Human Capital Management: BPI - Overview

Human Capital
Management
(HCM)
BPI - Overview
January 2007 (v1.0) The Rushmore Group, LLC 1

Goal of HCM
• Right People for Right Job at the Right Time

• Functions
– determining staffing needs
– recruitment and training
– time management
– performance issues and performance monitoring
– compensation and benefits
– proper alignment of corporate and personnel goals

Shift in HCM
• Effects of Globalization and Technology

– Stereotype shift
• Payroll
• Personnel Department
• Human Resources
• Human Capital Management
– shift from brute labor force to quality workers
» get rid of the fishing nets and bring in the lines
– transform employees into competitive resources

Modules within HCM
• Personnel Management
– HR Master Data, Personnel Administration, Info. Systems, Recruitment,
Benefits & Salary Administration,
• Organizational Management
– Organizational Structure, Staffing Schedules, Job Descriptions, Planning
Scenarios, Personnel Cost Planning
• Payroll Accounting
– Payroll Administration, Payroll Simulation
• Time Management
– Shift Planning, Work Schedules, Time Recording, Absence Determination
• Personnel Development
– Career/Succession Planning, Profile Match-ups, Training, TEMs

Integration of HCM
• HCM with Production

– Shift Planning (Capacity)
• HCM with FI/CO
– Payroll
– Personnel Cost Planning
• HCM with MM
– TEMs (Training and Event Management)
• HCM with SD
– Salespeople - Commissions

Organizational Data
• A hierarchy in which the organizational units in an

enterprise are arranged according to task and
functions
• Are static data and are rarely changed
• The definition of organization units is a
fundamental step, it is a critical factor in how the
company will be structured

Structure of HCM
• Enterprise Structure
• Personnel Structure
• Organizational Structure

Organizational Structure for HCM
• Enterprise Structure
– This structure makes up the legal identity of the company
– The Enterprise Structure is made up of the following
elements:
• Client
• Company Code
• Personnel Area
• Personnel Subarea

Enterprise Structure
• Client
– technical structure feature
• Company Code
– highest level of the enterprise structure
• Personnel Area
– divides the company into sub-units (unique to a client)
– locations or divisions
• Personnel Subarea
– subdivision of the personnel area (the grouping of the personnel
area and subarea must be unique to a company code)
– departments

Enterprise Structure: Pen Inc.
Client Client 420
Company Pen Inc 100

Code
Personnel P100 P101

Area Pen Inc. Central Office Pen Inc. MFG Center
Personnel 0001 0002 0001

Subarea Administration Finance Manufacturing

Personnel Structure
• This structure describes an employee’s position

within the company in regards to work hours and
compensation
• The Personnel Structures is made up of the
following elements
– Employee Group
– Employee Subgroup
– Payroll Area

Personnel Structure: Elements
• Employee Group
– represents a division of the companies employees and
establishes a relationship between the company and the
employee
– defines the extent which the employees capacity is
available to for the company
• Active Employee, Pensioner, Interns, External Employee

• Employee Subgroup
– refines the relationship between company and employee
• Standard Salary, Executive Salary, Daily Wage, Hourly Wage,
Etc.
– control features for the personnel structure are defined at
this level.
• employee relationship with payroll
• eligible work schedules, wage types, attendance policy,
restrictions for collective agreement provision

• Payroll Area
– groups employees together that are paid the same (time)
• Weekly, Bi-Weekly, Monthly
– the payroll area is determined from a combination of the
Employee Group and Employee Subgroup
• number of employees in the payroll run
• specific dates of the payroll run

Organizational Structure
• This is an overview of your Company’s Organizational Plan (Org.

