Throughout my career, I’ve asked thousands of employees and managers what they think the primary function of HR is in their business. Most have told me one of two things 1) to find and hire talent, OR 2) to defend management and to police employee behaviors (which includes firing people). Oh, and I should say, the third runner up would be 3) to pay employees.
From my perspective, after 25+ years in Human Resources operations, the job of HR even before serving managers and employees in the ways stated above is to be stalwart stewards of employee data. In addition, to share the necessary parts of that same HR data to other company functions (finance, IT, business ops, etc.) so leaders can make business decisions, analyze labor costs for purposes of profit and loss, pay employees, and measure human productivity and organizational performance.
As part of their stewardship, every HR person should put the utmost priority on data integrity to ensure it always reflects the truth. In several companies I’ve worked for, we talked about our HR data as “the one source of truth” and painstakingly ensured we centralized, in one repository, all information that had initially been in multiple places, hard copy files, or disparate systems. As HR departments have transitioned from manual, paper-based processes to implementing HR information systems/platforms to automate activities – the goal is to remove potential human data entry errors but also to ensure data integrity. In contrast, if the HR team is not rigorous in its handling of its critical data – making it inaccurate at its core – the HR department loses credibility in the business that can be difficult to win back.
Anyone who has read my blogs or articles before, knows I like a good origin story. I believe in all things that you must learn how they began so you can best apply that history to the change you are about to cause when you implement the solution to a problem.
Prior to the invention of electronic HR Information Systems (aka HRIS), all of a company’s Human Resource data was housed in physical documents within multiple types of confidential employee records (personal employment data, recruiting, payroll, benefits, performance reviews, and other types of correspondence, etc.) Any reporting out to the business of that data was manually pulled and compiled by HR professionals mining their employee files and centralizing the data into spreadsheets and other software.
Over time, the centralized data repository HR had created – whether on a hard drive or one of the initial electronic HR systems – became critical and highly valuable to the business and still is today. During mergers and acquisition events, it was a usual practice for the acquiring company to request all the hard copy HR document files be sent to ‘headquarters.’ Then those documents would be painstakingly scanned to ensure all the historic employee information and data changes were captured for record-keeping compliance purposes and legal defensibility if needed. By owning this critical aspect of the business operations, Human Resources was elevated from being mere administrative file keepers to being the strategic service and data providers that it always has been regardless of whether business leaders initially saw it that way. HR ‘owns’ the data related to the most expensive line item on a company’s General Ledger – its employees. That’s a pretty serious responsibility!
While historically, employees have always had the right to request access to their employee data file contents, in recent years, global data privacy laws, the expansion of pay transparency laws, and employee litigation for unfair employment practices has put heightened attention on the very information HR is steward of. The onus continues to be on the HR department to be able to produce all of the historic changes to employee data and all other forms of documentation from the beginning of their employment, if requested. And legal, financial or compliance authorities don’t care if it is in physical form or electronic in nature – they just care if it is thorough and accurate with dates, reasons and approvals. That includes every type of data change that can occur – which are many. And whether employees, people managers, or HR people initiate the data changes, each of those changes need to have a justifiable business reason and appropriate approvals. And for those reasons, it is why over the last few decades HR departments, large and small, have chosen to install and/or upgrade HR Information Systems with automated workflows in them so there are clear steps and accountabilities along an electronic trail, and data changes are consistently handled every time.
Again, the core responsibility of every HR department is data related to nearly all aspects of the people working for the business. Because of its importance, if you don’t have experienced HR professionals on your team that have a full spectrum of HR operations knowledge and HR systems design experience, you have a problem. Ownership of your HR data is an inside job. Remember my comment about compliance and legal defensibility? You don’t want to leave any responsibilities for your data accuracy to an external vendor. If your core data is inaccurate due to flawed recordkeeping, lack of compatibility to other systems, poor data transfers that left out key information, lack of established processes and documentation, lack of data fields needed to collect the necessary data you are required to keep – you have a BIGGER problem because pointing to the vendor you bought your system from is not a legal defense.
During my career in corporate HR and HR consulting, I have been actively involved with M&A integrations and many HR transformation initiatives because HR departments have been moving from paper to electronic platforms for decades as the focus on HR data has become more elevated and acute. And what I have found makes or breaks these sometimes massive change management events – is the state of the data prior to a system implementation, the competency of the individuals who comprise the project team, and the combined understanding of all parties with what the current state HR operations is in relation to what HR Information Systems are capable of automating. A mismatch of what work is actually done by the HR team members to the HR system functionality can be detrimental to a successful choice being made and an implementation going smoothly.
