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New Technology Is HR's Route to Reengineering

July 1, 1994
Related Topics: Reengineering, Human Resources Management Systems (HRMS/HRIS), Featured Article
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Just three years ago, HR manager Nanci Kerlin felt herself being crushed by the collective weight of the world's paper. Every time a payroll request or employee-records update filtered into one of 24 human resources centers of Chicago-based Sears Roebuck & Co., it sloshed between desks and filing cabinets for days, even weeks, on end. Clerks, data-entry operators and supervisors spent countless hours verifying and signing off single pieces of paperwork, while associates often had to wait weeks to see their records or paychecks updated. Having 573 human resources staff members in 24 offices throughout the country—with none of the offices operating with more than a single standalone computer—Kerlin figured there had to be a more efficient way for HR to function. "We simply were drowning in inefficiency. We were totally unautomated, every office had a different way of doing things, and we had so many checks and balances, things weren't getting done in a timely manner," she says.

To remedy the problem, Sears embarked on the treacherous chore of radically reengineering its HR department and introducing technology that could automate its work flow and shift some of the burden to other people in the organization. Today, associates update records from personal computers located in their stores, and the system enables them to automatically route tax changes to payroll for electronic processing. Those who want to change their profit sharing or medical coverage can call a toll-free number and push buttons on a touch-tone phone. The system updates records to reflect the changes almost instantly. And if a store has a new associate, there's no need for a hiring manager to fill out a data-entry sheet, which used to crawl across desks in HR as clerks manually computed tax rates, withholdings and deductions. Now, when the person doing the hiring inputs basic information online, the computer immediately spits out an employee number and updates payroll records.

The net effect? Sears has managed to reduce its human resources staff from 573 people to 125, while consolidating its HR centers from 24 to two. And since implementing its ambitious plan to reengineer human resources and find ways to eliminate unnecessary work, it has slashed 74.6% of its HR costs. Says Kerlin: "The system has made all the difference in the world. It has enabled us to transform ourselves from processing centers preoccupied with administrative work to units able to offer a high level of service and expertise. Today, information flows with incredible efficiency."

Welcome to the world of workflow automation, a process of incorporating radically different work patterns with powerful new software and hardware systems that can route data through the corporate catacombs with lightning speed. Whereas traditional work flow is task oriented—in most cases a project is organized into a series of sequential steps—workflow automates the processes by breaking everything down into discrete functions. Individual tasks are sent to appropriate workers within the flow, and once completed, are routed automatically to the next person. Because workflow processes data electronically and with minimal human intervention, it can save upwards of 90% of the time required to handle the same procedure using paper. It typically also boosts productivity by 20% to 50%, while improving customer service and providing far better internal controls.

What's more, in this era of reduced budgets, global competition and relentless pressure to achieve superior results using limited resources, many human resources departments are finding that workflow automation finally enables them to banish administrivia and become a strategic business partner. It's redefining the way HR departments function, the services that they offer and even what their roles are.

It's an elegant concept, but one that requires a great deal of effort, frustration and fortitude. Shredding existing work processes and reassembling them in a far more efficient way can be traumatic for even the open-minded and ambitious company. Choosing the right computer systems and software to drive the workflow automation can become an exercise in patience and determination. And dealing with the fallout of this new-found efficiency—handling workers who are fearful of losing their jobs, training remaining HR staff members and adjusting to a flow of information that breaks conventional boundaries—can be nothing less than gut-wrenching.

As Tom Ledger, director of the Process Improvement Practice at Baltimore-based The Hunter Group, puts it: "Reengineering involves fundamental changes in the way people work. Automating inefficient processes serves very little purpose."

Reengineering techniques help redefine HR.
Wander into a typical HR department at a Fortune 500 company, examine the way work's handled, and it's perfectly clear that basic processes and procedures haven't changed significantly during the last half century. Although today's computers handle transactions faster, they have eked out only marginal gains in productivity. And it isn't difficult to understand why. In most cases, they're simply automating already inefficient workflows.

For a growing legion of companies, that's no longer acceptable. And some now are seeking to toss conventional logic aside and find ways to radically redesign workflow. They're using reengineering techniques—project teams, data mapping and detailed process analysis—to change the way HR does business. Then, once they have all the pieces in place, they're moving ahead with technology that's able to fully automate the new business processes.

