Improving Services and Operations
The Human Resource (HR) department plays a significant role in the ultimate success of a firm. The functions of the HR department include recruitment where the HR professionals attract talent and hire resources, training of the recruits, professional development of the employees, appraising the workers and getting involved in the payroll management which falls under the category of rewards and incentives. Besides, the HR department is responsible for maintenance of the employee relations, resolving conflict within the organisation and maintaining a desirable work culture. However, the current system where the HR database is neither interfaced nor integrated with the Payroll System has many demerits such as double entry of data. The purpose of the report is to present a proposal that a firm can use to integrate the Human Resource Management System (HRMS) and the Payroll System. The key aspects of the proposal include the SWOT analysis of the integration, the flow chat in the current system, flow chart for the desired system and the stakeholders that can be impacted by the proposed changes. Besides, the report explains the recommendations for the Human Resource Department concerning the information systems that can assists it in the delivery of its services to clients and other stakeholders.
The meaning and use of the Human Resource Management System (HRMS) and the Payroll System as separate Information Systems
According to Johnston and Clark (2008), the HRMS is the decision making systematic procedure that allows the Human Resource Professionals to collect, store, maintain, retrieve and validate information concerning the staff and other stakeholders within the Human Resource Scope. Therefore, the system supports the functions of HR in different ways. In recruitment, the HRMS helps in attracting talent through job advertisements and helping in the ultimate hiring process in four ways. First, the HRMS allows the prospective recruits to fill in online forms through which they submit their personal information. Secondly, the HRMS is used by the HR professionals to schedule and inform the candidates their interview dates and other details which may be necessary as determined by the job specifications. The third way in which the HRMS is useful in the hiring process is the provision of a platform upon which the candidates can receive feedback or track their job applications. There are various statuses which can be used in the system to categorise the various employees. For example, terms like qualified, admissible, and shortlisted can be used to update the potential employees of the application process. The last benefit of using the HRSI in the hiring process is the maintenance of recruits’ privacy, which profits the company by boosting its reputation and corporate brand.
The other aspect in which the HRSI is essential is in the personal training and development of the employees. There are various training exercises which employees can be subjected to depending on their skills and the requirements of their job specifications. The HRSI contains details about the employees’ performance, including their attendance records, and therefore, the HR professionals can be in a position to address any forms of weakness in all the departments. For example, auditors can be trained on business ethics if the system has stored information that there exist auditors who do not comply with the required ethical standards.
On appraisal, the HRMS has stored information on the employees’ attendance records, progress statistics and productivity thus making it a vital database whose output can assist in the ultimate appraisal of the workers. For example, in the accounting system, the HRMS stored data about the attendance of junior accountants who may not be qualified to receive other bonuses thus assessing the workers who are determined to offer their services to the company despite the remuneration.
The payroll system is arguably one of the most critical information systems in any organisation because it is used of the rewards and remuneration of the workers and executives. The payroll system is beneficial in three ways. First, the payroll system is used to apply taxes and other deductibles on the workers’ earnings as required by the authorities like the local and federal governments. Secondly, the payroll system helps in the creation of payrolls, which differentiate the levels of earnings. Finally, the system helps the HR professionals in specifying the job requirements considering that compensation and remuneration are often pegged on the productivity of an individual employee (Thite and Sandhu, 2014).
From the meaning and the benefits of the HRMS and the payroll system, it is apparent that the two are interconnected and that there is a need to integrate them.
Difference between interface and integration of the information systems
There exists a difference when the management of a company decides to integrate or interface the information systems. Integrating an information system means that a single database is created with information useful to all the departments that can rely on such data. For example, integrating the HRMS and Payroll would imply that a single database is created to contain information that can be useful to both the payroll assistant and the HR professionals. However, the interface refers to the arrangement where each information system has its database, but there is a connection between the two systems which then allows for continuous update and maintenance of the data for the benefit of the connected systems, like the HRMS and the Payroll system (Bhuiyan, Chowdhury and Ferdous, 2014).
The SWOT analysis of integrating the information systems
The analysis focusses on the Strengths, Weaknesses, Opportunities and threats of having an integrated payroll system.
