HR TO THE POWER OF e

Internet-Powered Transformation of Human Resources

Mike Christie
Hewitt Associates, LLC

Abstract

For the past decade, the Human Resources (RR) profession has been undergoing a
fundamental shift-from performing as a tactical administrative function to performing as a
strategic and consultative business-planning group. While this shift has been underway for
some time, it has suddenly accelerated because HR is using a whole new set of solutions
made possible by Internet technologies. Early experiences with Internet-powered HR
transformations have illuminated the possibilities of "eHR" for transforming not only the
human resources function, but also the organization's relationship with its workforce----Qne
employee at a time.

What's driving the "eTransformation" of HR?

HR transfonnation efforts in organizations have produced process
efficiencies and have shifted administrative work into shared services or
outsourced service centers. But in most cases, the fundamental nature of the
work itself has not changed. Companies have changed where the work gets
done and who does it, but they have not changed what work gets done.
Today, the vast majority of HR's time and resources continue to be
dedicated to administrative activities-whether this work is done in a
centralized processing group or is distributed among the field HR staff. For
example, we recently conducted an activity analysis of a client's HR
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44 HR to the Power of

function I. Our study revealed that more than 74 percent of HR staff time and
money was spent on administrative activities, such as data entry, process
coordination, and re-work. Only 14 percent was spent on consultation-
related activities, such as workforce planning, job design, and performance
planning. And only 12 percent was spent on strategic activities, such as
compensation, benefits design, succession planning, and special projects.
Studies of other organizations with blue-collar and white-collar workers,
have shown similar results. We concluded from these studies that HR
transformation efforts may have created efficiencies by centralizing and
streamlining administrative activities, but they have not yet accomplished
the ultimate outcome of creating an entirely new strategic business role for
HR.
Many HR executives recognize that the Internet can positively impact
their organizations. It offers a new set of solutions that can help HR change
the fundamental nature of its work. Table 1 shows how three distinctly
different companies plan to use Internet solutions within HR, as stated in
their strategic planning documents. Company A is a global technology and
engineering organization with a mix of highly technical employees, a well-
educated managerial staff, and manufacturing workers. Company B is a
leading printing and publishing company with long-tenured manufacturing
workers. Company C is a retail company with short-tenured, high-turnover
service employees.
Although these three companies are engaged in different businesses,
their objectives for deploying HR Internet solutions are similar. They hope
to change the role of HR, and they all seek outcomes that they are not
viewing through a purely technical or operational lens. They hope to get the
following fundamentals right: increased operational efficiency, lower costs,
and better service to the end users of HR information and processes. The
specific solutions these companies design and deploy are-and will continue
to be-tailored to suit the demands of their businesses. These companies
speak of HR Internet initiatives in terms consistent with the eTransformation
ofHR.
Note that the companies described above are neither the youngest nor
the most technologically advanced organizations in the world. They have

I This chapter presents the perspectives and knowledge of Hewitt consultants, based on their
work and study in the area of HR effectiveness. Hewitt Associates LLC is a global
management consulting firm specializing in human resource solutions, with more than
11,000 associates working in 37 countries worldwide. Hewitt is the largest multi-service
HR delivery provider in the world. Its client roster includes more than two-thirds of the
Fortune 500 and more than a third of the Global 500. The information included in this
chapter is not intended to profile Hewitt's client engagements. It does include references to
HR projects (such as Dell and Cisco) that did not involve Hewitt consultants.
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HR to the Power of 45

Table 1. In Their Own Words: Company Objectives for HR

eTransformation

Company A Company B CompanyC

Global technology and Printing and publishing Major U.S. retailer
engineering company company
1. Make HR more 9. Focus on high 13. Drive speed,
strategic visibility/immediate efficiency,
2. Reduce process impact solutions productivity,
cycle times 10. Reduce HR consistency, and
administrative burden accessibility
3. Reduce transaction
costs and make HR more 14. Increase associate
strategic satisfaction/reduce
4. Increase satisfaction
11. Increase satisfaction frustration
with HR services
with HR services 15. Reduce HR
5. Improve accuracy,
12. Create savings and administrative work
consistency, and
process and forge a more
currency of
improvements strategic role for HR
information
16. Heighten our
6. Drive manager and
attractiveness to job
employee
seekers
effectiveness
7. Enhance company
image with current
and potential
employees
8. Drive the ''Web
mentality"

several decades (in one case, almost a century and a half) of history baked
into their cultures and processes. Technology and the Internet are not coded
into their organizational DNA-at least not yet. Rather, the three companies,
and many others like them, are large, traditional, complex organizations that
are focused on using the Internet to catalyze and accelerate the
transformation of HR by leveraging two dimensions of eTransformation:
• Empowering HR customers. Internet technologies make it possible for
organizations to automate HR processes and allow end users to own
their HR information and outcomes so that the need for intervention by
HR staff is significantly reduced or eliminated .
• Enabling the (new) HR professional. The Internet can deliver new tools
and accurate, timely information to HR professionals and can help them
succeed in their new role as consultants to the business.
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46 HR to the Power of

