II.

STRATEGIC HR PLANNING

 Strategic Planning
-is an ongoing process by which an organization sets its forward course by bringing all of its
stakeholders together to examine current realities and define its vision for the future.
-determination of the overall organizational purpose (mission, vision) and goals and how they are to be
achieved.

STRATEGIC PLANNING PROCESS

Step 1: Determine where you are

Before you can get started with strategy development and define where you’re going, you first need to define
where you are. To do this, your management committee should collect a variety of information from
additional stakeholders—like employees and clients. In particular, plan to gather:

 Customer insigts to understand what your customers want from your company—like product
improvements or additional services
 Employee feedback that needs to be addressed—whether in the product, business practices, or
company culture
 A SWOT analysis to help you assess both current and future potential for the business (you’ll return to
this analysis periodically during the strategic planning process).
To fill out each letter in the SWOT acronym, your management committee will answer a series of questions:

Strengths:
 What does your organization currently do well?
 What separates you from your competitors?
 What are your most valuable internal resources?
 What tangible assets do you have?
 What is your biggest strength?
Weaknesses:
 What does your organization do poorly?
 What do you currently lack (whether that’s a product, resource, or process)?
 What do your competitors do better than you?
  What, if any, limitations are holding your organization back?
 What processes or products need improvement?
Opportunities:
 What opportunities does your organization have?
 How can you leverage your unique company strengths?
 Are there any trends that you can take advantage of?
 How can you capitalize on marketing or press opportunities?
 Is there an emerging need for your product or service?
Threats:
 What emerging competitors should you keep an eye on?
 Are there any weaknesses that expose your organization to risk?
 Have you or could you experience negative press that could reduce market share?
 Is there a chance of changing customer attitudes towards your company?

Step 2: Identify your goals and objectives

This is where the magic happens. To develop your strategy, take into account your current position, which is
where you are now. Then, draw inspiration from your original business documents—these are your final
destination.

To develop your strategy, you’re essentially pulling out your compass and asking, “Where are we going next?”
This can help you figure out exactly which path you need to take.

During this phase of the planning process, take inspiration from important company documents to ensure
your strategic plan is moving your company in the right direction like:

 Your mission statement, to understand how you can continue moving towards your organization’s core
purpose
 Your vision statement, to clarify how your strategic plan fits into your long-term vision
 Your company values, to guide you towards what matters most towards your company
 Your competitive advantages, to understand what unique benefit you offer to the market
 Your long-term goals, to track where you want to be in five or 10 years
 Your financial forecast and projection, to understand where you expect your financials to be in the next
three years, what your expected cash flow is, and what new opportunities you will likely be able to
invest in
Step 3: Develop your plan
Now that you understand where you are and where you want to go, it’s time to put pen to paper. Your plan
will take your position and strategy into account to define your organization-wide plan for the next three to
five years. Keep in mind that even though you’re creating a long-term plan, parts of your strategic plan should
be created as the quarters and years go on.

As you build your strategic plan, you should define:

 Your company priorities for the next three to five years, based on your SWOT analysis and strategy.
 Yearly objectives for the first year. You don’t need to define your objectives for every year of the
strategic plan. As the years go on, create new yearly objectives that connect back to your
overall strategic goals.
  Related key results and KPIs for that first year. Some of these should be set by the management
committee, and some should be set by specific teams that are closer to the work. Make sure your key
results and KPIs are measurable and actionable.
 Budget for the next year or few years. This should be based on your financial forecast as well as your
direction. Do you need to spend aggressively to develop your product? Build your team? Make a dent
with marketing? Clarify your most important initiatives and how you’ll budget for those.
 A high-level project roadmap. A project roadmap is a tool in project management that helps you
visualize the timeline of a complex initiative, but you can also create a very high-level project roadmap
for your strategic plan. Outline what you expect to be working on in certain quarters or years to make
the plan more actionable and understandable.
Step 4: Execute your plan
After all that buildup, it’s time to put your plan into action. New strategy execution involves clear
communication across your entire organization to make sure everyone knows their responsibilities and how to
measure the plan’s success.

Map your processes with key performance indicators, which will gauge the success of your plan. KPIs will
establish which parts of your plan you want achieved in what time frame.
A few tips to make sure your plan will be executed without a hitch:

 Align tasks with job descriptions to make sure people are equipped to get their jobs done
 Communicate clearly to your entire organization throughout the implementation process
 Fully commit to your plan
Step 5: Revise and restructure as needed
At this point, you should have created and implemented your new strategic framework. The final step of the
planning process is to monitor and manage your plan.

