“HUMAN CAPITAL FORECAST, THE COMPETITIVE ADVANTAGE” FOR: HR PROFESSIONALS

Sachidanand R. Kulkarni

Sr. Manager – Human Resource

Nihilent Technologies Pvt. Ltd.

             

It’s vitally necessary to invest considerable time for Human Resource (HR) professionals to understand and analyze the business environment, customer demand, labor market conditions and balance the ‘Demand/Supply’ of talent.

Today, in the knowledge-led economy the attrition among top performers is increasing day-by-day. In the other hand business demand is sporadically dynamic; it’s difficult to meet the desired level of business expectations in short time. The ultimate focus for recruitment function must be to build the ability to ramp-up fast with right people on board at right time in order to balance the demand and supply.

“Human Capital Forecast” can prove to be competitive advantage for an organization to achieve its business objectives. However this seeks focused approach and humongous collaboration across functions such as Human Resources, Sales & Marketing, Project delivery and Finance.

How “Human Capital Forecast” can be a competitive advantage, one of my HR friend asked me during our casual conversation. It is essential for HR function to make sure that ‘HR Strategy’ communicates with ‘Business Strategy’ of the organization. Now the whole question is around where is the ‘Business Strategy’? Has HR been involved when ‘Business Strategy’ was being designed and finalized? Same applies to ‘HR Strategy’…!. It’s the demand of the dynamic business environment that the traditional way of corporate working won’t lead to desired results. People got to come together, seat across the table and collectively decide on what we want to achieve, how do we achieve and agree on accountabilities, acceptable results and processes. Unless the ‘Why’ is established, ‘How’ can’t be explored!

Let’s park strategy issue at senior management’s level to think and bring rationality, but focus on actions that are under control of HR Manager.

I am categorically using ‘Human Capital’ phrase than “Human Resource’ with reference to the intense research happening around HR function and its future. ‘Resource’, anything which is referred as resource is supposed to be exhaustible by its natural characteristics, at one point it loses its potential to grow, however it’s ‘Capital’ where we intend to invest for long term and gain value out of it. Hence it is imperative to treat employees as ‘Capital’ to be invested with long term vision than ‘Resource’ for gaining short term benefits.

‘Human Capital Forecast’ is representation of various levels of analysis that reflects the consolidated view of manpower.

1. Attrition Analysis, Retention Analysis & Attrition Forecast
2.        Demand Analysis
3.        Supply Analysis

a.    Internal capacity / Capability matrix

b.    External/Recruitment pipeline

                      4. Potential Investments / R & D

Let’s look at in details the expected outcome from each analysis listed above:

     Attrition Analysis, Retention Analysis & Attrition Forecast:

·         Attrition Analysis:

o    Consolidate list of employees resigned/separated in the specific month, quarter and year.

o    Calculate:

1.    How many employees have been separated in a month

2.    How many employees have been separated in a quarter

3.    And how many employees have been separated in a year

4.    Convert each outcome in percentage %

E.g. Attrition % = Number of employees separated in a month

                         Total number of employees in the month

Though there are few other ways to calculate attrition but in general this is the widely used method to analyze gross level attrition.

·         Retention Analysis:

o    Calculate average retention rate i.e.

Number of employees retained in particular month/quarter/year from number of employees resigned/separated

         E.g. Retention % = Number of retained employees

                 Number of resigned employees

·         Attrition Forecast:

o    Based on attrition % calculated for a particular month, prepare attrition forecast template (monthly, quarterly and for a year)

o    This forecast must reflect expected number of employees moving out in each month, quarter & year ahead.

o    Analysis must capture skills wise/level wise expected deficit in employee headcount.

.   Demand Analysis:

·         Sales Pipeline

o    Work closely with sales operations team and analyze business demand for a month/quarter and if visible at high level for a year

o    Demand must be analyzed in two perspectives:

1.    Capability (Skills):

·         What kind of skills, technology and experience is required

·         Categorize the specific demand as “Opportunity based demand” & “Capacity fulfillment demand”

·         Opportunity based demand would give some breathing space for planning and onboarding required talent

·         Capacity fulfillment demand is just in time need

2.    Capacity:

·         Volume required

·         Timelines for fulfillment

·         Demand - Trend Analysis

o    Consolidate sales pipeline and prepare trend analysis report that reflects:

·         Kind of skills/technologies in highest to lowest demand (define skill range array)

·         Frequently requested profiles

·         Client wise skill demand trend

o    Outcome of this analysis must reflect the skill demand trend, frequently requested skills over the period of 3 months, 6months etc.