Strengths of Integrated information system between the HRMS and the Payroll system
The integration allows the company’s payroll accountant to access information about employees, which can assist in the overall. Gupta (2013) posits that there are numerous data which the payroll unit cannot access without having to connect with the HR personnel. These include the personal history of employees like the sex, name and date of birth, the work history such as the appraisal data and salary history, the internal training and development, career plans and the employee inventory such as education, competence and skills. Therefore, the integration helps the company by preventing double data entry, which saves on cost for the firm in terms of labour hours spent and the propensity of errors.
The second strength of integration is the enhancement of better and faster reporting within the company. For example, the executive management relies on data from the Human Resource (HR) and the Payroll unit; it is easier for a single report to be produced as an output from the integrated system thus making it easier for decisions to be made which require data from both financial and human resource centres (Gupta, 2013). The third strength of system integration is the enhancement of compliance with the regulatory requirements. It is the responsibility of the payroll system manager to comply with requirements on attendance records, taxes and overtime of employees, which requires a continuous update and maintenance of a large volume of data. The integration can, therefore, save time for the payroll manager considering that all the employee information is available in a central system, thus avoiding penalties that come with late submission of the compulsory reports (Simaanya, 2014).
The fourth strength of integration within a company is the improvement of communication and enhancement of teamwork. Whenever information is deleted or modified in an interface, it is often required that the HR professional responsible for such an action provides an explanation justifying the same. In cases where the payroll system is handled differently from the other HR-related functionalities, it is difficult for any changes to be communicated promptly. For example, there are cases where the company pays for leave days when the HR policy states that employees who overstay their leave days should not be entitled to any compensation or remuneration (Gupta, 2013). However, an integrated system with a single interface makes coordination within the HR department more efficient, thus enabling the payroll manager to avoid such mistakes as paying employees who have violated their terms of the contract. The fifth strength of the integration of the information systems is the empowerment of employees, which ultimately results in increased productivity. Employees who are allowed to access their payroll information are often motivated to work because they, at their leisure, can check the accuracy of the information to avoid delays in payment caused by avoidable errors such as wrong tax information. Therefore, a single interface does not only improve the accessibility of information to employees but also ensures that the workers feel empowered and valued as key stakeholders with a firm.
The last strength of integration is the impact that it has on an organisation’s objective of being environmentally friendly. Apart from having a seamless transfer of information between the HR professionals and the payroll manager, the single Information system that joins HR and Payroll helps by reducing paperwork which essentially means that the company lowers its litre. Therefore, the integration reduces the cost that a company could have spent in the proper waste disposal and ensures that the money is re-channelled to other useful departments which then raises the productivity and overall output of a company.
The weaknesses of an integrated information system between the HRMS and the Payroll system
Even though the proposed integration has numerous strengths, it also has weaknesses which can adversely impact the productivity and ultimate success of the company. The first weakness of integration is the lack of synergy within the organisation. For example, the creation of a single interface reduces innovation in the HR department because the information is readily available. Consequently, the employees may reduce their dedication to the company considering that all the processes are automated thus lowering the overall performance of the company.
The second weakness of the single-interface is high integration costs, which may not match the proposed benefits. Besides the financial cost, such integration may cost the company with regards to communication among employees, especially if the concerned employees have a mismatch in skills. For example, if an HR professional feels that he or she has no technical skills to operate the integrated system, there is a possibility that he or she may abandon the routine responsibilities that require access to the system.
The last weakness of integration is the encouragement of intra-departmental conflicts and misunderstanding among the users, especially if the departments have different privileges when accessing the integrated system.
Threats of an integrated information system
These are the factors which are external and may adversely impact the implementation of the integrated system. The first threat is the security breach by external players such as the hackers who may want to access the employees’ payroll information for malicious reasons. The second threat is strict rules which may slow down the implementation process, such as the General Data Protection Regulation (GDPR). The third threat is the reliance on the system’s components from outsourced companies which may fail during the integration stage, thus slowing down the performance of the HR department (Storey, 2014).