Hierarchy)
– Depicts the reporting structure and task distribution
• The Organization Structure is made up of the following elements
– Organizational Unit
• represent functional units within an enterprise (ex. departments)
– Position
• spots that are occupied by individuals (Salesperson)
– Job
• classifications of functions within an enterprise
– ex. Job: Officer, which is used for Positions: CEO, CFO, COO
• job description for numerous positions
– Person
• the individual, he/she is assigned to a specific position

Organizational Structure: Pen Inc
Organizational Units
Position
Person

HCM: Master Data
• Master data is relatively fixed

– Record that contains all the necessary information to conduct
business transactions
– Information within a master record can and will change, our hope
is that it does not change frequently.
• Before making the master data configurations,

you must have completely defined the
organizational structures

Employee Data
• Information must be recorded and maintained

effectively for every employee
– Infotypes (Information Types) are units of information
that aid in the entry of master data and group like
information together
• Status of the Employee will determine what
information should be gathered
– Active vs. Intern
– Exempt vs. Non-exempt

Employee Data: Infotypes
• Numerous infotypes will be created for each employee

– Organizational Assignment must be the first infotype recorded

Employee Data: Infosubtypes
• Certain data that is entered in an infotype can trigger the

need for a infosubtype
– ex. Family Member/Dependents
• If you enter that you are married or have children it will generate the
need for a spouse/child infosubtype to capture the information about the
spouse or child(ren)
• Subtypes also allow you to account for time constraints
– Different addresses may be current at the same time
• Permanent Residence
• Temporary Residence
• Home address

Employee Data: Personnel Actions
• Personnel actions are a series of predefined

infotypes that are grouped together to speed the
data entry process
– Hiring, Firing, Reassignment, Retiring – would all be
examples of procedures that could be represented by a
Personnel action
• Personnel Actions enable users to enter
information about an employee without having to
access each individual infotype

Personnel File
• Information maintained about an employee is stored in their

Personnel File

HCM: Process/Functions
Hire
Recruitment Employee
Training and
Development
ESS
Cost Planning Employee
Self-Service
Reporting Manage Work
Time (CATS)
Payroll
Administration Compensation
& Benefits

Recruitment – Selection - Hiring
Applicants
Advertising
Vacancy
Hire Select & Notify

Profile Match

HCM Process: Recruitment
• allows you to monitor and meet the personnel

requirements within the company
• determines vacancies within the company
– maintained by Personnel or Line Managers
– the system will generate a list of all positions that are
marked vacant
• once a vacancy has been identified advertising can
be initiated

Recruitment: Advertising
• Vacancies are published in advertisements

– internal or external announcement of a position
• The advertisements are recorded in the system
enabling you to gather information about that
advertisement
– cost
– applications
– medium
– recruitment instrument

Recruitment: Applicant Administration
• allows a company to coordinate and monitor all the steps involved in

the applicant process
• Applicant Administration is a
combination of
– receiving applications
– profile match
– selection of applicants

• Maintaining applications
– Applicants are the central object of Recruitment
• it is a person who expresses interest (through job application) in employment or
position change within the company
– All applicants must be maintained in the system
• maintenance responsibility must be delegated (one or more people)
• the status of the applicant will determine the information that is needed
• Profile Matching
– Compares skills of the applicant to the requirements of the position
• can the applicant offer what the company needs
– is there another vacant position that he/she would have a better match

• Selection
– Applicant Activities aid in Selection process
• used to enter, log, and plan all the tasks for an applicant during the
selection process
– Activity Types: mail confirmation of receipt, mail invitation to interview,
schedule appointment for interview, reject applicant, offer contract
» depending on the activity and the system output can be generated
automatically
– Activity Status: planned, completed
– Performance Date: when it was carried out
– Person Responsible: person responsible for carrying it out
– Upon completion of qualification review and interviews the position must be
filled

HCM Process: Hiring
• Master data (information) is obtained during the

hiring process (employee data)
• Personal Data, Payroll Data, Time Data, Etc.
• Hiring can be integrated with Recruitment
• information obtained about an applicant can be copied into
his/her personnel record
• Hiring can be done independently of Recruitment
• through the Hiring personnel action (infotypes)

HCM Process: Personnel Development
• Personnel Development component is used to assess and create

employee “value” that can be utilized by the company.
• Purpose is to manage the work efforts and develop the work skills of
employees within the company
• A company’s Personnel Development needs are determined by
comparing current or future work requirements with employees’
qualifications, preferences, and aspirations.
• Personnel Development comprises of the following components:
– Qualifications/Requirements
– Appraisal Systems
– Career and Succession Planning
– Development Plans

HCM Process: Training & Development
Personnel
Development
Career &
Development
Succession generate
Plan
Planning
determine
Appraisals based upon
Qualifications/ creates Training

