Reengineering HR through

Information Technology

Group 3
Coming Up
What is reengineering?

Inclusive of case study

Importance of HR process reengineering

Re-orientation to high value-added HR

Working of reengineering

Reengineering of HR function in HP, Apple computers, AT&T

and GE Nuclear Energy

Phases of design and implementation of reengineering

Outcomes of reengineering
Critical success factor for HR reengineering efforts

Why does reengineering fail

Implications for HR professionals

Learnings from 5 steps of reengineering

 What is reengineering:

The re-definition of the company’s internal processes

Today many HR professionals started utilizing Information technology to reengineer

their HR processes

Many still do not have a clear understanding about reengineering

The reason behind the vague idea about reengineering is the question: Why do we
need reengineering?

Earlier reengineering had been used for negative terms like down-sizing, delayering
and restructuring
Case Study includes…
Survey findings of 33 corporations including Hewlett Packard,
Apple computers, AT& T and GE nuclear energy

Process followed in survey was a combination of interviews +

formal presentations +live demos +company documents + on-
site study

Basis of selecting the companies

Contribution in explaining reengineering in HR endeavour
Analysis done on:
Single HR process
Or
Entire HR function
 Contd…
Questions covered were:

Why reengineering?
How to use reengineering?
Possible outcomes of reengineering?
What makes it work?
What factors stall reengineering initiative?
What are the difficulties during its design and implementation
Reengineering targets improving cost-efficiency, customer service and
competitiveness

Case study also shows reengineering through two contrasting approaches

Technology-driven
Process-driven
Research Process
The research was conducted in the spring of 1994 by sending a
survey instrument including over 100 questions to senior HR
executives in 160 major California companies including a full
variety of industries sizes.

Out of research thirty-three companies responded, consisting of

a response rate of 21%.

The researcher has requested to the companies that either allow

them to take interview from HR executives or someone familiar
with the reengineering effort.

The result was that 52% of our survey respondents were the top
HR executives in their corporations, while 45% were HR directors,
managers, or specialists. The remaining 3% of respondents were
consultants.
 Importance of HR process
reengineering
To eliminate non-value added work, not just reducing employees but also utilizing the
resources
Cost Cultur
Higher
al
Redu Quality
Chang
Service
ction e
In the current business environment, HR have pressure to reduce costs of
HR administration, delivering high quality services and develop an effective
culture
 Cost Reduction
Reason
Because of competition and price-cutting, profi margin is
decreasing
Example 1
Between 1990 and 1993, the gross margin of Apple quickly eroded from 53% to 24%, due to its price cutting
strategy as compared to its competitors.
Solution
Senior VP of HR, Apple completely revamped its delivery of HR services and dramatically decreased its HR-
to-employee ratio from 1/30 in 1990 to 1/49 in 1993.
Today Apple uses advanced information technology to transform the delivery of routine but essential HR
processes.
Conclusion
These strategies simultaneously allow for an increase in knowledge based, problem-solving activities and
higher levels of customer satisfaction.
This is an example of process driven approach.
 Cost Reduction Contd..
Example 2
Between 1990 and 1993, Hewlett- Packard reduced its personnel staff by one-
third, decreasing its HR-to-employee ratio from 1/53 to 1/75.This headcount
reduction has helped the organization in saving $50 million annually and also
service quality has been increased.
Conclusion
-Reengineering of HR processes is one of the most important means of delivering
HR services at a lower cost.
-This is why 79% of our survey respondent companies considered cost reduction
an important reason for initiating reengineering efforts in their HR function.

●
 High Quality Service

To enhance the speed and accuracy of people related decisions and to

provide employees consistent, high quality, and timely HR services.

