Saving trees and serving up benefits

When it comes to IT spending at retail companies, the human resources function has been something of a stepchild. It’s had to get in line behind the competitive resource demands of customer-facing web site bells and whistles and back-end systems that manage inventory and logistics. But as retailers poke into every corner of their operations to find savings and boost margins, the web is slowly emerging as HR’s new best friend.

It can reduce the load on the human resources staff who spend hours getting answers to the same questions for employees over and over again by putting that information online. And by streamlining communication between workers and the company, it also can support strategic objectives such as employee retention, those using it say.

Hannaford Bros. Co., a grocery store chain in New England and New York, will this summer roll out HR self-service in its 115 stores, using an HR solution from Lawson Software Inc. and Compaq Computer Corp. in-store kiosks. Employers will be able to use either web-enabled kiosks in the stores or home PCs to access and update personal information on file, making changes to name, address, emergency contacts and insurance beneficiaries or even changing their tax withholding information. “If we can provider better ‘customer service’ to our associates, if they can view their pay and benefit information online and answer their questions themselves, they’ll be happier and therefore less likely to leave,” says Bill Punsky, human resources information services manager.

250,000 faxes

Hannaford Bros. HR managers in each store already are able to access each employee’s personal information from their own desktop PCs, which speeds up their ability to answer employees’ questions. In the fall, the company will add functionality that lets employees complete benefits enrollment online, a labor-intensive task at most large companies as forms with current information must be collected for every employee in what’s generally a two- or three-week enrollment period.

Hannaford Bros. hopes the new system will eliminate as many as 250,000 HR-related faxes a year and will reduce employee turnover—at about 60% annually, already under the industry average—by another 2.5%, Punsky says. “This also will present information in a much more user friendly format—it will be less frustrating than going through some of the mechanisms we have today,” Punsky says.

Cost-savings and employee retention were both top of mind at regional discount retailer Ames Department Stores Inc. when it launched Planet-Ames.com, an employee portal from provider Plumtree Software Inc. With 23,000 employees, Ames looked to the web to help break a paper chain of internal communications. It has moved policy and procedure manuals as well as HR FAQs online, saving paper, printing and distribution costs. The portal is also streamlining the in-house job applications process. Jobs once posted on bulletin boards are now posted online, saving administrators several hours weekly in updating the boards.

“Letting employees view in-house job opportunities in the portal increases privacy, making for more satisfied workers in addition to saving time,” says human resources manager Gail Gagnon. “The portal helps ensure that professional choices aren’t public events.” Gagnon adds that the portal also helps retain employees by linking them to resources that promote a healthy work/life balance. “Our portal brings together links to corporate discounts, volunteer opportunities, and a variety of support networks, raising morale,” she adds.

At Best Buy Co. Inc., another Plumtree installation, the corporate portal offers self-service for employee information and benefits information. Employees can use desktops or in-store kiosks to view their own salary and job description and history. On the benefits side, they can access and change enrollment information from home PCs as well. “It’s eliminated a lot of paper and manual entry both on the employee and the benefits administrator side,” says customer relations manager Laurie Roach. “By automating the process, our employee data is more timely and more accurate. And if employees want to know what their own HR data is, they can look online instead of having to call their HR representative.”

$525 a year each

For retailers and other companies with a lot of employees, and a lot of HR and benefits forms to handle, web-based self-service is a tantalizing prospect. Studies have shown that anywhere from 50% to 70% of an HR department’s time is spent in administrative tasks such as distributing forms and seeing that they are filled out and entered into the right system.

“You don’t need someone with a college degree to do that,” says Monica Barron, senior analyst with AMR Research Inc. “Yet estimates are that by the time the forms are passed around, approved, and the data entered, it can cost up to $35 per transaction. At an average of 15 transactions per employee per year, do the math, and you can see that you’d like to start moving some of this out to self-service on the Internet.”

Workscape Inc., a provider of HR and benefits corporate portals and software, says the cost of distributing and filing a paper HR form is $20 to $30, depending on its complexity. Interactive voice response through an automated phone system may cut the cost of the transaction to $2 to $4, while going online can reduce the cost of the same function to as little as a nickel or a dime.

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The economic benefits of online HR should come as no surprise to Internet retailers, who’ve already discovered the value of customer self-service online. Buy.com Inc., for example, has deflected 23% of customer e-mails that would otherwise require expensive live help by beefing up interactive self-service technology in the help area of its web site. That reduced customer service costs from 2% to less than 1% of revenues.

Using the web for HR functions can show many of the same benefits. “It’s similar to what they are trying to do with customer self-service,” says AMR’s Barron. “For example, employees would first see if they could find their own answer online. If the matter is too complex, they might be able to send e-mail to HR and receive back either an e-mail answer or a request that they call. You can move through different levels of service, but the more you can move out to the Internet, the less expensive it’s going to be.”

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.”

mary@verticalwebmedia.com