Some examples I have seen of flawed HRIS implementations include:
- No connection between the HRIS to the General Ledger because finance and accounting were not involved in the system selection or design. That glaring error negatively affected payroll processing, labor costing activities, financial reporting and required a lot of manual manipulations of data outside the system – which made data accuracy and compliance tricky.
- Separate modules of an HRIS being installed one at a time (ATS, Compensation, Performance Management, Payroll, etc.) because the company was too cheap to implement the whole system at once. By doing so, without using the whole system as it was designed, the HR team became reliant on manual workarounds so as new modules were installed, not all of the team members adopted the system changes – which made consistency tricky.
- One system did not have the functionality needed to automate some of the company’s compensation programs. This was a mismatch to system needs and system functionality. And it meant the company’s pay programs were all calculated manually on spreadsheets outside of the system that should have been able to do the calculations leaving important activities open to human interpretation and errors – which made data accuracy tricky.
- And last but not least, a system where project team members did not have a clear understanding of what data fields should be used, what data would go in them and what business functions would ‘own’ them. By using a limited amount of available data fields, it caused significant issues when data was transferred from an old HR system because the former had more data fields than the new database. The outcome resulted in the team losing pertinent HR data in the transfer. This meant the new system was already flawed at set-up because widely known HR and finance related data fields were not there from the beginning. Also due to the lack of proper data fields, some existing ones were inappropriately connected to other aspects of the database causing complex data issues to occur when mass data changes were made – which again made data accuracy tricky.
I could tell you MANY more (horror) stories about the millions of dollars in sunk costs related to poorly chosen HR systems, systems that were sound choices for the business but improperly implemented, and even extreme cases where a system had to be completely scrapped and replaced. None of these scenarios are optimal if your business is relying on HR to provide ‘the one source of truth’ and you can’t provide it.
The HR Information System you choose can make or break your HR team’s success and ability to provide critical data to the business. The one you choose should not be taken lightly, not only because of cost, but because your business is relying on it. And please note that I said, ‘the one.’ If you haven’t already surmised by my commentary that you need to commit to a wholistic solution, I will say it again. After working in HR departments at the beginning of my career that had to creatively mine data out of disparate hardcopy files and electronic systems; and, after seeing many other HR departments deploy separate HR tools one at a time that didn’t effectively speak to each other – look at full solutions (i.e. comprehensive and covering end-to-end HR activities).
As you look to purchase, you need to include not only subject matter experts from each subfunction of the HR team (TA, HR Ops, Comp, Benefits, Payroll, T&D); but, also representatives of the other business functions in the company when doing system due diligence, product evaluations and making decisions. Then, research the origin story of every system you evaluate because, no two HR systems are 100% alike. If you do not know, there are HR systems whose origin stories include starting out as 1) a finance system that now includes HR functionality; 2) a payroll processing system that expanded to include HR functionality; 3) an ERP that expanded to include HR specific functionality; 4) others that were created specifically to perform 1 aspect of HR, for example, performance management, that were bought by other tech companies who bundled a bunch of separate HRIS products together as their solution, and 5) some that were designed from the beginning to do all end-to-end HR activities and easily connect with the surrounding business systems.
I am not here to pitch a specific product so don’t ask me what HR system I prefer or would recommend because my answer is ‘it depends.’ Every HR department is different. While there are general responsibilities that most HR departments have in common, no two companies have the same HR support model because of their unique company culture, how the entire business is organized, and what type(s) of product or service the company sells. You need to choose the HR system that 1) aligns with what your company does/sells, and 2) the other business systems it operates with beyond your HR function. And then, it has to align with 3) how your HR department is set up to support the company (i.e. decentralized, COE model, etc.) and 4) it should have the functionality that allows for all of the activities your HR department is asked to perform.
I have always said, “Employees don’t show up to work to suck at their jobs.” Their productivity is discretionary and when you give them poor tools and systems that make their work harder, they are frustrated and unproductive (and some will eventually leave your employ due to it). In a HR department that should be focused on providing quality data to the business AND serving the employees that make the products and services your company sells – it is important to get this key system right.
People Matter in Business
Cindy Goyette, SPHR, MAOM, CC – cindygoyette.com 2024
