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Enterprise Resource Planning

ERP Systems: Human Resources

Prof. D.G. Jha / Prof. Pratima Dabholkar


Examine the HR processes supported by ERP Understand the interrelationships among business processes supporting human resource management


What does a companys strategy consist of ? Company strategies concern, How to grow the business
How to satisfy customers How to out compete rivals How to respond to changing in market conditions How to manage each functional piece of the business and develop needed organizational capabilities How to achieve strategic and financial objectives

Manufacturing Organizations are complex `Systems' where the interactions between the various functions Sales, Distribution, Manufacturing, Materials, Finance, Human Resources, Maintenance have to be managed towards a common purpose of delivering the customers maximum value at the optimum price. However, since most of these organizations have a `Functional Structure', each function/department works towards their own goals and objectives, rather than the organizational goals. These are the issues addressed by `Enterprise Resource Planning' software solutions providing a common, consistent system to capture data organization wide, with minimum redundancy.

What is ERP?
ERP integrates the information across functions, and provides a set of tools for planning and monitoring the various functions and processes and ensuring progress towards a common purpose A business management system that integrates all facets of the business, including planning, manufacturing, sales, and marketing. ERP helps business managers to implement ERP in business activities such as inventory control, order tracking, customer service, finance and human resources

Human Resources Problems

Maintaining accurate employee information Job analysis and design Applicant selection Compensation Benefit administration Training Governmental reporting

Evolution of HR Systems
Traditionally relied upon stand-alone systems
Specialized applications for applicant tracking, compensation, benefits, attendance
Redundant data

No link to financial systems

Linked to financial systems Best practices

HR Modules
Integration Common database
Provide audit trails

Scalable and flexible Workflow management for electronic routing of documents and other document management Process standardization Security User friendly and web-accessible


Human Resources Management

Management Managers Evaluations Compile Merit Evaluations & Salary Changes Management Reports Merit Produce Management Employee Reports Employee Summaries Government Produce Government Reports EEO Data Employee Data Files Job & Applicant Data Screen Jobs & Applications


Merit & Salary

Government Reports

Process Payroll Benefits Vacation Employee Data Employees

Employee Data

Sales Data & Commission Customers

Applicant Data Job Applicants

Human Resource Module ERP

Human Resources is another widely implemented ERP module. ERP HR module streamlines the management of human resources and human capitals. HR modules routinely maintain a complete employee database including contact information, salary details, attendance, performance evaluation and promotion of all employees. Advanced HR module is integrated with knowledge management systems to optimally utilize the expertise of all employees.

Human Resource Module ERP

ERP HR modules, refers to the systems and processes at the intersection between human resource management (HRM) and information technology. On the whole, these ERP systems have their origin on software that integrates information from different applications into one universal database. The linkage of its financial and human resource modules through one database is the most important distinction to the individually and proprietary developed predecessors, which makes this software application both rigid and flexible.

Human Resource Module ERP is a component The HR management module

covering many other HR aspects from application to retirement. The system records basic demographic and address data, selection, training and development, capabilities and skills management, compensation planning records and other related activities. Human resource management function involves the recruitment, placement, evaluation, compensation and development of the employees of an organization. Initially, businesses used computer based information system to:
Produce pay checks and payroll reports; Maintain personnel records; Pursue Talent Management.

The most advanced modules provide broad flexibility in data collection methods, labour distribution capabilities and data analysis features. Cost analysis and efficiency metrics are the primary functions. The Benefits Administration module provides a system for organizations to administer and track employee participation in benefits programs. These typically encompass, insurance, compensation, profit sharing and retirement.

Human Resource Module ERP

Example ERP HR Module

HR processes

IT resources

payroll programs, personnel files, health plan documents, recruiting, Servers & networks, etc.


Human Resources
Recruiting Compensation Assessment Development and Training Planning


Human resource management is an essential factor of any successful business. The various subsystems under HR module are: Organizational management: (Organizational structure, staffing, schedules, job descriptions, planning scenarios, personnel cost planning) Personnel management: (HR master data, Personnel administration, information systems, recruitment, travel management, benefits administration, salary administration) Payroll Accounting: (Gross/net accounting, history function dialogue capability, multi currency capability, international solutions) Time management: (Shift planning, work schedules, time recording, absence determination) Personnel development: Career and succession planning, profile comparisons, qualifications assessments, additional training determination. Training and event management.)


