1. 1 Human Resources Processes with ERP

2. Concepts in Enterprise Resource Planning, Second Edition 2 Chapter Objectives  Explain why the Human Resources function is critical to the success of a company  Describe the key processes managed by a Human Resources Department

3. Concepts in Enterprise Resource Planning, Second Edition 3 Chapter Objectives  Describe how an integrated information system can support effective Human Resources Processes

4. Concepts in Enterprise Resource Planning, Second Edition 4 Introduction  A company’s employees are its most important resources  The Human Resources Department is responsible for attracting, hiring, rewarding, terminating employees.  The decisions made in the HR department can affect every department in the company.

5. Concepts in Enterprise Resource Planning, Second Edition 5 Introduction  Companies are increasingly aware of the importance of an experienced, well-trained workforce and have begun using the term Human Capital Management (HCM) to describe the tasks associated with managing a company’s workforce.

6. Concepts in Enterprise Resource Planning, Second Edition 6 HR Department Responsibilities  Attracting, selecting, and hiring new employees using information from resumes, references, and the interview process  Communicating information regarding new positions and hires throughout the organization and beyond

7. Concepts in Enterprise Resource Planning, Second Edition 7 HR Department Responsibilities  Ensuring that employees have the proper education, training and certification to successfully complete their duties  Handling issues related to employee conduct  Making sure employees understand the responsibilities of their jobs

8. Concepts in Enterprise Resource Planning, Second Edition 8 HR Department Responsibilities  Using an effective process to review employee performance and determine salary increases and bonuses  Managing the salary and benefits provided to each employee and confirming that the proper benefits are disbursed to new and current employees

9. Concepts in Enterprise Resource Planning, Second Edition 9 HR Department Responsibilities  Communicating changes in salaries, benefits, or policies to employees  Supporting management plans for changes in the organization (expansion, retirements and so on) so that competent employees are available to support business processes

10. Concepts in Enterprise Resource Planning, Second Edition 10 Problems with Fitter Snacker’s HR Processes  The description of the qualifications required for the job may be incomplete, sometimes because the supervisor is in hurry, sometimes because the supervisor does not realize all of the functions required for the position, and sometimes because the supervisor assumes that all candidates will have certain basic skills.

11. Concepts in Enterprise Resource Planning, Second Edition 11 Problems with Fitter Snacker’s HR Processes  Paper form can be lost, delaying hiring process Functional department left shorthanded, creating tension between the departments Good candidates lost due to drawn-out hiring process

12. Concepts in Enterprise Resource Planning, Second Edition 12 Problems with Fitter Snacker’s HR Processes  Keeping track of resumes submitted from different sources is problematic Being able to retrieve resumes on file that fit a job description is difficult, time-consuming and fraught with error

13. Concepts in Enterprise Resource Planning, Second Edition 13 Problems with Fitter Snacker’s HR Processes  Interviewing Process Problems: Without group appointment software, HR has difficulty scheduling interviews when all interested parties are available Similarly, collecting feedback on the job candidates is difficult Managing travel arrangements and reimbursing candidates for travel expenses is also a problem  Delays may result in losing a top candidate

14. Concepts in Enterprise Resource Planning, Second Edition 14 Problems with Fitter Snacker’s HR Processes  Gathering new employee information and enrolling employee in correct benefits plan (such as healthcare plans, life insurance, retirement plans, and medical savings accounts) is difficult May take months to get employees proper compensation and benefits

15. Concepts in Enterprise Resource Planning, Second Edition 15 HR Duties after Hiring  Performance Evaluations Important to maintain sufficient documentation on underperforming employees in case termination is warranted  Without proper documentation, lawsuits may follow

16. Concepts in Enterprise Resource Planning, Second Edition 16 HR Duties after Hiring  Performance Evaluations Difficulties in managing performance evaluation data makes it difficult to identify employee problems and take corrective action (counseling, transfer) before problem leads to termination

17. Concepts in Enterprise Resource Planning, Second Edition 17 HR Duties after Hiring  It is difficult to quantify the employee’s historical knowledge of the job, which is lost when an employee leaves a company. For example, If a purchasing manager leaves a company, then all of the manager’s knowledge about supplier relation is lost. The company does have a record of the contract signed with the supplier, but details of the negotiations that led to the contract may not be documented.