Empowering HR customers
Customer empowerment is giving employees, managers, employee
candidates, and other customers of HR services direct access to and
ownership of information and outcomes. It begins with providing access to
decision-support content and personal data, expands to the execution of
transactions and processes, and eventually transforms relationships in the
organization.

The self-service misnomer

Customer empowerment is not merely about self-service, a concept that is

often used to describe the activities and solutions associated with putting HR
services on the Web. HR eTransformation efforts have been most successful
in situations where organizations have looked beyond the concept of self-
servIce.
Dell Computer, for example, calls its eTransformed HR model "HR
Direct." By extending to internal customers the "Be Direct" brand message
that the company espouses with its external customers, Dell's HR
eTransformation efforts have given employees and managers direct
ownership of HR information. The concept seems simple enough. But when
this philosophy is implemented in the context of HR processes, managers
have direct, on-line access to a broad range of information about employees,
and they can act on that information. At Dell, managers can hire, transfer,
promote, and change pay for individual employees-all on-line, all on their
own. Controls, for the most part, are built into the system, rather than into
the HR staff.
Dell's HR Direct team did not conceive of its Internet-related HR efforts
as self-service solutions. In fact, in internal and external communications
about these efforts, references to self-service are plastered with a bold red

Customer empowerment
is not merely about self-service.
"x." The message is clear: Dell's Web-enabled solutions are about
empowering HR customers to take ownership, obtain the information they
need, and achieve the outcomes they desire in order to be effective. These
solutions are not an effort to get others to do the work of HR. The HR Direct
team has insisted that this distinction was a critical ingredient to the project's
success (Dell "HR Direct" Presentation, March 2001).
The self-service concept fails, from an HR customer perspective, to
capture the power of the Internet. To the HR customer, self-service is a lot
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HR to the Power of 47

like pumping gas-something most of us are not excited about doing and
would prefer to have someone else do it for us. The eTransformation of HR
creates opportunities for customers to access information they never had
before and to get results fast. From a strictly process view, the Internet
allows HR to put existing transactions and processes on-line, as-is. From the
eTransformation view, on the other hand, the Internet allows HR to
eliminate unnecessary steps; to remove degrees of separation between users,
information, and outcomes; and essentially to strip out a lot of the excess
junk that accumulates around processes over time.
It may appear that the distinctions drawn here between self-service and
eTransformation are merely semantic. But the shift in mindset is critical. If
the focus were merely to let employees and managers fill out forms on-line
instead of on paper, HR would miss opportunities for cost savings and for
strategic change in HR's role in the organization. Customer empowerment is
about a real change in ownership and control in the organization. It is about
getting HR out of the middle and enabling employees, managers, and others
to be self-sufficient.

The evolution of HR customer empowerment solutions

With this distinction between self-service and HR customer empowerment in

mind, we use the framework below to discuss, with clients, the three stages
of HR customer empowerment solutions: information, automation, and
transformation.
Most organizations have implemented, or are in the process of
implementing, solutions at various points along this evolutionary path. But
many organizations have found it helpful to think directionally about their
position and progression on this path and where they should be focusing
their energies.

Information

In the past, most organizations used the Internet purely as a communication

medium. It was another channel through which to disseminate, gather, and
share information. In the early 1990s, many organizations began to develop
externally facing Internet sites that included such static content as the
mission statement, descriptions of products and services, profiles of senior
managers, and contact information for customers, suppliers, investors, job
seekers, and the press. Alongside their externally facing Websites, they
quickly began to develop internally facing intranet sites. Their HR groups
immediately saw an opportunity to leverage this internal channel as a means
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48 HR to the Power of

to distribute infonnation more quickly, and they began to develop static,

content-based Websites. The promises of content-based Websites were
• Reduced costs for developing, disseminating, and maintaining
communication
• Easy access to targeted, timely, and accurate infonnation for employees,
managers and other HR customers
The HR group used to produce and distribute thousands (in large
organizations, millions) of booklets, newsletters, fonns, etc. Every change in
policy or plans required HR to update, re-produce, and re-distribute its
publications. In addition, HR could never be sure that employees, managers,
and others had on hand the most current version of the relevant publication
when a need for infonnation arose. Even if employees and managers
possessed the most accurate version of the infonnation, they would have to
navigate a large volume of if-then statements to find the nugget of policy
infonnation that applied. HR's costs of communication in a large
organization were overwhelming, and the effectiveness of their efforts was
questionable at best.
The Internet promised to resolve these issues by delivering the right
infonnation to the right user at the right time and to maintain all the
infonnation in one place--on-line. Based on the promises of lower costs and
greater accuracy of infonnation, many organizations developed HR intranet
sites. Some even developed disparate Websites within HR, one for benefits

