Of the many reasons cited for outsourcing one or more HRM business processes as well as for making investments in HRM software, none is more susceptible to marketing hype than that outsourcing providers and software vendors deliver “best” practices in HRM. The best HRM software, “out of the box,” may certainly deliver some good practices in business event workflow, data edits, regulatory reporting, and even considerable guidance and content around the strategic HRM processes (but only a few software vendors actually do this to any extent). But no software, “out of the box,” can deliver “best” HRM practices in those areas that really matter, e.g. proposing both the KSAOC profiles and related assessment tools that will produce a better fit hire for a specific role in your organization or proposing the design of an incentive compensation plan which will motivate your sales force to greater productivity and revenue generation. If you don’t have proven competency models for your key roles, you won’t get competency-centric HRM, no matter what the software does. If you don’t have proven practices around how to conduct an interview with a position seeker embedded in that software, then there’s a great likelihood that the interviewer will ask inappropriate or even illegal questions. However, great HRM software does enable those who actually know what “best” practices are to execute them much more effectively and to institutionalize them, bringing those “best” practices to everyone.
In human resource management (HRM), there are three types of practices that are amenable to process or practice improvement through automation, outsourcing, process redesign, etc. and which can have an impact on achieving business outcomes. I call these three types of practices big P processes, little p processes, and business rules. When we speak of “best” practices in HRM, we need to be very clear as to which of these three types we’re referring, and we need to understand their very different impacts on business outcomes.
Big P processes are the fundamental designs of the HRM business for a particular organization. To what extent do you have competency-centric HRM processes? Around what approach to competency models? And how do you determine who has what competencies and to what degree? To what extent do you have a total compensation approach to rewards and remuneration? Around what approach to balancing the various business objectives served by different forms of total compensation? What is your leadership development approach, and upon what assumptions about adult learning and motivation is it based? How do you integrate your competency models and behavioral approach to assessing competencies into your staffing processes? These are just some of the important questions that shape an organization’s entire approach to its human resource management processes, and here is where true competitive advantage can be found when such processes are shaped very effectively for a given organization. But there is no software or outsourcing provider that tells you the answers to these questions. At best, your HRM delivery system and, especially, its software platforms are robust enough to support the answers you select, the big P processes you design, and the business rules that you need – now and over time.
Little p processes are the actual work flows (manual and automated steps) triggered by specific HRM personal life events (employee has a baby), work life events (manager conducts employee performance review), organizational life events (manager establishes a new work team), and external events (IRS issues new tax tables). These are the events for which HRM software and the HRM delivery sytem must supply the transactions and data structures needed to capture, validate, respond to, store, share, report on, etc. the relevant data. This perspective is especially important because today’s HRMDS presumes a very high degree of self service, thus forcing the redesign of nearly every business event-initiated little p process as a matter of course. The best HRM software and HRMDSs offer well-designed, “good” practice workflows for single event processing (the system transaction perspective) as well as multi-step work flows (designed in their work flow engines, to include configuration tools for those work flows). Seeing how an HRM software vendor or outsourcing provider executes a prescribed scenario (which is often a business event-initiated process) is a key part of evaluating the fit between that software’s/provider’s offering and your business needs. Increasingly, HRM BPO providers’s little p processes, called their service delivery model, will not be subject to change as that provider works hard to reduce the complexity, cost and variability of their HRMDS.
Business rules are the specific eligibility criteria for a health care plan, the number of hours considered to be a full-time work year for some set of employees, the exact formula for calculating sales incentives, the elapsed time allowed between promotion to a managerial role and completion of the new manager training program, and the questions you may not ask a position seeker in a specific situation. They are the decisions we make and implement to hire from within and grow our own talent or to search out experienced management to augment what we have. An outsourcing provider and/or transformational consultant might well argue that a specific client’s business rules are more complex and variable than can be justified by the client’s business needs, and they might insist on either simplification and standardization of those business rules or require that the client pay a higher migration and ongoing servicing cost. But no HRM BPO provider or HRM software vendor stipulates those business rules (except where they are regulated and not subject to the customer’s control), let alone which business rules would constitute best practice for a specific client at a moment in time and in a particular situation. Even where an HRM BPO provider, typically one offering comprehensive, integrated HRM BPO, has a considerable HRM consulting capability and a delivery system that really can deliver business rules, the most that provider would do is to help the client determine which business rules, ideally a simpler and more consistent set, will do the best job for that client. But that’s a work product of domain consulting, not an outsourcing service.
