Ifyouunderstandthataninformationsystemcanprovidethefoundationfortechnologythathasaveryvisible,concretefinancialreturn,thenyoureallycanseeanROIfromanHRMS.ByMarciaBarkleyThisisaperiodofremarkablechangeforthehumanresourcesfunction.Almostintheblinkofaneye,HRisbeingforcedtosheditsnearly100-yearcharterasthecaretakerofemployees,andtobecomeastrategic,value-enhancingbusinesspartnertothefirm.WiththisdramaticchangecomesomesignificantdifferencesinthewayHRplansandexecutesitsinitiatives,withaspecialemphasisonleveragingtechnology.Intuitively,HRhasgenerallyunderstoodthevalueoftechnology,particularlyinlargeorganizationswherevolumesofinformationhadtobebuiltandmaintained,ifonlyforthenarrowbutcriticalpurposeofgettingpaychecks,intherightamounts,totherightpeopleattherighttime.TheterrorofY2Kwasablessingindisguise,asitprovidedtheperfectinducementforCEOsandCFOstoapprovelargeinvestmentsinpowerfulnewHRinformationsystems.HRprosdidnotalwaysknowhowtheywouldactuallyuseallthefunctionalityofthosepowerfulnewsystems,andeventheCEOsandCFOscouldnotdemandadetailedjustification.TheneedtoproveanacceptableROIwentrightoutthewindowinthefaceofthepossibilityofmassive,catastrophicdataloss.That'sunfortunate,formanyoftheverysameseniorHRmanagerswhohavemadesuchadmirableeffortstobecomebusinesspartnerswiththeirnon-HRcounterpartsaremissinganenormousopportunity.AnHRMSisexactlythetooltheyneedtoprovethatHRcandomuchmorethanchannelrésumés,processbenefitsenrollment,andmaintainafileroom.Itisnot,inandofitself,thecompleteanswertothequestionHowdoIproveHR'svaluetotheorganization?butitisanabsolutelycritical,indispensablepartoftheanswer.Totakethingsastepfurther,companiesthatwishtobecomeorremaincompetitivecannotaffordtonothaveafullyfunctionalHRMS.Thereareatleastthreesignificantreasonswhythisistrue.Thefirstreasonisperhapsthemostbasic.Justlikeanyotherpartoftheorganization,theHRdepartmenthasanobligationtocontrolitscosts.Buttocontrolcosts,youmustbeabletomeasuretheminthefirstplace.Second--andthishasmorefar-reachingimplications--informationaboutcompanyperformanceisacriticalcompetitiveadvantage;personnelinformationistooimportanttoomitfromtheequation;andnoorganizationtodaycaneffectivelygatherandanalyzethebreadthandquantityofdataitneedsforthispurposewithoutafullyutilizedHRMS.Thereturnoninvestmenthereissometimesdifficulttoquantify,butisnonethelessquitereal.ThethirdreasonforastrongHRMSisthatitprovidesthefoundationforatechnicalarchitecturethatcanprovideafinanciallymeasurablereturnoninvestmentintheformofgreaterproductivity,andevenreducedlaborcostswithintheHRdepartment.Thattechnicalarchitectureismoregenerallyknownasemployeeormanagerself-service.ControllingcostsManycompanieshavebeenmeasuringHR-relatedcostsforquitesometime.Therearemanysuchcosts,butthosethataretrackedmostfrequentlyincludethefollowing:TotalcostofpayrollAveragesalarycostperemployeeHRsalariesaspercentageoftotalpayrollPayrolltaxaspercentageoftotalpayrollCostperhire(usuallyrelatedtoadvertisingandrecruiterfees/salaries)Thedatabehindthesecalculationsmaycomefromavarietyofsources:anHRMS,apayrollsystem,ageneralledgersystem,etc.Butotherkindsofcostscannotbecalculatedunlessyouhavetherelativelybroaddata-trackingabilitythatisfoundinafullyutilizedHRMS.Oneoftheseisthecostofacompanymanagingitself.Thatsoundslikearathercomplicatedequation,butitcanbeassimpleasthetotalsalariespaidtosupervisorsandabove--statedeitherasasimplenumberorasapercentageoftotalsalaries.Simpleasthecalculationmightbe,however,youfirstneedtoknowhowmanysupervisorsandmanagersyouhave,andwhattheyarepaid.Thisandothermeasurements,includingappropriateformulas,areexplainedindepthbyJacFitz-enzinhisbookHowtoMeasureHumanResourcesManagement.Onceyouknowthecostofmanagement-orofanythingelse-youcanbegintocontrolit.HRdataisessentialIncreasingly,humancapitalmanagementisbecomingrecognizedasanon-financialcomponentofanorganization'sfinancialsuccess:HRstrategy--whichshouldbefocusedonmaximizingtheoverallqualityofhumancapitalthroughouttheorganization--isasimportantassalesorproductionstrategies.ArecentbooktitledTheHRScorecard:LinkingPeople,Strategy,andPerformancediscussesthisatgreatandeloquentlength.AsnotedbyDaveUlrichandothersinTheHRScorecard,tobuildandmaintainastockoftalentedhumancapital,aHPWS(High-PerformanceWorkSystem)doesthefollowing:LinksitsselectionandpromotiondecisionstovalidatedcompetencymodelsDevelopsstrategiesthatprovidetimelyandeffectivesupportfortheskillsdemandedbythefirm'sstrategyimplementationEnactscompensationandperformancemanagementpoliciesthatattract,retain,andmotivatehigh-performanceemployeesRegardlessofwhatitcallsitselforhowitstructuresitself,thehumanresourcesfunctionalwayscomesbacktothesethreebasicfunctions:attract,retain,andmotivate.Todoanyofthesethreethingseffectivelyintoday'slargeorganizationsrequiresmeasurementandanalysis.Measurementandanalysisrequiredata.Lotsandlotsofdata.ThatrequiresanHRMS.Someexamples:Attractingemployees:Successfulfirmskeeptheirsalarystructuresup-to-dateandtheiremployees'paycompetitive.Onesignthatthecompanyisnotdoingthesethingswellisthatthesalaries