Customer empowerment is about a real change in

ownership and control in the organization.
and compensation, another for training, and so on. In most cases, these sites
were not well organized from a customer's perspective, and they were not
well connected to each other-from either a content or a usability
standpoint. The sites consisted primarily of static content that employees,
managers, and others could find in printed materials.
As organizations gained experience with their Internet and intranet sites,
it became clear that if they were to achieve the promise of reduced
communication costs and better end-user access to current infonnation, they
would need to manage their on-line environment more effectively. HR began
to consolidate on-line infonnation and organize it according to the ways
users accessed it. Soon, they began to deliver truly personalized infonnation.
For example, where an employee once could navigate only static pages of
reference material on the rules of the 401 (k) plan, she now could access her
personal account balance and her contribution rate. Today, companies are
developing personalized portals that offer targeted, role-based access to all
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HR to the Power of 49

the infonnation and transactions employees need-from static policy

reference materials to the advanced applications described in the
"Automation" and "Transfonnation" sections below.
For example, groups at AlliedSignal have been developing Websites
since 1997. These Websites focused on benefits, diversity, learning, and
other areas. Recently, the company (the fonner AlliedSignal, post-merger
with Honeywell) worked with Yahoo! to deliver a single, integrated portal
that enables users to customize their own Web pages according to their
specific, individual needs and preferences. This portal integrates external
content (world and local news, sports, and weather) with internal corporate
content (company news and policies) and personal infonnation (benefits and
compensation). But all these changes did not happen overnight. The current
company portal is three or four generations beyond the disparate collection
of static Websites that once constituted its intranet (Wilky, 2000) In addition
to personalizing the delivery of content through portal interfaces, content-
management solutions are making the infonnation stage of customer
empowennent more effective and more efficient. They help to streamline
efforts to author and publish infonnation, and they help to deliver targeted
and personalized infonnation to users. Content-management software
packages, such as Interwoven and Vignette, allow content owners to author
and publish infonnation with a Web browser, rather than having to learn and
manipulate HTML code. Some software packages, such as Authoria, offer a
wealth of pre-developed, configurable HR content. These software solutions
essentially manage content and permit creating rules about which content
should be presented to which users under which circumstances. This means
HR's customers will see only the infonnation that is relevant to them. For
example, an employee in a lab in Seattle could not see policy infonnation
about security at the headquarters building in New York. The concept is
simple, and the advantages to users are tremendous.
While the infonnation stage is not the most exciting stage along the
evolutionary path in Figure 1, it is absolutely fundamental, and many
organizations still do not have it entirely right. Many HR staffs continue to
publish content on-line without developing standards for quality and
consistency and without assigning accountability for ongoing maintenance.
In these organizations, developing and maintaining most HR content still
requires the attention of technical experts to make changes in HTML pages.
Nevertheless, getting the infonnation base right and creating a meaningful
gateway for users is the foundation to the more advanced stages.
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50 HR to the Power of

t
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~~~ I: I Relationship Management
Tomorrow

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---- - --_ .. ---- ----- -- - ...... --.~- ---- ------_ .. ----- ----- ----_ .. ---- ..

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Supply Chain Integration ~
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.... _.. _- ------- --- ---_ .. -------_ .... -_ .. ----------- --_ .. ------_ .. ---_ .. --- -- ................. - ..... -
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Figure 1. Three stages of HR eTransformation evolution