Opportunities for the Integrated Information System
The first opportunity is the existence of software packages that the company management can use to integrate the HR and Payroll systems. The first system is the SAP application, which was introduced in 1972. The application uses a web interface and e-business applications like the supply chain management system to join two or more systems within an organisation. The second application that is available to the organisation is Oracle Financials, which allows flexible, complete and seamless integration of information systems. For example, the Oracle e-business suite can allow the payroll manager gain access to information such as the general ledger, cash management, inventory, accounts payable and receivable, fixed assets, work in progress and bills of material. The third application which can be used by the management in the integration process is the Cobra solutions which have the Employee Database Manager (EDM) useful in storage of employee information and retention of the emails and other documents (Stevenson, Hojati and Cao, 2007). Therefore, a company has the opportunity of using the EDM to provide a history of wages, salaries and benefits of employees, create and maintain the benefit statements of employees, store employees’ emergency information, distinguish the employee data and retain all the emails of employees.
Design, Components, Software and selection of the right Human Resource Information System (HRIS) that can integrate the Human Resource Management System (HRMS) and the Payroll.
Design of the HRIS
The proposed HRIS should be designed following the desired contribution of employees and the human resource philosophy. For example, the HRIS can include elements of artificial intelligence responsible for the automatic update of the human resource data with regards to potential recruits progress in the job application and hiring process. The other essential elements which should be included in the system design are the decision support system which allows the HR manager to make both structured and semi-structured decisions, the communication system which ensures that there is a seamless exchange of information and the transaction processing system for the benefit of the payroll.
According to Boroughs and Palmer (2016), the HRIS should consist of three key components, which are the input, data processing and maintenance and output. The input component refers to the data entered into the database, like the employees’ personal information. The second component of the data processing and maintenance is the modification or adjustment of the information that has already been captured in the database. For example, the employee’s tax returns can be updated in the HRIS from time to time. The last component has to do with the final product, which is used for decision making. For example, the appraisal report generated from the integrated system becomes the output that the HR professionals can use for promotion and rewarding of the employees.
Flowchart of the Current System’s components
Information System Component 1 Component 2 Component 3 Final Component
Flow Chart of the Proposed System’s Components
The software to be used in the proposed HRIS
The proposed system can be built using SAP, Oracle Financials or PeopleSoft software. This software can be useful to the company because they do not only offer human resource-related services like workflow planning, career development and job matching but also payroll services like job pricing and compensation planning. The best software that can be used by the company for integration is Oracle because it is flexible and adaptable compared to PeopleSoft and SAP. However, the software is expensive and may require thorough vendor training to all the stakeholders who will be interested in the implementation of the integration system.
Having considered the design, components and software of the Human Resource Information System (HRIS) that integrates the Human Resource Management System and the Payroll, the most important aspect is the selection of the right HRIS. It is imperative for the firm’s management to understand that selection process can last between three to nine months and therefore the concerned employees should be patient if they are to have a fully functional infrastructure (Berry, Zeithaml and Parasuraman, 1990). In case the organisation lacks Information Technology specialists, it is recommended that the firm hires one who coordinates with the vendor in the implementation of the proposed system which would rely on the Oracle Financials as the software. It is at this stage that the IT specialist, selected or hired by the firm gets to determine if the system is user-friendly or may force the firm to have special training sessions. Besides, the selection process should consider the objectives of the firm and the cost-benefit analysis.
Implementation of the integrated system
After the organisation has selected the HRIS supported by the Oracle system, the final stage is the implementation (Maes, 2015). The team members involved in the implementation stage of the integrated system should be determined by the Human Resource Manager. For example, there can be cross-functional teams made up of two Information Technology (IT) and three professionals from other departments to oversee the implementation of the integrated system. The use of team members is useful because the stakeholders get to understand the single interface and the comments thus being able to understand the basic functions of the Information System without additional training (Kavanagh and Johnson, 2017). The organisation can use numerous systems to offer back-up for the essential information which may be lost during the integration of the Payroll and the Human Resource Management systems. These systems include the Web-Based System, the Application Service Providers, and the Employee Self-service, and portal and cloud information systems (Crook and Software AG, 2013).
The project has proposed an integration of the Payroll and Human Resource Management System to form the Human Resource Information System (HRIS). The proposal has explained that the organisation should use Oracle Financials as the software because of its adaptability and flexibility. However, it is imperative of the organisation to conduct a Cost-Benefit analysis to ensure that the expensive integration process is compensated by the benefits covered under the SWOT analysis. It is also imperative to involve the internal audit and finance in the implementation process.
References
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