Productivity through HRIS

All companies, whether large or small, must engage in compensation planning. Compensation
planning is the process of ensuring that managers allocate salary increases equitably across the
organization while staying within budget guidelines. Usually, the company identifies set times
during the year (called reviews when all the firm managers review employee’s
performance, and match these with budgetary constraints and formulate pay raise
recommendations for the coming year.

As employers like IBM have moved toward linking their compensation plans more closely with
strategic consideration, the job of developing salary raise recommendations has become
increasingly complex. no longer just a case of the manager allocating raises across the board, or
allocating raises based just on performance appraisals. Instead, (as at IBM) numerous issues
including strategic concerns, geographic considerations, the effects of paying employees based on
competencies rather than job duties, and the need to take into consideration a variety of elements
including bonus payments and stock option grants make allocating equitable raises while staying
within budget quite a challenge.

Making raise decisions has always been cumbersome, even when there were fewer complexities
involved. In the 1980s and early 1990s, employers used spreadsheets to administer this
compensation planning periods. The firm HR department would create individual spreadsheets
for each manager, and the manager would use these to record their salary increase
recommendations for all their subordinates. HR and its compensation unit would then have to
assemble the spreadsheets by unit, department, division, and finally companywide. This was
obviously a very labor-intensive and costly process.

In the late 1990s, firms began moving toward mainframe or client-server-based applications for
facilitating this compensation planning process. This usually required developing custom
designed compensation planning software for each customer. It also tended to lack the flexibility
most companies desired, for instance, to add new compensation components, such as when a
company moves to competency-based pay.

Today, companies are moving toward intranet based compensation planning programs. Using an
intranet-based compensation planning application has many advantages. It lets the company
control and distribute its application centrally, so that it can quickly update its compensation
programs, without having to modify the software on individual managers computers. Automating
the system can also produce huge cost savings for even medium-sized businesses. For example
one company estimated that it cost them about $35 to complete a single manual compensation
transaction such as combining the raise budgets for two departments, but about $16 if it
automated this process. Using a centralized application saves money in other ways. For example,
employers often assign pay raise budgets to all their managers, only to find that once the various
department budgets all come together the accumulated excess raises amount to millions of
dollars. This generally happen with an automated system.

In acquiring a system like this for a company there are several criteria to keep in mind. First, look
for the most intuitive and easiest to use application. Second, make sure the application includes
decision-support tools such as pop-up window with guidelines alerts, calculators, and additional
supporting information to make it easy for managers to make intelligent compensation allocation
decisions. Third, the application should be flexible, so that the employer can easily add different
pay raise components like merit pay, yearly bonuses, and so on for various departments. Fourth,
the application should be robust, in that it can easily handle all of the business rules and actual
calculations that the system aims to support. Fifth, the compensation planning application has to
be compatible with a variety of HRIS (such as payroll systems) so that the employer has no
problem integrating systems from several vendors without costly code customization.

NEEDS OF HRIS
 Increasing competitiveness by improving HR operations and
improving management process
 Management of all employees information
 Reengineering HR processes and functions
 Reporting and analysis of employee information
 Streamlining and enhancing the efficiency and effectiveness of HR
administrative functions
 Shifting the focus of HR from the processing of transactions to strategic
HRM Complete integration with payroll and other Helps to company
related documents such as employee hand books, emergency
evacuation procedures
 Producing a greater no off variety of accurate and real time HR related
reports
 Improving employee satisfaction by delivering HR services more
quickly and accurately
 Applicant and resume management
 Collecting appropriate data and converting them to information and
knowledge for improved timeliness and