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That’s assuming, of course, that the necessary infrastructure is in place. Companies can deliver online HR self-service to workers through a broader multi-function corporate portal of which HR is just one element. Or they may choose a more narrowly defined workplace or employee management-focused portal and software solution. Depending on what they already have in place, which approach they choose and what functionality they want to offer to employees, retailers can expect to pony up accordingly in buying packaged solutions for training, software, hardware, installation and internal communication to introduce workers to online HR services before they can start counting up any cost savings.
Riding on other apps
Retailers who have moved into online HR self-service are playing it close to the vest on the total cost of implementation. An independent ROI study on AmeriKing Inc., a Plumtree client, provides some basis for comparison. With 376 restaurants and more than 13,000 employees in 12 states, AmeriKing, Burger King Corp.’s largest franchise holder, faces the same challenge of communicating with a large, constantly changing and widely distributed workforce that major retailers do.
Total three-year costs for Ameri-King’s corporate portal, which went live in January 2001, were projected at just over $411,000, with more than half of that investment in the first year of the project. The cost estimate included everything from the cost of internal resources such as training, administration and maintenance, to outside professional services, to software licenses and equipment.
Factoring in projected benefits from both increased productivity and cost avoidance from the use of the portal, the study forecast the three-year return on that investment at 355%. The projected ROI covers all functions of the portal, which go far beyond employee-focused benefits functions to include the dissemination of corporate news, sales reports, and other information. HR forms are currently view-only, but AmeriKing expects to add interactive capacity that will allow employees to request and fill out forms with personalized information by the end of this year.
A further benefit is that the need to mail paper has gone down significantly since it installed the portal. AmeriKing’s 70,000-document library already existed in electronic form at corporate headquarters before the Plumtree portal was implemented. The problem was that managers outside of corporate headquarters had limited ability to access files and reports in the system; headquarters had to print and mail a lot of documents to the field. Now, mangers can access that information directly from their desktops. AmeriKing says having a portal has reduced its paper generation by 20,000 pages a year.
Software and installation to support more narrowly defined HR self-service can cost considerably less than what AmeriKing paid for its full-featured corporate portal. Hannaford’s Punsky isn’t saying what implementing web-enabled HR self service is costing the company, though the break-even point has been moved farther into the future a couple of times in the two-year life of the project due to unanticipated setbacks. That highlights the fact that HR self-service via the web is still new ground for most retailers.
Even with 115 stores, Hannaford Brothers is a small company compared to others who are in the lead in pushing HR functions out onto the web. To date, it’s more often been the province of retail giants such as Staples Inc. and Kmart Corp. “You need a critical mass of employees to justify this. Once you get into the mid-market, it’s harder to justify,” says Barron, who places that threshold at around 500 employees, depending on the extent to which they are spread out among different locations and on which HR applications the employer wants to put online.
The human factor
But analysts note that a focus on cost-saving doesn’t cover every element companies should consider when deciding whether to push HR functions into self-service on the web. In fact, some should continue to keep in mind the function that a live HR person in a store serves. Barron cites one client, a supermarket chain that was looking for cost savings and wrestling with those very questions. The company had one HR manager in each store whose job was to answer questions about HR and benefits.
The company realized that in-store HR managers were filling another job as well: they were mirrors on the employees’ state of mind and they provided feedback on what the company could do to retain and motivate workers. “It seemed important to have that person in each store, listening to employees, resolving issues before they got out of hand, particularly given the company’s goal of remaining a non-unionized organization. Did they really want to pull that person out of the store?” Barron says.
Aside from political considerations, though, the possibilities for web-enabled HR, from a technology standpoint, are almost without limit. “The web can handle almost anything employees need to do on paper today, from something as simple as changing their address to asking about their benefits coverage and what it means,” says Barron. “It’s very easy to do online.”