1. Share your strategic plan—this isn’t a document to hide away. Make sure your team (especially senior
leadership) has access to it so they can understand how their work contributes to company priorities
and your overall strategic plan. We recommend sharing your plan in the same tool you use to manage
and track work, so you can more easily connect high-level objectives to daily work. If you don’t already,
consider using a work management tool.
2. Update your plan regularly (quarterly and annually). Make sure you’re using your strategic plan to
inform your shorter-term goals. Your strategic plan also isn’t set in stone. You’ll likely need to update
the plan if your company decides to change directions or make new investments. As new market
opportunities and threats come up, you’ll likely want to tweak your strategic plan to ensure you’re
building your organization in the best direction possible for the next few years.
Keep in mind that your plan won’t last forever—even if you do update it frequently. A successful strategic plan
evolves with your company’s long-term goals. When you’ve achieved most of your strategic goals, or if your
strategy has evolved significantly since you first made your plan, it might be time to create a new one.

 Human Resource Planning

-an important component of Human Resource Management and is the process of matching the internal
and external supplies of people with job openings anticipated in the organization over a specific period
of time.
The six parts of the HRM plan include the following:

1. Determine human resource needs. This part is heavily involved with the strategic plan. What growth or
decline is expected in the organization? How will this impact your workforce? What is the economic
situation? What are your forecasted sales for next year?

2. Determine recruiting strategy. Once you have a plan in place, it’s necessary to write down a strategy
addressing how you will recruit the right people at the right time. In the recruitment phase of the talent
development process, you begin the search for applicants that match the skills your company needs. This
phase can involve posting on job websites, searching social networks like LinkedIn for qualified potential
employees, and encouraging current employees to recommend people they know who might be a good fit.

3. Select employees. The selection process consists of the interviewing and hiring process. Once you have
connected with a pool of qualified applicants, conduct interviews and skills evaluations to determine the best
fit for your organization. If you have properly forecasted supply and demand, you should have no trouble
finding the right people for the right roles.

4. Develop training. Based on the strategic plan, what training needs are arising? Is there new software that
everyone must learn? Are there problems in handling conflict? Whatever the training topics are, the HR
manager should address plans to offer training in the HRM plan. After hiring your new employees, it's time to
bring them on board. Organize training to get them up to speed on your company’s procedures. Encourage
them to continue to develop their skills to fit your company’s needs as they change. Find more ideas on how
to develop your own employee onboarding process, and then get started with this onboarding timeline
template.

5. Determine compensation. In this aspect of the HRM plan, the manager must determine pay scales and
other compensation such as health care, bonuses, and other perks. Keep your current employees and new
hires happy by offering competitive salary and benefit packages and by properly rewarding employees who go
above and beyond. Retaining good employees will save your company a lot of time and money in the long run.

6. Appraise performance. Sets of standards need to be developed so you know how to rate the 2.2 Writing
the HRM Plan 41 performance of your employees and continue with their development.
The benefits of strategic planning

Strategic planning can help with goal-setting by allowing you to explain how your company will move towards
your mission and vision statements in the next three to five years. If you think of your company trajectory as a
line on a map, a strategic plan can help you better quantify how you’ll get from point A (where you are now)
sto point B (where you want to be in a few years).
When you create and share a clear strategic plan with your team, you can:
 Align everyone around a shared purpose
 Proactively set objectives to help you get where you want to go
 Define long-term goals, and then set shorter-term goals to support them
 Assess your current situation and any opportunities—or threats
 Help your business be more durable because you’re thinking long-term
 Increase motivation and engagement

Link HRM Strategic Plan to Company Plan

Understanding the nature of the business is key to being successful in creating a strategic plan for
HRM. Because every business is different, the needs of the business may change, depending on the economy,
the season, and societal changes in our country. HR managers need to understand all these aspects of the
business to better predict how many people are needed, what types of training are needed, and how to
compensate people, for example. The strategic plan that the HR manager writes should address these issues.
To address these issues, the HR manager should develop the departmental goals and HR plans based on the
overall goals of the organization. In other words, HR should not operate alone but in tandem with the other
parts of the organization. The HRM plan should reflect this.