     Supply Analysis:

a.    Internal capacity / Capability matrix:

·         Consolidate employee data with their primary skills and experience level.

·         Categorize employees as those who are utilized on projects and those who are available for next opportunity (with their tentative available date/month)

·         Arrive at the summarized view that reflects number of employee’s skills wise and experience level wise available in-house.

·         Further analyze list of employees available for next opportunity with possible dates of availability.

·         The outcome of this analysis must give clear picture of number of employees that are available skills wise/experience wise to take up new opportunities.

b.    External/Recruitment pipeline:

·         On the similar lines of internal supply, analyze External/Recruitment pipeline.

·         Review with Recruitment team, prepare list of candidates in offer given status, number of candidates that have confirmed joining and categorize these in to skills and experience level.

·         Further analyze possible date of joining for candidates that have accepted offer.

·         Outcome of this analysis must reflect the number of candidates skill wise/experience level wise expected to join in due course.

   Potential Investments / R & D:

·         Organizational technology roadmap and business strategy are key input sources to plan potential manpower investment.

·         HR manager must work closely with R&D team and CTO to understand potential areas that organization is likely to invest and what kind of skills sets it requires and by when.

·         This analysis must reflect number of people skill wise/experience level wise required by specific time.

I trust this article may be helpful for HR professionals. I request readers to post their feedback to improve this further.

E-HRM Implementation

Author: Sachidanand R. Kulkarni


I am glad to put across my thoughts on how Human Resource Management (HRM) function in the organization can make use of technology and enhance efficiency of processes and practices that they drive and there by achieve the state of high employee involvement and create conducive environment for better performance.

Before I jump on to the subject, we need to understand importance of organizational democracy. "Organizational democracy is achieved when the organization applies the principles of democracy to design the way it operates, cultivating a workplace that enhances potential, achieving its business goals, and positively impacting the community". Generally organizational democracy refers to all efforts that, within an organization, seek to harmonize individual and collective goals. Everyone is capable of actively participate in decision making that affects his or her work life, everyone is equally entitled to be heard and respected, everyone’s opinion counts equally, everyone is a leader in achieving goals, and everyone collaborating yields better results.

E-enablement of HRM function can give space for everyone to contribute and operate on one platform for betterment of the organization and create healthy workplace. For effective E-HRM functioning, organizational democracy is critical factor, it is the foundation for the success of E-HRM initiative.

E-HRM (Electronic HRM):

E-HRM is the web-based solution that takes advantage of the latest web application technology to deliver and online real-time human resource management solution.

The knowledge economy is characterized by core assets such as intelligence, understanding, skills and employees experience. This idea is associates with decentralization and the necessary access to information. Traditional HRM is no more effective, its functioning has moved from the state where HR uses to operate solo, now each employee takes part in designing, building culture in the organization, people’s ideas are called for considerations.

In other words, Electronic HR Management (E-HRM) can be considers as a way to implement HR strategies, policies and practices in organizations through the use of web-based technology.


Benefits of Using Technology in HRM:

• An E-HRM can perform number of functions from the simple storage and communication of information system to more complex transactions.

• As technology advances, the range of functions that an E-HRM can undertake increases.

• The use of E-HRM can provide a number of benefits to the HR function, line managers, and the wider organization.

• The use of technology has lead to faster, more accurate and more efficient processes and reduced HR costs.

• Technology can also be used to provide HR information and to enable managers and employees to perform simple HR tasks themselves.

• The use of E-HRM to reduce the administrative and transactional burden on the HR function can lead to change in the structure of HR and allow the function to play a more strategic role in the organization.

E-HRM – Activities:

E-HRM includes following activities:

1. Recruitment

2. Selection

3. Training & Development

4. Performance Management

5. Compensation & Benefits

6. Reward & Recognition

7. Employee Relations & Employee Engagement

The list can go on as the HR function widens its scope of activities that are to be e-enabled; however above are the primary functions of HRM.

E-HRM implementation:

The implementation of E-HRM brings additional complexity by integrating an HRM, people management, and related aspects to its implementation. This is complex, stress generation among HR professionals, user’s dissatisfaction and line manager’s resistance.

There are various other departments, functions and employees who would access E-HRM application and making use of it day-in-day out. Activities like leave applications, salary slips, project allocation, training, appraisals etc. HR professionals have to consider employees and managers as primary customers of E-HRM application and hence take their views, ideas in consideration while designing and implementing any E-HRM application. This process of involving multiple people and arriving at final conclusion and defining roadmap for E-HRM implementation organization wide takes lot of commitment and dedication from top to bottom and vice versa.

