategic, reactive and proactive.

Transactional / reactive
This is where an organisation uses CRM to record and monitor transactions. Calls, opportunities, letters, complaints, orders etc... It's employees will then take action based on this historic record.

Strategic / proactive
Where an organisation plans the action it is going to take and uses CRM to monitor the response. For example - plan and execute a marketing campaign, then use CRM to monitor the response by, for example, the number of call received.

It doesn't take too much figuring out to see that the strategic / proactive approach is better. Both are very valid uses of CRM and I wouldn't want to sit here and say one is right and the other wrong. However, many CRM implementations barely make it past the transaction level and if they did they would release enormous value.

Getting to the strategic stage is all about using good business methods -

• Having a vision for the system
• Making it part of your business plan
• Knowing what a successful system will look like
• Understanding the effect change will have on customers and staff
• Producing and sticking to a plan
• Accepting that the work must be phased over time
• Don't get carried away with the new toy
• Celebrating successes and non judgementally understanding setbacks

CRM is not a tool that will solve all problems but it must help an organisation release knowledge about how it affects it's environment. It should provide the stimulus to take action and the knowledge to make decision making more comfortable.

Payroll - bureau or in house

The last quarter of the year tends to be when a number of our clients consider bringing their payroll in house. Many mid-sized companies outsource payroll to a small bureau or one of the big players (eg ADP) and this costs them a packet. However, bringing it in house can be scary and will it actually save money?

In my experience the only honest answer is 'yes - but'....

Something as sensitive (critical) as a payroll can not be experimented with and many companies think of it as a project to implement software. Actually, its all about the people that are going to end up running the payroll. Projects to bring payroll in house must be resourced properly and if it is going to go wrong this is the most likely cause. A company that outsources its payroll usually has someone in house that does a large part of the work (bureaus rarely earn their keep) and this person can / should be central to the project. They will dislike software, be very nervous and fear for their job. Training this person must not be skimped on and a level of hand-holding after implementation is essential to build up confidence and experience (don't forget that the first tax year end). Even when they are up and running, someone to call on occasionally when a difficult question arises is important. In a few cases this person is simply not the right resource, so a change of personnel has to happen but this rapidly becomes obvious to all concerned.

CRM systems - Buy vs build

One question I get asked quite often when talking to organisations needing to improve how they manage their relationships is should they buy an off the shelf CRM system or build their own.

There is no straight forward answer to this as it really depends on requirements. With some clients it is obvious that an off the shelf solution is right - maybe the system has exactly the features they need or there aren't the right skills available to build.

The decision to build from scratch tends to come from one of three positions:

• "My requirements are so simple I don't need a system with all the extra
  stuff."
• "I want a system that matches all my requirements exactly and none of the packages do this."
• "We can't afford a package solution."

In each case we suggest the client looks a bit deeper before making a decision.

Simple requirements - I don't need all the stuff
It is true that CRM packages have lots of functionality that never gets used but they are also designed to allow for this. Typically a company will only use 20% of a software system's functionality but every company uses a different 20%. The point to consider here is the over time you will no doubt want to add functionality - as your knowledge and confidence grows so will your requirements. It is also often true that as you get used to using a CRM system your understanding of what you really need will change - the power of hindsight. So the system needs to be flexible and easily changed - not always possible with a bespoke system.

Exact requirement - one size does not fit all
When CRM systems became the rage in the late 90s the trend was to try and make them do everything. This led to high profile implementation failures, as organisations pushed the boundaries, trying to implement systems to do exactly what they wanted and to include everything the CRM pundits said they should have. We advise our clients to carry out a dispassionate cost benefit analysis of their requirements - for example, linking CRM to an accounting system is great but exactly what benefit will you get, is it wort the extra cost?