This module will assist you in maintaining an accurate picture of your organizations structure, no matter how fast it changes. In many cases, graphical environments make it easy to review any moves, additions, or changes in employee positions. Department and Position Details


Human Resources with ERP Software

Figure 6-3 Relationships among positions, jobs, tasks, and persons who fill positions

Organization Chart


Sample Resource Histogram



Personnel management includes numerous software components, which allow you to deal with human resources tasks more quickly, accurately and efficiently. You can use these components not only as part of the company wide ERP solution but also as stand alone systems.

i. Personnel Administration Information is no longer owned by specific departments, but is shared by multiple entities across an organization. This eliminates duplicate entries reduces the chance for error and improves data accuracy.

ii. Employee master data Human resource module has a centralized database with integration to multiple components for processing employee information. The system provides tools to save time and help you tailor the system to fit your needs. The HR module contains features for storing any desired information about your employees. Most systems have the facility to scan the original documents for optical Storage. The HR Information system displays graphical information such as organization charts or employee data. The system can produce charts and reports-both standard and customer defined. iii. Recruitment management This function helps in hiring the right people with the right skills. Reducing the cost of recruiting and hiring new employees is a challenge for the HR professional, who is responsible for placing people in the right job, at the right time, and with the right skills and education. These requirements are fulfilled only through effective automation of the entire recruitment process. The recruitment component is designed to help meet every facet of this challenge like managing open positions/requisitions, applicant screening, selection and hiring, correspondence, reporting and cost analysis.

iv. Travel Management This module helps you in processing the travel expenses effortlessly, in several currencies and formants. HR Travel management allows you to process a business trip from start to finish-from the initial travel request right through to posting in financial accounting and controlling. This includes any subsequent corrections and all retroactive accounting requirements. Travel management automatically calculates the tax. It automatically processes credit card transactions for a particular trip. You reimburse costs incurred during a trip through a payroll accounting, accounts payable accounting. In addition, Travel management provides multiple report formats. You can enter receipts in any currency and then print reports in your native currency.

Benefits Administration Using the benefits administration component, we can define eligibility groups and rules based on a wide range of factors. We can determine the variables, rules and costs formulas for each benefits plan. Salary Administration This function helps you in simplifying the process of rewarding your employees. Administration of salaries is an ongoing process within your human resource department. It is particularly important during the review processes, when your goal is to justify reward good performance. The salary administration module assists you in the salary review process.

HR & Payroll

1. 2. 3. 4. 5. 6. 7. 8.

Personnel Information (Qualifications, Experience, details) Employee Profile (Performance Rating, History, Promotions) New Hires Vacation/Holiday/Leave Management Monthly salary based on TLM and Vacation & Leave Management Bonuses Compensations Deductions Loan Advances

Time & Labor

1. 2. 3. 4.

Integration With Bio-Metric/Swipe Card Devices Schedules/Shifts of Employees Process Data to Generate Time Card with Overtime Variance Reports


Benefits Admin

1. 2. 3. 4. 5.

Generates reports for the total sums to be paid towards Bonuses Provident Fund ESI Insurance Professional Tax


Employee Master


The payroll accounting system can fulfill the payroll requirements and provide you with the flexibility to respond to your changing needs. Payroll accounting should address payroll functions from a global point of view. You should be able to centralize your payroll processing, or decentralize the data based on country or legal entities. Most payroll accounting systems give you the options and capabilities to establish business rules without modifying the existing payroll. Many systems have the features to remind you when transactions are due for processing. With payroll accounting, you have the ability to tailor the system to your organization requirement. With country specific versions of payroll accounting, you can fulfill language, currency and regulatory requirements.


It is a flexible tool designed to handle complicated evaluation rules to fulfill regulatory requirements and determine overtime and other time related data. The time evaluation component stores your organizations business rules and automatically validates hours worked and wage types.

Shift Planning
Shift planning module helps you to plan your workforce requirements quickly and accurately. You can plan your shifts according to your requirements taking into consideration all criteria, including absences due to leave or sickness, and employee requests for time off. Shift planning keeps you informed at all times of any staff excess or deficit. Another advantage of shift planning is that it enables you to temporarily assign an employee or employees to another organizational unit where they are needed, allowing for a temporary change of cost centre.