Automation

The continuing advancement of Internet technology and HR's increasing

experience with applications have led to using the Web for many more
functions than distributing information. From permitting the isolated
execution of basic transactions, to automating complex processes, to wiring
external suppliers into company processes, the Internet allows HR to change
how and where its work is done. The automation stage is where most of the
energy, attention, and funds are being invested today. Over the past two
years in particular, a flood of activities has driven HR processes to the Web.
Automating HR processes begins with basic transactions and builds on
the foundation laid in the information stage. For example, not only can
employees access reference information about the 40l(k) plan and view their
personal account balances-they can now change their contribution rate on
line. Employee transactions like these are now Web-enabled in many areas
of HR, such as benefits enrollment, 401(k)-account management, and name
and address updates.
Beyond basic transactions, HR Internet solutions have begun to address
broader, more complex processes that involve a series of transactions strung
together across different users and user applications. In staffing and
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HR to the Power of 51

recruiting, for example, a number of software providers enable managers to

create job requisitions, post jobs internally and externally, and view
candidate applications and resumes as they arrive on-line. These software
packages also allow setting the required workflow and approvals among
managers, HR professionals, and recruiters, in accordance with the
organization's preferred recruitment process.
In large, complex organizations today, the compensation-planning
process often involves hundreds of managers working thousands of hours,
cumulatively, on unwieldy, disconnected spreadsheets. Software for
compensation planning allows hiring managers to access budgets for their
specific groups, to model pay increases according to the plan rules that are
built into the system, and to submit their proposed increases for the year.
Their proposals are routed to senior managers and compensation planners,
enabling them to roll up multiple group and division budgets and if
necessary send back individual proposals for changes to the managers who
issued them. There are many other such processes, including performance
management, learning and development, succession planning, and career
planning, that can be Web-enabled to save time and money and increase
workforce productivity. Automation-stage solutions can also look at
processes that involve participants outside the organization. In staffing and
recruiting, for instance, software can integrate background checkers, drug
screeners, and search firms into the Web-enabled workflow. In benefits,
health planners, fund managers, investment advisers, and others can be
wired into Web-based processes.

Transformation

Perhaps the best way to understand the truly transformational power of the
Internet is to look at a recent development in the marketing profession, the
widespread adoption of customer relationship management (CRM). CRM
allows marketing staff to focus on deepening relationships with individual
customers by learning as much about them as possible, institutionalizing the
learning, and working to maximize the profitability of these relationships
over the course of the customer lifecycle. Web-based CRM technologies
have been developed that enable all employees who interface with customers
to gain access to a complete database of customer information and to use
Web-based tools that facilitate direct interactions with customers. For
example, every time an Amazon.com customer makes an on-line purchase,
the transaction is recorded in Amazon's database of customer information.
The customer's purchasing history is then used to send e-mail messages to
specific customers offering books and music the customer might want to
purchase.
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52 HR to the Power of

Beyond automating basic processes and distributing information, HR

groups can concentrate their eTransformation efforts on "employee
relationship management" (ERM) that enables their organizations to manage
talent more effectively. We have extensively studied why employees choose
to stay with an employer, to serve that employer with extra effort, and to say
good things about the employer to others outside the organization-all of
which are indicators of the high level of commitment required to drive
organizational performance. These studies highlighted two factors that are
nearly always among the few critical levers identified: (1) opportunities in
the organization and (2) the employee's relationship with his or her manager.
The insights offered by CRM show how HR might deploy Web-based
technology to leverage opportunities and create more effective relationships
between employees and managers.
Cisco's approach to eRecruiting on its corporate Internet site is an
outstanding example of applying ERM principles. In addition to submitting
their usual resumes on-line, job seekers who log on to Cisco's careers page

Automation-stage solutions can also look at processes that

involve participants outside the organization.
can enter data about themselves-name, company, job interests, desired
geographic locations, etc. Based on the information in the job seekers'
profiles, the site asks pre-screening questions designed to round out
information about their work experiences. Once the job seekers complete
this exercise, they immediately receive an e-mail thanking them for the
information. Within days, they begin to receive targeted job opportunities
via e-mail. No more venturing out on the Web to search job databases
repeatedly to see if anything new has been posted. Job seekers have a one-to-
one relationship with Cisco. Without ever having interacted with a live
person at Cisco, they are suddenly receiving more information, more
relevant information than they may be receiving from their own employers,
who know more about them than Cisco could imagine. Of course, it is
difficult to build and maintain relationships entirely on-line. If job seekers
wish, they may log onto Cisco's career site and access a "Make Friends at
Cisco" tool that helps them connect with live Cisco employees (see
http://www.CISCO.com/for examples).
Cisco's Web-based recruiting approach is a great example, but it
represents just the tip of the iceberg when it comes to ERM. HR in many
organizations could deploy similar applications internally for employees
who seek new opportunities. HR could deploy solutions to help employees
navigate career opportunities, model development needs, and create
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HR to the Power of 53

