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Harvey CFMA Magazine Article

  1. 1. r e p r i n t March-April 2011CONSTRUCTION FINANCIAL MANAGEMENT ASSOCIATION The Source & Resource for Constr uction Financial Professionals
  2. 2. BY VICTORIA SATRANHUMAN CAPITAL MANAGEMENT:The Heart of Your Company In the past, contractors almost exclusively focused on managing labor production and its costs. However, with the recent economic challenges and ever-increasing regulations – including the enactment of the Patient Protection and Affordable Care Act (the “Health Care Reform Act”) – this practice is no longer sufficient for future growth and prosperity. Companies are finding the need for a more well-rounded approach to human capital management that will meet indus- try and government standards. This new approach allows the focus to remain on the bottom line. In order to address this need and ensure that managers, supervisors, and support staff have the most current and accurate in- formation, companies are turning to human capital management solutions to record, track, and maintain employee data in cen- tralized, easily accessible systems. SELECTING A SOLUTION Selecting a solution that meets your company’s needs can be difficult and time-Human capital is the heart of every company. For consuming. Most solutions are either gen-contractors, it’s one of the key elements that ensures eralized and designed to work across a number of industries or so specialized thatprojects are completed on time, within budget, and to they fail to communicate with other keythe highest possible standards. systems that drive your company’s daily processes.However, managing human capital can be challenging, With that in mind, it’s necessary thatregardless of a company’s size, line of business, or CFMs become familiar with the available solutions and the impact implementationlocation. Coupled with industry regulations and govern- will have on both their companies’ IT in-ment standards, the process can be overwhelming. frastructure and employees.CFMA BP March-April 2011
  3. 3. Human Capital ManagementLaying the Groundwork to learn about their benefits from Web-based materials when offered.3It’s important to start by identifying and addressing yourcompany’s specific needs to ensure that the ultimate solution “The demand for comprehensive HR solutions that automatewill effectively and efficiently address those concerns. By the administration of personnel data and benefits informationdoing so, the results will transform not only the HR strategy, has increased over recent years, and there will be an evenbut also the company as a whole. greater need once the recently enacted Health Care Reform Act takes effect in 2014,” comments John Harvey, EmployeeThrough research and discussions with leading commercial Benefits Consultant, MJ Insurance, Inc., Phoenix, AZ.contractors, we have identified six key areas that must beaddressed in any human capital management solution. This Self-Service Applicationsarticle identifies these areas of concern and demonstrates how Employee self-service applications allow individuals to up-they have impacted various contractors and their search for a date and maintain their own information through an easilysolution. The six key areas are: accessible portal. Let’s take a look at three areas of benefits1) Benefits management management where automation would be helpful.2) Regulatory compliance Personnel Data3) Employee development It’s important to have accurate and up-to-date addresses, qualifications and certifications, and emergency contact4) Knowledge transfer information. And, personnel data maintenance is essential to5) IT security and integration ensure accurate payroll, tax forms, and financial reporting,6) Recruitment management as well as the matching of personnel to requirements for projects and other open positions. However, maintaining thisAfter you have addressed these areas, you can then develop a data can be a time-consuming challenge for HR and adminis-framework for evaluating and comparing different solutions to trative personnel.help select one that will serve your company for years to come. According to Jeff Moryn, CIO of Parsons Electric, Minneapolis, MN, “Each year when we send out our W2s, it never fails thatBENEFITS MANAGEMENT we experience approximately 10% of them being returnedMaximizing employee benefit plans is a crucial element of because the address was incorrect.”any human capital management program. To control costs Employee Benefitsand improve effectiveness, companies are turning to tech- Employee self-service applications provide all employees,nology for benefits administration solutions. Benefits admin- whether they’re remote or in the office, with the ability toistration can be a very narrow or broad application, based on manage their health benefits, pension, and stock plans, andthe company’s perspective or need. to access company information without having to involve theBenefits administration solutions automate business pro- back-office administrative staff or HR teams. This can be acesses and reduce or eliminate costs from ineligible depend- boon to productivity and make a significant difference forents, which cost American companies an estimated $22 billion companies with large workforces, multiple offices, and/oreach year.1 They also: many projects across multiple states.• fully automate year-round benefit processes “Workers have the ability to manage their personal benefit and communication; statements online, including benefits they are enrolled in as• enforce a consistent set of benefit rules; well as how much both they and the company have spent on these benefits during the year to date,” explains Todd Andrews,• produce accurate data and reports; and Assistant Treasurer at Moretrench in Rockaway, NJ.• virtually eliminate HR staff intervention. “This information, along with the year-to-date cash compen-A recent study shows that 52% of employers surveyed sation information, can provide employees a picture of theirsought greater use of employee self-service technologies rel- entire compensation package. The employees can makeative to restructuring the administration of some or all changes remotely, as allowed by the company, and plan forrewards programs.2 And, 70% of employees surveyed chose the future.” March-April 2011 CFMA BP