We can't afford a package
This is a difficult one as it needs to take into account what is involved in developing a system. It is relatively easy for someone with good PC skills to create a basic CRM system using MS Access or similar. There are a number of serious questions that need to be considered before setting off down this route such as:

• Have we really got a good handle on our requirements?
• Can these requirements be documented in a way that they can be passed onto the person developing the system?
• Are you happy to rely on one person developing the system - all eggs in one basket?
• Is the developer prepared to work to a fixed price & time frame and provide support?
• What happens when the system needs changing - will they be there, able to cope and charge a reasonable amount?

When all of these points are taken into consideration the cost of an entry level CRM package often doesn't sound so bad.

Buy vs Build is not a straightforward decision and should always be considered when you start the process of implementing. However, good off the shelf systems come with lots of the thinking already done and best practice embedded. They are also implemented by people that know about CRM and have valuable experience to pass on. You can read any number of articles that say CRM is about changing a mindset not just a system, and I suggest that buying an implementation from CRM expert using, a well proven package, is the best way to achieve this.

Getting away from it all!

As I close things down for my summer holiday I face the same quandry as many business owners and managers - how 'in touch' do I stay?

I often go to the highlands of Scotland during the summer and until a couple of years ago the mobile coverage wasn't up to much. More recently I get better coverage there than I do in Surrey so the temptation to check mail is always there.

On the one hand I know that a complete break is best BUT will I relax better if I check in occasionally? I have a great team of people who would consider it a failure to have to contact me on holiday and I wouldn't insult them by calling in. So, this year the 'out of office' is on and I am determined to only check my mail once or twice a week.

Joined up HR systems

There is a lot of buz around the subject of 'Talent Management', with any number of seminars, workshops and white papers available. As ever, the software world has latched onto this potentially huge market place and solutions are available from many vendors.

What I don't understand though, is that this new breed of system seems to be being implemented independently from an organisations HR system. This leads to an organisation having two (or more) silos of employee related information that may or may not speak to each other. Surely the business world knows that this is a bad idea so why is it happening?

The problem seems to lie somewhere between a lack of clarity as to what a talent management system (TMS) should look like and a lack of flexibility in many HR systems. Gartner have identified that many organisations implementing TMS, are doing so as a toe in the water effort to replace spreadsheets or Word Docs ('Unlocking the Strategic Value From Talent Management Application Investments' - Dec 2007). It is also well known in the HR world that traditional HR systems are cumbersome (aka expensive) to adapt so are not being tailored to handle TM.

Organisations are spending vast amounts of money joining up business systems, removing silos and sharing information. Lets hope we don't have to go through the whole process again combining HR data. HR and talent management systems must not be separated - information about the employee should be held in one place.

An organisation adopting talent management strategies is making an important investment but lets not forget that the ideas are not completely new - they draw on lessons from the past. In that same spirit, lets not forget the great IT lesson of the 90s not to create data silos.

Age discrimination

I met a contact at the Employers Forum on Age today and he shared with me the idea that the debate over retirement ages could be solved by having three dates:

• State pension age
• Work scheme pension age
• Actual retirement age

This approach would then allow the employer and employee maximum flexibility instead of the state dictated retirement age.

CRM and short term memory

There seem to be two types of CRM users - those that use it to manage transactions and others that use it to organise their business lives.

I unashamedly fall into the latter group - I use my CRM system to manage my every move. In looking at ways to release more time for thinking and planning it came to me that I use CRM as the system equivalent of my long term memory - memory stored as meaning that can fade over time if it is not recalled on a number of occasions. CRM for me has become a memory store. With smart use of reminders and triggers I can get the system to recall information over time. The problem with this is that reminders can interrupt and overwrite what users are currently thinking, ie what is going on in short term memory. Smart use of CRM takes this into account but in this respect a system is only as good as its user.

Succession planning - inside outsiders

Whilst researching succession planning I came across the idea of 'inside outsiders'. These are employees that have managed to keep an open mind and haven't been sucked in by company think. The argument is that they make excellent future leaders as they have an outside view of the business and its world. Listen to Harvard Business Online Episode 68

Once again, a great contact base is cited as essential. More evidence that, to succeed, a business must have a strategy to manage its relationships. See also Darren Shirlaw's article

Education / Business partnership

I have just come back from speaking at a Surrey Education Business Partnership event near Dorking about using data to help develop client relationships. The audience was a group of Business Studies teachers and the aim of the event was to give them some some insight into areas of the business world. A really great bunch of people and a relief to know that future entrepreneurs are in good hands.