"learning agents" that will alert them when appropriate development

opportunities emerge.
Further, HR could create tools that help managers more effectively lead,
develop, and manage people. In marketing's CRM evolution, the sales agent
is the primary point of contact between the customer and the organization.
CRM gives sales agents the tools to be more effective. In ERM, the manager
is the primary point of contact between the employee and the organization.
These eTransformation-stage solutions will do more than simply help
managers deploy cost-saving, self-service transactions. Transformational
solutions will enable managers to access, at their fingertips, complete
employee histories, goals and objectives, performance and pay records,
disciplinary records, even project assignments and training needs.
Ultimately, such information can be used to develop more productive, more
engaged employees who are more closely aligned with the needs of the
business.
One interesting finding from our work with clients is that in most global
organizations the HR issues that tend to be associated with ERM, such as
performance management, career development and planning, strategic
staffing and succession planning, are also the issues most commonly
addressed throughout the organization. As issues of data privacy and cultural
differences emerge, it will be fascinating to see how the eTransformation
stage of HR customer empowerment plays out in global companies. In the
meantime, there are a few rare examples, like Cisco's recruiting model, of
existing ERM solutions.

How are HR customers reacting?

Do employees and managers resent these technological solutions as attempts

to push the work of HR onto them? Not at all. Our anecdotal experience
shows that, where solutions are effectively developed and deployed,
employees and managers clamor for more functionality, more information
on-line, and more control over their own information. Of course, when
solutions are poorly developed and deployed, the feedback is less
encouraging. And as with any other initiative, there are detractors and people
who resist any form of change.
But how will employees and managers react to the more
transformational types of solutions suggested above? To find out, we
recently conducted focus groups with managers and employees from
organizations with low-turnover knowledge-workers and from organizations
with high-turnover service employees. The employees in our focus groups
were excited about the career development and training opportunities in the
ERM model. They thought that if their companies deployed such solutions,
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54 HR to the Power of

they would have far better access to jobs, development projects, and training
resources. On the other hand, they were concerned about confidentiality
issues, and they expressed the fear that poor managers would use technology
as a crutch. Meanwhile, the managers in our focus groups were excited
about consolidating all employee information in one place and having the
potential for faster resolution of people-related issues. On the other hand,
they too were concerned about confidentiality issues and the lack of
interpersonal interactions with employees, as managers begin to manage
more of the employment relationship on-line.
In essence, many of our clients find that the demand for new,
increasingly sophisticated customer-empowerment solutions outpaces HR's
ability to develop and deploy their new capabilities. So far so good, at least
from an HR customer standpoint. That leads us to the next dimension of HR
eTransformation, enabling the new HR professional.

Enabling the (new) HR professional

A client recently shared an anecdote about an HR generalist's reaction to
customer empowerment efforts. The HR generalist had contacted a member
of the HR technology team to inquire about the best way to get a manager's
reorganization of his department reflected in the system. The HR technology
person informed the HR generalist that all managers could transfer
employees from one group to another, on their own, at the click of a mouse.
The generalist's response was, "They can't do that. What am I going to do?"
There are significant negatives for HR professionals in the
eTransformation stage, particularly for those who were hired and trained to
do purely administrative tasks. A shift in mindset is required ifHR staff is to
let go of the reins and enable employees and managers to solve problems on
their own. But there are also significant positives for the HR professionals
who want to take on the consultant and strategist roles.

The "take-aways"

As mentioned earlier, a study of one organization showed that 74 percent of

HR activity continues to be devoted to administrative tasks. Whenever we
have mentioned this finding to other HR executives, most thought the
percentage in their organizations would be similar. When HR customer
empowerment works, it truly eliminates the need for HR intervention in the
majority of administrative tasks. For example, a recent Hunter Group (2000)
report states that some organizations have seen up to a 50-percent reduction
in process cycle times, a 59-percent reduction in inquiries to call centers, and
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HR to the Power of 55

