609 Assignment 7 & Discussion 7

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Concepts in Enterprise Resource Planning
Fourth Edition

Chapter Six

Human Resources Processes with ERP

Concepts in Enterprise Resource Planning, Fourth Edition

Objectives

After completing this chapter, you will be able to:

Explain why the Human Resources function is critical to the success of a company
Describe the key processes managed by a Human Resources department
Describe how an integrated information system can support effective Human Resources processes

Concepts in Enterprise Resource Planning, Fourth Edition

Introduction

Human capital management (HCM): tasks associated with managing a company’s workforce
Human Resources (HR) department responsibilities
Attracting, selecting, and hiring new employees
Communicating information regarding new positions and hires
Ensuring proper education, training, and certification for employees
Handling issues related to employee conduct
Making sure employees understand job responsibilities

Concepts in Enterprise Resource Planning, Fourth Edition

Introduction (cont’d.)

Human Resources (HR) department responsibilities (cont’d.)
Using effective process to review employee performance and determine salary increases and bonuses
Managing salary and benefits for each employee
Communicating changes in salaries, benefits, or policies to employees
Supporting management plans for changes in the organization

Concepts in Enterprise Resource Planning, Fourth Edition

Problems with Fitter Snacker’s Human Resources Processes

Personnel management relies on paper records and a manual filing system
Creates problems
Information is not readily accessible or easy to analyze

Concepts in Enterprise Resource Planning, Fourth Edition

Recruiting Process

Fitter Snacker (FS) has three employees in its HR department
Problems occur because of:
Large number of HR processes (from hiring and firing to managing health benefits)
Lack of integration among all departments
Number of people with whom HR interacts
Inaccurate, out-of-date, and inconsistent information

Concepts in Enterprise Resource Planning, Fourth Edition

Recruiting Process (cont’d.)

Problems that can arise in the recruiting process:
Description of qualifications required for the job may be incomplete or inaccurate
Job vacancy form may be lost or not routed properly
Human Resources department will not know that the position is available
Supervisor will assume that paperwork is in process
Filing and properly keeping track of resumes and applications is a challenge at Fitter Snacker
Due to applicant’s data being kept on paper form

Concepts in Enterprise Resource Planning, Fourth Edition

The Interviewing and Hiring Process

At FS, requesting department develops a short list of candidates based on data provided by HR
Human Resources department:
Contacts candidates on the short list
Schedules interviews
Creates a file for each candidate
If a candidate accepts an interview offer, HR makes arrangements for the interview
After the initial interview, HR updates candidate’s file to indicate whether he or she is a possibility for hire

Concepts in Enterprise Resource Planning, Fourth Edition

The Interviewing and Hiring Process (cont’d.)

Second interview may be scheduled
HR representative and supervisor of requesting department decide which candidates are acceptable and rank them
HR person makes the highest-ranking candidate a job offer
Acceptance of job offer by candidate

Concepts in Enterprise Resource Planning, Fourth Edition

The Interviewing and Hiring Process (cont’d.)

Many of Fitter Snacker’s problems in interviewing and hiring process deal with information flow and communication
After candidate accepts formal job offer, Fitter Snacker hires an HR consulting firm to perform a background check
Fitter Snacker frequently has problems enrolling new employees in correct benefits plans and establishing proper payroll deductions

Concepts in Enterprise Resource Planning, Fourth Edition

Human Resources Duties after Hiring

HR department should maintain good, continual communication with employee and supervisor to make sure the employee is performing well
Fitter Snacker issues performance evaluations to new and current employees
Evaluation documents become part of employee’s file; maintained by HR department

Concepts in Enterprise Resource Planning, Fourth Edition

Human Resources Duties after Hiring (cont’d.)

Not having an effective information system makes it difficult for Fitter Snacker:
To manage all of the performance evaluation data
For HR department to identify problems with an employee and take corrective action
To maintain proper control of sensitive personal information

Concepts in Enterprise Resource Planning, Fourth Edition

Human Resources Duties after Hiring (cont’d.)

Employee turnover can be a significant problem
Costs related to hiring and training new employees
Companies lose knowledge and skills that may be crucial to keeping them competitive
Employee turnover is strongly related to job satisfaction and compensation

Concepts in Enterprise Resource Planning, Fourth Edition

Human Resources with ERP Software

Figure 6-1 Personal data stored in SAP Human Resources software

Concepts in Enterprise Resource Planning, Fourth Edition

Human Resources with ERP Software

A good information system allows all relevant information for an employee to be retrieved in a matter of seconds
SAP ERP Human Resources (HR) module provides tools for:
Managing an organization’s roles and responsibilities
Definitions
Personal employee information
Tasks related to time management, payroll, travel management, and employee training

Concepts in Enterprise Resource Planning, Fourth Edition

Human Resources with ERP Software (cont’d.)

SAP ERP’s Organization and Staffing Plan tool used to define:
Company’s management structure
Positions within the organizational structure
SAP ERP distinguishes between task, job, position, and person
Manager’s Desktop tool within SAP HR module
Provides access to all Human Resources data and transactions in one location

Concepts in Enterprise Resource Planning, Fourth Edition

Figure 6-2 Organization and staffing plan in SAP ERP

Concepts in Enterprise Resource Planning, Fourth Edition

Human Resources with ERP Software (cont’d.)

Figure 6-3 Relationships among positions, jobs, tasks, and persons who fill positions

Concepts in Enterprise Resource Planning, Fourth Edition

Human Resources with ERP Software (cont’d.)

Figure 6-4 Assignment of a task to a job in SAP ERP

Concepts in Enterprise Resource Planning, Fourth Edition

Figure 6-5 Manager’s Desktop provides single-point access to HR functions

Human Resources with ERP Software (cont’d.)

