Introduction to Application of ERP software in HRM
ERP, the abbreviated form of Enterprise Resource Planning, is a revolutionary infrastructure tool that enables organizations to drive synergy between different processes by using IT.
Over the past few decades, ERP has become the backbone of human resource management as it has helped in streamlining processes like payroll management, performance management, productivity management etc., thus leading to strategic benefits and cost savings.
Top Applications of ERP in HRM
The various applications of ERP software in HRM are discussed as follows:
Productivity Management
With companies shifting to agile and distributed workforce systems, ERP helps the managers to track and monitor the day to day activities of their workforce. Hence it helps to foster greater discipline and streamline productivity.
Software for HR and payroll also opens up the opportunity for two-way communications as the employees are updated about their performance on a regular basis and hence could plan their activities accordingly.
Workforce Management.
In this era of distributed manufacturing and scattered back offices, companies are readily adopting the JIT (Just-in-Time) strategy when it comes to managing their workforce.
In fact, HRM relies heavily on ERP to figure out the exact requirement of the organization in terms of human resource. So ERP helps the human resource team to strategically plan the quantitative and qualitative aspect of their workforce.
Moreover, since companies are resorting to outsourcing a part of their work to reduce cost and save time, ERP payroll management plays a pivotal role in ensuring that the human resource management framework is properly planned. In short, ERP can help an organization to align its workforce according to the seasonality and quality of demand.
Implementing organizational structure
Nowadays most of the companies are looking to drive a flat organization structure to usher in the concept of equality, openness and innovation. In such a scenario, ERP helps the human resource team to develop transparency and accountability while driving synergy between different departments.
Using ERP, the human resource department can ensure that there are proper information flow and communication between departments. For instance, using ERP it is possible to align the requirements of the finance department with those of the marketing department thus ensuring that no one gets an upper hand.
Hence software for HR and payroll is a panacea for human resource management for ailments like interdepartmental conflicts or even conflicts at an individual level.
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Payroll Management
For any company to succeed, it is imperative that the employee morale is high and they are treated fairly. In fact, employees are the internal customers of the company and how the company treats its employees reflects in the way the employees treat the end customers.
So ERP payroll management helps in continuous monitoring and performance of the employees. Hence at any given point of time, the human resource management team can map the net economic value added by the employee.
Hence the compensation especially the variable pay can be calculated in a very effective manner as this would eliminate any cognitive bias. Hence this would foster the feeling of equality and merit driven reward and recognition which would motivate the employees to work harder to achieve the accolades.
This would also lead to lower attrition thus reducing the cost of on-boarding new employees. In fact, most of the organizations deploy a considerable amount of time and money to train the employees.
Hence if an employee leaves the company, it leads to huge costs in terms of on-boarding the employee, training him/her and making him/her job fit. Hence no company wants a high attrition rate. ERP by ensuring proper payroll and productivity management plays a big role in reducing attrition thus saving cost and time.
Employee Training and Skill Management
For any human resource management team, training of the employees is a big challenge. Moreover, with the advent of new technologies, ever-evolving business models, changing financial positions, retraining of the existing workforce is an even greater challenge for the human resource management team.
In such a scenario ERP serves as a knowledge bank by effectively storing the past experiences, SOPs, workflow etc., thus helping in better and quicker training.
Conclusion
In a nutshell, ERP forms the backbone of effective human resource management and companies should invest heavily in it.