Monitor the Plan Constantly

Oftentimes a great strategic plan is written, taking lots of time, but isn’t actually put into practice for a
variety of reasons, such as the following: 1. The plan wasn’t developed so that it could be useful. 2. The plan
wasn’t communicated with management and others in the HRM department. 3. The plan did not meet the
budget guidelines of the organization. 4. The plan did not match the strategic outcomes of the organization. 5.
There was lack of knowledge on how to actually implement it. There is no point in developing a plan that isn’t
going to be used. Developing the plan and then making changes as necessary are important to making it a
valuable asset for the organization. A strategic plan should be a living document, in that it changes as
organizational or external factors change. People can get too attached to a specific plan or way of doing things
and then find it hard to change. The plan needs to change constantly or it won’t be of value.

Measure It

A good strategic plan and HR plan should discuss the way “success” will be measured. For example,
rather than writing, “Meet the hiring needs of the organization,” be more specific: “Based on sales forecasts
from our sales department, hire ten people this quarter with the skills to meet our ten job openings.” This is a
goal that is specific enough to be measured. These types of quantitative data also make it easier to show the
relationship between HR and the organization, and better yet, to show how HR adds value to the bottom line.
Likewise, if a company has a strategic objective to be a safe workplace, you might include a goal to “develop
training to meet the needs of the organization.” While this is a great goal, how will this be measured? How will
you know if you did what you were supposed to do? It might be difficult to measure this with such a general
statement. On the other hand, a goal to “develop a safety training workshop and have all employees complete
it by the end of the year” is specific and can be measured at the end to determine success.

Sometimes Change Is Necessary

It can be difficult to base an entire plan on forecasted numbers. As a result, an HRM department that is
willing to change quickly to meet the needs of the organization proves its worthiness. Consider a sales forecast
that called for fifteen new hires, but you find out months later the organization is having a hard time making
payroll. Upon digging deeper, you find the sales forecasts were overexaggerated, and now you have fifteen
people you don’t really need. By monitoring the changes constantly (usually done by asking lots of questions
to other departments), you can be sure you are able to change your strategic plan as they come.

Be Aware of Legislative Changes

One of the major challenges in HRM, as we discuss in Chapter 1 “The Role of Human Resources”, is
having an awareness of what is happening from a legal perspective. Because most budgets are based on
certain current laws, knowing when the law changes and how it will affect department budgets and planning
(such as compensation planning) will create a more solid strategic plan. For example, if the minimum wage
goes up in your state and you have minimum wage workers, reworking the budget and communicating this
change to your accounting team is imperative in providing value to the organization.
Conducting an Environmental Scan
Environmental scanning is the ongoing tracking of trends and occurrences in an organization’s internal and
external environment that bear on its success, currently and in the future. The results are extremely useful in
shaping goals and strategies.

Effective environmental scanning examines both quantitative and qualitative changes. Ultimately, you should
create a set of key environmental indicators—internal, external, qualitative and quantitative—that you believe
have the most important potential impact on the work you do.

Consider Internal and External Factors

These indicators may include internal issues and trends that are inherent to the institution, such as budget
issues, enrollment fluctuations, fundraising opportunities, and changes in leadership.

They may also include external factors in the environment outside of the institution that our out of our control
such as:

 Demographics – locally, regionally, nationally, and increasingly internationally (e.g., population,

racial/ethnic mix, immigration status, education levels, etc.)
 Politics and public policy – changes in governmental regulation, federal financial aid policies, and public
attitudes toward institutions of higher education
 Economies – local, regional, national and international
 Labor market – the demand in relevant fields and the associated skills desired by employers
 Academic interests – popular fields and the employment interests of prospective students and their
families
 Technology – the increasingly rapid changes in which bear on nearly every aspect of higher education
 Research – changes in interests and funding from governmental, private and foundation sources
 Philanthropy – changes in available funding and in the attitudes, interests, and approaches of donors

TURNOVER
-Losing an employee. There are two types of turnover, voluntary turnover and involuntary turnover.
  Voluntary turnover is the type of turnover that is initiated by the employee for many different reasons.
 Involuntary turnover is where the employee has no choice in their termination—for example, employer-initiated
due to nonperformance.

1. A poor match between the job and the skills of the employee. This issue is directly related to the recruitment
process. When a poor match occurs, it can cause frustration for the employee and for the manager. Ensuring the
recruitment phase is viable and sound is a first step to making sure the right match between job and skills occurs.

