CHAPTER 1
Human Capital Management Systems
CHAPTER OVERVIEW
This opening chapter provides an overview of Human Capital Management Systems (HCMSs), including Human Resource Systems history, current HCMS Computing Environments, use of Cloud Computing Platforms, HCM System Development Practices, and the importance of Development and Test Systems. Systems Acquisition based on Needs and GAP Analysis Methods are also discussed. These methods play an important role in HCM Systems Vendor selection. The purposes of HCM Systems and their interaction with other Business Systems in modern-day applications along with integration with Human Capital Policies and Culture, which varies across organizations, is also examined.
STATE OF AFFAIRS
In the mid-1970s, Information Systems Management and Programming for Personnel Administration was almost exclusively relegated to the Management Information Systems Group along with Finance and other client departments. In most cases, systems were homegrown in mid to large organizations, with dedicated in-house Systems Analysts and Computer Programmers. Many organizations, especially smaller ones, still had large Personnel Systems, today referred to as Human Resources or Human Capital Management Systems, and at the time most aspects of their systems were in manual noncomputerized operations.
Computerized Personnel Systems in the 1970s through most of the 1980s were text-based mainframe or mid-range hosted systems with dedicated clerical workers trained at data entry. Batch processes coordinated and scheduled by Computer Operations produced reports and global record updates, while individually trained Data Entry Operators handled single record entries and updates.
In the late 1980s and early 1990s, the beginnings of Business Systems for Finance and Human Resources with Graphical User Interfaces (GUIs) began to emerge, with the vision of eventually achieving better integration across different Business Systems in the Enterprise such as Human Resources, Finance, Sales, and Manufacturing. At the time the GUI-based systems still had core batch processing and traditional core Business Application Languages as a base; an example is COBOL used in development. GUI-based systems initially used the Client-Server model for Multi-user implementations, and due to the heavy data traffic involved in such a computing model, performance greatly suffered. Text-based system users had become used to sub second response times on routine Data Entry and online Record Views, whereas early GUI Client-Server based systems had very long response time delays lasting many seconds or even minutes due to the initial large overhead of data traffic to send a request and receive a response within the GUI-based Client-Server environment.
POLICIES, SYSTEMS, AND CULTURE
Human Capital Management Systems exist within organizations to support Employee Policies, Programs, and Culture. Figure 1.1 depicts the Management and Team Member Groups together in an Environment supported at the inner level by Policies promulgated by Management, with participation by Team Members supported by a range of Systems including Finance, Human Resources, Manufacturing, Customer Support, and othersâall within the Culture of the organization.
HCMS Environments change and mature as the Organizations that they support grow and change. Like Project Life Cycles, discussed in Chapter 10, Organizations also have Life Cycles. Organization Life Cycles manage change inherently; Human Capital Management Systems must be flexible to accommodate the shifts in requirements and must keep up with changes in Information Technologies.
Human Capital Systems support a wide range of Employee Programs and Functions in the organization, including Compensation, Benefits, Talent Acquisition/Recruitment, Payroll, Training, Employee Assistance, Succession Planning, Performance Management, Strategic Human Resources Planning, and others. In addition to Functional Employee Related Program Support, HCM Systems provide both the Data and Capabilities for HCM Planning and Research, including Metrics, Analytics, and Data Mining. Business intelligence requires the capabilities of acquiring information, storing it, and analyzing it using different tools and techniques. These three aspects are Data collection and blending, Data modeling and storage and Analytics (Sangupamba Mwilu et al. 2016).
FIGURE 1.1 HCMS environment.
Ongoing Project Management, whether formal or informal, is critical to successful HCM Systems Development, Acquisition, Maintenance, and Change Management. Today all HCM Professionals, Technicians, and Administrative Staff members must be well versed in Information Technologies as they apply to the HCM Systems they support and interact with every day Basis. In medium and larger private- and public-sector organizations, many HCM systems are part of a larger Enterprise Resource Planning (ERP) suite of applications from vendors such as Oracle, IBM, Sybase, SAP, Workday, and others that not only support Human Capital Management but also Finance, Sales, Manufacturing, Customer Support, Stockholder Relations, Corporate Administration, and other functions. ERP suites are designed to improve the accessibility and efficiency of information flow in organizations by using common data architectures, programming structures, and data repositories across the range of Information needs for an organization. Most organizations employ a number of systems from a combination of vendors and, in some cases, custom build systems for certain applications.
