EGN_5622 HCM Part 1 Spring 2012

7/29/2019 EGN_5622 HCM Part 1 Spring 2012

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Human Capital ManagementHuman Capital Management

Part IPart I

(Function, Structure, and Master Data)(Function, Structure, and Master Data)

EGN 5622 Enterprise Systems IntegrationEGN 5622 Enterprise Systems Integration

Spring, 2012Spring, 2012




Part IPart I(Function, Structure, and Master Data)(Function, Structure, and Master Data)

Concepts & TheoriesConcepts & Theories



Human Resources ManagementHuman Resources Management

Manage requirements for human resourcesto support company current needs andfuture growth, including:◦ Planning,

◦ Hiring/assigning,

◦ Training, and

◦ Evaluating employees



Human Resources ManagementHuman Resources Management

Typical HR Functions:Planning and job analysis,Recruitment and selection,Training and development,Performance management,

Compensation and benefits, andEmployee and labor relations.



HCM Process in the Employee LifecycleHCM Process in the Employee Lifecycle



Leveraging HCM for OrganizationalLeveraging HCM for Organizational

Performance ImprovementPerformance Improvement



Organizational structureOrganizational structure

1. Functional Organization Structure2. Projectized Organization Structure

3. Matrix Organization Structure



Functional Organization StructureFunctional Organization Structure

FIGURE 3.1



Projectized Organization StructureProjectized Organization Structure

FIGURE 3.3



Dedicated Project TeamDedicated Project Team

FIGURE 3.2



Matrix Organization StructureMatrix Organization Structure

FIGURE 3.4



33 – –1212

Different Matrix FormsDifferent Matrix Forms

Weak Form◦ The authority of the functional managerpredominates and the project manager hasindirect authority.

Balanced Form◦ The project manager sets the overall plan andthe functional manager determines how workto be done.

Strong Form◦ The project manager has broader control andfunctional departments act as subcontractorsto the project.



Organization LayersOrganization Layers

Corporation (Conglomerate)Company

◦Division Plant (Directorate)◦Department

Section

Group



Notes on Resources structureNotes on Resources structureAll resources should be organized in a hierarchical

structureAll resources should be organized along with the

HR structureThe system should allow the use to specify the

number of organization layers and re-configure as

often as required.Committees is handled as a virtual org. unitEach unit allows for a generic and proper name.Each unit is assigned with a rank and may be

assigned to a parent unit.

Each unit may has multiple roles and each role canhave multiple positions.



Role designation within a unitRole designation within a unit

Generic role designations◦ Head

◦ Assistant head

◦ Member

◦ Executive assistant◦ Staff

Additional roles◦ For example, the member role may further

classified into senior member, member, and junior member.

Communications between units arechanneled to unit heads.



Positions for each rolePositions for each role

Each role may have multiple positions;

each has an ID.Each role has at least one position.Each employee is assigned to a position to

play a role in the unit.An employee may take more than one

position, play more than one role inmultiple units. In such a case, rules arerequired for assessing resource capacity

for each unit.



Organization unit classificationOrganization unit classification

On system privilege◦ Administrative (viewing)

◦ Specialist (execution)

◦ None

On accounting/controlling designation◦ Profit center

◦ Cost center

◦ Sub-cost center



Performance and accountabilityPerformance and accountability

concernsconcerns

Profit center◦ usually set at the company/division level;employees share the bonus within the samedivision,

Cost center◦ usually set at the department or directory level;for settling expenses between departments

Non-cost center unit (sub-cost center)◦ at the unit lower than the cost center, forperformance evaluation of resources and work(orders).



Privileges & security controlPrivileges & security control

System privileges are controlled with◦ User’s ID

◦ User’s position

◦ User’s role

◦ User’s unit (group)

◦ Function Which may be assigned to a specific user or byrole/unit



Mapping work structure toMapping work structure to

resources structureresources structure

Principles◦ Corporate decisions are made at threemanagerial layers: strategic, tactic, andoperational.

◦ Work orders are planned and carried out at theoperational level.

◦ Change of capacity (unplanned overtime andoutsourcing) requires a tactic decision.