Workflow automation actually is an umbrella concept that incorporates several technologies, including interactive voice response, document imaging processing and decision support solutions (see "Glossary of Technological Terms"). In some cases, it uses rules-based routing—software that uses an organization's rules and policies—to zip an electronic form to the right person (it even can send the form to an alternate if an individual is on vacation). The software automatically can track, notify and prioritize work—generating electronic to-do lists on one's personal computer and filtering out data that isn't relevant. What's more, the software—now able to tackle a wide range of HR functions—provides seamless links to electronic mail and document-management systems, and is able to integrate with off-the-shelf spreadsheets and data bases to provide advanced reporting capabilities.

That might translate into a London-based production manager filling a position simply by entering a request into his or her personal computer. The workflow concept would take the information about who's needed and send it to personnel, which would be able to view the requisition form online. Then, after HR has selected a group of candidates—perhaps using a computer search to filter through electronically stored resumes—the manager in London would review the applicants and make specific recommendations. The workflow system then would schedule the interviews and send out letters. Remarkably, the entire process might take place in 10 minutes or less.

"It's fundamentally changing the way HR works. It allows HR to streamline operations and become a corporate resource," says Natasha Kroll, vice president of advanced information management strategy at the Meta Group, a Westport, Connecticut, human resources consulting firm. "Today, progressive HR departments not only are [administering] benefits and handling requests, they're actually helping companies look at their employee base from a skills perspective and make management decisions."

Frank Aparicio, vice president of employee services at CalFed Inc., a 120-branch, 3,400-employee bank based in Los Angeles that reengineered its HR payroll department a few years back, says of workflow automation: "It's empowering employees and it's empowering HR. Ultimately, it's completely changing the mindset of human resources and allowing it to do things of which it has never before been capable. It's clearly the driving force behind a successful reengineering effort."

Benefits of workflow automation include improved resume tracking and career-development systems.
Step onto National Semiconductor Corp.'s campus in Santa Clara, California, and you get a good idea of just how powerful workflow automation can be. Five years ago, the firm's HR department used a traditional paper-based system to track the more than 50,000 resumes it receives each year. When a position opened up, a recruiter had to sort through hundreds of color-coded files to find applicants who seemed worthy of an interview. That could take days, even weeks.

National Semiconductor, which employs 25,000 people worldwide and has dozens of offices scattered throughout the U.S., set out to change that situation by reengineering its human resources functions. It installed sophisticated scanning and data-storage software from Santa Clara, California-based Resumix, and began accepting applications via electronic mail and fax.

Now, with all the information being fed directly into the system, HR has a data base of 82,000 qualified applicants. Recruiters, as well as those in the field, can pull up a list of candidates based on virtually any set of conditions or skill sets. "If they're looking for a person who has an MBA but not a PhD, who speaks English and Japanese and has worked in this field for at least 10 years, they can pull it up immediately," says Helen Wick-Martin, systems manager for HR at National Semiconductor. "It allows them to find the proverbial needle in a haystack."

Once a document is onscreen, HR instantly can e-mail or fax it to a hiring manager, who then can offer input or make a hiring decision. The technology has allowed the HR department to reduce its hiring cycle from 110 days to 62, find better workers and process more work using the existing staff.

But that's only part of the story. National Semiconductor uses its E-mail as a gateway into a brave new world of company information. By simply typing "COPS", employees can access its Career Opportunity Programs System, which provides up-to-date job openings. The menu-driven system—which sorts jobs into 20 different categories—provides detailed job descriptions and offers data on internal training or educational requirements. If a candidate is qualified, he or she can fill out an application or apply for a transfer online. And those who don't have access to their own terminal can log on from PCs scattered throughout the campus. Already, HR is receiving 2,000 to 2,500 online responses a month; it has completely done away with hundreds of pages of paper listings that used to plaster bulletin boards throughout the facility.

Eventually, Wick-Martin would like to link all of National Semiconductor's computers so that information can flow across division boundaries throughout the entire company. That could lead to even more career-development information online, a sophisticated succession-planning module and an advanced system that would allow employees to update their own records and benefits online. "We have tried to eliminate extraneous work and redesign the way we function. We know we need state-of-the-art systems to help us achieve our goals," she explains.