2. Lack of growth. Some employees feel “stuck” in their job and don’t see a way to have upward mobility in the
organization. Implementing a training plan and developing a clearly defined path to job growth is a way to combat this
reason for leaving.

3. Internal pay equity. Some employees, while they may not feel dissatisfied with their own pay initially, may feel
dissatisfaction when comparing their pay with others. This theory relates to one reason why people leave.

4. Management. Many employees cite management as their reason for leaving. This can be attributed to overmanaging
(micromanaging) people, managers not being fair or playing favorites, lack of or poor communication by managers, and
unrealistic expectations of managers.

5. Workload. Some employees feel their workloads are too heavy, resulting in employees being spread thin and lacking
satisfaction from their jobs, and possibly, lack of work-life balance as a result.

High-performance work systems (HPWS) - a set of systematic HR practices that create an environment where the
employee has greater involvement and responsibility for the success of the organization. a HPWS gets employees
involved in conceiving, designing, and implementing processes that are better for the company and better for the
employee, which increases retention.
Theories on Job Dissatisfaction

1. Progression of Job Withdrawal - developed by Dan Farrell and James Petersen

- It says that people develop a set of behaviors in succession to avoid their work situation. These behaviors
include behavior change, physical withdrawal, and psychological withdrawal. Within the behavior change
area, an employee will first try to change the situation that is causing the dissatisfaction. For example, if the
employee is unhappy with the management style, he or she might consider asking for a department move. In
the physical withdrawal phase, the employee does one of the following:
• Leaves the job
• Takes an internal transfer
• Starts to become absent or tardy
If an employee is unable to leave the job situation, he or she will experience psychological withdrawal. They
will become disengaged and may show less job involvement and commitment to the organization, which can
create large costs to the organization, such as dissatisfied customers.
2. Maslow’s Hierarchy of Needs
In 1943, Abraham Maslow developed what was known as the theory of human motivation (Maslow, 1999).
His theory was developed in an attempt to explain human motivation. According to Maslow, there is a
hierarchy of five needs, and as one level of need is satisfied, it will no longer be a motivator. In other words,
people start at the bottom of the hierarchy and work their way up. Maslow’s hierarchy consists of the
following:
• Self-actualization needs
• Esteem needs
• Social needs
• Safety needs
• Physiological needs
Physiological needs are our most basic needs, including food, water, and shelter. Safety needs at work might
include feeling safe in the actual physical environment, or job security. As humans, we have the basic need to
spend time with others. Esteem needs refer to the need we have to feel good about ourselves. Finally, self-
actualization needs are the needs we have to better ourselves. The implications of his research tell us, for
example, that as long as an employee’s physiological needs are met, increased pay may not be a motivator.
Likewise, employees should be motivated at work by having all needs met. Needs might include, for
example, fair pay, safety standards at work, opportunities to socialize, compliments to help raise our esteem,
and training opportunities to further develop ourselves.
3. Herzberg Two-Factor Theory
In 1959, Frederick Herzberg published The Motivation to Work (Herzberg, et. al., 1993), which described his
studies to determine which aspects in a work environment caused satisfaction or dissatisfaction. He
performed interviews in which employees were asked what pleased and displeased them about their work.
From his research, he developed the motivation-hygiene theory to explain these results. The things that
satisfied the employees were motivators, while the dissatisfiers were the hygiene factors. He further said the
hygiene factors were not necessarily motivators, but if not present in the work environment, they would
actually cause demotivation. In other words, the hygiene factors are expected and assumed, while they may
not necessarily motivate.
His research showed the following as the top six motivation factors:
1. Achievement
2. Recognition
3. The work itself
 4. Responsibility
5. Advancement
6. Growth
The following were the top six hygiene factors:
1. Company policies
2. Supervision
3. Relationship with manager
4. Work conditions
5. Salary
6. Relationship with peers
The implication of this research is clear. Salary, for example, is on the hygiene factor list. Fair pay is expected,
but it doesn’t actually motivate someone to do a better job. On the other hand, programs to further develop
employees, such as management training programs, would be considered a motivator. Therefore, our
retention plans should be focused on the area of fair salary of course, but if they take the direction of
Herzberg’s motivational factors, the actual motivators tend to be the work and recognition surrounding the
work performed.
4. McGregor
Douglas McGregor proposed the X-Y theory in his 1960 book called The Human Side of Enterprise
(McGregor, 2006). McGregor’s theory gives us a starting point to understanding how management style can
impact the retention of employees. His theory suggests two fundamental approaches to managing people.
Theory X managers, who have an authoritarian management style, have the following fundamental
management beliefs:
• The average person dislikes work and will avoid it.
• Most people need to be threatened with punishment to work toward company goals.
• The average person needs to be directed.
• Most workers will avoid responsibility.
Theory Y managers, on the other hand, have the following beliefs:
• Most people want to make an effort at work.
• People will apply self-control and self-direction in pursuit of company objectives.
• Commitment to objectives is a function of expected rewards received.
• People usually accept and actually welcome responsibility.
• Most workers will use imagination and ingenuity in solving company problems.
5. Carrot and Stick
- It is unknown for sure where this term was first used, although some believe it was coined in the
1700s during the Seven Years’ War. In business today, the stick approach refers to “poking and prodding” to
get employees to do something. The carrot approach refers to the offering of some reward or incentive to
motivate employees.
Many companies use the stick approach, as in the following examples:
• If you don’t increase your sales by 10 percent, you will be fired.
• Everyone will have to take a pay cut if we don’t produce 15 percent more than we are currently
producing.
As you can see, the stick approach takes a punitive look at retention, and we know this may motivate
for a short period of time, but not in the long term.
The carrot approach might include the following:
• If you increase sales by 10 percent, you will receive a bonus.
• If production increases by 15 percent, the entire team will receive an extra day off next month.
The carrot approach takes a much more positive approach to employee motivation but still may not
be effective. For example, this approach can actually demotivate employees if they do not feel the goal is
achievable. Also, if organizations use this as the only motivational technique, ignoring physiological rewards
such as career growth, this could be a detriment as well. This approach is used as a retention method,
usually as part of a compensation plan.