◦ Operation manager is expected to create a goodfit between the work structure and the resourcestructure at the operational layer.



Mapping work structure toMapping work structure to

resources structureresources structure

Principles◦ A task should not be assigned to more thanone unit. However, a task and its sub-task

may be assigned to the same unit.

◦ Performance is assessed, based on theobjective(s) assigned to the unit. For example,

optimal resource utilization is not an objectivefor a work group in a push system.




SAP ImplementationSAP Implementation



R/3

SAP Module ViewSAP Module View

Integrated Solution

Client / Server

Open Systems

Financial Accounting

Controlling

Fixed Assets

Mgmt.

Project

System

Workflow

IndustrySolutions

Production

Planning

Sales &

Distribution

Materials

Mgmt.

PlantManagement

Quality

Maintenance

HumanResources



HCM Modules in SAPHCM Modules in SAP

Quarles: Flya Kite IntroductionQuarles: Flya Kite Introduction 2424



Human Capital ManagementHuman Capital ManagementHuman Capital Management (HCM) modules in SAP

R/3 incorporates HCM concepts and practices,enabling managers to perform transactions pertainingto the HRM cycle of events.

HR modules in SAP R/3:

Organizational management

Personnel management,

Payroll

Time management

Training and event management,

Travel management,

Manager’s desktop

Environment, health and safety



Organizational ManagementOrganizational Management

It provides the basis for structuring personnelplanning and development processes, and isnecessary for personnel administration.

Using this application, an organizational structure,including departments, jobs, positions, and tasks,can be created.

Work is further defined and described through theprocess of job analysis: the cornerstone of HRM.



Organizational ManagementOrganizational Management




Organization ManagementOrganization Management

Organizational PlanExpert modeInfo systemTool

Setting



Personnel ManagementPersonnel Management

Personnel administrationRecruitmentPersonnel developmentBenefits

Compensation managementPersonnel cost planningManagement of global employees



Personnel Management Module in SAPPersonnel Management Module in SAP




Personal AdministrationPersonal Administration

Facilitates the management of HR masterdata, personnel files, and relational databases.

Maintaining accurate and confidentialemployee records is critical to this function.



Personnel AdministrationPersonnel Administration

HR master data◦ Personnel actions

◦ Personnel files

Info system◦ Report

Employee

Organizational entity (Headcount changes, headcountdevelopment, salary accounting to seniority, assignment towage level)

Age/gender

Setting◦ Define organizational unit

◦ Define positions

◦ Define jobs



Recruitment and SelectionRecruitment and Selection

Transactions enable the advertising of positionvacancies, the identification of recruitmentsources, and the hiring of employees.

Additionally, qualifications required of vacant

positions can be matched with the qualificationsof applicants to facilitate decision making in theselection process.

This functionality in SAP R/3 relates torecruitment and selection in HCM.



Personal DevelopmentPersonal Development

Pertains to performance appraisals, career andsuccession planning, and career development.

Performance appraisals help facilitate decisions

regarding promotions, merit pay, andterminations.

Transactions in SAP R/3 relate to the typical HCMpractices associated with performancemanagement systems.



BenefitsBenefits

Benefits pertains to flexible spendingaccounts, 401(k) plans, health care accounts,as well as mechanisms to track costs of benefits.

SAP R/3 extend far beyond the typical benefitsrequired by law.



Compensation ManagementCompensation Management

It is essential in promoting internal equity andexternal competitiveness.

Features of this application include job pricing,

reviewing salary surveys, and creating policiesand budgets.



January 2007 (v1.0)January 2007 (v1.0)

© 2007 by SAP AG. All r ights© 2007 by SAP AG. All rights

reserved. SAP University Alliance.reserved. SAP University Alliance.

The Rushmore Group, LLCThe Rushmore Group, LLC 3737

HCM Process: Compensation & BenefitsHCM Process: Compensation & Benefits

Compensation is not the cut-and-dry subject itonce was◦ Past – consisted of an employee's base salary or, at

most, a base salary and commission.

