Human Capital Management (HCM) PDF

IT2406 Human Capital Management (HCM) Human Capital Management (HCM) is a variety of practices and applications used for recruiting, managing, and d...

IT2406 Human Capital Management (HCM) Human Capital Management (HCM) is a variety of practices and applications used for recruiting, managing, and developing an organization’s human capital or workforce. SAP HCM software is the systems and solutions used to accomplish and optimize tasks and support organizational goals and is often referred to as human resources management systems (HRMS). This SAP module is needed as the demands placed on human resource (HR) teams are greater than ever, given how a workforce is now more diverse and geographically distributed. Employee expectations have also changed, with experience becoming a significant factor in employee recruitment and retention. The HCM module helps HR adapt and meet evolving needs and expectations. HCM Organizational Structure (SAP SE, 2022) An organizational structure represents the structural and personnel organization of a company, consisting of organization units. It illustrates hierarchies and an employee's responsibility. The organizational structure is necessary to know where everyone works and what skills a job requires. It is also needed for the workflow in other parts of SAP. The HCM organizational structure consists of three (3) parts: Enterprise, Personnel, and Organizational Plan. Enterprise Structure It represents formal and financial structures in a company. Each employee must be assigned to an enterprise structure. Here are the organizational units in the HCM Enterprise Structure: Client – an independent environment in the system. Company Code – the smallest organizational unit where a legal set of books can be maintained. Personnel Area – represents a company area differentiated between personnel administrative, time management, and expensive organizational aspects. Personnel Subarea – represents part of a personnel area and represents a company area differentiated between personnel administration, time management, and payroll accounting aspects. Figure 1. Global Bike SAP HCM enterprise structure. Retrieved from 2022 SAP SE/SAP UCC. 02 Handout 1 *Property of STI Page 1 of 6  IT2406 Personnel Structure It describes an employee’s position within the company. It is defined by employee group and employee subgroup. Employee Group – an organizational unit for which personnel-related regulations can be specified such as active employees, external, and retirees. Employee Subgroup – an organizational unit within the employee group for which personnel-related regulations are specified, such as industrial employees, commercial clerks, and laboratory assistants. Figure 2. Global Bike SAP HCM enterprise structure. Retrieved from 2022 SAP SE/SAP UCC. Organizational Plan It describes in which function an employee is acting. It is object-oriented, and each element is represented by an object which can be assigned to each other. Organization Unit – can be grouped according to functional and regional aspects. Position – assigned to organizational units and filled by employees such as accounting clerks in the Accounting Department Person – the employees who fill positions. Cost Center – originates from SAP Controlling and can be linked with positions or organizational units. Job – general description of tasks an employee must perform, such as the position of the Head of Department. Figure 3. Global Bike SAP HCM enterprise structure. Retrieved from 2022 SAP SE/SAP UCC. 02 Handout 1 *Property of STI Page 2 of 6  IT2406 HCM Master Data (SAP SE, 2022) Here are the following master data involved in SAP HCM. Personnel Number It is the central employee identifier in SAP assigned by the system or manually. It comprises up to eight (8) digits. All employee data in the system is identified based on their personnel number. Reference Personnel Number It helps map different contractual relationships. It recreates an existing employee in the system with a new personnel number. The old personnel number serves as a reference personnel number. Certain data can be copied and assigned to the new number. In case of concurrent employment, the employee will be identified using a personal ID. InfoTypes These are collections of logically linked data fields wherein HR master data are structured. They process employee data in an effective structure based on business requirements. Each InfoType has an explicit four- digit ID, such as InfoType Addresses 0006. Other characteristics of InfoTypes: Has sub-types representing a sub-variant of the InfoType Time-dependent Maintained in three (3) different ways: Fast entry, Personnel action, and Single InfoType Maintenance HCM Processes (SAP SE, 2022) Here are the processes included in SAP HCM. 1. Organizational Management 6. Performance Management 2. Personnel Administration 7. Personnel Controlling 3. Recruitment 8. Employee Self-Service (ESS)/Manager Self- 4. Personnel Development Service (MSS) 5. Talent Management Organizational Management It models the organizational structure of the enterprise. It also analyzes an organizational unit to define workforce requirements and personnel cost planning. Other functions include: Create, change, and delimit organizational units Create, change, and delimit jobs Create, change, and delimit positions Create further organizational units for planning scenarios or simulations Personnel Administration It is concerned with creating and maintaining personnel master data. It sets the data basis for other processes in Human Resource Management and reporting. It has plausibility checks to detect errors and prevent incorrect data transfer. It also has an automatic history created when changing master data for reporting and verification of data integrity. 02 Handout 1 *Property of STI Page 3 of 6  IT2406 Recruitment The recruitment process objective is to employ personnel with all the required qualifications. In general, there are two (2) types of recruitment: external and internal. In external recruitment, people search for an external market for skilled personnel. In internal recruitment, HR looks for personnel within the company for a certain position. The goal of recruitment in SAP HCM is to support the HR department in searching, choosing, and recruiting adequate applicants. At the same time, the HR department gets support in building up an applicant database. If a requirement for new personnel arises, this database can be used. The recruitment process starts from Vacancy, Job Advertisement, Applicant Data, and Profile Match, to Hiring an Employee. A database for applicants is developed in this process, including the administration of vacant positions. Maintaining applicant data is done in InfoTypes using the Initial Data Entry or Application Actions in SAP Fiori. Applicants are assigned to the elements of the application structure: Applicant Group – structures applicants based on their employment relationship type. Application Range – classifies applicants based on hierarchical or functional criteria. In SAP HCM, two (2) types of selection procedure are distinguished: Global Selection Procedure and Selection Procedure for each Vacancy. The Global Selection Procedure lets every registered applicant partake in the selection procedure. A decision is made if the applicant is to be hired. If the applicant is not selected, they can join the selection procedure for vacancies. An overall status determines the