HR Management 2009

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					January 21, 2009

Topic Overview: Human Resource Management
by Zach Thomas, Paul D. Hamerman, and Claire Schooley for Business Process & Applications Professionals

Making Leaders Successful Every Day

For Business Process & Applications Professionals

Topic Overview: Human Resource Management
by Zach Thomas, Paul D. Hamerman, and Claire Schooley with Sharyn leaver and Meghan Donnelly

January 21, 2009

ExECuT i v E S u M MA Ry
The most important investments that businesses and government organizations make are in their people. In addition to direct expenditures on compensation and benefits, organizations invest in technology, outsourcing, professional services, and learning and development programs to make employees successful at their jobs and help the organization achieve its goals. Forrester estimates that organizations will spend more than $7 billion in 2009 on human resource management (HRM) software alone. This document provides an overview and summary of our research to date on HRM topics, including best practices, trends, strategies, and technology product evaluations, as well as planned research as we continue our coverage of topics relevant to HRM professionals and their IT business partners.

TABl E O F CO n TE nTS
2 Why HRM Matters 3 Forrester’s Take On HRM 5 Best Practices 6 Trends And Forecasts 7 Strategic Reading 8 Vendor And Product Comparisons 8 Related Topics 8 Upcoming Research 10 For More Information

n OT E S & RE S O u RCE S
Forrester compiled its most pertinent research on human resource management to provide an overview of our research and perspectives on this subject.

Related Research Documents “The Forrester Wave™: Human Resource Management Systems, Q4 2008” October 28, 2008
“improve Strategic HCM Processes And Technologies” August 1, 2008 “HR/HCM Applications 2008: Best-Of-Breed Solutions Make A Comeback” January 7, 2008

© 2009, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester®, Technographics®, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. To purchase reprints of this document, please email clientsupport@forrester.com. For additional information, go to www.forrester.com.

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Topic Overview: Human Resource Management
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WHy HRM MATTeRS It’s no secret that talent is a firm’s greatest asset and that talent initiatives are under the microscope of the C-suite. Why? Because labor costs account for 36% of total operating costs and 30% of total revenues for US companies, employees are the differentiating factor for most firms, and slight improvements in employee productivity have a great impact on bottom-line results.1 An effective HRM application and technology strategy will help you realize several tactical and strategic benefits — from wringing out transactional process inefficiencies to fostering a loyal and high-performing employee base (see Figure 1).
Figure 1 Benefits Of An Effective HRM Apps Strategy
Process Recruiting Strategic benefits • Hire better talent whose success is more predictable • Build a compelling employment brand • Embed Web 2.0 technologies to attract the Millennials Tactical benefits • Reduce cost per hire • Decrease time to hire • Ensure statutory compliance

Learning

• Capture and transfer tribal knowledge from • Manage course curriculum exiting Baby Boomers to Gen Xers and • Manage and track course completion and Millennials learning budgets • Create career plans that foster employee • Meet compliance and regulatory loyalty and retention requirements • Offer varied learning offerings for different generations • Create succession plans that foster employee loyalty and retention • Align individual goals with organizational goals • Create consistent competencies for assessment, promotion, pay, and hiring • Provide visibility into top performers • Automate the performance review process • Improve performance process compliance and consistency

Performance

Compensation • Create a pay-for-performance culture • Ensure pay equity • Forecast future workforce budgets

• Price jobs consistent with the market • Prevent overpayments • Manage other incentives such as stock, lump payments, and commission plans • Effectively administer salaries • Increase efficiencies for highly transactional processes (e.g., payroll) • Manage employee records and transactions • Create a foundation for other HRM processes and systems
Source: Forrester Research, Inc.

HRMS

No strategic benefits

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January 21, 2009

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Topic Overview: Human Resource Management
For Business Process & Applications Professionals

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FORReSTeR’S TAKe ON HRM The market for HRM applications is currently $5.9 billion in product revenues (i.e., licenses, maintenance, and subscriptions). Forrester expects this market to grow at a composite rate of 9% through 2011, reaching $8.3 billion.2 The HRM application footprint spans a broad range of administrative human resources (HR) and talent management processes, including (see Figure 2):

· Human resources management systems (HRMSes). This core component serves primarily

tactical objectives in managing personnel costs, meeting government compliance obligations, and operating efficient transactional processes. The HRMS is the system of record for those who work within the organization, including paid employees and other affiliated persons (e.g., contractors and volunteers).

· Workforce management (WFM) applications. WFM applications are tactical because they
enable organizations to accurately pay employees (mainly hourly employees) based on time worked and meet compliance obligations related to labor practices. This category also has a strategic component in optimizing the supply of labor relative to operational requirements.