◦ Today - looked at as compensation packages; including:

salaries, stock optionsemployee stock ownership plans

pay-for-performance plans

bonuses, profit sharing

commissions, non-cash rewards

variable pay, and much more.







HCM Process:HCM Process: CompensationCompensation

ManagementManagement

The balancing of company interests to operatewithin the company's fiscal budget and fairlypaying employees◦ key component of attracting, developing, retaining, and

rewarding high quality staff through wages and salaries

which are competitive in the labor marketsCompensation Management is comprised of the

following components:◦ Job Pricing

◦ Budgeting

◦ Compensation Administration

◦ Long-term Incentives







HCM Process: Benefits AdministrationHCM Process: Benefits Administration

benefits today are offered as a part of an employeesoverall compensation package

this component allows a company great flexibility increating and maintaining individual packages for youremployees◦ Six international Plan Categories

Allows for detailed company reporting◦ Benefit Plan Participation◦ Health Plan Costs◦ Employee Demographics◦ Benefits Election Analysis

Country Specific Settings available◦ FSA, COBRA (US examples)

HIPPA Certificates



PayrollPayroll

Release payrollStart payroll processCheck payrollCorrectionSimulationFollow upTaxOverpayment recoveryBank transfer



PayrollPayroll

4141







HCM Process: PayrollHCM Process: Payroll

AdministrationAdministration

SAP contains an international payroll driverthat is modified for each countrypayroll is released for individual payroll

areas

◦ the run is for a specific group of employees anda specific period of time

◦ upon release all affected personnel records arelocked

will generate an payroll results, andearning statement, bank transfers andcheck payments







HCM Process: PayrollHCM Process: Payroll

AdministrationAdministration

Payroll Process◦ determine Gross Amount base pay and any other additional payment

◦ overtime, sick pay, Christmas bonuses, special pay

◦ determine Deductions (Net Amount)processes garnishments, deductions, taxes, andbenefits for employees◦ Federal/State Income Tax, Insurance (Health, Life),

Loans

◦ Integration with Financial Accounting & ControllingG/L postings, payments processed, reportsavailable



Overview of the Payroll ProcessOverview of the Payroll Process



Payroll AccountingPayroll Accounting



Calculation of Remuneration ElementsCalculation of Remuneration Elements



Time ManagementTime Management

4747

Shift planningAdministrationTime dataTime evaluationWork schedule

Incentive wagesTime sheet



Time ManagementTime Management

4848



January 2007 (v1.0)January 2007 (v1.0)© 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore© 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore

Group, LLCGroup, LLC 4949

HCM Process: TimeHCM Process: Time

ManagementManagement

supports planning,recording, andevaluation of internalemployee time data

time data that would be

gathered and evaluated◦ hours worked◦ leave◦ illness◦ overtime◦ substitutions

◦ business trips conference, training



January 2007 (v1.0)January 2007 (v1.0)© 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore© 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore

Group, LLCGroup, LLC 5050

HCM Process: Time ManagementHCM Process: Time ManagementThere are multiple methods for data collection:

Time TerminalsTime Terminals

Mobile TechnologyMobile Technology

Cross Applications Time SheetCross Applications Time SheetEmployee Self ServiceEmployee Self Service

Time AdministratorsTime Administrators

Time Manager’s WorkplaceTime Manager’s Workplace







HCM Process: Time ManagementHCM Process: Time Management

Time collection will be used for:

◦ payroll accounting

◦ personnel cost analysis

◦ internal cost allocations

◦ invoicing

◦ performance analysis◦ capacity availability

◦ shift planning



Time Management ProcessTime Management Process



Training and Event ManagementTraining and Event Management

It involves the management of employee activitiesassociated with training, workshop attendance,and other business-related events.

Information on descriptions of programs,prerequisites, and cost factors can be generated.

This functionality in SAP R/3 relates to trainingand development in HCM.



Travel ManagementTravel Management

It enables organizations to monitor thecontrollable expense associated with travel,training, and entertainment.