  4. 4. Documentation Requests Federal RegulationsWhen employees apply for a loan, file a tax return, or transfer Government projects introduce a set of complex and uniquefrom one job or company to another, they need proper doc- requirements and regulations. To be able to vie for govern-umentation. Employee status updates that involve the addi- ment funds and engage in government projects, contractorstion or removal of a dependent or a change in marital status must provide accurate and real-time reports on very specificrequire immediate administrative action and must also be data.documented. So, federal contractors need the ability to conveniently pullWithout a self-service application, they need to contact together comprehensive reports. Without softwaretheir employer to obtain the necessary docu- solutions to support the administration and re-ments, complete the forms, and file the infor- porting of such information, this intricate pro-mation for action. However, with a self-service cess can cost significant staff time and, inapplication to fulfill these tasks, the em- some cases, lead to failed bids.ployees fill out the necessary forms on theportal and, once they are submitted, the Safety Requirementsforms are automatically recorded and “Every job requires safety measures. Thererouted to the necessary people for appro- are various standard formats on how con-priate action. tractors have to administer and comply with these measures at the company, project, state,If employees are empowered to manage their and federal levels,” says Fluker.own personnel data and benefits information,then there is no more chasing paperwork or one-time “Some projects require the completion of specific safetyadministrative requests. training programs for each employee. Contractors that en- gage in civil engineering, chemical engineering, building con-Overall, employee self-service applications and similar HR struction, demolition, and remodeling must perform extensiveportals benefit companies of any size. Enabling employees to safety training programs to prevent any exposure to envi-make necessary changes and corrections to their personal ronmental factors and job-related accidents.”data saves a significant amount of time for HR personnel andimproves accuracy by removing the need for double entry of So, contractors must spend a significant amount of timeinformation and capturing data from handwritten forms. ensuring that very specific labor requirements are met. Days of IT and/or HR staff time can be saved if the information for“The closer the data entry and personnel data management is comprehensive labor reports for each project resides in a sin-to the employee, the higher the accuracy,” says Tom Fluker, a gle, integrated solution.construction IT consultant with Sentigy in Houston, TX. “Withtoday’s integrated mobile communication technologies, these Health Care Reform Actprocesses can be easily pushed down to the employee, as they “The most frustrating thing with the newly enacted Healthshould be.” Care Reform Act is not knowing what will change,” says Fluker. “It is unclear what parts of the reform have passed,REGULATORY COMPLIANCE and what items will be deductible and taxable. The unknown does not provide a lot of time or comfort for companies try-The challenge of ensuring that HR practices comply with the ing to plan ahead.”numerous and often complex laws and regulations can bedaunting, and it’s not going to get easier anytime soon. Although it is too soon to tell the specific impact that the Health Care Reform Act will have on construction compa-There is an increased need to meet regulatory requirements nies, one thing is certain: There will be more administration,in order for contractors to bid on and successfully complete documentation, and information tracking.projects. Ever-changing federal regulations, safety require-ments, the recent Health Care Reform Act, and employee While companies can be penalized for not meeting specificturnover compliance demand more administration and requirements, they can also benefit from being in total con-reporting. trol of worker and company data.CFMA BP March-April 2011