· Talent management applications. The talent management category is strategic because

it enables the organization to align investments in talent with the overall objectives of the company. Talent management apps help leaders hire and onboard the best talent, nurture and develop that talent to higher levels of performance, and retain and reward these individuals aligned with the company’s objectives (see Figure 3).

· Learning management systems (LMSes). The LMS is slowly moving its way from being a

standalone application to becoming an integral part of the talent management suite. An LMS is tactical in allowing course registration, recording assessments, and reporting learner progress and course completion results. LMSes are also strategic in providing skill gap analysis based on user profiles, dynamic individual learning plans (both formal and informal), and analytics related to learning usage, especially in areas of compliance training.

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January 21, 2009

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Topic Overview: Human Resource Management
For Business Process & Applications Professionals

Figure 2 HRM Applications Footprint
User experience Extended interactions Employee processes Manager processes Non-employee processes Content and communications Management reporting and analysis

Talent management processes

Performance and compensation processes Employee performance Succession planning Competency management Compensation and rewards Career development

Learning management processes Training administration Learning content management Learning delivery

Staffing and recruiting processes Workforce planning Requisitions Applicant tracking New hire onboarding

Workforce management processes Transactional processes Time capture and evaluation Forecasting and scheduling Absence management

Transactional HRMS processes Employee records and personnel actions
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Benefits administration

Payroll

Position management

HR compliance
Source: Forrester Research, Inc.

January 21, 2009

© 2009, Forrester Research, inc. Reproduction Prohibited

Topic Overview: Human Resource Management
For Business Process & Applications Professionals

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Figure 3 The Four Pillars Of Talent Management

Recruitment

Learning management system (LMS) • Training administration • Learning content management • Online learning delivery • Course catalog • Learning reports • Compliance • Individual learning plans

Performance

Compensation

• Requisitions • Sourcing • Applicant tracking • Onboarding

• Goal management • Performance appraisals • Multirater appraisals (360) • Succession planning • Career planning

• Pay for performance • Salary administration • Market pricing • Commission plans • Pay-equity analysis • Stock programs

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Source: Forrester Research, Inc.

BeST PRACTICeS Forrester’s best practices research helps you identify areas where your HRM strategies, processes, and technologies need to mature. This research is designed for organizations embarking on the path to assessing and improving their current HRM programs or for jump-starting programs that are just getting off the ground. „ Alcoa Employees Access eTools For Fast learning Claire Schooley „ Best And Worst Of Career Web Sites Zach Thomas „ Forrester’s Best Practices Framework For HCM Self-Assessment Zach Thomas „ Generational Workforce Strategies: Suggestions For Coping Claire Schooley „ How To Select A learning Management System Claire Schooley „ HR Process Outsourcing: Adopt Standard Transactional Processes And Technologies Zach Thomas

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January 21, 2009

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Topic Overview: Human Resource Management
For Business Process & Applications Professionals

„ improve Strategic HCM Processes And Technologies Zach Thomas „ learn From A Community: The elearning Guild Claire Schooley „ Put The Right People in Place For A Successful learning Management System implementation Claire Schooley TReNDS AND FOReCASTS In trends and forecasts research, Forrester interprets current trends in the HRM markets and how they are expected to shape the future of this area. Trends and forecasts research can help organizations align their HRM initiatives with the evolving markets for talent, services, and technology. „ Are you Ready To innovate your Career Web Site? Zach Thomas „ Corporate Social networks Will Augment Strategic HR initiatives Zach Thomas „ HR/HCM Applications 2008: Best-Of-Breed Solutions Make A Comeback Paul D. Hamerman „ HR/HCM Applications: Strategic Processes Move To The Forefront Paul D. Hamerman „ HR Professionals Prioritize Talent Management But lack Proficiency Zach Thomas „ informal learning Connects With Corporate Training Programs Claire Schooley „ inquiry Spotlight: Human Capital Management Application Strategies Paul D. Hamerman, Zach Thomas, and Elisse Gaynor „ Knowledge, learning, And Work unite! Claire Schooley „ Recruitment Automation: A Consolidating Market That’s Ripe For innovation Zach Thomas „ Talent Management Best Practices Zach Thomas

January 21, 2009

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„ The Workforce is Changing; What Are you Doing About it? Claire Schooley „ Trends 2009: Human Resource Management Paul D. Hamerman and Zach Thomas „ unified Hourly And Salaried Hiring — Reality Or Empty Promise? Zach Thomas STRATegIC ReADINg Strategic research gives you Forrester’s view on the broader context of HRM and how organizations can build strategies that support their long-term HRM vision. „ Building your HRM Applications Strategy Paul D. Hamerman „ For Stickier learning, Try A Dose Of Serious Gaming Claire Schooley „ Get Ready: The Millennials Are Coming! Claire Schooley „ How To Create A Comprehensive, High-impact learning Strategy Claire Schooley „ HR Analytics Become A Must Zach Thomas „ informal Methods Challenge Corporate learning Claire Schooley „ learning Director: Are you Ready For your new Role? Claire Schooley „ Social Computing Moves into Recruitment Zach Thomas „ Social Computing Reshapes elearning Claire Schooley „ Strategic Human Capital Management initiatives Benefit From Expert Guidance Zach Thomas

