Vendors are pitching enterprises on the idea of using e-business technology to improve their relationship with employees. As usual, a number of labels--including employee relationship management (ERM), business-to-employee (B2E), and human capital management (HCM)--have emerged to brand this concept. Regardless of what you call it, there's no clear evidence whether this concept offers anything new.
ERM isn't an application category so much as it is a point of view. ERM throws a conceptual umbrella over disparate tasks, such as disseminating corporate communications, handling expense reports, selecting benefits, preparing performance appraisals, recruiting, and training. The common thread is that all these tasks touch the employee in some way. The realisation that "maybe we can use the Internet to pull all these tasks together and present them to employees in a way that's convenient and meaningful" basically describes ERM.
From a technology perspective, ERM is just a portal aimed at employees. Using a browser, employees can access corporate information, services, and applications. The applications exposed within the portal aren't new either, having already been addressed by numerous enterprise software vendors. For example, most major ERP packages already handle human resources functions such as managing payroll or allowing employees to choose benefits options. "Employee relationship management is just a human resource management system respun by some PR guy," says IDC Vice President Dennis Byron.
An employee-oriented portal does offer benefits. Automating tasks--such as answering benefits questions; filing expense reports; handling payroll; purchasing office supplies and other indirect goods; recruiting; and training--should yield efficiencies by reducing headcount, streamlining processes, and reducing errors. Productivity gains probably pay off even more for managers than employees, according to David Rhodes, a principle of human resources consulting firm Towers Perrin. "It frees up managers to spend more time with customers and other strategic concerns by reducing the amount of time they spend on performance appraisals, compensation plans, and other administrative tasks," he says.
But ERM's biggest selling point isn't higher productivity--it's improved communications with employees. At the most basic level, a well-designed portal can improve morale and employee retention. "Employees are using the technology and they are saying it is now easier for me to get my job done, get my investments, fill out my benefit forms," says Rhodes.
Employee portals are especially useful to companies with large numbers of employees scattered across different locations and divisions. "A lot of companies are big and highly fragmented," says Paul Hamerman, Giga Information Group research director. He cites Hewlett-Packard as an example of a company that used a portal to communicate with employees in a consistent way.
Enterprises can also use portals to filter information and applications to specific people. For example, managers and staff would have different access to performance management applications and information.
An employee portal is also a good way to reinforce the corporate identity and strategy. "The portal is a great way to demonstrate the brand to employees," says Rhodes. The portal can even be used to align employees with corporate strategy. "The company can use the portal in a process that revolves around employee interaction with customer data," says AMR Research Vice President John Hagerty. "So, an engineer looking for information about customer requirements would go to the ERM portal."
All this makes sense, but don't be fooled when it comes to new terms like ERM or B2E--it's just an employee portal. There is certainly merit in creating a portal that gives full consideration to the relationship between an enterprise and its employees. However, creating a portal that handles human resources processes isn't easy because it involves emotional decisions such as hiring, firing, job performance, promotions, and compensation. Having a convenient new marketing term to describe it doesn't make those decisions any easier. CIOs and other IT managers should be especially careful about creating an environment that handles the full spectrum of an enterprise's interactions with employees.
"Handling HR issues is very different than other transactions," warns Rhodes. "There's no resemblance to things like CRM and it must be done with great care otherwise it will backfire. HR is about the messiest thing of all--people."