Concepts in Enterprise Resource Planning, Fourth Edition

Advanced SAP ERP Human Resources Features

Time management
Payroll processing
Travel management
Training and development

Concepts in Enterprise Resource Planning, Fourth Edition

Time Management

Hourly employees
Paid for each hour worked
Must record time that they work
Salaried employees
Not paid based on hours worked
Their time worked usually must be tracked as well

Concepts in Enterprise Resource Planning, Fourth Edition

Time Management (cont’d.)

SAP ERP system uses Cross Application Time Sheets (CATS) to:
Record employee working times
Provide the data to applications including:
SAP Controlling module
SAP Payroll module
SAP Production Planning module

Concepts in Enterprise Resource Planning, Fourth Edition

Payroll

Remuneration elements of an employee’s pay
Base pay, bonuses, gratuities, overtime, sick pay, and vacation allowances
Statutory and voluntary deductions
Taxes (federal, state, local, Social Security, and Medicare), company loans, and benefit contributions
Payroll run: process of determining each employee’s pay
SAP ERP system evaluates input data and notes any discrepancies in error log

Concepts in Enterprise Resource Planning, Fourth Edition

Travel Management

Travel request may originate with employee or employee’s manager
Travel requests usually require management approval
Once travel request is approved, travel reservations must be made

Concepts in Enterprise Resource Planning, Fourth Edition

Travel Management (cont’d.)

SAP ERP Travel Management system
Maintains travel data for each employee, including flight, hotel, and car preferences
Integrates travel data with:
Payroll module for reimbursements
Financial Accounting and Controlling modules to properly record travel expenses

Concepts in Enterprise Resource Planning, Fourth Edition

Training and Development

In SAP ERP system, employee development is driven by qualifications and requirements
Requirements: skills or abilities associated with a position
Qualifications: skills or abilities associated with a specific employee
One of the most important reasons for managing the development and training of employees is succession planning

Concepts in Enterprise Resource Planning, Fourth Edition

Training and Development (cont’d.)

Succession plan outlines strategy for replacing key employees when they leave the company
Career and Succession Planning components of SAP ERP Human Resources module
Allow HR professionals to create, implement, and evaluate succession planning scenarios

Concepts in Enterprise Resource Planning, Fourth Edition

Additional Human Resources Features of SAP ERP

Mobile time management
Management of family and medical leave
Domestic partner handling
Administration of long-term incentives
Personnel cost planning
Management and payroll for global employees
Management by objectives

Concepts in Enterprise Resource Planning, Fourth Edition

Mobile Time Management

Many employees may not have regular access to a PC
Mobile Time Management allows employees to use cellular phones to:
Record their working times
Record absences
Enter a leave request
Check their time charge data

Concepts in Enterprise Resource Planning, Fourth Edition

Management of Family and Medical Leave

Human Resources module reduces administrative burden imposed by Family and Medical Leave Act (FMLA) of 1993
HR system can:
Determine whether an employee is eligible to take FMLA absences
Automatically deducts those absences from the days the employee takes from allowable leave

Concepts in Enterprise Resource Planning, Fourth Edition

Domestic Partner Handling

Human Resources module now supports the management of benefits for domestic partners and their children
Provides more flexibility in:
Customizing dependent coverage options for health plans
Eligibility for enrollment of dependents
Designation of beneficiaries

Concepts in Enterprise Resource Planning, Fourth Edition

Administration of Long-Term Incentives

Companies must account for expected costs that occur as a result of long-term incentives such as the exercising of stock options
Human Resources module now provides more options for processing long-term incentives
Integration with SAP Payroll module
Can calculate taxes accurately when employees exercise incentives and sell their shares in the company
SAP can share incentive data with Accounting

Concepts in Enterprise Resource Planning, Fourth Edition

Personnel Cost Planning

Personnel Cost Planning tool
Allows HR personnel to define and evaluate planning scenarios to generate cost estimates
Performing cost planning and simulation
Allows HR to forecast cost estimates by integrating data with other SAP ERP modules

Concepts in Enterprise Resource Planning, Fourth Edition

Management and Payroll for Global Employees

Management of global employees involves many complicated issues
Relocation plans, visas and work permits, housing, taxes, bonus pay
SAP ERP has enhanced features to support the management of these issues
Customized functionality for more than 50 countries

Concepts in Enterprise Resource Planning, Fourth Edition

Management by Objectives

Management by objectives (MBO)
1954: first outlined by Peter Drucker in The Practice of Management
Managers encouraged to focus on results, not activities, and to “negotiate a contract of goals” with their subordinates without dictating the exact methods for achieving them

Concepts in Enterprise Resource Planning, Fourth Edition

Management by Objectives (cont’d.)

SAP ERP provides a comprehensive process to support the MBO approach
Performance appraisals
Appraisal results can affect employee’s compensation
Managers can include results of achieved objectives in the employee’s qualifications profile

Concepts in Enterprise Resource Planning, Fourth Edition

Summary

Employees are among a company’s most important assets
Without qualified and motivated employees, a company cannot succeed
Human Resources department responsible for:
Ensuring that the company can find, evaluate, hire, develop, evaluate, and compensate the right employees to achieve the company’s goals
Employee training and development, succession planning, and termination

Concepts in Enterprise Resource Planning, Fourth Edition

Summary (cont’d.)

Managing, sharing, controlling, and evaluating the data required to manage a company’s human capital are simplified by an integrated information system
Additional features of SAP HR systems address today’s changing technology and legislation

Concepts in Enterprise Resource Planning, Fourth Edition