Staff movements

Five years ago, employee relationship management (ERM) suites were being pushed as the next big thing by customer relationship management (CRM) vendors.

Suppliers argued that the area was the last bastion of the enterprise to be automated and was crucial for organisations wanting to boost morale, productivity and ultimately staff retention levels.

But the hype appears to have fizzled out and ERM seems to have died a death. So what happened? Is it all over, or has the idea morphed into something else?

According to Paul Hamerman, vice president of enterprise applications at Forrester Research, while the moniker may not have stuck, the concept of using suites of packages to manage the employee lifecycle is still valid.

‘It is now referred to as human capital management (HCM), and in that there are a number of components for managing different processes, some of which are strategic and some are not,’ he says.

The non-strategic elements comprise mature systems, such as transactional human resources (HR) management, which concentrate on administrative functions, including payroll and benefits, and have now been adopted by most organisations.

The strategic components, meanwhile, relate to two other emerging market segments: talent management and workforce management. The former focuses on activities such as recruitment, performance, compensation and succession management, while the latter deals with tasks such as labour scheduling, time and attendance, staff budgeting and planning.

Although talent management applications are applicable to all organisations, workforce management tends to be deployed by organisations in labour-intensive industries, such as retail and healthcare, as firms attempt to manage and use staff as effectively as possible.

Jim Holincheck, a research vice president at analyst Gartner, says many of the things that vendors were talking about in relation to ERM are now included in the talent management area. ‘However, it has coalesced into a market in itself that is distinct from ERM,’ he says.

ERM is less about the technology and more about the philosophies and strategies that can help improve employer-employee relations, ensuring that both parties interact effectively to mutual benefit.

Holincheck sees ERM as underpinning HCM, which is used as an umbrella term to describe activities relating to personnel management. He believes talent management is the fastest growing HCM technology segment, although it is also the most immature in terms of adoption.

And although 64 per cent of global organisations view performance management applications as important to the business, only 43 per cent believe they are effective, according to AMR Research.

Judy Sweeney, AMR’s senior vice president of research operations, believes the discrepancy between desire and reality is because the majority of organisations still use manual processes, Word documents or Excel spreadsheets to carry out performance management.

‘Even among organisations using appropriate software, there is a lack of integration between packages and a lot of these functions are done in silos,’ she says.

‘Some 40 per cent of applications are bought by line-of-business managers, but without tight integration. A lot is lost in terms of performance because there is no holistic view of individual staff members.’

An holistic view is important, not just in terms of aligning the goals of staff with those of the organisation, but also in recognising that employees are assets rather than simply an expendable resource.

Such a realisation is partly driven by impending skills shortages as the baby-boom generation begins to retire. But it is also prompted by an underst anding of how expensive and potentially damaging to the business it is to have a poorly motivated and unproductive workforce, or to have to continually replace proficient staff.

Forrester’s Hamerman says most firms have now implemented a good HR administration system and the majority have extended processes to provide self-service. ‘But firms are now looking beyond that area to improve performance, loyalty and retention, which are really important in competitive markets,’ he says.

The attitude is particularly marked in fast-moving service-oriented markets, such as financial services, but less so in capital-intensive sectors, such as manufacturing.

But it is only the top 10 per cent of global firms that focus on loyalty issues. ‘And that is out of necessity as they have to look at staffing issues more holistically, although there are pockets of visionaries in the mid-market, too,’ says AMR’s Sweeney.