RETENTION PLANS

 Salaries and Benefits

- a comprehensive compensation plan that includes not only pay but things such as health benefits
and paid time off (PTO) is the first retention strategy that should be addressed. The compensation
plan should not only help in recruitment of the right people but also help retain employees. Utilizing
a pay banding system, in which the levels of compensation for jobs are clearly defined, is one way to
ensure fairness exists within internal pay structures.
 Training and Development
- To meet our higher level needs, humans need to experience self-growth. HR professionals and
managers can help this process by offering training programs within the organization and paying for
employees to attend career skill seminars and programs. In addition, many companies offer tuition
reimbursement programs to help the employee earn a degree.
 Performance Appraisals
- formalized process to assess how well an employee does his or her job. The effectiveness of this
process can contribute to employee retention, in that employees can gain constructive feedback on
their job performance, and it can be an opportunity for the manager to work with the employee to
 set goals within the organization. This process can help ensure the employee’s upper level self-
actualization needs are met, but it also can address some of the motivational factors discussed by
Herzberg, such as achievement, recognition, and responsibility.

Succession Planning

Succession planning is a process of identifying and developing internal people who have the potential for filling
positions. As we know, many people leave organizations because they do not see career growth or potential. One
way we can combat this in our retention plan is to make sure we have a clear succession planning process that is
communicated to employees. Succession planning is sometimes called the talent bench, because successful
companies always have talented people “on the bench” or ready to do the job should a key position become vacant.
The goals of most succession plans include the following (Rothwell & Kazanas, 1999):
• Identify high-potential employees capable of advancing to positions of higher responsibility.
• Ensure the development of these individuals to help them be “ready” to earn a promotion into a new position.
• Ensure diversity in the talent bench by creating a formal succession planning process.

OPPORTUNITIES, CHALLENGES AND CURRENT TRENDS

 Discovering The Right Talent

With the rise of business competition at a fast pace and many other investments at stake, it will be a daunting
task to find the most suitable talents for them. This is one aspect that will be a headache for most companies
in 2023.

This means the responsibility of finding the right people to take care of their business processes will always be
a complex process for all emerging sectors and organizations. making it one of the top challenges that HR
management people will face in 2023.

Upskilling & Grooming The WorkForce

Upskilling to develop the skills of your existing workers is one trend that needs proper emphasis. Equipping
them with the right knowledge and skills will prove fruitful for every company in the future. So in 2023,
companies expect to encourage their employees to upskill their level of skills by offering proper training to
bring the best out of them.

