DELIVERING COST-EFFECTIVE COMPLIANCE SYSTEMS

The third part of HR management being a strategic business contributor is to deliver HR services and activities in a cost-effective manner that ensures compliance with applicable laws and regulations. Based on a study of HR’s role in organizations, the study results show that the greatest amount of time and costs of HR management are concentrated at the administrative level. However, HR management adds the greatest value at the strategic level, and the administrative activities produce a limited value for the organization. Two

aspects that must be considered in this area are legal compliance and administrative systems.

ENSURING LEGAL COMPLIANCE Over the past thirty years numerous laws and regulations have been enacted at national, state, and local levels. Every year these regulations have been expanded due to regulatory actions and judicial decisions.

As a result, considerable time and effort must be spent by HR professionals and other managers in organizations ensuring that compliance with HR-related laws

and regulations occurs. Just to name a few, consider the following areas that must be managed daily by HR staff members.

l Equal employment l Family/medical leaves

l Sexual harassment prevention l Safety and health management

l Health benefit portability l Union contract grievances

l Pension compliance reporting l Disability accommodations

The role of HR is to ensure that the organization and its managers and employees know of these regulations, and that HR management reduces the legal liabilities and complies with the myriad regulations. With more and more people willing to file lawsuits, and more government enforcement agencies inspecting HR practices in organizations, it is crucial that HR management be done in ways that reduce the legal exposures faced by the organization.

DEMONSTRATING ADMINISTRATIVE EFFICIENCY A final part of HR management is

to deliver HR services and activities in a cost-effective and timely manner. Many HR professionals are aware that there is too much “administrivia” affecting HR. One study of senior-level HR executives found that 59% of their time is spent on administrative matters, and only 6% is spent on strategic issues with the remainder being operational in nature. But the HR executives indicated that they would rather spend only 6% on administration and 92% on strategy. Three trends in this area are currently affecting HR delivery systems.

First is the growing use of information systems to replace the manual record keeping and processing of HR data. There are numerous federal, state, and local laws requiring that organizations keep many different records on employees. The requirements are so varied that it is difficult to identify exactly what should be kept and for how long. Generally records relating to employment, work schedules, wages, performance appraisals, merit and seniority systems, and affirmative action programs should be kept by all employers who are subject to provisions of the Fair Labor Standards Act (FLSA). Other records may be required on issues related to EEO, OSHA, or the Age Discrimination Act. The most commonly required retention time for such records is three years. Throughout the book, details on the most important laws and regulations are presented in appropriate content sections.

Second, rather than HR information being centrally processed and controlled, it has been more dispersed, so that managers and employees can access HR data

themselves. The distribution of HR information has changed dramatically as a result of the widespread usage of e-mail, the Internet, distributed information processing, and other technology. However, with wider access has come the need for greater security to protect employee privacy of certain types of data and to preserve the integrity of the data from improper alteration.

A third trend is the growing use of outsourcing of HR activities. Increasingly, HR departmental functions are being examined to determine if outside providers can perform them more efficiently and at lower cost than when done internally.

Not reflected in those figures is the large number of employers that have outsourced payroll administration, which is often done by HR or accounting staff members. In summary, HR professionals must cost-justify their existence and administratively deliver HR activities efficiently and responsively. Otherwise, HR management is seen as a cost center that does not produce results for the organization.