a 75-percent reduction in headcount associated with Web solutions for

employees and managers. The results are real. In organizations where HR
customer-empowerment solutions have been effective, the impact on HR
staff has been significant.
Compounding the issue of HR's changing role is a trend toward
outsourcing HR's administrative work and technology management. Many
organizations implemented pre-Web human resource information systems
(HRIS). They have since built new solutions for advanced HR processes on
top of their HRIS. Some organizations have had success with these add-on
software products. Others have struggled. Many organizations have learned
the hard way that when a start-up software company folds, HR and IT are
left with the job of supporting the software themselves or rushing to
implement a new system at break-neck speed. Because PeopleSoft, SAP,
Oracle, Lawson, and others have released Web-native versions of their
software, HR groups face a big decision: stick with the HRIS they have (and,
potentially end up with software that is no longer supported) or migrate to
Web-native versions (which potentially involve expensive and often painful
implementations too closely on the heels of the last round of implementing
new software). As a result, many HR groups are looking to combine their
eTransformation and outsourcing efforts by joining with a partner who will
deliver comprehensive, robust HR administrative services-thus shifting the
burdens of HR administration management and constant upgrades to the
outsourcing partner. Beyond basic application service providers, employers
seek partners who will manage the technology and provide backroom
processing and other supportive business services around HR administration
systems. In our work, we have noted a trend from the types of outsourcing
that are common today (benefits and payroll) to the types of outsourcing that
stretch broadly across HR content areas and deeply into HR administrative
activities.
The combined trends of outsourcing and customer empowerment will
create a window of opportunity for HR to re-focus its talents and efforts and
seize a more strategic role. As one HR executive said about the
eTransformation efforts in his organization, "When the winds of change are
blowing, some people will hide behind rocks, and some will build
windmills." We have observed the truth of this executive's observation.
Simply creating solutions and waiting for results will not be effective. If
change-management issues are not addressed, reluctant HR staffers can slow
the momentum and limit the results the change would otherwise yield. In our
experience, staff reluctance to embrace change has been, more than any of
the technology details and the process re-design issues, the "dark side" (as
one of our clients ominously put it) ofHR eTransformation.
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56 HR to the Power of

Volumes have been written on effective change management, so we will

not address the issue here--other than to acknowledge that effective HR
eTransformation will require change management at its best. By implication,
the change effort must focus on the HR function itself. Organizations that
take HR eTransformation seriously will develop plans for re-skilling, re-
staffing, and redeploying existing HR staff. We asked one executive what
portion of the current HR staff would be effective at the far end of
eTransformation. He predicted that 50 percent or less would make it. When
we subsequently shared his prediction with other HR executives, the vast
majority said that the same percentage or less would survive HR
eTransformation in their organizations. The re-skilling and change-
management issues associated with HR's eTransformation have just begun
to be explored.

The "pluses"

As HR eTransformation efforts mImmIze their administrative actIvItIes,

many HR professionals will acknowledge the change as positive. For HR
generalists in the field, the change will mean having more time to focus on
people-related needs. The HR professionals who are experts in such issues
and who prefer to spend their time working to solve them will welcome the
change.
Further, the HR professionals who take the consultant role will have
tools and information at their fingertips. Whenever a process is automated on
the Web, the technology produces a series of records that can be used to
monitor trends and events as they occur. Turnover, performance levels,
attendance-whatever factors are critical to the success of a given
business--can be tracked and monitored in real-time. HR professionals and
managers can have the information they need to make effective decisions, to
change behaviors, and to target interventions in ways they never experienced
before. Targets and warning signs can be set for critical measures and tied to
HR systems. Automatic alerts can arrive at the HR professional's computer
the moment a trend takes shape.
For example, an HR professional and a VP of sales for a medical
systems company may together decide to set a warning-level for the number
of involuntary separations in the North American region. As sales managers
in the region initiate employee terminations and record these events in the
system, they will code each event as voluntary or involuntary. If the number
of involuntary separations hits the warning level, the HR professional will
receive an instant alert on her computer. She can examine the data and find
that the rate of involuntary separations has spiked in the Philadelphia area.
She might then identify the fact that a Philadelphia area sales manager was
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HR to the Power of 57

promoted into his role three weeks ago, which is when the trend started. The
HR professional now has a great set of data with which to begin analyzing
the situation. If she uncovers a managerial effectiveness issue, she and the
VP can intervene. If they decide to retrain the new sales manager, the HR
professional can refer to expert content about managerial effectiveness on
the Internet, identify several targeted tools, and put together a development
plan. In a few months, she and the VP can review the involuntary separation
data to determine if their intervention had been effective.
While this scenario may seem far-fetched, it is all possible today. A
number of tools are available to analyze such workforce situations.
However, few organizations have capitalized on opportunities to deploy
these capabilities. Most have focused all their efforts on HR customer-
empowerment issues and efforts. The successful approach to HR
eTransformation will address the need to enable HR professionals in their
new role of consultant/strategist through information and tools like those
described above. For an eTransformation effort to have a real and lasting
impact, HR must develop solutions to empower their customers and enable
the new HR professional.