18. Concepts in Enterprise Resource Planning, Second Edition 18 HR Duties after Hiring Such details can be crucial in successfully negotiating the next contract. The manager may have developed good relations with the supplier and knows who to contact when there are problems. These relationships are not specified as part of the purchasing manager position, but accrue over time with the individual holding the position.

19. Concepts in Enterprise Resource Planning, Second Edition 19 HR Duties after Hiring  Employee satisfaction is strongly related to job turnover Well compensated employees with satisfying jobs are less likely to leave the company

20. Concepts in Enterprise Resource Planning, Second Edition 20 HR Duties after Hiring Human Resources can help maintain a satisfying work environment through:  Training programs through supervisors and managers  Conducting employee satisfactions surveys  Conducting employee exit surveys Human resources should ensure compensation levels are competitive and applied fairly to all employees

21. Concepts in Enterprise Resource Planning, Second Edition 21 Human Resources with ERP  Managing a company’s human capital is information intensive Electronic storage of data greatly simplifies the retrieval of important data

22. Concepts in Enterprise Resource Planning, Second Edition 22 Human Resources with ERP The SAP R/3 HR module provides tools to:  Manage an organization’s structure, job roles and responsibilities, and definitions  Personal employee information  Time management  Payroll  Travel management  Employee training

23. Concepts in Enterprise Resource Planning, Second Edition 23 Organizational Management  Most companies have an organizational chart or plan to help define an individuals responsibilities in the organization  With ERP, the organizational chart provides a structure to support additional tasks

24. Concepts in Enterprise Resource Planning, Second Edition 24 Organizational Management  SAP R/3 provides an Organizational and Staffing Plan tool to define a company’s management structure and define positions within the organizational structure The plan can also define the individuals that hold each position

25. Concepts in Enterprise Resource Planning, Second Edition 25 Figure 6.1 Organization and Staffing Plan in SAP R/3 Organizational Units Positions Person holding position

26. Concepts in Enterprise Resource Planning, Second Edition 26 Task, Job, Position and Person  SAP distinguishes between Task, Job, Position, and Person An employee is a Person who performs Tasks Tasks can be assigned to:  Jobs, which are generic descriptions of an employee’s work responsibilities  Positions, which are the specific organizational assignments a person holds

27. Concepts in Enterprise Resource Planning, Second Edition 27 Task, Job, Position and Person  If Tasks, Jobs and Positions are well- defined and current, then recruiting is simplified and compensation levels can be set more consistently and fairly

28. Concepts in Enterprise Resource Planning, Second Edition 28

29. Concepts in Enterprise Resource Planning, Second Edition 29 Figure 6.3 Assignment of a Task to a Job in SAP R/3 Job Task assigned to Job

30. Concepts in Enterprise Resource Planning, Second Edition 30 Manager’s Desktop  The SAP HR Module provides the Manager’s Desktop (see Figure6.4), a tool that provides access to all Human Resource data and transactions in one location  Human Resource data is very sensitive, so controlling access is critical

31. Concepts in Enterprise Resource Planning, Second Edition 31 Manager’s Desktop  With an integrated information system, controlling access is simplified as a range of authorization tools are available See User Authorizations in Chapter 5

32. Concepts in Enterprise Resource Planning, Second Edition 32 Figure 6.4 Manager’s Desktop provides single-point access to HR functions Employees in manager’s organization Functions in task area

33. Concepts in Enterprise Resource Planning, Second Edition 33 Advanced SAP R/3 HR Features  Time Management Cross Application Time Sheets (CATS) record employee working times and provide data to:  Controlling (CO), for cost management  Payroll, for calculating payroll data, which is transferred to Financial Accounting (FI) for payment  Production Planning (PP), to manage labor required for production

34. Concepts in Enterprise Resource Planning, Second Edition 34 Advanced SAP R/3 HR Features  Payroll Management Paying employees the correct amount at the correct time is critical for employee satisfaction Payroll calculations are complicated, involving:  Remuneration Elements: Base pay, bonuses, gratuities, overtime and sick pay, vacation allowances

35. Concepts in Enterprise Resource Planning, Second Edition 35 Advanced SAP R/3 HR Features  Statutory and Voluntary Deductions Taxes: Federal, State, Local Medicare and Social Security Benefit contributions Company loans

36. Concepts in Enterprise Resource Planning, Second Edition 36 Advanced SAP R/3 HR Features  Travel Management Companies can spend a significant amount of money on employee travel Managing travel planning and expenses requires a number of tasks  Travel authorizations  Travel reservations Must meet trip requirements while controlling costs  Recording expenses and providing reimbursement

37. Concepts in Enterprise Resource Planning, Second Edition 37 Advanced SAP R/3 HR Features The SAP R/3 Travel Management system facilitates this process by maintaining travel data for each employee,  including flight, hotel and car preferences and  integrating this data with the Payroll module (for reimbursements) and with the Financial Accounting and Controlling modules to properly record travel expense.