Employees frequently travel on business, somanaging this expense is essential



Manager’s DesktopManager’s Desktop

It is a tool which enables managers to accessemployee information at a manager’s fingertips,i.e., managers do not have to access menu pathsor transaction codes to retrieve employeeinformation. Rather, through decentralization of

HR tasks and responsibilities, managers can easilyaccess HR data of subordinates, both directly andindirectly supervised, to perform administrativeand organizational tasks, and to make strategic

decisions



Business Process IntegrationBusiness Process Integration

January 2008January 2008

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rights reserved.rights reserved. 5656

MM

P P

SD

O r g

D a t a

R u

l e s

MM

PP

SD

M a s t e

r D a t a

M M

P P

S D

FI HCMMM

F I

FI

F I

PPSD

HCM

HCM

H C M



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Business Process IntegrationBusiness Process Integration

HCM

HCM

HCM

H C M

O r g

D a

t a R

u l e

s

M a s t e r

D a t a



Organizational Data in HCMOrganizational Data in HCM

A hierarchy in which the organizationalunits in an enterprise are arrangedaccording to task and functions

Are static data and are rarely changed

The definition of organization units is afundamental step, it is a critical factor in

how the company will be structured



Structures of HCMStructures of HCM

Enterprise structurePersonnel structureOrganization structure



Structures of HCMStructures of HCM

Enterprise Structure

Personnel Structure

Organizational Structure



Enterprise StructureEnterprise StructureThis structure makes up the legal identity of the

companyEvery employee in an organization is included in

the structure of his or her enterprise. TheEnterprise Structure sub-divides organizations

and employees according to factors relevant totime management and payroll.

The Enterprise Structure is made up of thefollowing elements:

Client

Company Code

Personnel Area

Personnel Sub-area



Enterprise Structure (-continued)Enterprise Structure (-continued)

Client is the major organization criterion inthe system, and is a self-contained unit.

◦ Client has technical structure feature

Personnel data entered in a client can only beaccessed in that client.

Data cannot be exchanged among clients.

If employees change clients, data have to be re-created in that new client.




Company code is an independentaccounting unit, and is also self-contained.

A set of accounts can be developed in thecompany code, and financial statements suchas balance sheets and profit-and-lossstatements are created at this level.

i ( i d)




Personnel area represents the “company andcountry version for payroll” view.

It used primarily in personnel administration, isunique within a client, and is a sub-division of thecompany code based on locations or divisions.

It serves as a selection criterion for reporting,constitutes a unit in authorization checks, and

allows one to generate default values for dataentry, e.g., for the payroll accounting area.

i S ( i d)




Personnel sub-area represents the “location and

public holiday calendar” view. It is subdivision of a personnel area (such as a

department), and identifies groupings of employeesassigned to a particular personnel area or companycode.

It is the level at which the primary organizationalaspects of human resources are controlled. Itsfunctions include specifying a country grouping, settinggroupings for time management so that work schedules

can be set up for individual personnel sub-areas,generating a default pay scale type and area for basicpay.

sub-area must be unique to a company code

i S



Enterprise StructureEnterprise Structure





iE i S P I



Enterprise Structure: Pen Inc.Enterprise Structure: Pen Inc.

Client

Personnel

Subarea

Company

Code

Personnel

Area

Client 750

Pen Inc _ _ _

P_ _ _ Pen Inc. Central Office

P _ _ _ Pen Inc. MFG Center

0001 Administration 0002Finance 0001Manufacturing

l S



Personnel StructurePersonnel StructureThis structure sub-divides organizations

and employees according to factorsrelevant to time management and payroll.

The Personnel Structure is made up of thefollowing elements:◦ Employee Group

◦ Employee Subgroup

◦ Payroll Area

P l St t ( ti d)P l St t ( ti d)



Personnel Structure (-continued)Personnel Structure (-continued)Employee group is the highest level, and

defines the relationship between an employeeand a company in terms of work, i.e., activeemployees, pensioners, and early retirees.

These groups can be differentiated further. Forexample, an active employee may also be atrainee, an hourly wage earner, a salariedemployee, etc.

The principal functions of the employee groupinclude generating default values for payroll

accounting area and basic pay, serving as aselection criterion for reporting, and serving as aunit in authorization checking.