Workflow automation is aided by updated technologies.
To be sure, the development of hardware and software capable of handling complex data retrieval and routing has been key to the success of workflow automation for companies such as National Semiconductor. "With client-server systems, networks and electronic mail, there's the opportunity to push the inputting of data or the recording of the transaction as close to the point of origin as is reasonably possible," explains The Hunter Group's Ledger.

Adds Bill Busbin, director of HR product management at Dun & Bradstreet Software in Atlanta: "Workflow automation eliminates boundaries and chains information so that an action causes a reaction, and that sets other processes into play. It's more than just passing E-mail or an image. It's getting data onto individual users' desktops at the right time and place. As a result, the days of the centralized, departmental hierarchy are fast disappearing. It's forcing HR to take on more of a customer-service orientation."

Much of workflow automation's magic can be achieved on a mainframe computer. However, it's the ability of PC-based systems running a graphical user interface, such as Windows, OS/2 or a Macintosh, that's exciting many in the human resources arena. These environments can link, exchange and share data in ways never before possible. At Florida Power and Light, a Miami-based utility that has 3.2 million customers and revenues in excess of $5 billion, a sophisticated employee-records system is able to transfer information from scanned resumes and applications, pull together several other types of employee documents and store everything on optical laserdiscs. When HR or a manager in the field is interested in viewing a record, it's possible to pull it up on a PC over the firm's wide area network. As a result, the human resources department has eliminated 65% of the paper and 50% of its staff since 1991, notes Gary Thomas, director of HR.

"The development of hardware and software capable of handling complex data retrieval and routing is key to the success of workflow automation."

At CalFed, workflow automation has resulted in eliminating 12 of 55 processes and significantly changing those remaining. Previously, a special check request could take days to process as the paperwork stalled on various desks waiting for approval. By eliminating the intermediate steps and creating an electronic form that could be sent directly to the employee-services department, cycle time has been reduced to 10 or 15 minutes.

The company also has introduced a timeclock system that routes information directly to payroll. The computer reads the timecards and calculates pay, withholdings and deductions for 4,000 employees. Altogether, workflow automation has allowed HR to trim 50% of its staff and cut cycle time by as much as 90%. Says Myron Oakes, HRIS manager: "Human resources has undergone a transformation from handling administrative work to knowledge-based work."

No doubt, the technology at CalFed and Florida Power and Light has had significant effects. Collectively among businesses reengineering their HR functions, however, the workflow technology that's having the most widespread effect is interactive voice-response systems and employee kiosks. Just a few years ago, they were little more than independent systems that merely could generate a list of employees changing benefits and what their selections were. An HR clerk still had to type all the information into the computer. Today, the entire process often works transparently, with minimal input from HR staff.

At Sears, for example, it's voice-response that enables employees to access their records for benefits, profit sharing, withholding and medical coverage. They're able to make changes simply by pushing buttons on a touch-tone phone, while the computer automatically routes the proper forms to the correct department and updates records.

And that cuts to the heart of what workflow automation is all about. "It fits into the whole concept of employee empowerment. It really does make the point that employees can update and change their own records, and that ultimately they're responsible for themselves," says Joe Bender, a consultant specializing in HR information management for Towers Perrin in Saddle Brook, New Jersey. In fact, he believes that it's fundamentally changing the corporate mindset. "The ideal is to get HR involved at a corporate level. Because people tend to sink to the most pressing need—deadlines and transactional activities—the goal is to eliminate work that isn't value added, to increase the business partnering role and resolve problems on a more proactive basis."

Automation requires reengineering work flow.
Despite the benefits advanced technologies provide, it's clear that results aren't achieved by simply throwing dollars at the latest high-tech gadgetry. Says the Meta Group's Kroll: "The technology is only as good as the ideas you put behind it. If you simply are bringing in a sophisticated system to shuffle papers faster, that isn't what it's all about. It's looking for opportunities to be more efficient and productive. The technology is based on the underlying workflow. Powerful computers and clever reengineering slogans do no good unless there's a fundamental change in the organization."

Towers Perrin consultant Bender insists that reengineering changes come in three forms: policy, organizational and technological. "In many ways, the technology changes are the easiest. It's a dollar commitment, but it's a straightforward solution. Policy changes and organizational changes are far more complex. You're trying to alter entrenched ways of doing things, and you're often dealing with turf issues and departmental silos that have been built up over many years. But if they aren't addressed, the hardware and software isn't going to achieve the desired results."