Requirements

• Qualifications/Requirements
– this component is used to define, structure, and manage
your qualifications catalog
• the catalog enables you to place requirements on positions and
qualifications on employees (or applicants) within the company
– perform profile match-ups (people and positions)
– run reports to recognize qualification deficits and enact training
measures

• Appraisal Systems
– used in
• Personnel Administration
– as an instrument to evaluate members of your organization in a
planned, formalized and standardized manner
• TEMs
– training appraisals
– attendance appraisals
• Compensation Management
– appraisal results can be used to influence remuneration

• Career and Succession Planning

– Career Planning
• planning functionality that allows you to analyze an employees
skills, preferences, dislikes, qualifications, potential and
determine positions they should hold during their tenure at the
company
– Succession Planning
• planning functionality that allows you plan for positions in the
company that will need to be filled because of turnover (or new
position)
• enables a company to analyze employees and determine and
prepare potential replacements

• Development Plans
– a series of development measures and information on
the sequence in which they should be passed through
and time requirements to provide an individual with a
specific qualification
• Generic Plans
– training program (all prospective sales reps must complete a course
on Fundamental Selling Techniques)
• Individual Plans
– comprises of all the items that a person has completed, is currently
involved in, or will be involved in the future
– proposes needed course work (integration with TEMs)

• Training
– enable new hires and current employees access to the
necessary resources to build job skills needed for both
current and future task assignments
• this is figured through Qualifications/Requirements reports,
development plans, career planning, etc
– Encourage continually learning and professional
development
• SAP offers a powerful resource to assist in scheduling training -
TEMs

• Training and Event Management (TEMs)

– Component that enables
a company to manage,
track, and plan various
different business events
– Helps determine demand
for courses and schedule
dates, manage the
resources, attendees, and
costs associates with the
event

HCM Process: Training & Event Mgmt
• TEMS Catalog Structure

– Business Event Groups
• Used to classify business event types
– Business Event Types

• Time independent description of a
business event
– Business Events
• Actual time based event that is to take
place

HCM Process: Training & Event Mgmt
– Integration Points
MM SD
FI TEMS CO
HCM
Personnel Time
Development Management
Organizational Personnel
Administration Administration

HCM Process: Time Management
• supports planning,
recording, and evaluation of
internal employee time data
• time data that would be
gathered and evaluated
– hours worked
– leave
– illness
– overtime
– substitutions
– business trips
• conference, training

• There are multiple methods for data collection:
Time Administrators
Time Manager’s Workplace
Time Terminals
Cross Applications Time Sheet

Employee Self Service
Mobile Technology

• Time collection will be used for:

– payroll accounting
– personnel cost analysis
– internal cost allocations
– invoicing
– performance analysis
– capacity availability
– shift planning

HCM Process: Compensation & Benefits
• Compensation is not the cut-and-dry subject it once was

– Past – consisted of an employee's base salary or, at most, a
base salary and commission.
– Today - looked at as compensation packages; including:
• salaries, stock options
• employee stock ownership plans
• pay-for-performance plans
• bonuses, profit sharing
• commissions, non-cash rewards
• variable pay, and much more.

HCM Process: Compensation Management
• The balancing of company interests to operate within the

company's fiscal budget and fairly paying employees
– key component of attracting, developing, retaining, and rewarding
high quality staff through wages and salaries which are
competitive in the labor markets
• Compensation Management is comprised of the following
components:
– Job Pricing
– Budgeting
– Compensation Administration
– Long-term Incentives

HCM Process: Benefits Administration
• benefits today are offered as a part of an employees overall

compensation package
• this component allows a company great flexibility in creating and
maintaining individual packages for your employees
– Six international Plan Categories
• Allows for detailed company reporting
– Benefit Plan Participation
– Health Plan Costs
– Employee Demographics
– Benefits Election Analysis
• Country Specific Settings available
– FSA, COBRA (US examples)
• HIPPA Certificates

HCM Process: Payroll Administration
• SAP contains an international payroll driver that

is modified for each country
• payroll is released for individual payroll areas
– the run is for a specific group of employees and a
specific period of time
– upon release all affected personnel records are locked
• will generate an payroll results, and earning
statement, bank transfers and check payments