After years of piecemeal addition and modifications, traditional HR

systems often result in cumbersome, complex, and inefficient systems that
are not well integrated, user-friendly, accessible, or flexible.
High Quality Service Contd..
Example
Five years ago, HR system at Hewlett-Packard were decentralized in 50
divisions and 120 sales offices.
A line manager at HP had to confront inefficiencies in coordinating the
complex challenges of people management.
A deluge of resumes and interview files made the basic task of hiring the
right candidates costly, time consuming, and occasionally ineffective.
EMS allows applicants to send their resumes to a centralized
Employment Response Centre where, through advanced optical
character recognition technology, their resumes are scanned and made
available to all HP personnel departments in the US.
TABS, another component of People-Base, answers and processes
routine enquires about HP benefits, medical and retirement plans, pay
and withholding information, and stock plans 24 hrs a day, seven days a
week
Conclusion
The need for higher quality service is the second most important reason our
survey respondents initiated HR reengineering (76%).
 Cultural Change

Many corporations are reengineering the HR processes to support over all culture
change

Example 1
At Intel, two basic HR strategies have been developed under the leadership of Kirby Dyess,
VP of HR, to transform the company’s HR function. The strategies are listed below:
1. Take HR out of the middle
2. Focus on the business

- It is far more efficient to let managers address employees issues directly or to

allow employees instantly to take care of such matters as address changes,
benefits, employment status, career development, etc.
- It saves countless hours spent on relatively mundane operations.
Thus, reengineering offers the opportunity to reduce unnecessary steps and
number of people involved in the processes and cost reduction also.
 Example 2

Apple has changed the HR strategy from people-oriented to

service-oriented. As when managers need to process a HR
transaction, they now no longer need to call an HR
representative for assistance . Instead, they can easily and
quickly process their requests through Merlin, an on-line HR
system that processes managerial reports at any time and
anywhere in the world.
 Reorientation to High Value-
Added HR
HR processes are streamlined and standardized using information
technology; the HR function can then be liberated to focus more on high
value-added HR activities.

Here few questions were asked to the HR professionals to estimate the

breakdown, time-wise, spent on operational, day-to-day transactional HR
activities.

The challenge in this process is ‘if the basic, transactional, administrative

HR activities are not being effectively taken care of HR professionals
cannot be liberated to address strategic HR issues.

The goal is to take good care of routine HR activities through information

technology so that the HR departments can focus on more on other high
value-added services.
Working of Reengineering

The first question to be asked

is: “how should it look like?”

Reengineering starts with

ignoring the existing constraints
and limitations
 Approaches to reengineering

Technology driven
It adopts ‘off-the-shelf’ system packages and redesigns the HR processes

Its advantages
Allows vendors to provide technical support readily available from existing
systems

To lower the costs as it is built up on the previously existing systems

Already tested and used systems ensure the absence of any time-
consuming and problematic bugs

Example
Employment Management System was based upon the design of PeopleSoft’s system
 Contd…

Process driven

Its approach starts with unique process redesign

for each company and custom design system
packages to support new processes
 Reengineering of HR function in
Hewlett Packard
Objective of reengineering
To develop an integrated system that supports people and workforce management, HR process
improvement and improving relations with external stakeholders

Reengineering program of HP
PeopleBase program consists of:
Employee Management System
Telephone-activated benefits system
Management compensation system
Paperless wage review
Personnel document management system
Worldwide employee database etc
The program was launched in 1990, the full program would be implemented in the time-period of
10 years
External vendors like PeopleSoft and Restrac are involved

Learnings from HP reengineering

IT strategy is linked with HR strategy
Sustained sponsorship is critical
Standardization in equipment, tools and processes is vital
 Contd…
Before reengineering
• Earlier, employment process was very much decentralized
• The system was frustrating for applicants and inefficient for
HP
• One department had ample of resumes and applications;
other department had no information

After reengineering
• All resumes and applications are centralized
• Saving tremendous amount of costs through EMS
Reengineering by Apple Computers

Goal
To reduce clerical/ transactional costs
Enhancing problem solving activities

Implementation
New information system developed with participation and feedback from
HR staff
Learnings from Apple Computer’s reengineering:
Clients are receptive to easy-to-use and accessible innovations
Innovative technology must fit in with the overall HR strategy
To patiently stick with the strategy
Reengineering by GE Nuclear Energy
Goal of GE for reengineering was
Development of a paperless process (without incurring any
out-of-pocket expenses)
To enhance the analytical aspects of salary planning