Making HR eTransformation happen

HR eTransformation is complex work. There is no simple recipe for success.
But there are a few common building blocks that an organization must
consider in planning eTransformation efforts:
• Strategy and Action Plan
• Wired Workforce
• Portal Solution
• HR Applications
• Business Services Operations

Strategy and action planning

When it comes to executing an HR eTransformation, one of the most

common pitfalls is the lack of an integrated strategic plan and a vision for
the transformation. Many organizations have made a number of disparate,
disjointed efforts that either conflict with each other or fail to capture the
potential synergies across process and content areas. We have used the
framework depicted in Figure 2 to help clients define their priorities and
organize their eTransformation efforts:
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58 HR to the Power of

Should-Be
Competent World-Class

World Class

As-Is Competent

Sub-Par

Figure 2. HR eTranformation opportunity analysis framework

This framework enables HR executives to zero in on the areas where

eTransformation will have the most impact. For example, if the organization
should be world-class in its recruiting efforts but is sub-par today, HR ought
to focus on developing innovative approaches to recruiting by leveraging
technology and making process improvements. This approach to defining
HR's focus is intended to prevent the knee-jerk reaction of simply Web-
enabling that which exists today, without strategic consideration of what will
matter most in the future.
While the framework helps in examining at the highest level what areas
deserve HR focus, there is another step. Once the organization has identified
its high-level focus, say recruiting or benefits, the change effort must be
divided into discrete, executable projects. These projects must be prioritized
and sequenced. We often use the matrix in Figure 3 for this work.
We suggest that clients give top priority to projects that fall in the "strike
zone" (the upper right quadrant). These projects have significant impact and

High
Phase 2 Strike zone

Impact

Low priority Phase 3

Low
Low High
Ease of implementation

Figure 3. HR eTransformation project prioritization

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are not insurmountable challenges. The intent is to execute important

successes fast and build momentum. Next, we suggest focusing HR efforts
on the projects that have high impact but are more difficult to execute (the
upper left quadrant). Inertia might otherwise drive the HR staff to focus on
the easier projects, even though they will have less impact (the lower right
quadrant). After having worked through the process of defining priorities by
direction and project level, the usual work of first-rate project planning and
management begins. This planning work, which can be done in a few short
days, will save months of wasted time and heaps of wasted money down the
road.

Wired workforce

All efforts will be for naught if HR staff and organization managers do not
have access to intranet-connected PCs. The eTransformation project team
should know what portions of the workforce are wired. If this information is
not readily available, the team must gather it. (Very few organizations will
find that their workforce has 100 percent access to their intranets.) Once the
wired-workforce gap is understood, the eTransformation team decides (or
helps senior managers decide) what to do about it. A few common strategies
can be used to address the wired-workforce gap:
• Aggressive connectivity plans. In late 1999 and throughout 2000, amid
the e-business craze, a number of stories were widely circulated about
organizations offering free, or virtually free, PCs and Internet access to
all employees. This is certainly an approach to eliminating the wired-
workforce gap, but one that most organizations' balance sheets will not
support.
• PC purchase plans. Organizations can choose to offer PCs and Internet
access to employees at a discount through a number of leading PC
manufacturers. Dell's "Employee Purchase Program" is an example. PC
purchase programs can be subsidized by the organization at whatever
levels will encourage employees to participate. One concept that has
been discussed but not yet implemented (to our knowledge) is building a
PC purchase program into the enrollment periods for flexible benefits.
Such an approach would certainly raise visibility and encourage
participation in the plan.
• Shared workstations. Perhaps the most usual approach to addressing the
wired workforce gap, particularly in manufacturing environments, is to
set up intranet-connected PC workstations in common areas, such as
break rooms. The shared-workstation approach is relatively low cost and
easy to implement, but it has limitations. For example, employees may
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60 HR to the Power of

be reluctant to conduct such transactions as benefits enrollment in the

break room during lunch. Also, front-line managers may not be entirely
supportive of employees taking time from other tasks to use the PC
workstations. Nonetheless, shared workstations can certainly be one
approach to a wired workforce .
• Targeting "wired" populations. Some organizations have opted to
address the wired workforce gap by directing customer-empowerment
efforts toward specific employee groups who are already connected to
the Internet or the intranet. For example, one company decided to
develop solutions for managers and HR staff because they had 100
percent access. A targeted approach may be a first step to building
credibility and making the case for some combination of the broader
approaches described above.
These approaches are not mutually exclusive. In particular, some
combination of the latter three may expedite progress toward closing the
wired-workforce gap. Analyzing the wired-workforce gap and developing a
plan to address it, are critically important to HR eTransformation efforts.

Portal solution

Much has been written about portals and their role in a Web-enabled
organization. A portal is a personalized gateway to information and
applications. The portal itself is a fairly empty solution; it is simply a
gateway to other things. Some organizations are developing enterprise-wide
portals to serve as gateways to broad corporate information and applications.
Others are developing functional portals within HR and other groups. The
danger in the latter approach is that a series of disconnected, un-integrated
portals will be developed within the organization-making it all the more
difficult for employees to get what they need. The most effective HR
eTransformation efforts are coordinated with the development of an
enterprise-wide portal. In this approach HR can guarantee that its content
and functions are delivered through the primary Web gateway to the
organization. It is no wonder that HR often leads or catalyzes organization-
wide portal efforts. HR groups' eTransformation success depends on their
customers having easy access to information and applications.

