Human Capital Management (HCM) is becoming even more critical as the world is transitioning to a knowledge economy. How are enterprises grappling with this area?
As a world leader in process efficiency, ADP has had to both understand human capital management (HCM) to help our clients manage their payroll and HR, as well as develop our own best practices to become the global industry leader we are today. We have seen several methodologies that growing enterprises have adopted to retain, nurture and attract the best talent. The most effective of these strategies make excellent use of data to derive meaningful insights. Key areas of focus of the more valuable types of analytics for enterprises include: Total Cost of Ownership; Talent Productivity, and Hiring and Retention metrics. To reach a deeper understanding of their data, we have seen enterprises of all sizes investing in HCM data mining and analytics. The more intuitive the analytics tools and dashboards, the easier it is for HR professionals to use numbers to start making more scientific decisions regarding talent. One of the biggest challenges most enterprises face in taking this journey to more data-driven talent decision making is disparate systems that have created data silos that impact the quality of the analytics.
How can organizations leverage IT to get the most out their HCM initiatives?
Information technology for HR is relatively new on the scene. Long an area that compliance needs dictated paper forms, a fairly rapid recent set of technology developments in HCM has moved through two stages: automating the paper process flow to increase productivity and the most current drive to harness data and drive better decision making via the power of analytics.
From the user’s perspective, two other changes have impacted the widening use of technology in HCM decisions: simpler user interfaces (UX) and mobile interfaces. These changes have driven broader self-service usage deeper into organizations by moving some simple HR tasks out of the queue of the HR team and down to the individual employee. For instance, companies are effectively able to move time and attendance management out of the office and directly to employees via their mobile devices. Similarly, approval and running of payroll can now be done via tablets, and HR data can be updated and maintained real time from anywhere. An improved UX is a critical component of this, as current programs are written in non-HR specific terms and don’t need user manuals or commands to operate. This has resulted in more accurate and faster HR decisions.
It also helps companies maintain HR compliance more consistently, which is critical to managing and potentially reducing risk. A report by CEB suggested that organizations in the APAC region have incurred costs at an average of up to $1.24 million related to payroll non-compliance in the past five years.
Decentralized structures within organizations can make workforce management a cumbersome task. How do organizations deal with it?
Decentralized structures are – unfortunately for many enterprise firms – very common. They result in an accumulation of tools that manage just one or a few data streams delivering poor visibility into their workforce data, which, in turn, can impact the company’s financial performance. An ADP Research Institute® study1 determined that a large multi-national company manages more than 30 HCM applications on average. Imagine pulling together a single monthly report from more than 30 systems every few weeks. A daunting challenge to say the least. And that’s just to compile basic counts and statistics. That process doesn’t begin to provide the analytic insights necessary to make key decisions. We find enterprise frms dealing with this in a few key ways:
- Regional consolidation of vendors/systems to reduce silos and consolidate data.
- Building talent team processes across departments. This group-oriented hiring process enlists various stakeholders that have the information needed to address people strategies.
Compliance to various regulations that change from time to time also seems to be an issue. How do organizations deal with it?
According to a study2 by the ADP Research Institute® HR leaders cite compliance risk as the top concern in their organization. For one calendar year, there were over 20,000 payroll regulations globally. HR leaders are increasingly turning to technology to help them manage the changes. Automation, updates and detailed information uploaded into their systems can help make this extremely large task more manageable.
One of ADP’s areas of expertise is helping clients manage and maintain compliance – and experience has taught us that companies -- particularly complex global enterprises -- shouldn’t rely on technology compliance updates. The degree of risk and potential penalty costs are simply too great for companies of this size. It requires some local expertise to be sure that regulations are met in a timely manner, and to provide interpretation and context. Some firms will hire their own internal compliance people, or require legal or service representatives located in different countries to help provide on-the-ground tracking. But many global companies go a step further and outsource this either as a facet of their payroll/HR solutions or add it to their auditor/accounting relationship at additional expense. Although this second approach takes advantage of the expertise from the accounting firm, it still leaves the company in need of a compliance solution for their HR technology.
How does ADP help address these challenges?
With decades of experience in managing global organizations, ADP has continuously invested in improving its people skills, process efficiency and technology adoption.
HCM-related compliance regulations could pose serious administrative challenges to organizations. With the right technology and the expertise of our people, ADP ensures that clients receive timely notification of pending compliance regulations. Our statutory and compliance services ensure that the entire process – from data collection to submitting the amount to the right authorities – are streamlined and processed on time. Our cloud-based compliance management system gives clients real-time visibility into their submission status.
Cloud based solutions such as the one offered by ADP bring with them data confidentiality and security concerns. How do you address them?
ADP takes security and confidentiality of its clients’ data very seriously. Its Global Security Organization (GSO) manages these issues across the world. The main objective of this organization is to ensure that all the applications and facilities (datacenter infrastructure) maintain the utmost levels of security, and are compliant with changing data privacy laws across countries and regions. In addition, ADP’s managed services division continuously aims to improve the quality of the services the company delivers, be it in the form of introducing newer modules to scale or processes to ensure smoother experience. For our India operations, we have been certified with ISO 27001:2013 certification for information security; ISO 9001:2008 certification for quality in our business processes and client deliverables and ISAE3402 report which is issued annually by third party auditors for effectiveness of our business controls.. Standards similar to these in respective countries are applied to all our 630,000 clients whether they choose to have our managed services offerings by outsourcing their payroll and other HR activities, or prefer to do in-house processing using ADP’s on-demand SaaS solutions.
What, in your view will be some of the defining trends in the HCM marketplace in 2016?
We believe the continued development and adoption of integrated data and data analytics will be among the defining trends in the coming year. Companies will continue to try to encourage employees to take a greater role in managing their HR and payroll decisions both in the workplace, as well as via mobile devices.
We see trends in India and Asia focusing on the use of improved HCM tools to drive more sophisticated business talent decisions, such as talent mobility between states and regions to expats. HCM technology has enabled – and, indeed, is driving – the need to match the best skills for the right job, and to automate HCM from payroll to time and attendance to talent, as well as maintain it within a single system. Due to the scale of the challenge at many large enterprises, this transformation may take years, but there’s no doubt it will pay dividends in terms of a more engaged, productive and efficient workforce.
About ADP (NASDAQ: ADP)
Powerful technology plus a human touch. Companies of all types and sizes around the world rely on ADP's cloud software and expert insights to help unlock the potential of their people. HR. Talent. Benefits. Payroll. Compliance. Working together to build a better workforce. For more information, visit: http://www.adp.in
1. ADP Research Institute® Global Human Capital Management (HCM) Decision-Makers Survey in December 2014
2. ADP Research Institute® Global Human Capital Management (HCM) Decision-Makers Survey in December 2014