Discussing in detail the many processes related to Human Resources is beyond the scope of this article; however, some of the advanced features of the Human Resources module in the SAP ERP system, including time management, payroll processing, travel and training coordination, are discussed below.
Hourly employees, who are paid for each hour worked, must record the time that they work so that they can be paid. Salaried employees are not paid based on hours worked, but their time must usually be tracked as well. For cost-accounting purposes, it is important to be able to attribute an employee’s time to a cost object (such as cost center, project, or production order), and any time not worked must be attributed to vacation or leave. The SAP ERP system uses Cross Application Time Sheets (CATS) to record employee working times and provide the data to applications that include:
- The SAP Controlling module, for cost management
- The SAP Payroll module, for calculating employee pay and transferring the data to the Financial Accounting module
- The SAP Production Planning module, to determine whether enough labor is available to support production plans
Payroll is probably the most important Human Resources function. Employees are, not surprisingly, very particular about being paid the correct amount at the correct time! Many people live paycheck-to-paycheck, meaning that getting paid correctly and on time is crucial. Without proper management of the payroll process, employees might not be paid for all of the hours they worked, they might not be paid at the appropriate rate, or they might have too much or too little money withheld from their pay for taxes and benefits. Mistakes in payroll can cause significant job dissatisfaction. The two key processes in determining the pay an and voluntary deductions. The remuneration elements of an employee’s pay include the base pay, bonuses, gratuities, overtime, sick pay, and vacation allowances that the employee (federal, state, local, Social Security, and Medicare), company loans, and benefit contributions. Properly determining the pay for an employee requires accurate input data and correct evaluation of remuneration elements and deductions.
The process of determining each employee’s pay is called a payroll run. In the payroll run, the SAP ERP system evaluates the input data and notes any discrepancies in an error log. Payroll employees review the error log, make the necessary corrections, and repeat the payroll run until no errors are recorded. Then the payroll run is used to generate information for accounting, electronic funds transfers, employee pay statements, withholding tax payments, and other calculations.
Companies can spend a significant amount of money on employee travel, and managing travel and its associated expenses can be a significant task. A travel request, which may originate with the employee or the employee’s manager, is the first step in the travel management process. Travel requests usually require management approval, and the level at which travel must be approved may depend on the duration and location of the travel. Once management has approved the travel, travel reservations must be made. Because airfare, hotel, and rental car costs can vary widely, companies frequently require employees to make reservations through either a company travel office or a travel agency under contract to the company. The employee must keep receipts for expenses incurred during the trip in order to complete an expense report and receive reimbursement. The SAP ERP Travel Management system facilitates this process by maintaining travel data for each employee, including flight, hotel, and car preferences, and integrating this data with the Payroll module (for reimbursements) and with the Financial Accounting and Controlling modules, to properly record travel expenses. Submitting an expense report can be simplified using a Web-based application that allows employees to submit reports through a Web browser.
Training and Development
The Personnel Development component of the SAP ERP Human Resources module supports the planning and implementation of employee development and training activities. Such education maximizes an employee’s ability to contribute to the organization. Because advances in technology quickly render an employee’s knowledge obsolete, employees will not be productive without continuing development and training efforts. In addition, many positions require certifications that must be updated, and continuing education is frequently required for recertification. Without an effective Human Resources information system, managing the training, development, and certification needs for a company’s employees can be both time-consuming and error-prone.
In the SAP ERP system, employee development is driven by qualifications and requirements. Requirements are skills or abilities associated with a position, while qualifications are skills or abilities associated with a specific employee. Requirements and qualifications refer to the same concept from a different perspective. Using the Personnel Development tool allows a manager to compare an employee’s qualifications with the requirements for a position to which the employee aspires. This comparison enables the manager to identify gaps and to plan development and training efforts to close the gaps. It can also serve as a basis for employee evaluation, and can motivate the employee by providing a goal and the means to achieve it.
One of the most important reasons for managing the development and training of employees is succession planning. A succession plan outlines the strategy for replacing key employees when they leave the company. The success of a company depends in large part on the skills, abilities, and experience of its management team. This is especially true for a small company like Fitter Snacker. Savvy customers have been known to avoid establishing long-term relationships with companies that do not have well-developed succession plans. The Career and Succession Planning components of the SAP ERP Human Resources module allow HR departments use Career Planning with individual employees, identifying potential career goals and drawing up career plans. Companies use Succession Planning to find people to fill unoccupied positions. Succession Planning allows the human resources function to meet staffing requirements by identifying candidate employees within the company and ensuring that their training and development plans will prepare them for the new position when it becomes available. Using the career and succession planning tools in an ERP system ensures that HR will have accurate and timely employee and position data when developing the plans. The system allows changes in human resources (such as hiring new employees, current employees leaving, promotions) to be more easily integrated and tracked, and gives all important users easy access to the information.