Big P processes transcend the automated components of the HRM delivery system to include the strategies, organizational design, business outcomes and policies, etc. which are the essence of the HRM business and, therefore, which shape all HRM processes (big P and little p) and business rules. While HRM software, regardless of your chosen deployment model, does speak of such “processes” as career management or staffing, they do so more from a marketing, little p (again, think work flow) and data structure perspective than from a big P process design perspective. They, in fact, offer very little guidance (although their implementation consultants may) and few constraints on how an organization decides to assign ownership for and/or responsibility over its HRM processes, how an organization measures the true business outcomes of these processes (as opposed to the activity metrics of the processes), and who should play what roles in these processes, let alone the basic plans or intent and business practices around which these processes are designed. Again you’re left with software as an important enabler, with surrounding delivery system capabilities providing further assistance, but the design of these big P processes and their execution remains the responsibility of the client’s HR organization.
Every organization needs to create a set of business rules that are shaped by the business outcomes they are intended to help achieve (e.g. having common compensation and benefit plans across an organization makes it easier to move people across business units, thus enabling organizational synergies), have the fewest needed complexities and differences across the organization, and are designed with the HRM delivery system in mind (i.e. with the intention of using technology to a very great extent to enable intelligent self service). This latter point is key, because self service puts a real premium on ease of use and customer satisfaction, both of which objectives depend on having HRM business rules (to include data definitions and code sets) that are understandable to everyone. But no matter how sleek the delivery or how standard and simple the rules, they have to be the right rules for the business or the business really suffers.
Are there best practices in human resource management (HRM) and in the human resource management delivery system (HRMDS)? Absolutely! With respect to the HRMDS, it’s reasonable to expect that a reputable outsourcing provider and/or software vendor will offer best practices in whatever elements of your HRMDS they are providing. By offering such HRMDS best practices as embedded intelligence in self service, click to speak from self service to customer care center, fully effective-dated business rules and event processing, well-defined little p processes, and many of the other features that I’ve discussed in previous columns, along with excellent migration tools that enable the configuration of their offering to support your business rules and big P processes, an HRM BPO provider or HRM software vendor can greatly improve your HRMDS. And we know that an excellent HRMDS is a necessary but unfortunately not a sufficient condition for achieving best practices in HRM. But to achieve best practices in HRM, your HR community, with whatever consulting support they require, must do the heavy lifting of big P process and business rule design and implementation. If you don’t know what competencies matter, how to recognize them, what motivates them to perform, etc., then you are in grave danger of having your HRMDS enable the rapid and cost-effective hiring of the wrong people. If you don’t know what types of compensation produce the best sales results, then providing every sales person with self service access to current accrued sales commissions may reinforce their displeasure with the plan design rather than motivating them to sell more. No pain, no gain.
While it’s true that an outsourcing providers’ terrific HRM delivery system, or an HRM software vendor’s SaaS InFullBloom, including lean and rigorous little p processes (think work flow), can make it possible, even easy, to execute really excellent business rules and big P processes, it can just as easily speed up and spread around really stupid business rules and flawed big P processes. Imagine what happens when a poorly designed benefits plan has such an efficient enrollment little p process that everyone wants to take advantage of it, thereby costing you much more than would have been the case if folks stayed in their old plans? Or the classic example: imagine being able to engage management fully in making gut-based (rather than competency-based) but mediocre hiring decisions faster and at lower cost? As so often happens, the devil really is in the details.