Martia DeLauro knows all about building a strong foundation for workflow technology. The human resources applications support manager at J.M. Huber Corp., an Edison, New Jersey-based conglomerate that has 11 operating divisions scattered across the U.S., began a complex HR reengineering effort in early 1993. "We decided up front that we didn't want to install new software on top of old practices. We consciously set out to find more efficient ways to get work done."

Human resources began by documenting existing workflow, carefully studying it and creating detailed strategies for improving efficiency. Top management, line managers and others participated in the discussions. "We worked through the issues one by one," DeLauro says, trying to determine what processes they most wanted to improve. The most crucial issue, they determined, was to get off an old mainframe and on to a client-server system that could access data far more freely (the mainframe computer previously tracked only the most basic information on salary level and benefits), while eliminating many of the repetitive steps that slowed work down.

To date, the HR department, in its efforts to reengineer the workflow, has streamlined record keeping functions, eliminated redundant steps and automated dozens of manual processes. Currently, it's working on improving the integrity and reliability of data, while raising overall standards. Full automation should be accomplished in 1995, at which time much of the company will be put on a PC- and UNIX-based network.

The automated system will allow employees to sign up and change benefits using an interactive voice-response system that feeds information into the company's data base. In addition, authorized managers in the field soon will be able to pull up an employee's salary history, job description and a host of other data. Using that data, they'll be able to determine quickly if an employee is qualified for a promotion or a salary increase. Once the request has been initiated and approved, the system will process it—with no keypunching or batch processing—and the changes will be reflected on the appropriate paycheck.

Already, even without the complete computer system installed, the redesigned workflow has reduced the HR department's hand-offs by 42%, cut work steps by 26% and eliminated approximately 20% of the original work. New reporting functions will provide human resources with data never before available—allowing it to make far more informed decisions about company policies and procedures. And although the cost of all this certainly isn't cheap—J.M. Huber may spend more than a million dollars to make the technology work—the investment should pay for itself within a few years.

Indeed, according to analysts, a typical human resources department can expect to see the investment in workflow automation pay for itself in one to five years, despite the fact that the technology can cost anywhere from a little more than $100,000 for a basic interactive voice-response system to tens of millions for a client-server system running comprehensive workflow software.

CalFed, for one, has consistently recouped its investments in technology within a year, even for multimillion-dollar hardware and software systems, Oakes says.

The bank's HR reengineering process took seven months to map out as the company tackled several tough technical issues. "You're often venturing into totally unknown technological territory," says Oakes. "Fitting all the pieces together requires a lot of hard work and patience. There always are going to be glitches and problems along the way. It's important to maintain your vision and a sense of the big picture."

One of the keys to assembling efficient technology, experts contend, is making sure all systems interface and support one another. A glaring weakness can prove far more than frustrating—it can prevent the system from ever achieving its potential. Likewise, it's important to make sure the vendor selling the hardware or software will still be around in five years. "Corporate America is littered with the debris of obsolete and proprietary systems that can't be upgraded," says Florida Power and Light's Jim King, manager of professional placement.

There's also the issue of installing software that's user friendly—some say user seductive. "There still are a lot of people who aren't all that comfortable with computers," King says.

When Florida Power and Light reengineered its human resources department, it spent months scrutinizing products and vendors. After sifting through literature on resume-scanning and retrieval software, Thomas and King viewed several presentations. Then they narrowed the field to their two top picks and asked representatives to return and offer specifics about how the systems would solve HR's unique needs. After weeks of sorting through the issues and using HRIS expertise to determine how the system would integrate with existing applications, they finally made their decisions.

The company now feeds tens of thousands of resumes into the computer every year, and will soon add existing employees to the data base. That will enable hiring managers to study existing employees' qualifications for internal job placement. Thomas and King haven't looked back.

The effect of workflow automation on people must be considered and addressed.
Not everyone immediately is satisfied with the results of HR reengineering. The human side of the equation can get in the way. Reengineering often translates directly into layoffs—something that can strike fear in even the most well-run HR department.

On top of that, those who have endured the process point out that HR also must cope with resistance by remaining HR workers to new technologies and new ways of getting work done. HR managers must train employees to function within the new workflow (interestingly, most HR specialists say these highly automated systems actually reduce the need for training) and HR must learn to interface with other departments on a far different basis than before.

For example, in many instances information that was once the domain of HR suddenly is available to other departments. Even if HR doesn't feel threatened by this democratization of data, it must contend with often unforeseen repercussions, says Bender. "The workflow system becomes the control device for the company rather than HR management and administrators. There's often a deep sense of territorial loss," Bender adds. Therefore, an organization's policies, procedures and practices must be built directly into the workflow system if it's to be fully successful.

What's more, reengineering the workflow can uncover glaring deficiencies. Many HR departments discover that policies and practices they thought were consistent throughout the company actually are wildly divergent.

Sears' Kerlin knows that fact all too well. Before the firm began reengineering its HR centers, its 24 units all were processing work differently. After surveying associates and analyzing the way HR tasks were handled in the stores and human resources centers, it discovered that some locations spent nearly twice as many hours as others on certain tasks, such as disability tracking or medical benefits administration. "There were tremendous inconsistencies," she notes.

Sears—using a reengineering steering committee and outside consultants—eventually charted the processes and established a consistent set of rules. That was incorporated into the software, which guides HR—screen by screen—through a series of online forms.

"You have to resolve the issue because the rules have to be formalized to construct a workflow model that works," says Bender. "The more diverse the business units become over time—even though you may have roughly the same benefits plans, compensation plans and staffing rules—the more challenging it is to reach a consensus and make a cultural change."

And a cultural change is vital for workflow automation to succeed. "The bottom line," says The Hunter Group's Ledger, "is that people have to be committed to make these changes occur. And you only can get major commitment by having them participate throughout the reengineering process. Companies that involve their employees find they're highly imaginative and very capable of generating new ideas, as long as they have a consultant to facilitate the process. Once employees feel they have a stake in things, they'll embrace the new methodologies and technologies."

Reengineered HR departments reap results.
HR departments whose members get over their initial fears and embrace workflow automation usually find that it pays dividends beyond what they ever imagined possible. When IBM revamped its national benefits administration department in 1992—paring 36 phone centers down to a single location—Big Blue knew it was going to cut costs. It ultimately wound up saving 40% a year. But by creating a system by which representatives access data from hypertext searches on their PCs and then log the nature of the calls, IBM is able to provide consistent information that's also legally defensible. In fact, the program has worked so well that the firm now is using the sophisticated system for compensation, diversity and equal-opportunity inquiries.

Equally important, IBM has embraced the notion of cost centering its HR activities. What used to get lost in the paper shuffle now shows up on balance sheets. And when another department uses HR's services, it receives a technology bill. "We know exactly what it costs to create reports, produce benchmarks and maintain a data base. As a result, we run things in a far more businesslike manner. We can see exactly where further economizing can take place," says George Krawiec, WFS Workforce Solutions general manager for IBM.

Sears' Kerlin says: "Workflow automation has enabled us to shed our image as nothing more than processing centers and spend more time working with the units and the associates. We're taking more calls now from associates out in the field, and we can counsel them and guide them to make better decisions about issues that affect them. We're no longer paper pushers, we're a genuine corporate resource."

"Like a series of timed traffic signals, workflow automation helps to regulate the crush of data. It helps funnel information with lightning speed."

That's the essence of what workflow automation is about. Says the Meta Group's Kroll: "It's fundamentally changing the way HR operates. At companies embracing workflow automation, HR no longer is a backwater operation that's simply processing data. It's helping companies look at employees from a skill-base and knowledge perspective. It's giving them the tools to compete in a new, far more difficult environment."

Certainly, activities in this reengineered world are taking place faster and smarter then ever before. Like a series of timed traffic signals, workflow automation is helping regulate the crush of data. It's helping funnel information with lightning speed and unnerving accuracy through the vast, multinational layers—and in ways even computer gurus couldn't imagine a few short years ago. Quite simply, it's finally delivering on all the hype and promise of the PC.

Many, such as The Hunter Group's Ledger, believe we've only seen the beginning. "So far, we've realized little in the way of productivity gains, despite seemingly sophisticated technology. We're only at the beginning of the workflow automation curve. In a few years, virtually all communication within a company will be handled electronically. Those who understand and embrace the concept will be in a position to reap the rewards."

Personnel Journal, July 1994, Vol.73, No.7, pp. 32A-32O.

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