By Lesley Garside, operations manager, Northgate HR

The HR department is emerging from its ghetto of administration and paper-pushing to become a champion of change.

Spearheading this change are HR directors who are embracing Information Technology (IT) in order to deliver quick wins of reduced recruitment costs and improved staff retention. Evidence shows, however, that they may be neglecting the further opportunities that IT offers to position human capital at the heart of their organisation’s strategy.

A survey of 250 HR directors and their use of E-HR, conducted by Vanson Bourne on behalf of Northgate HR, shows that E-HR and Information Technology are transforming the way recruitment is managed.

The longer-term goal of transforming organisations into knowledge-based cultures through e-learning is being ignored while HR continues to be mired in routine tasks that could be easily automated. These were key trends to emerge from the study, which surveyed HR directors from all sizes of organisation across a spectrum of industries.

Key trends
Recruitment was the most pervasive application of E-HR with 59% of respondents using a self-service system for recruitment purposes and a massive 51% of organisations already using Internet recruitment technology. Such high levels of usage reflect the fact that recruitment was rated as the most time consuming HR activity absorbing, on average, 63% of the respondents’ time.

By contrast, the use of E-HR to enable employees to access HR functions on a self-service basis was lacklustre. Only 26% of respondents are currently using E-HR technology, the method traditionally used for delivering self-service access.

This is despite 26% of respondents rating administering employee requests and approvals in the top three most time consuming activities and also stating that they would like to spend only 3% of their time on this activity. Of those that are using an E-HR system, between 47% and 42% of the sample are using it to automate requests and approvals, training enrolment and e-learning tasks.

E-recruitment delivers quick wins
The popularity of e-recruitment revealed by the study is not surprising given that the use of the Internet requires no capital outlay. By posting vacancies on a corporate website or Internet job board, companies are saving money by cutting out recruitment consultants and expensive advertisements.

With recruitment consultants charging around 20% commission on salaries for positions placed, e-recruitment can enable significant cost savings: the NHS, for example, is looking to online methods to significantly slash its £20 million annual recruitment bill.

Organisations prepared to invest in a recruitment system are reaping a longer-term benefit too – greater staff retention.

Implementing a system that manages the recruitment lifecycle from publishing vacancies through to sifting applications and interview scheduling enables an ongoing dialogue with interested candidates. Growing and drawing upon a pool of talent, rather than filling each new vacancy as it arises is very appealing because it enables a better match between candidate and job and improves retention as well as immediately cutting recruitment expenditure.

Enterprises embrace self-service
Interestingly, the largest companies interviewed were more likely than their smaller counterparts to use E-HR technology for the bread-and-butter tasks of managing employee records and administering requests for holiday and submitting expenses.

These large enterprises also formed the biggest contingent of companies planning to invest in E-HR with 44% planning to implement a self-service system over the next 12 months.

Self-service overlooked by the majority
The broader perspective, however, shows a different picture. Of the total survey sample, an average of just 26% is currently using E-HR technology, which means that three quarters are still relying on manual management of this administrative burden.

Under-investment in this area could leave HR directors stranded in their traditional territory of administration rather than moving into the more strategic space of advising the board on human capital issues.

This avoidance is happening at a time when HR departments in both the public and private sectors are being exhorted to become more efficient and strategic.

The recently leaked Gershon report points out that the HR overheads of a public sector employee are up to three times greater than in private enterprise. His recommendations that HR procedures be "simplified, standardised, shrunk and shared" are likely to be heeded not only by government departments but also by a private sector looking for ever-greater efficiencies.

HR directors’ priorities misaligned
Similarly, the survey reveals that the priorities of HR directors, when justifying and implementing E-HR, may not necessarily support its optimum success.

A focus on line managers’ HR skills and training at the expense of communicating the planned E-HR strategy to them reveals a lack of awareness of the importance of winning over stakeholders and achieving buy-in.

Just 17% identified communication as the top priority, well behind the 26% that deemed skills and training to be the most important. Communication also rated lower than cost savings, at 25%, and impacts on managers’ time and resources at 21%.

Poor understanding and adoption of devolved HR functions by line managers is frequently an obstacle to E-HR delivering on its promises. Lack of participation by line managers may result in poor use of the system, or, in the worst scenario, misuse.

Another block to effective E-HR, cited by independent third parties, is the poor relationship between HR and the IT department. It appears that HR directors need to focus on communications and foster good relationships with other departments to deliver successful self-service systems.

The future is e-learning
E-HR technology provides the key to enable HR departments to take the lead in transforming organisations into knowledge-based cultures and maximising the use of human capital. Northgate Information Solutions’ research shows that HR has already grasped the nettle on e-learning. Currently, 42% of companies polled use e-learning and an even higher 44% enable staff to enrol electronically for training.

However, the potential of e-learning and HR’s role promises to grow significantly. The IT Skills Research Programme reports that in 2002, UK companies spent 11% of total training budget on e-learning, up from 9% in 2001. Recent research by the Meta Group is even more upbeat.

If specific competencies are correctly identified and measured then e-learning can provide 30% more content in 40% less time and at one third of the cost of more traditional training techniques, predicts the analyst firm.

Devolving administrative tasks down through the organisation will enable the HR department to be the steward of e-learning and knowledge.