Keeping yourself updated with the modern world of knowledge and skill is highly essential. In today’s time,
expertise in one field is never enough for any company. So constantly upgrading the skill of the current
employees will certainly be a key trend in 2023.

Artificial Intelligence(AI) In HR & Recruiting

Most HR and recruiting work is already automated. And in 2023, it will only take this process of automation
further. Using the combination of AI-powered tools and human elements, engaging and retaining more
employees has become the norm.

Even the outfitted HR software, along with artificial intelligence, has begun managing the applications, filtering
& selecting processes. Not just that, it is even processing the recruiting & interviewing of applicants. So,
therefore, the more vast merging of AI with the HR & Recruiting process is going to be the next big trend of
2023.

Flexible Working Adjustments

In order to retain more talented employees, providing them with a flexible working environment is
highly essential. Many talented young employees want flexible working hours to have a social life outside of
work. Also, many talented women decide to come back to work after long breaks. As a result of this
realization, many businesses have already begun to revise their working-conditions policies.
There is a great requirement for a newly hired employee to have a flexible working facility. Something that
gives them mental peace, as this has been a game changer in most companies in terms of retention. If they
stick to the traditional way of working arrangement policy, they tend to lose a lot of talented people.

Focusing More On Collaborative Work

If any company is looking to get the best out of its team, then collaborative teamwork is really important. So
in 2023, organizations will focus on encouraging their employees to do their jobs as collaboratively as possible.
It is seen as a force of strength for getting their work done efficiently & productively in almost every
organization these days.

Organizations that emphasize collaborative work have found that employees who work together online but
never meet face-to-face are way less effective than employees who work collaboratively from one location.
This is why companies with HR solutions are always encouraging more and more teamwork to maximize
productive results and build better relationships with each other in 2023.

Giving Importance To Employee Experience

In this age of digitalization, employers expect to enjoy a much better working experience everywhere. It is
mainly because of the growing impact of millennials and transparency. As a result of that, company leaders
are looking to focus on making every possible employee experience better. This also plays an important role in
the retention of talented employees.

Nowadays, employees are the most powerful strength of any company’s competitors. And they are not
someone whose data and transactional information are limited to being managed by HR. As a result, HR’s role
is constantly being revised and revamped to ensure a better working experience for employees. So in 2023,
the main objective of company owners would be to provide their employees with the best possible working
experience.

What is an HRIS?

HRIS stands for Human Resources Information System. The HRIS is a system that is used to collect and store data on an
organization’s employees.

In most cases, an HRIS encompasses the basic functionalities needed for end-to-end Human Resources Management
(HRM). It is a system for recruitment, performance management, learning & development, and more.

An HRIS is also known as HRIS software. This is a bit confusing as it implies that different systems can have different
software running on them. However, this is not the case. The HRIS is, in essence, an HR software package.

The HRIS can either run on the company’s own technical infrastructure, or, more common nowadays, be cloud-based.
This means that the HR software is running outside of the company’s premises, making it much easier to update.

Other commonly used names are HRIS system and HRMS, or Human Resources Management system. These are all
different words for the same thing. Collectively, these systems are also called Human Capital Management systems, or
HCM. In this article, we will use the terms HRIS and HRIS systems interchangeably.

Benefits of an HRIS

As we discuss in our Digital HR Certificate Program, using an HRIS has a number of clear benefits. That’s why
companies of all sizes implement this tool to support their people operations. Centrally, the HRIS holds employee
information. A wide range of employee data is then easily accessible, in one system.

Record-keeping. An HRIS is a record-keeping system that keeps track of changes to anything related to employees. The
HRIS can be seen as the single source of truth when it comes to personnel data.

Compliance. Some data is collected and stored for compliance reasons. This includes material for the identification of
employees in case of theft, fraud, or other misbehaviors, first contact information in case of accidents, citizens
identification information for the tax office, and expiration dates for mandatory certification. All this information can be
stored in the HRIS. It is essential that data is stored safely and securely, in line with GDPR regulations.

Efficiency. Having all this information stored in one place not only benefits accuracy but also saves time. Some
companies still keep a lot of data about employees as physical paperwork. Finding the right folder, and locating the right
sheet, can take up a lot of staff time.
HR strategy. The HRIS permits the tracking of data required to advance the HR and business strategy. Depending
on the priorities of the organization, different data will be essential to track. This is where the HRIS shines.