38. Concepts in Enterprise Resource Planning, Second Edition 38 Advanced SAP R/3 HR Features  Training and Development The Personnel Development component of the SAP R/3 Human Resources module supports planning and implementation of employee development and training activities

39. Concepts in Enterprise Resource Planning, Second Edition 39 Advanced SAP R/3 HR Features Employee development is driven by Requirements and Qualifications  Requirements: Skills or abilities associated with a position  Qualifications: Skills or abilities associated with a specific employee Two perspectives on the same concept

40. Concepts in Enterprise Resource Planning, Second Edition 40 Advanced SAP R/3 HR Features  Training and Development An employee’s qualifications can be compared to the requirements of a position to which the employee aspires  The comparison identifies gaps and allows a manager to plan development and training efforts to close the gap  The comparison can serve as a basis for employee evaluation, and can motivate the employee by providing a goal and a means to achieve it

41. Concepts in Enterprise Resource Planning, Second Edition 41 Advanced SAP R/3 HR Features  Succession Planning Companies should have plans for replacing key employees when they leave the company Small companies can lose business if customers are unclear about succession plans for key people

42. Concepts in Enterprise Resource Planning, Second Edition 42 New HR Features in SAP R/3  Mobile Time Management: Allows employees who spend significant time “on the road” to use cellular phones and other mobile devices to record work times, time charges, absences, and leave requests

43. Concepts in Enterprise Resource Planning, Second Edition 43 New HR Features in SAP R/3  Management of Family and Medical Leave: The SAP R/3 HR system can now determine employee eligibility for FMLA leave and track usage

44. Concepts in Enterprise Resource Planning, Second Edition 44 New HR Features in SAP R/3  Personnel Cost Planning: Scenarios can be developed for major organizational changes like expansions, acquisitions and downsizing to determine the cost impacts Cost planning and simulation allows HR to forecast cost estimates by integrating data with other SAP R/3 modules

45. Concepts in Enterprise Resource Planning, Second Edition 45 New HR Features in SAP R/3  Management and Payroll for Global Employees: Managing global employees involves complicated issues including relocation, visas, work permits, housing, taxes, and bonus pay SAP R/3 has enhanced features to support the management of these issues with customized functionality for over 50 countries

46. Concepts in Enterprise Resource Planning, Second Edition 46 Summary  Employees are among a company’s most important assets. Without qualified and motivated employees, a company cannot succeed

47. Concepts in Enterprise Resource Planning, Second Edition 47 Summary  The Human Resources Department has the primary responsibility of ensuring that the company can find, evaluate, hire, develop, evaluate, and compensate the right employees to achieve the company’s goals. HR is also responsible for employee training and development, succession planning, and termination

48. Concepts in Enterprise Resource Planning, Second Edition 48 Summary  Managing, sharing, controlling, and evaluating the data required to manage a company’s human capital is simplified with an integrated information system

49. Concepts in Enterprise Resource Planning, Second Edition 49 Summary  Effective Human Resource processes require a system that controls the flow of timely and accurate information within and among departments

50. Concepts in Enterprise Resource Planning, Second Edition 50 Exercise 1. Describe a position in a company that you would like to have after five years of work experience. List the requirements that you think would be required to hold this position. List the qualifications that you currently possess. Describe how you plan to obtain the qualifications necessary to hold the position.

51. Concepts in Enterprise Resource Planning, Second Edition 51 Exercise 2. List the steps in a typical recruiting process. Highlight the steps that involve interaction with the potential job candidate. Identify problems in the process that might lead a candidate to develop a negative opinion of the company. How might an effective information system reduce the potential for these problems? Incorporate into your answer experiences you may have had in looking for a job.