HR applications

The preceding sections, "Empowering HR customers" and "Enabling the

new HR Professional," presented a number of applications. When it comes
to deploying these applications, organizations must set a directional strategy
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HR to the Power of 61

for HR information management and technology. There appear to be three

fundamental approaches to building the foundation for HR eTransformation:
• The Web--enabled HRlS approach. Traditionally, HR groups
(particularly in large organizations) have built their HR information and
technology foundations around such information systems products as
PeopleSoft, SAP, Oracle, and Lawson. In the past, these products were
strong in data management and weak in HR processes. They also were
not Web-enabled. However, new Web-enabled versions (for example,
PeopleSoft's Version 8) offer far better functionality, and they have
become truly viable options for Web-enabled HR.
• The "HRlS wrapper" approach. A number of software providers in the
market offer products that sit between the company portal and the HRlS
(or other source system) database. These middleware solutions offer
functions that enable employees and managers to access and update a
broad range of HR information. These products were developed around
the gap that the formerly non-Web-enabled HRlS providers have now
filled. For organizations that are seeking greater independence from their
core HRlS solutions, these products may make sense.
• The "best in class" approach. In either of the two preceding approaches,
most organizations will continue to use a few additional technology
products beyond the core HRlS. The main advantage of using "best-in-
class" applications is that their functionalities are robust for each
specialized area of HR. For example, an organization may implement a
Web-enabled HRlS for core data administration but implement separate
software packages for specific areas like staffing, learning,
compensation, etc. The main disadvantage is that they can be difficult
and expensive to integrate and maintain. Ultimately, every organization
must decide ifit will take a best-in-class approach.
• HR will clearly need IT support in setting the stage for eTransformation.
Appropriate IT resources may exist within HR, or HR may partner with
an IT organization. A few organizations have formed e-business groups
and made them available to support such important organization efforts
as HR eTransformation. In any case, having access to a strong
technology staff with knowledge of Web solutions and e-business
principles is essential to the success ofHR eTransformation.

Business services operations

As mentioned in the "Enabling the New HR Professional" section, there is

an increasing trend toward outsourcing HR operations. There is also a
continuing trend toward shared services models. In either case, an HR
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eTransformation effort will need to analyze alternative models and decide

whether it makes more sense to insource or outsource, centralize or
decentralize. Also, an eTransformation effort will impact existing HR
operations. For example, a series of customer-empowerment solutions will
eliminate the transactions that may currently be managed in a centralized
service center. The organization should have a plan for handling this change
and adjusting roles and staff accordingly.

Conclusion
Earlier, we looked at CRM, a trend in marketing that offers lessons for the
HR profession. Another, different trend is underway across the corporate
hallway in the IT group. This trend, too, offers lessons for the HR
profession. Recall that IT used to be focused on keeping the mainframe
running, fixing printers, and helping techno phobic workers solve software
and hardware snags. Today, much of that work is outsourced, and the Chief
Information Officer (CIO) has been charged with taking a strategic business-
planning role and working closely with the CEO to shape business direction.
The CIO's staff focuses on lines of business and other functional areas by
providing supportive technologies for the business strategy as it is cascaded
through the organization. Likewise, HR is shifting from being an
administrative, tactical, procedural, compliance-driven function to being one
that is more focused on developing strategic talent and supporting strategic
employee management and recruitment.
Will a Chief People Officer be the next role to emerge on the
organization chart? Such a role already exists in some organizations. The
eTransformation efforts that many HR groups are engaged in will certainly
help drive that change. To be successful, HR must focus on both dimensions
of eTransformation, empowering HR customers and enabling the new HR
professional. Simply launching Web-based solutions atop today's HRIS and
creating thousands of pages of Web content will not be effective. Great work
has already been done, but HR must get strategic and serious about what it
will accomplish.
Lloyd Wilky, Director of Employee Services at Honeywell, recently
reflected on his eTransformation work of the past few years: "The climb is
steep, but the view is spectacular. This is the best work that HR can be doing
right now." Let us begin the journey.

References

Dell. (2001, March). "HR Direct" Presentation.

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HR to the Power of 63

Hunter Group. (2000). Human Resource Self-Service Study.

Wilky, L. (2000). 1: I Relationship Management at Honeywell. Presentation to Conference
Board, October 4, 2000.