Self-Service HR. A final benefit is the ability to offer self-service HR to employees and managers. This enables
employees to manage their own affairs. When done right, the HRIS can offer a good employee experience. Keep in mind
that not all HRIS systems offer this in a user-friendly manner!

Working with an HRIS has multiple benefits for the organization, HR, and the employee. Using an HRIS becomes
interesting when you have between 30 to 50 employees.

At this time, managing this basic information in Excel becomes cumbersome and simple procedures like approving
employee holidays need to be standardized.

Using an HRIS is especially beneficial for large organizations which typically use more advanced HRIS systems to support
different HR functions. Small businesses would suit a more basic HRIS.

HRIS functions

There are different kinds of HRIS systems and software. Because an HRIS encompasses all the functionalities for HR, all
separate functionalities are part of the system. These functionalities include:

Applicant Tracking System (ATS). This software handles all the company’s recruiting needs. It tracks candidate
information and resumes, enables recruiters to match job openings to suitable candidates from the company’s
application pool, and helps in guiding the hiring process.

Payroll. Payroll automates the pay process of employees. Contractual data and information on new hires is often
entered into this system – sometimes combined with time & attendance data – and at the end of the month, payments
orders are created.

Benefits administration. Another functionality of the HRIS is benefits management. Employee benefits are an
important aspect of compensation and are also managed in this system. More advanced systems offer an employee self-
service model for employee benefits. In this case, employees can select the benefits they are looking for themselves.
One may want more paternity leave, the other one a more expensive company car. This self-service approach to benefits
is also called a cafeteria model.

Time & Attendance. This module gathers time and attendance data from employees. These are especially relevant for
shift workers where employees clock in and out. Back in the day, employees often wrote down their working hours on a
piece of paper. Then, the manager would manually enter the data into a time tracking system. Based on this data,
payment orders were generated and paid to all employees. Nowadays, workers often check into work by fingerprint or a
card that is synced with an HRIS. This gives an exact time for arrival and departure. Any issues with lateness are easily
detected.

Training. Learning and development is a key element when it comes to employee management. This module allows HR
to track qualification, certification, and skills of the employees, as well as an outline of available courses for company
employees. This module is often referred to as an LMS, or Learning Management System, when it’s a stand-alone. An
LMS usually includes available e-learning and other courses to be followed by employees.

Performance management. Performance management is a key part of managing people. Performance ratings are
generated once or multiple times a year by the direct manager or peers of the employee.

Succession planning. Creating a talent pipeline and having replacements available for key roles in the organization is
another key component of an HRIS.

Employee self-service. Employee self-service has already been mentioned. Organizations are focusing increasingly on
having employees and their direct supervisors manage their own data. Requests like holidays can be asked for by the
employee him/herself. After approval, these are then immediately saved into the system (and registered to track for
payroll and benefits purposes).

Reporting & Analytics. A much rarer module in HRIS systems is reporting and analytics. Modern systems enable the
creation of automated HR reports on various topics like employee turnover, absence, performance, and more. Analytics
involves the analysis of these insights for better-informed decision making. We’ll explain more about this in the section
below.

Reporting and analytics in an HRIS

The common characteristic for all HRIS systems is that they have been designed as transactional systems. They are
databases that record a company’s transactions. An example of a transaction is when new employees join the company.

A new employee record is entered, and the person is considered ‘active’. If a person leaves the company three months
later, a new transaction is recorded, setting the person’s status to ‘terminated’.
The fact that these systems are designed as transactional systems, makes them bad at data reporting and analytics. They
simply haven’t been designed for this. In addition, not all HRIS systems have all the above capabilities built-in.

Some functionalities, like payroll, LMS, or ATS could also be recorded in external systems. This makes HR reporting even
more challenging, as it means that data is dispersed into multiple systems. In order to report data, a new layer needs to
be added on top of all HR systems to report and analyze the HR data.

This is the second reason why the practical use of reporting and analytics for these systems is limited. Be aware of this
when you are talking to HRIS providers, as they often tout their systems to be excellent in data reporting and analytics.

References:
https://asana.com/resources/strategic-planning
https://www.fordham.edu/info/26625/conducting_an_environmental_scan
https://open.lib.umn.edu/humanresourcemanagement/ https://www.aihr.com/blog/human-resources-information-
system-hris/