P l St t ( ti d)P l St t ( ti d)



Personnel Structure (-continued)Personnel Structure (-continued)Employee sub-group enables distinguishing

among employees specifically with regard totheir status. For example, active employees maybe classified as a trainee, hourly wage earner, nonpay-scale employee, salaried employee, etc.

Functions include allowing different payrollprocedures for different employee subgroups,controlling the validity of wage types on anemployee sub-group level, and defining the

validity of work schedules, attendance andabsence quotas.

Personnel StructurePersonnel Structure



Personnel StructurePersonnel Structure

P l S ElP l St t El t



Personnel Structure: ElementsPersonnel Structure: ElementsPayroll Area

◦ It groups employees together that are paid thesame (time) Weekly, Bi-Weekly, Monthly

◦ The payroll area is determined from acombination of the Employee Group andEmployee Subgroupnumber of employees in the payroll run

specific dates of the payroll run

O i ti St t i HCMOrganization Structure in HCM



Organization Structure in HCMOrganization Structure in HCMThe organizational structure and plan is the

comprehensive model of the structural andpersonnel environment in the enterprise, withhierarchies and reporting relationships clearlydefined.

Hierarchies and reporting relationships are

determined once object types are created.Typical object types include

◦ organizational units,

◦ jobs,

◦ positions,◦ tasks, and

◦ persons.



Organizational StructureOrganizational Structure• Using organization and planning, you can get a clear picture of

your organization at any point in time: past, present or future.With this information, you can be proactive in planning for future

human resource needs.

O i ti l St t P IO i ti l St t P I



Organizational Structure: Pen IncOrganizational Structure: Pen Inc


Organizational Units

Person

Position

Organization Structure ( continued)Organization Structure ( continued)



Organization Structure (-continued)Organization Structure (-continued)

Organizational units reflect the various

business units or departments in theenterprise.

Several organizational units can be created, andthey must be related to one another in an

organizational plan. They can be defined asfunctional, divisional, or geographical departments,or as project groups.

An example of a functional structure would includeaccounting, sales, human resources, andmanufacturing departments.





Jobs reflect the tasks, duties andresponsibilities of the work being performedin the organization.

Typically, they are grouped in terms of thesimilarity of tasks being performed, and are moregeneric in nature. Some examples include analyst,specialist, manager, and supervisor.

O gani ation St ct e ( contin ed)Organization Structure ( continued)




Positions are more specific than jobs, and allof the information stored in a job is inheritedby all of the positions created from the job.

Positions reflect individual employee assignments,and are occupied by persons.

Examples of positions include Accounting Analyst,Logistics Specialist, Compensation and Benefits

Manager, and Production Supervisor.





Persons are assigned to positions in theorganizational structure, and generallyrepresent the employees in the company.

For example, Ross Quarles may be the Accounting

Analyst, Fawzi Noman may be the LogisticsSpecialist, Kathy Utecht may be theCompensation & Benefits Manager, and High AsaKite may be the Production Supervisor.





Tasks are the individual duties andresponsibilities undertaken by employees intheir positions, as reflected in their jobdescriptions.

Examples of tasks include “prepares accountingreports,” “maintains warehouse inventory,” “reviews salary surveys,” and “overseesproduction scheduling.”

Organizational StructureOrganizational Structure



Organizational StructureOrganizational Structure

Integration of Org. Mgt. with PersonnelIntegration of Org. Mgt. with Personnel



g g gg g g

Admin.Admin.

Integration of Org. Management withIntegration of Org. Management with

l d iP l Ad i



Personnel Admin.Personnel Admin.

HCM: Master DataHCM: Master Data



HCM: Master DataHCM: Master Data

Master data is relatively fixed◦ Record that contains all the necessary information to

conduct business transactions

◦ Information within a master record can and will change, ourhope is that it does not change frequently.

Before making the master dataconfigurations, you must have completelydefined the organizational structures

HCM: Master Data Master DataHCM: Master Data Master Data



HCM: Master Data Master DataHCM: Master Data Master Data A vast amount of HR data can be maintained in SAP R/3.

Personnel data provide the basis for various HR transaction

processing and reporting. Hence, its accuracy, timeliness,relevance, and completeness are crucial.