Stages at which implementation can be called as “complete”-

Implementation is complete when… Study

A new system (or more changes in the system) is technically installed Lucas (1981), Nutt (1986)

The system is accepted by its users Venkatesh (2000), Brown, Massey, Montoya-Weiss, & Burkman (2002)

The system is appropriated Ruel (2011), Hettinga (2002)

Satisfaction with the system is achieved Schuring and Spil (2002)

Intended objectives are met Leader and Salmela (1996)

The system is antiquated, and there is a need for removing the system or for a major change in it Pipek and Wuff (1999)

Process in E-HRM Implementation:

It is obvious that HR professionals have to dedicate their time and energy in making the E-HRM as part of organizations day-to-day activity and hence it requires systematic planning and process oriented approach while implementing the E-HRM organization wide.

As far as my personal experience goes in the matter of subject, I would describe the E-HRM Implementation process through following 8 step approaches:

Step 1: Objective setting & Assigning Accountability:

HR professionals must anchor and drive the initiative of E-HRM implementation, as a part of Step 1, organize meetings with all relevant stakeholders such as various department heads, line managers, and functional heads. Also choose few employees who has been with the organization for as long as and few who are very fresh and come from other organization with different experience. This mix of various stakeholders would help HR for clarifying the objective of the initiative at all the level of audience.

HR professionals must do proactive preparation and announce accountability of various aspects involved in implementation. For example, IT Infrastructure Manager must be accountable for providing required systems, software and hardware for installing E-HRM application.

Step 2: Process Familiarization:

It is extremely important that stakeholders involved are aware of how E-HRM application works and the various HRM functions it offers to users. HR professionals with the help of E-HRM application development team should organize Process Familiarization sessions and create overall sense of understanding in stakeholders and begin the journey together.

Step 3: System installation & Configuration:

IT Infrastructure team have to provide required IT infrastructure to install and configure E-HRM application. It has to also ensure that the application is stable and running up with no issues. Representative from IT team has to be nominated to support the application if any technical issue arises.

Step 4: Integration and Accessibility:

E-HRM installation can be independent of any other e-enabled applications in the organization, however if there is a need of integrating other e-enabled applications used by various functions then it needs to be integrated with E-HRM application. The end objective of integrating multiple applications with E-HRM should be to achieve data sanity, larger information and accuracy across the functions for data.

Access control needs to be established with the guidance of HR, who should have what level of access has to be defined by HR and ensure the system configuration has taken care of it to avoid post implementation issues.

Step 5: User Acceptance:

This is where the real challenge HR professional faces. Acceptance by users is very difficult activity as the system is viewed differently from different perspectives and hence there is no one opinion. In day-to-day use it can emerge various other suggestions which were not spotted during designing the applications and hence user finds himself that application is not up to the expectation. This is where HR has to ensure that people are involved from beginning and it doesn’t become bottleneck at the end.

Step 6: Objective Evaluation:

After having E-HRM installation done organization wide, seek people’s opinion, conduct survey and collect inputs to evaluate whether the system meets the objective of its existence.

Step 7: Change Management:

Suggestions received from people after implementation of E-HRM, evaluate each suggestion in the context of future enhancement of the application and see whether it makes sense to incorporate in the application. If it, then take help from technology team and explore possibilities of incorporating changes in application or customizing it. The objective behind customization should be clear that it enhances quality and process from current state to better state.

Step 8: Antiquated/Removal of system:

Over the period of time E-HRM application may become outdated, and that state comes if it has not been reviewed regularly for its betterment. In the changing business, it is equally difficult to manage your e-enabled applications and keep them in line with future context. If the desired output is not recorded and system yielding issues frequently then it becomes antiquated and calls for un-installation or removal from its usage.

HR professionals must organize a meeting with all relevant stakeholders and take final decision about removal or enhancement of the system in the interest of organization.

Conclusion:

At the concluding note, it is important to mention that any successful implementation can be called as successful when it achieves its utmost stability. At the end of implementation of E-HRM the adoption of its offerings during the transition between E-HRM application installation and its effective use by stakeholders and HR professionals is must in order to reach the ultimate objective of E-HRM implementation.



References:

Worldblu, 2007, Drucker, 2011

Electronic HRM in Theory & Practice, Chapter 1, Gottschalk, 1999

Franciso Javier Forcadell, Universidad, Rey Juan Carlos, Spain

Emma Parry, Cranfield School of Management, UK