Followed process
User-friendly system was designed by HR and MIS task force
Part-time staff allocated for designing
Training the users
Assisting managers in using the new system

Result of reengineering
Effort successful and well received by the line managers
New system drastically reduced cycle time of salary planning
from 10 days to 1-2 days
GE now focusing upon reengineering of recruitment and
staffing process
 Reengineering by AT&T

Goal for reengineering

To reduce redundancy in processes
To screen matching job applications
To develop common database that readily provides management reports
To reduce cycle time in position filling
Need for filling 30,000 management and 16,000 occupational positions
Positions filling process was costly
The goal was to save money and resources

Followed process:
Streamlining and simplifying the process
Managers hired to conduct initial screening of applicants via computer
System was made to have the capacity to access all needed information about job openings;
permit managers to do ‘paperwork’ through terminal

Learnings:
Development of a centralized system to accommodate varying needs of business is important
Overall culture of the company must be understood well for reengineering process
 Four phases from design and
implementation of reengineering
Phase 1
‘Need assessment’

Analyzing the need for reengineering

Searching for the reason for dissatisfaction with the present

system

To understand how reengineering fits with the overall

strategy of the business goals

Example: HP initiated PeopleBase Program due to

dissatisfaction from cumbersome, complex and inefficient
system of decision making
 Contd…

Phase 2
‘Championship from the Top’

Active championship of top management is important to avoid the failure

of reengineering

In HR reengineering, top HR executives need to champion efforts with

support of top management

For any decision making related to reengineering, the involvement of top

management if necessary

Example: Pete Peterson of HP champions PeopleBase program and Kevin

Sullivan of Apple Computers champions the application of IT to HR
 Contd…

Phase 3
‘Formation of Steering team’

A team consisting of:

HR managers
MIS managers
Line managers
Outside consultants
Responsibilities of the steering team:
To understand the key concerns of customers/users regarding the processes
To map current processes and system constraints
To set new cost/service targets for the processes
To identify processes for reengineering
Develop an implementation plan
 Contd…
Phase 4
‘Formation of Implementation teams’

Implementation teams needed to generate solutions for

each target process

For making action plans for pilot-testing, equipment

installation, transition management, training and
staffing
 Outcomes of Reengineering

Over half of the surveyed respondent companies indicated improvement

in productivity, output, cost reduction, process accuracy and customer
satisfaction

Assessing cultural changes and profitability require longer period of time

Employee morale only had decline (several reasons)

 Critical Success Factors for HR
reengineering efforts

Involvement of senior management

Clear vision for change in business and HR

Early and ongoing communication

Changes in supporting systems e.g. rewards, appraisals etc)

Empowering the reengineering teams

Strategic alignment )with the company strategy)

Line ownership
 Why does reengineering fail
Working with an incomplete reengineering strategy

Inappropriate use of outside consultants and contractors

Work force is tied to old technologies with inadequate training programs

Management lacks long-term commitment

Morale problems due to fear of change

Lack of understanding the reengineering process

Underestimating the psychological and political resistance

Lack of direction from top management

Underestimating the required skills and knowledge

 Implication for HR professionals
How does IT tie with overall HR strategy

Who will champion the reengineering process and whom will you inform and
update?

What is the reengineering approach? Process-driven or technology-driven

What is the scope?

What is the estimated cost?

What are its implications on roles, responsibilities and competencies of HR

professionals

How to minimize resistance?

How to measure the progress

 Learnings from 5 Steps of Reengineering
Step 1 Step 2
1. Understanding 1. Benchmarking
process 2. Define process owner
3. Work in top-down maner
2. End & Start points

Step 3 Step 4
1. Common understanding 1. Useless processes to be
2. Measuring performance discarded
3. Analyze the process to 2. Using common services
avoid “waiting lines” uncommonly

Step 5
THANK YOU