I had the pleasure of meeting Justin Urquhart Stewart from Seven Investment Management (http://www.7im.co.uk/) who was also presenting. You may have heard him on the TV or radio and he is well worth meeting if you ever get the chance.

His view on the economy? - have a look at http://www.7im.co.uk/InvestmentLibrarySubMenu.aspx

Linkedin

I have been working on my Linkedin profile recently and am starting to see some interesting results.



Having played with Linkedin and ecademy I decided to concentrate on growing my Linkedin network. ecademy just seemed to be too hard to navigate and sent me too many 'update' emails.

It is taking a while but I am now making contact with past colleagues, clients and contacts. Starting with a view that quality of contact is far better than quantity, I am engaging with some really interesting people. For me it is essential that you know why you want to make contact with a person - business, personal or maybe just to say hi - but collecting names is not for me. For each person I link to, I am trying to find a way to engage with them outside of Linkedin. There seem to be some real 'professional' Linkedin'ers who have hundreds of contacts and it must be a full time job to keep in touch.

Some interesting tips at http://www.linkedinhelp.com/

If we are heading into a recession then business is going to become even more focused on who you know and I see Linkedin as being a great getting to know tool.

Apple iPhone - a generational thing?

Had an interesting exchange with a colleague at the end of last week about the iPhone. It was prompted by an article on the web http://www.b2bm.biz/news/?groupId=&articleId=28579

To me, the iPhone is a personal phone that has an uphill struggle to be accepted as a mainstream business tool. Cool but useless for business was my view.

My colleagues is gen 'Y' and his take is that the iPhone interface is the way forward and the rest had better watch out. I was taking a thinking approach and he was taking a feeling approach - seems like a classic generation divide. Leaving aside the rights and wrongs of the argument it will be his generation in charge of corporate purchasing soon! Need I say more?

Talent Management

I went to a seminar last week that was all about talent management. One of the talks was on managing 'troublesome talent' and that sparked quite some debate.

Questions from the audience included:
Are talented employees, by their very nature, troublesome?
Shouldn't all troublesome employees be moved on - whether talented or not?
Is troublesome the worng word?
Are all gen Y employees troublesome?

The test seemes to be to focus on the talented bit first - is an employee talented? If so, then you should spend more time and effort on accomodating them. The alternative approach being suggested was to work with a troublesome employee just in case they are talented!

Peanut Butter salary policy

I have sat in on meetings with clients where the subject has been how to handle the annual pay round. Companies typically have a policy about how to award salary increases, but in essence many take a pot of money and spread it thinly across every employee. However, those self same companies will say that they reward performance - a real contradiction!

In doing some research around this subject it seems to be a common problem and has been dubbed as the 'Peanut Butter' approach. Spread it too thinly and it wont be as tasty. So why does this happen?

One typical cause seems to be management's ability to carry off the policy. If an organisation truly wants to reward employees based on performance they need to ensure that managers have the tools and ability to handle the situations that inevitably arise - how to handle under performers, how to get a difficult message across etc.

Pay for performance must be the right approach if organisations want to recruit and retain the most talented people and as is so often the case this starts with a mind set change followed closely by training.

Too fast with the product recommendation

Happy New Year.

I have just responded to request on a networking site for CRM system recommendations. The request was posted on the 2nd and already a number of vendors have rushed in and recommended their offering. Well done to them for getting there before me but I have a problem with their responses - almost without exception, they didn't ask and questions. How can they know what is right without knowing requirements (eg what pain is being targeted?, # users, # contacts etc etc).

A few simple questions to understand more about the situation would make the recommendations useful rather than just a blunt sales pitch.