While most data may be housed in an HR department’sinformation system, it is important that data that

pertaining to an overall HR information system be included.

Typically, the data pertains to employee information whichis entered into the system using

infotypes (types of information) and HR Master Database which stores Infotypes.

HCM: Master Data (-continued)HCM: Master Data (-continued)




Infotypes categorize information and enabledata input, i.e., they are data entry screenswhich allow the entering of various types of information into data fields.

Similar types of information can be grouped bycontent to facilitate data entry.

Infotypes can be processed individually or through

the fast entry mode (entering specific data forseveral employees at once).




HCM: Master Data (-continued)HCM: Master Data ( continued)

Processing of infotypes may include creating

(creating a new record with beginning and enddates), changing (changing or correcting a record),copying (using the initial record as a template),delimiting (upon entering a delimitation date,records valid for that date are selected, and then

setting the end date for that record to the daybefore the delimitation date), and displaying(viewing but not changing records).

There are over 600 HR infotypes used to maintainemployee and applicant data, and the number,types, and settings of infotypes can be customizedto fit the business requirements of the company




HCM: Master Data (-continued)HCM: Master Data ( continued)

HR Master Database is where HR data are

stored. Typically, employee information isstored in a personnel file which can beaccessed by entering the employee’sassigned personnel number (usually generatedinternally by the system).

Several records of information on an employee canbe reviewed, such as organizational assignment,basic pay, addresses, travel preferences, planned

working time, etc.




HCM: Master Data ( continued)HCM: Master Data ( continued)

Information can also be retrieved in a

relational database format by accessingspecific infotypes.

For example, if a manager wants to review the

basic pay of an employee, the manager doesnot have to access the personnel file andreview all of the records until basic pay isreached. Rather, the basic pay infotype (i.e.,0008) can be accessed directly so that only

that information is retrieved.

HCM: Master Data Employee DataHCM: Master Data - Employee Data



HCM: Master Data - Employee DataHCM: Master Data - Employee Data

Information must be recorded and

maintained effectively for every employee◦ Infotypes (Information Types) are units of information that aid in the entry of master dataand group like information together

Status of the Employee will determinewhat information should be gathered◦ Active vs. Intern

◦ Exempt vs. Non-exempt

Employee Data: InfotypesEmployee Data: Infotypes



Employee Data: InfotypesEmployee Data: Infotypes

Numerous infotypes will be created for eachemployee◦ Organizational Assignment must be the first infotype recorded

Employee Data: InfosubtypesEmployee Data: Infosubtypes



Employee Data: InfosubtypesEmployee Data: Infosubtypes

Certain data that is entered in an infotype can

trigger the need for a infosubtype◦ ex. Family Member/Dependents

If you enter that you are married or have children it willgenerate the need for a spouse/child infosubtype to capturethe information about the spouse or child(ren)

Subtypes also allow you to account for timeconstraints◦ Different addresses may be current at the same timePermanent ResidenceTemporary ResidenceHome address

Employee Data: Personnel ActionsEmployee Data: Personnel Actions



Employee Data: Personnel ActionsEmployee Data: Personnel ActionsPersonnel actions are a series of

predefined infotypes that are groupedtogether to speed the data entry process◦ Hiring, Firing, Reassignment, Retiring – wouldall be examples of procedures that could be

represented by a Personnel actionPersonnel Actions enable users to enter

information about an employee withouthaving to access each individual infotype

Personnel FilePersonnel File



Personnel FilePersonnel File

• Information maintained about an employee is stored in their

Personnel File

HCM: Employee LifecycleHCM: Employee Lifecycle



HCM: Employee LifecycleHCM: Employee Lifecycle


Birth

Work Taxes

Death (Retire)

HCM: Process/FunctionsHCM: Process/Functions



HCM: Process/FunctionsHCM: Process/Functions

Recruitment

Cost Planning

Reporting

Training and

Development

Manage Work

Time (CATS)

Payroll

Administration

Hire

Employee

ESSEmployee

Self-Service

Compensation

& Benefits

EGN_5622 HCM Part 1 Spring 2012

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