Effective personnel development planning ensures that the goals of the organization and the goals of the employee are in harmony. The benefits of such planning include improvements in employee performance, employee potential, staff quality, working climate and employee morale. i. Training and Event Management A good HR system will have scheduled seminars, training courses and business events. On completion of a training course, appraisal forms can be automatically issued. Appraisals can be carried out for instructors, attendees, business events and training

Financial Accounting Information System (FAIS) Payroll System

Financial Accounting Information System (FAIS) (PAYROLL-Maintaining Individual Details)

Financial Accounting Information System (FAIS) (INCOME TAX)

Financial Accounting Information System (FAIS) (INCOME TAX)

Financial Accounting Information System (FAIS) (INCOME TAX)

Financial Accounting Information System (FAIS) (PF-Maintaining Individual Details)

Financial Accounting Information System (FAIS) (PAYROLL-Payslip in ENGLISH)

Financial Accounting Information System (FAIS) (PAYROLL-Payslip in HINDI)

Financial Accounting Information System (FAIS) (BUDGET)

Financial Accounting Information System (FAIS) (BUDGET)

Financial Accounting Information System (FAIS) (BUDGET)

Financial Accounting Information System (FAIS) (INCOME-EXPENDITURE)

Financial Accounting Information System (FAIS) (RECEIPT-PAYMENT)

Financial Accounting Information System (FAIS) (BALANCE SHEET)

Financial Accounting Information System (FAIS) (RECEIPT-PAYMENT)

Financial Accounting Information System (FAIS) (INCOME-EXPENDITURE)


Personnel management
HR master data Personnel administration Information systems Recruitment Travel management Benefits administration Salary administration

Payroll accounting
Gross/net accounting History function Dialog capability Multi-currency capability International solutions

Time management
Shift planning Work schedules Time recording Absence determination Error handling

Organizational management
Organization structure Staffing schedules Job descriptions Planning scenarios Personnel cost planning


Personnel development
Career and succession planning Profile comparisons Qualifications assessments Additional training determination Training and event management

Other features
SAP Business workflow Internet scenarios Employee self-service

Additional Human Resources Features of SAP ERP

Mobile time management Management of family and medical leave Domestic partner handling Administration of long-term incentives Personnel cost planning Management and payroll for global employees Management by 54 objectives

Mobile Time Management

Many employees may not have regular access to a PC Mobile Time Management allows employees to use cellular phones to:
Record their working times Record absences Enter a leave request Check their time charge data

Management of Family and Medical Leave

Human Resources module reduces administrative burden imposed by Family and Medical Leave Act (FMLA) of 1993 HR system can:
Determine whether an employee is eligible to take FMLA absences Automatically deducts those absences from the days the employee takes from allowable leave 56

Domestic Partner Handling

Human Resources module now supports the management of benefits for domestic partners and their children Provides more flexibility in:
Customizing dependent coverage options for health plans Eligibility for enrollment of dependents Designation of beneficiaries

Administration of Long-Term Incentives

Companies must account for expected costs that occur as a result of long-term incentives such as the exercising of stock options Human Resources module now provides more options for processing long-term incentives Integration with SAP Payroll module Can calculate taxes accurately when employees exercise incentives and sell their shares in the company SAP can share incentive data with Accounting

Management and Payroll for Global Employees

Management of global employees involves many complicated issues
Relocation plans, visas and work permits, housing, taxes, bonus pay

SAP ERP has enhanced features to support the management of these issues
Customized functionality for more than 50 countries

Management by Objectives

Management by objectives (MBO)

1954: first outlined by Peter Drucker in The Practice of Management Managers encouraged to focus on results, not activities, and to negotiate a contract of goals with their subordinates without dictating the exact methods for achieving them

SAP ERP provides a comprehensive process to support the MBO approach

Performance appraisals Appraisal results can affect employees compensation Managers can include results of achieved objectives in the employees qualifications profile



Employees are among a companys most important assets

Without qualified and motivated employees, a company cannot succeed

Human Resources department responsible for:

Ensuring that the company can find, evaluate, hire, develop, evaluate, and compensate the right employees to achieve the companys goals Employee training and development, succession planning, and termination

Managing, sharing, controlling, and evaluating the data required to manage a companys human capital are simplified by an integrated information system Additional features of SAP HR systems address todays changing technology and legislation