level of the applicant in the global selection procedure. With the Selection Procedure for Every Vacancy, the applicant is assigned only to special vacancies. The status of vacancy assignment describes the level of the applicant in the selection procedure for a vacancy. Personnel Development Its goal is to qualify employees for current and future needs and provide long-term employee benefits. The personnel development system supports the HR department in planning and administrating teaching and development actions. Furthermore, it records the qualifications of employees and can show deficits in their skills. To ensure this, the requirements of a position or job are compared to the qualifications of employees within a profile matchup. Out of qualification deficits, the system can generate development proposals and plans. Additionally, employees can be booked directly for training courses or other events. After a training course or a development action, acquired qualifications are recorded into the qualification profile of an employee. In performance management, the benefits and training of employees can be evaluated. Qualification can be connected to persons or positions and needs to be attached to attributes. It can have a half-life period or a validity period. Qualifications are defined in the qualifications catalog maintained in Customizing. The catalog structure may consist of qualification groups that classify similar qualifications. Requirements are qualifications, knowledge, and experiences that can be attached to positions. It is created with a characteristic. A comparison is made between employee qualifications and the position requirements in this process. It is called profile matchup, which helps identify further training needed. With profile matchups, positions and jobs can be compared to each other. The difference between the requirement characteristic and qualification characteristic is also determined, which leads to three (3) possible results: 02 Handout 1 *Property of STI Page 4 of 6  IT2406 o Both characteristics are identical o The requirements are higher than the qualification (Underqualification) o The requirements are lower than the qualification (Overqualification) Talent Management This process involves career planning arrangements and succession planning accomplishments. It generates general and individual development plans. Career Planning identifies career goals such as by defining and developing special stations of a career (job, position, and course of instruction). It includes comparing qualifications with requirements of one station of a career to personnel decisions and courses of instruction. Succession Planning assures continuity in personnel allocation for key positions. It includes proactive search for candidates to reallocate key positions. It gives a well-directed preparation for the adoption of the next job. Development Plans summarize teaching and other educational actions to achieve special qualifications. It describes further training and general training events that an employee may need during their career. A differentiation exists between general and individual development plans. General development plans are guidelines for several employees, whereas individual development plans are developed for a special employee. Performance Management It defines the objective setting between the enterprise and employees. It evaluates the benefits of employees to form feedback used to answer whether the goals are achieved. With goals, higher motivations and better benefits such as adjusting bonuses must be applied, although it must also be supervised. In SAP, performance management controls and constructs performance appraisals and/or objective settings between a company and its employees. The appraisal results are the foundation for eventually compensating employees for good work. The appraisal process starts with feedback, then, compensation adjustment, and lastly, planning, where goals are agreed upon. Within the planning of appraisals, enterprise, and individual goals are set between the employee and management. Then, feedback is given in the form of an appraisal, which evaluates the benefit of the employees with the expected goals. Individual and group appraisals and 360° feedback mechanisms can be used. Development events and compensation adjustments are determined after this feedback. To display a performance feedback process, appraisals and objective settings may have different statuses: In Preparation: An appraisal template has been created and provided with header data. The appraisal template consists of formulas, criteria groups, criteria, and qualifications. In Process: An appraisal has been given but it is not completed; the evaluation may still be changed. Completed: The appraisal is finished. Approved: The appraisal has been approved. Rejected: The appraisal has been rejected. Personnel Controlling It enables the creation of reports from a flood of data within Human Resource Management (HRM). Data needed for a report can arise from a single or several HR processes. SAP HCM allows reports and analysis for evaluating certain data, making simple employee lists and complex business calculations available. Personnel Controlling within SAP HCM facilitates the creation of cyclic reports and spontaneous report requests that can be compared to create a forecast. 02 Handout 1 *Property of STI Page 5 of 6  IT2406 This process includes the following tools: Standard Reports – predefined SAP requests with a unique design like employee and birthday lists. Human Resource Information System (HIS) – enables analysis based on the organizational structure. Manager’s Desktop (MDT) – managers can access transactions of other HCM module components. For example, approving a successful recruitment applicant via the MDT is possible. Ad-hoc Query – a tool for analyzing data from personnel management. Outside the HCM module, this tool is named “InfoSet Query.” Business Intelligence (BI): SAP BI is an independent system based on a portal technology. It helps data from SAP systems or from other systems to be integrated. SAP BI provides substantial planning and simulation functions and is profitable in case of a high amount of data. Employee Self-Service (ESS) It is a web-based user interface for employees that enables the time and location-independent maintenance of personal data. It also provides access to administrative functions that other departments usually access. Employees can do the following activities using ESS: o Submitting travel expenses o Applying for employer benefits o Browsing the employee directory o Documenting of working hours o Displaying the calendar o Updating of bank data o Updating of personal data o Registering for training courses Manager Self-Service (MSS) It is a central web-based access point for managers. It uses the backend systems of the human resources and finance departments and supports the management with enterprise-wide relevant information. Managers can do the following activities using MSS: o Gaining information o Hiring employees o Carrying out compensation planning o Controlling costs o Managing the budget and human resource planning o Changing personal data References: SAP (2022). What is human capital management (HCM)? Retrieved on June 18, 2024, from https://www.sap.com/sea/products/hcm/what-is-human-capital-management.html. Partner (2022 SAP SE/SAP UCC Magdeburg from Academic Competency Centre) 02 Handout 1 *Property of STI Page 6 of 6