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Topic Overview: Human Resource Management
For Business Process & Applications Professionals

VeNDOR AND PRODUCT COMPARISONS Knowing what to do is half the battle; knowing who can help get you there is the other half. A broad range of options exist for HRM solutions, usually building on a core system of record that is supplemented by best-of-breed solutions and outsourced services. Through Forrester Wave™ and other comparative research, Forrester helps you understand the strengths and weaknesses of vendors and their offerings. „ learning And Talent Management Join Forces Paul D. Hamerman and Claire Schooley „ The Forrester Wave™: Enterprise learning Management Suites, Q1 2008 Claire Schooley „ The Forrester Wave™: Human Resource Management Systems, Q4 2008 Paul D. Hamerman „ The Forrester Wave™: integrated Performance And Compensation Solutions, Q3 2007 Zach Thomas RelATeD TOPICS The following reports are also helpful for HRM professionals. „ HR’s Role in Sarbanes-Oxley Compliance Paul D. Hamerman „ Recruiting iT Talent: Adjusting To A Hot Market Samuel Bright „ Single Employee Portal vision Escapes Many Companies Matthew Brown „ Talent Management in large iT Shops Marc Cecere and Samuel Bright UPCOMINg ReSeARCH “HR’s Critical Role In Economic Downturns” Zach Thomas Q1 2009 “Market Overview: Time And Attendance Applications” Paul Hamerman Q1 2009

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“Mentoring And Coaching Co-Workers Effectively” Claire Schooley Q1 2009 “TEI Of Performance Management Solutions” Zach Thomas Q1 2009 “TEI Of Using Technology For Learning And Development” Claire Schooley Q1 2009 “The HR Business Analyst” Zach Thomas Q1 2009 “How To Run Your HR Department Like A Business” Zach Thomas Q2 2009 “Market Overview: Live And On-Demand Learning Technology” Claire Schooley Q2 2009 “Payroll: Should You Outsource” Paul D. Hamerman Q2 2009 “The Millennials Are Here: Now What?” Claire Schooley Q2 2009 “The Forrester Wave™: Talent Management Suites, Q3 2009” Zach Thomas Q3 2009 “The Forrester Wave™: Learning Management Systems, Q4 2009” Claire Schooley Q4 2009

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January 21, 2009

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Topic Overview: Human Resource Management
For Business Process & Applications Professionals

FOR MORe INFORMATION Analysts To Watch Forrester is continuously researching, analyzing, and writing about changes and new developments in technology. To keep abreast of future Forrester research on the subject of human resource management, you may want to watch for new research coming from the following Forrester analysts serving HRM professionals and their IT business partners:

· Paul D. Hamerman. Paul’s coverage focus for HRM includes the overall trends and market

characteristics, as well as evaluating core HRM solutions and processes, including payroll, time and attendance, as well as HRM application deployment models (e.g., software-as-a-service). Paul has been instrumental in developing Forrester’s frameworks and methodologies in building HRM application strategies, applications vendor selection, and justifying application upgrades.

· Claire Schooley. A leading expert in learning management, Claire covers the strategy and

technology associated with formal and informal learning and Web and videoconferencing. She also researches the effect of the retiring workers and the new generation of workers on human resource management and development. She advises clients on eLearning program configurations and vendors and Web and videoconferencing solutions.

· Zach Thomas. Zach focuses on the processes, strategies, and tools that help organizations

hire, engage, and promote effective workforces. Zach’s primary research areas include hiring automation, performance management, and compensation systems. Zach developed Forrester’s best practices assessment framework for strategic human resource management processes and our methodology for assessing corporate career Web sites.

Research Help Desk Research specialists in Forrester’s Research Help Desk collaborate with Forrester analysts to compile these Topic Overviews for selected areas of Forrester’s coverage. If you have additional questions about this topic, please contact us at researchhelpdesk@forrester.com, and we will respond to your question within 36 hours. Research Alerts To be notified when a new document is published about HRM or by any of the analysts listed above, set up a Research Alert. eNDNOTeS
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Source: Saratoga Institute, “2007/2008 US Human Capital Effectiveness Report Executive Summary,” PricewaterhouseCooopers, 2007.

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This market sizing includes maintenance revenues in addition to licenses and subscriptions. Since softwareas-a-service subscriptions include maintenance and hosting components, it is more comparable to include licenses plus maintenance for licensed software. See the January 7, 2008, “HR/HCM Applications 2008: Best-Of-Breed Solutions Make A Comeback” report.

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January 21, 2009

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