Technology and web-based applications are giving corporations operating in the global markets the opportunity to develop practical and cost-efficent strategies to manage their human resources departments worldwide.
As workforces increase in numbers, the need to set up global networks to deal with employee-related tasks is now more important than ever. The web seems the best solution to achieve best practice as well as cost savings.
When it comes to creating an efficient e-HR business, Cisco Sytems
is a good example to take into account. Cisco has been the fastest-growing company in the history of Nasdaq. In 1994, the company had 1,500 employees and made $1bn in sales. Today, the company employs more than 27,000 employees and operates in around 90 countries worldwide. With these
figures, finding a way to manage their HR department in the most cost-efficient and comprehensive way has been one of the firm’s main targets.
With around 85% of all the internet traffic flowing across Cisco’s equipment, the company has been a leader in developing the internet. This expertise has been succesfully translated into HR management.
In 1994, and as part of Cisco’s network, an intranet website was developed. This application, the Cisco Employee Connection (CEE) is limited to information and services that address employee needs. Apart from services related to recruitment, marketing, sales, training and other facilities, Cisco’s employees can also access information on employee benefits and compensation plans.
Cisco’s employee benefits include stock purchase plans, a 401(k) saving plan (for US employees) and several flexible plans, including health care cover and life insurance. The CEE allows employees to enrol for this program on the web as soon as they are hired.
The system delivers up-to-date information and services to networked employees, anywhere in the world.
The cost of developing the whole of Cisco’s network system was $100m.The workforce optimisation system, which includes the CEE, cost around $25m on its own. The process, which is still under way, has saved the company around $75m a year through both reduced costs and improved productivity.
“In terms of developing an efficient e-HR structure Cisco can certainly be seen as a benchmark,” says Andrew Davis, consultant at William M Mercer in London. “But a lot of companies are doing important things in this area.”
Davis says that more and more companies are developing similar systems to make HR management easier and cheaper. In terms of managing employee benefits using web-based applications, he notes that this is being widely developed by many companies, in particular when it comes to dealing with employee pension arrangements.
“If we focus on the area of pensions, we see a lot of companies building up internet access to their schemes in
collaboration with software houses with experience in producing applications for corporate pensions departments,” Davis says.
However, giving detailed information related to individual member accounts is still difficult, especially in the investment area. “I think that giving specific information on individual accounts through the web is still quite complicated,” he says,
“Regarding this, I would say that there are three different levels of implementing these strategies.” He continues: “Usually, what most companies are providing through the web is basic static information about the pension schemes, including annual reports and details about the board of trustees and how the scheme works. Members can access online benefit statements, which might be updated once or twice a year, but sometimes it’s just means to see on the screen what you already have in paper.”
According to Davis the second stage would be to be able to do modelling and benefit projections. “This is particularly targeted to DC schemes and allows employees to make future projections about their pensions, and this is something that a lot of companies are already offering.”
The last stage of development of pension management through the web would be when employees can actually make investment decisions and change investment strategies on screen. “This is quite a complicated area but it’s already a reality and it will certainly be the way forward,”says Davis.
The web will be the natural habitat for the development of DC schemes and investment choices for scheme members, since using the possibilities of online tolls seems to be the best option to offer good service while keeping costs down.
As technology changes so fast the most sensible approach for those wishing to develop this type of system might be to look at those who have already been there, instead of trying to desing new solutions from scratch. However, each company has to define its priorities and adapt what has already been done elsewhere to its specifc needs.
“What Cisco has done is very significant and you certainly can get a lot of ideas from companies like that,” Davis says. “But repeating those ideas in your own company won’t necessarily work.”