In the 1970s and 1980s, most Personnel and Payroll systems were developed in house for most organizations; those that were acquired from system vendors were heavily customized in nearly all cases to support an individual organization. In that era, most hardware was a mainframe or mid-range computer hosted on premises. In the 1990s and beyond, vendors began to deliver Human Resources Information software that was more flexible in terms of customization and with newer GUIs that separated the offerings from applications that were text based and normally accessed through computer terminals. Microcomputers, including those from Apple and more so later from IBM, began to be used in dual modes with Human Resources Systemsâboth as Computer Terminals to Mainframe and Minicomputer Hosted Systems and as stand-alone adjunct Personal Computing platforms for Business Documents, Spreadsheets, and early Statistical Applications for Workforce Planning and early Analytics. Small to medium-size organizations saw Human Resources System offerings appear for stand-alone use on Personal Computers and increasingly in networked Personal Computer Systems attached to File Servers. File Server technology was initially limited to serving Applications in Personal Computers, where the processing occurred at the Personal Computer level with data updates residing on a central Database on the File Server. This simple Two-Tier Client Server Computing and Networking Technology eventually gave way Three-Tier Information Systems that included an Application Server that would handle most code processing, thus eliminating the need to load program code at the client Personal Computer Level. As a result, increased response times were closer to those achieved in the earlier Text-Based Hosted Applications using Computer Terminal Technologies (Figure 1.2).
FIGURE 1.2 Two- versus three-tier architecture.
Mainframes and Minicomputers are still in use today. They have evolved and can virtually host many separate computing environments.
PURPOSE AND DESIGN OF HUMAN CAPITAL MANAGEMENT SYSTEMS
HCMS Components have, in many cases, complex bidirectional relationships. For example, Compensation Procedures Systems are largely based on Compensation Policies, Job and Competency Analysis, and Job Evaluation. These three major areas of Compensation Administration provide core Job- and Pay-related information to many other Functional areas of Human Capital Administration including Talent Acquisition, Equal Employment Opportunity (EEO) Succession Planning, and Training. In turn each of those areas provide Compensation Managers and Analysts along with Line and Operations Management and employees with the source information needed to build and execute their systems.
For example, organizations that pay attention to and do due diligence in Job and Competency Analysis in compliance with the Uniform Guidelines on Employee Selection Procedures (Labor 2016) would be using a comprehensive Job and Competency Analysis system such as the Occupational Market Factor (OMF) Job and Competency Analysis System. This would provide Compensation Analysts with the tools and devices to collect and analyze a wide range of Job-related information including Critical Rated Job Performance Domains and associated Critical Tasks. Aligned with Critical Tasks and Job Functions would be Critical Rated Competencies, specifically, Knowledge, Skills, Abilities, and Personal Characteristics. In addition, for each Critical Performance Domain and Job Function, Observable Job Behaviors that would indicate Performance at Three Levels, for example, Meets Standards, Exceeds Standards, and Does Not Meet Standards, would be developed at the same time. Subject Matter Expertsâtypically Employees engaged in the Job Functions under analysisâwould be the primary information source and raters.
FIGURE 1.3 HCMS components and relationships.
This wealth of Job Information, which cannot be reliably obtained from off-the-shelf, generic Job Descriptions, fuels the activities of all other Human Capital Management Functions as outlined and depicted in Figure 1.3.
COMPUTING ENVIRONMENTS
Organizations use a number of Computing Environments today for HCM and other Business Systems. In most cases a combination or all of the Environments exist to some extent in many medium to large private- and public-sector Information Technology settings (Figure 1.4).
ON PREMISES, SOFTWARE AS A SERVICE, PLATFORM AS A SERVICE, INFRASTRUCTURE AS A SERVICE, HYBRID
The most common Business Computing Environment from the 1970s through the 1990s was On Premises Computing, where the Hardware, Software, and Information Technology Professionals such as Programmers and System Analysts...