|
||||||||||
Free Download
Strategic Reward Management and Integrated HR Systems
Issue 34 - February 2010
 printer friendly version |
How critical is the role of Reward in the implementation of a new HR system?
Over the last decade there has been a growing recognition of the importance of having an effective reward strategy that ties into the overall business strategy.
In order to implement a reward strategy, and deliver policies and solutions that are aligned with business strategy, it is essential that management information is readily available. It then becomes easy to demonstrate how effective – or not – specific reward initiatives have been.
The role of a Reward function has even more importance during a recession, for example:
- Pay policies may need to be revised to control costs and reflect changes in supply and demand
- Bonus arrangements need to be reviewed to ensure they are driving the correct behaviour and supporting business growth
- At pay review time, effective salary management is essential to ensure salary increases are affordable, equitable and justifiable and that the best use is made of the available budget.
Thus, due to the above points, a reliable source of good quality management information is vital.
HR systems and management information
In tandem with the development of Reward strategies, there has also been a significant increase in the number of integrated HR and Payroll systems being implemented across organisations.
With any new system, a project team will be set up and consultants brought in to deliver the new technology. In some cases Reward functions may be heavily involved or even manage the implementation, in others it can be delivered by payroll experts and professional project managers. Often the new systems are installed according to Payroll/Finance priorities, with HR modules a ‘bolt-on’ or secondary consideration.
Here lies the crux: with Reward and HR systems teams using and requiring more management information than any other part of the HR function, the system is crucial to delivering an effective Reward strategy. Systems and processes that enable the strategy to be built on solid foundations need to be implemented early on in the process.
There needs to be a clear picture of the jobs, posts and people. Without this it is a huge challenge to both gather data and make assumptions about who does what and also how much they should and are being paid.
From Local Authorities to Investment banks there are a plethora of job titles, which in many cases bear limited resemblance to the actual role and responsibilities undertaken by the role holders. For example, the titles ‘manager’ and ‘strategic’ are applied at many levels within organisations and will invariably have many different meanings.
Any Reward Manager when asked what the market rate is for a job has a number of considerations: What is the job? How much do we currently pay? How do I match it to the market? Depending on where the data is stored, they could end up cross-referencing multiple data sources to make a judgement on job size, internal comparators and then external market comparison.
When scoping and implementing a new HR payroll system, workshops are often held to discuss process flows and how everything will be set up in the new system. One of the most important initial stages is the organisational structure or hierarchy (also called position management). The Reward function can often be omitted from this part of the process as there can be a view that this is all about cost centres, employment contracts, workflow and other transactional activities such as payroll.
This is probably the most critical point of the system set-up and configuration for any Reward Manager.
Why? Because at this point all the different considerations concerning which job does what, sits where and what the role holders are paid, can be brought together under one process where previously there may have been a number of spreadsheets or other systems to inform this. Often job evaluation can be the guiding hand for setting up the job and post structure.
Involving Reward in creating an effective process flow from job to post/position to person, can ensure that salary reviews, market matching, equal pay auditing, career development, headcount and job reporting are all properly taken into account and are available through one data source.
Whether this involves a full analytical job evaluation exercise, job families , job levelling, a market match or even in situations where there is no clearly defined reward approach, capturing the data in the organisation hierarchy is critical to increasing the efficiency of the Reward team through the reduction of spreadsheets and databases, potentially saving hundreds of person hours.
The benefits of getting this right include:
1. Placing reward at the heart of the organisation
2. Demonstrating strategic value through easy extraction of management information
3. Communicating the value of an employee’s reward package facilitates retention and recruitment
4. The ability to identify at risk positions and people against the market
5. Giving improved information to line managers during salary review
6. Ability to quickly conduct a equal pay audit
7. Provision of accurate data to assist in scenario planning and trend analysis
8. To improve the process for salary survey data submission.
Tips for Reward Managers and Job Evaluation Project Managers during HR systems implementations:
1. Ask the project manager how Reward will be incorporated into the system design
2. Consider new processes where none may exist
3. Be clear on the jobs within the organisation
4. Consider how market survey or Job evaluation ID’s maybe stored in the new system
5. Consider simplifying data sources with a common reference in the HR system
6. Ensure Reward’s needs, and the importance, are understood by project managers
7. Demonstrate how long a salary survey submission may take with current processes
8. Don’t assume the systems experts understand reward management or reward process flow
9. Ensure the business understands that HR systems are fundamental to its success
10. Review data from current systems to ensure it is correct prior to any data migration
11. Ensure Reward is involved and not left as a Strategic specialist area
12. Cut and pasting old systems structures and data into a new more sophisticated system may appear cost and time effective however it does not necessarily mean success
Andrew Worth
Senior Reward Consultant
Senior Reward Consultant
Find out more about Andrew and our other consultants on our website: