An Overview of HCM Business Processes

Human Resources Management is an important function in every organization. Without it, companies would not be able to effectively recruit and retain employees or maintain a healthy, accepting workplace.   In this episode, Lois Houston and Nikita Abraham, together with Cloud Delivery Lead Nigel Wiltshire, explore how employee management has evolved over time, the key functions within a Human Resources department, and the major players involved. They also look at the end-to-end business processes that are enabled by the Oracle HCM Cloud suite.   Oracle MyLearn: https://mylearn.oracle.com/ Oracle University Learning Community: https://education.oracle.com/ou-community LinkedIn: https://www.linkedin.com/showcase/oracle-university/ Twitter: https://twitter.com/Oracle_Edu   Special thanks to Arijit Ghosh, David Wright, Kris-Ann Nansen, Radhika Banka, and the OU Studio Team for helping us create this episode.   --------------------------------------------------------   Episode Transcript: 00:00 Welcome to the Oracle University Podcast, the first stop on your cloud journey. During this series of informative podcasts, we’ll bring you foundational training on the most popular Oracle technologies. Let’s get started. 00:26 Lois: Welcome to the Oracle University Podcast. I’m Lois Houston, Director of Product Innovation and Go to Market Programs with Oracle University, and with me is Nikita Abraham, Principal Technical Editor. Nikita: Hi everyone! Last week, we were joined by Bill Lawson, who gave us a wonderful overview of Oracle’s business process training. And today, we have another special guest, Nigel Wiltshire, who is one of our Senior Principal Instructors and Cloud Delivery Leads. We’re so lucky that Nigel has agreed to join us for a few episodes this season to tell us all about HCM business processes. Lois: Hey Nigel, we’re so happy to have you join us. 01:02 Nigel: Hi Lois. Hi Niki. Lois: I believe that today we’re going to discuss HCM as a concept and the typical processes that form the framework for a robust Human Resources operation. Let’s begin with the basics. For those that are not familiar with the acronym, what does HCM stand for? 01:19 Nigel: That’s probably going to be the easiest question to answer, Lois. HCM is “Human Capital Management.” The management of employees has been through many iterations and labels over the years. And back in the 1960s, 70s, and early 80s, the term “Personnel” was generally in use. Come the mid to late 1980s, this changed to the term “Human Resources,” which (rightly or wrongly) is interchangeably referred to as “Human Capital Management.” 01:47 Nikita: But why did the name change, Nigel? Nigel: In the days of “Personnel,” there wasn’t really any emphasis on managing and nurturing employees. It mostly centred around the simple task of recording the data necessary for the organization to operate. The thought process and the general concept of employee management has gradually changed for the better over the decades, and now goes beyond just a simple record keeping exercise. The “Personnel” regime tended to be reactionary, with actions only being taken when the situation necessitated it, whereas “Human Capital Management” focuses on proactive management, and by analyzing data, it’s possible to anticipate the need for action and even revise processes.  02:27 Nigel: Although the word “Personnel” describes a workforce quite adequately, accepting the “Human” and the “Resources” banners shows an acknowledgment of the humanity and value of a group of employees. Lois: OK. So you said the terms “Human Resources” and “Human Capital Management” are used interchangeably. Are there any differences at all to distinguish between the two? 02:49 Nigel: Human Resources Management primarily focuses on core administrative HR functions such as maintaining employee records and administering processes such as compensation, benefits, and recruiting. Human Capital Management is a broader term that includes the same Human Resources Management functions, as well as strategic functions such as analytics, planning, and performance management. Despite this distinction, most of us are a tad lazy and just lump everything under the same term. Some use Human Resources, some use Human Capital Management, some alternate between the two. 03:23 Nikita: Nigel, why do organizations need to manage their Human Capital? Nigel: Human Resources Management is a very important function in every organization. Without it, companies would not be able to effectively recruit and retain employees, improve, and enhance the organization, and they wouldn’t be able to maintain a healthy, accepting workplace culture and environment. Human Resources Management is so important to organizations that many call this function the heart and soul of the business. 03:51 Nigel: With a major shift from just focusing on the organization’s needs, to the needs and welfare of the employee, you end up with a happier and more productive employee. Many people are motivated by monetary awards, so a fair compensation package is paramount to the recruitment and retention of these employees. Others, whilst unlikely to work for free, are focused more on their contribution to the business and are interested in career development and progression. Therefore, a robust performance management and clear career path should be developed.  Whether an employee approaches their career from a monetary or a job satisfaction point of view, it’s all about “worth,” and an employee whose worth is satisfied is a happy employee and, therefore, more productive. So, organizations should be able to recognize that people are motivated by different things and have systems and processes in place to facilitate this, essentially bringing the best out of each employee. 04:46 Lois: That’s really interesting, Nigel. So, what are the key functions within a Human Resources department? Nigel: Human Resources is a broad subject and as such covers many functional areas. First and foremost is Talent Management. This is the recruitment aspect of the business. Efficient processes here ensure that vacancies are filled as efficiently as possible, by the best applicant identified for the job. The next is Benefits. For those employees that are motivated by cold hard cash, a robust benefits package ensures that employee retention is maintained at a high level, and that rates of attrition are minimized. This could be in the form of medical and/or dental insurance, Savings and Pension schemes, and even simple pleasures of life such as discount vouchers, a subsidized canteen, company-sponsored activities, Pizza Fridays, and last but definitely not least… free coffee on tap. 05:39 Nigel: Next, we have Absence Management, Time and Labor, and Payroll. These provide an efficient way to document the work performed by employees, and as a result the employee is paid what they are owed in a timely manner. It also encompasses the recording of time such as Vacation, Sickness, Maternity, Jury Service… to name just a few. Some of this time may result in the need to adjust the payments made to an employee, which is why it is included in this grouping. We also have Compensation and Rewards. I guess this is the more serious side of the money. Every employee wants to be paid what they are worth, for the job they do and contributions they make. The most basic way to compensate an employee, of course, is their regular salary. However, there are many other rewards and incentives that an organization can offer, such as bonuses, premium pay for working overtime or on a public holiday. Some rewards are based on the job that somebody does, such as Commission, which is a reward typically offered to employees in a Sales role, as an incentive to close deals. 06:43 The Oracle University Learning Community is a great place for you to collaborate and learn with experts, peers, and practitioners. Grow your skills, inspire innovation, and celebrate your successes. The more you participate, the more recognition you can earn. All of your activities, from liking a post to answering questions and sharing with others, will help you earn badges and ranks and be recognized within the community. If you are already an Oracle MyLearn user, go to MyLearn to join the community. You will need to log in first. If you have not yet accessed Oracle MyLearn, visit mylearn.oracle.com and create an account to get started. 07:24 Nikita: Welcome back. Nigel, you were telling us about all the functional areas within Human Resources… Nigel: As I was saying earlier, some employees are more motivated by job satisfaction and career progression, and the next two areas of HR speak more to them.  The first is Performance Management. This is where the organization manages the employee’s goals and performance reviews. A healthy and achievable set of goals focuses the employee into doing what they need to do to “get the job done” and to be evaluated on that work. And the second is Learning and Development. In order to progress in their current job, future career aspirations, and also personally, an organization needs to have a mechanism for employees to develop and grow, and to be nurtured in order to not only bring the best out of them, but also to ensure interest in being employed by the business is retained. 08:13 Lois: Yep, we all want that… Nigel: Exactly. And finally, we have Human Resources Planning. In order for larger organizations to thrive, a robust resourcing plan is required. This is generally split into two parts. The first of which is to make sure that each part of the business is resourced according to the workloads. For example, in the retail, manufacturing, and care hospitality industries, workloads are based on “shifts,” so it is incumbent on the management team to ensure that each shift is staffed adequately, by planning ahead as well as reacting to the odd curve ball when an employee cannot work due to unpredictable circumstances, like sickness. 08:52 The second part of this function lies with the prediction of possible staff movement and ensures that each part of the business can maintain operational. In some parts of the organization, it may not be imperative for you to be proactive, but in others, this will be the case. We can address this in many ways. The main ones include fostering relationships with employees, which will encourage them to not seek employment elsewhere, and to create Succession Plans or Talent Pools, which will ensure that other employees are nurtured and developed to such an extent that they are able to step up and progress to a vacant position if the need arises.  09:27 Nikita: Wow, you’re right, Nigel. There are actually quite a lot of functional areas within HR. I’m guessing all this is not performed by the same person, right? So, who are the key players here? Nigel: You are most definitely right there, Niki. This would be way too much for one person. However, that does depend on several factors, such as the size of the organization, the complexity of the processes developed, and the knowledge and experience of the people performing the duties. For example, in a small business, the number of employees to manage would be minimal and the processes put into place might also be minimal, which might be down to the fact that some processes and record keeping is outsourced to reduce the HR department’s wage bill. It could also be that the person employed to run the HR department is deliberately selected because they have experience with a wide range of functions. 10:16 Nigel: That said, it is more typical, especially for larger organizations, to have lots of employees working in the HR department, and the work they do is based on their area of expertise. For instance, managing Payrolls is a very specialist subject and as such it’s not unusual to see that as a separate “sub department” within HR. Of course, not all the work has to be undertaken from within the HR department itself. For the last 25 to 30 years, there’s been a shift towards Self Service. This means that some of the onus to enter and maintain data is placed firmly with the employee themselves. For instance, if an employee moves house or changes their phone number, it’s up to them to update that information in the system. If they wish to take a vacation, again it is up to them to enter and submit the request for consideration. 11:04 Nikita: Ya, that’s what we do… Nigel: Yeah right. And there’s the employee’s Line Manager whose job, from an HR point of view, is to ensure that the employee is keeping the relevant information up-to-date, and to respond to requests made by the employee, such as the previously mentioned vacation requests. In some organizations, it’s even the responsibility of the employee’s Line Manager to initiate data changes for things like Promotions, Salary Increases, Bonus Awards, and some general Assignment changes, such as working hours. So, we talked about the HR Specialists, the employees, and their line managers. The last group to play their part is the senior managers and directors. Some of them will be involved in overseeing the day-to-day operations within the HR function, such as the HR Manager, Payroll Manager, Compensation Manager, etc, whilst the most senior will have their influence centred around the more strategic side of the house...  the planning, the budgeting, the head counts, etc. and often form the buffer between the HR department and the Executive team. 12:04 Lois: So Nigel, let’s get down to the nuts and bolts of the HCM business processes. You spoke about all the functional areas that make up HCM, but is there a way to group these functional areas and the processes they encompass? Nigel: Absolutely, Lois. Within HCM, there are four main life cycles… Applicant, Employee, Rewards, and Talent. We’re going to be talking about each of these in a lot more detail in our upcoming episodes, but to whet your appetite, let me give you a brief synopsis of those life cycles, the processes they include, and how they interact with each other. 12:38 Nigel: So let us start with the Applicant Life Cycle. As you can imagine, this is the start of the whole HCM process. We need to identify vacancies within the organization, and subsequently seek out suitable applicants to fill those gaps. There’s a single process within the Applicant Life Cycle that we call “Recruit to Onboard,” which essentially is the whole recruitment campaign, right up to passing them over to HR so they can be converted from an applicant to an employee. At that point, the Employee Life Cycle kicks in. Each employee needs to be managed throughout their time with the organization, which may include Promotions, Transfers, basic assignment changes such as Line Manager Change, or Grade, to name just a couple. We call this the “Hire to Retire” processes. 13:23 However, it doesn’t stop there. The processes also include the need to manage absences and the subsequent return to work, which we call “Absence Planning to Productivity” and even the employee’s termination with the business should they wish to move on, called “Employee Separation to Workforce Analysis.” This leads us directly to the Rewards Life Cycle. 13:42 Lois: And everybody loves rewards! Nigel: Haha! There are four business processes included with this one. The first of which is “Benefits to Payroll,” which takes you through the mechanics of setting up benefit programs, which pass through to payroll, so that appropriate deductions can be made for the employee contributions. Then they have “Time Collection to Payroll.” This is where the employee records their worked time through various mediums such as Time Cards, Card Readers, Biometric Scanners, Web Clocks, and so on, which again are passed to payroll for processing and payment. We can’t forget the “Payroll to Payment” process, as this is the main one that works out the net pay that each employee should receive. Now, as we have already alluded to, the information for this comes from many sources, including Benefits, Compensation, and of course Payroll directly. 14:30 Nigel: The final process in this life cycle is “Reward Planning to Targeted Compensation.” I just mentioned that the information for payroll processing can come from many different sources, right? One of those is Compensation, but there is a whole set of activities that constitutes Compensation. We have to consider the employee’s base salary, we have to consider whether there are any ad hoc rewards that an employee can receive, and we also need to consider if there is a mechanism for managers to use a spreadsheet to award such compensation as Merit Increases and Bonuses, including the need to set budgets and awards based on models; for example, a percentage increase based on the employee’s performance review score. The final life cycle is Talent. This encompasses all aspects of developing and assessing employees and includes processes for “Goal Setting to Performance,” “Talent Review to Succession,” “Career Planning to Development,” and “Employee Insight to Work Life Balance.” 15:26 Nikita: Thank you, Nigel, for taking the time to give us these insights into the world of Human Capital Management. We’re really looking forward to you taking us through all the different HCM life cycles. To learn more about HCM business processes, visit mylearn.oracle.com. Lois: So, next week, you’ll be back with us to dive into the Applicant Life Cycle, which is the first HCM life cycle. Until then, this is Lois Houston… Nikita: And Nikita Abraham, signing off! 15:52 That’s all for this episode of the Oracle University Podcast. If you enjoyed listening, please click Subscribe to get all the latest episodes. We’d also love it if you would take a moment to rate and review us on your podcast app. See you again on the next episode of the Oracle University Podcast.