HCM Process: Payroll Administration
• Payroll Process
– determine Gross Amount
• base pay and any other additional payment
– overtime, sick pay, Christmas bonuses, special pay
– determine Deductions (Net Amount)
• processes garnishments, deductions, taxes, and benefits for
employees
– Federal/State Income Tax, Insurance (Health, Life), Loans
– Integration with Financial Accounting & Controlling
• G/L postings, payments processed, reports available

HCM Process: Cost Planning Reporting
• used to analyze, monitor, plan a company’s

personnel costs, wages, salaries, and employer
contributions
– cost plans are generated by developing and comparing
multiple cost scenarios, these scenarios might be actual
or projected

HCM Process: Employee Self-Service
• Employee Self-Service (ESS)

– empowers employees to create, display, and change their own
personal information
• streamlines and simplifies the HR data entry process
– some of the capabilities include
• SAP Office – appointment calendar, employee directory
• Personal Information – address, bank information
• Time Management – record working time, request leave
• Business Trips – submit travel request, reserve flights, rooms, also
expense reimbursement process
• Training – register for training, display your bookings
• Benefit Enrollment and Overview (Healthcare, Retirement, etc)
• Display Leave and Earnings Statements
• Qualification and Appraisal Review
• W-2 W-4 printout

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Human Capital

January 2007 (v1.0) The Rushmore Group, LLC 1

• Right People for Right Job at the Right Time

January 2007 (v1.0) The Rushmore Group, LLC 2

• Effects of Globalization and Technology

January 2007 (v1.0) The Rushmore Group, LLC 3

January 2007 (v1.0) The Rushmore Group, LLC 4

• HCM with Production

January 2007 (v1.0) The Rushmore Group, LLC 5

• A hierarchy in which the organizational units in an

January 2007 (v1.0) The Rushmore Group, LLC 6

January 2007 (v1.0) The Rushmore Group, LLC 7

January 2007 (v1.0) The Rushmore Group, LLC 8

January 2007 (v1.0) The Rushmore Group, LLC 9

Client Client 420

Company Pen Inc 100

Personnel P100 P101

Personnel 0001 0002 0001

January 2007 (v1.0) The Rushmore Group, LLC 10

• This structure describes an employee’s position

January 2007 (v1.0) The Rushmore Group, LLC 11

January 2007 (v1.0) The Rushmore Group, LLC 12

January 2007 (v1.0) The Rushmore Group, LLC 13

January 2007 (v1.0) The Rushmore Group, LLC 14

• This is an overview of your Company’s Organizational Plan (Org.

January 2007 (v1.0) The Rushmore Group, LLC 15

January 2007 (v1.0) The Rushmore Group, LLC 16

• Master data is relatively fixed

• Before making the master data configurations,

January 2007 (v1.0) The Rushmore Group, LLC 17

• Information must be recorded and maintained

January 2007 (v1.0) The Rushmore Group, LLC 18

• Numerous infotypes will be created for each employee

January 2007 (v1.0) The Rushmore Group, LLC 19

• Certain data that is entered in an infotype can trigger the

January 2007 (v1.0) The Rushmore Group, LLC 20

• Personnel actions are a series of predefined

January 2007 (v1.0) The Rushmore Group, LLC 21

• Information maintained about an employee is stored in their

January 2007 (v1.0) The Rushmore Group, LLC 22

January 2007 (v1.0) The Rushmore Group, LLC 23

Hire Select & Notify

January 2007 (v1.0) The Rushmore Group, LLC 24

• allows you to monitor and meet the personnel

January 2007 (v1.0) The Rushmore Group, LLC 25

• Vacancies are published in advertisements

January 2007 (v1.0) The Rushmore Group, LLC 26

• allows a company to coordinate and monitor all the steps involved in

January 2007 (v1.0) The Rushmore Group, LLC 27

January 2007 (v1.0) The Rushmore Group, LLC 28

January 2007 (v1.0) The Rushmore Group, LLC 29

• Master data (information) is obtained during the

January 2007 (v1.0) The Rushmore Group, LLC 30

• Personnel Development component is used to assess and create

January 2007 (v1.0) The Rushmore Group, LLC 31

Qualifications/ creates Training

January 2007 (v1.0) The Rushmore Group, LLC 32