  5. 5. Human Capital Management . . . the ability to know what our workforce looks like – size, skill set, demographics, certifications, performance, and other points of view – is probably one of the most critical components of an HR solution.Employee Turnover ComplianceDue to the economic downturn and resulting decrease in critical components of an HR solution. It helps us plan aheadbacklog and project availability, contractors have experi- and enroll into employee development programs to ensureenced increased employee turnover. If these processes are that we have the skill sets we need for the upcoming proj-not carefully documented, then the possibility increases for ects,” explains Will Trujillo, HR Director, Schuff Internationalformer employees to file claims and lawsuits. (a large structural steel company based in Phoenix, AZ).As a result, many contractors either outsource these duties “It also works the other way around,” continues Trujillo. “If weor have a full-time person on staff to maximize compliance of know that we have an abundance of labor in certain disciplinesrecruiting, hiring, and layoff procedures, and to ensure their while we lack skill sets in others, then we can proactivelyemployee handbooks are up to date. retrain our employees and managers to respond to market demands and, if needed, enter into new market opportunities.”(For more on hiring and firing, see Todd A. Jones’ article on“A CFM’s Legal Guide to Hiring & Firing” in the May/June KNOWLEDGE TRANSFER2007 issue.) An aging workforce creates additional reasons for effectiveEMPLOYEE DEVELOPMENT employee training programs, continued employee develop- ment, and corporate HR strategy. An integral part of thisAgainst the backdrop of the recent recession, many contrac- strategy must be the effective transfer of knowledge.tors have diversified their service offerings out of necessityby bidding for jobs outside of their immediate area of expert- Succession planning, which often refers to a company’s exec-ise or geographic location. utive management, is equally important at lower levels to ensure that the knowledge gained from years of experience(For more information on performing work in new geo- is not lost as employees retire. (For more on succession plan-graphic locations, be sure to read “Leaving Your Home State: ning for your company, see “The CFM’s Role in BusinesCommunication Is Key” by Gretchen J. Kelly in the January/ Succession Planning” by Elaine J. Ervin and Dan Gaffney inFebruary 2011 issue.) March/April issue of this magazine.)If a contractor wins a bid outside its region or area of expert- Through the use of an automated HR application, specificise, then it must have the labor force needed to deliver on the skill sets, knowledge, and certifications can be tracked alongproject. The more competitive or aggressive a bid, the more with employee ages and expected retirement dates. Plansimportant it is to hire the fewest possible workers with the can be made so that the most critical elements are passed onmost exact skill sets needed. Also, certifications are often to the younger generation of employees to provide continu-required for certain projects and must be presented before ity within the organization.proceeding with a job. In other words, when margins aretight, there is no room for error. IT SECURITY & INTEGRATION“We engage in a variety of complex and large specialty proj- As with direct access to any type of confidential information,ects. Therefore, the ability to know what our workforce looks personnel data made available through an HR portal requireslike – size, skill set, demographics, certifications, perform- that a company pay specific attention to its employees’ dataance, and other points of view – is probably one of the most and transaction security to ensure accuracy and privacy. March-April 2011 CFMA BP
  6. 6. For security reasons, many contractors opt to keep their criti- for projects. In addition, these different groups of workerscal business operations and data in-house, and expect the HR receive different benefits and pay rates, and may be subjectmanagement component to be part of a financial management to different regulations and standards.solution. But, financial applications are not always as efficientin managing critical personnel data. All of this places a tremendous burden on the HR depart- ment, or in many cases, administrative personnel in lieu of aConsider the recruitment-heavy nature of this industry: dedicated HR department. Not only do these employeesContractors try to hire the right amount of people with the need to manage the information for current workers, butright skill set for each job. So, they are likely to gain consid- they must also be constantly prepared to recruit new work-erable efficiencies by choosing an integrated software solu- ers as projects are won and labor requirements shift.tion that helps manage this highly repetitive process. Manual Process IssuesIn addition, the construction industry’s high turnover raterequires a streamlined on-boarding and exit process, role- Regardless of who is managing this information, personnelbased security with restricted access to applications and data (from basic contact information to complex qualifica-data, and predefined rules for what data is being displayed to tions and certifications) needs to be captured and main-employees in the home office and the mobile workforce. tained to know what resources are available and needed, andThese processes can be conveniently managed by to match those resources to specific jobs and proj-an HR software application. ects. Without an automated HR solution in place, the recruitment process can causeHowever, according to Fluker: “Since we major head-aches for all parties involved.are processing and accessing person-nel data in the field, we need to “I was working with a constructionensure that the proper security con- company two years ago, when onetrols are in place. HR solutions con- day 300-400 applicants were fillingtain an enormous amount of confi- out paperwork,” says Fluker. “I sawdential data about each person and an immediate opportunity for busi-the company overall. ness process improvement as I watched hundreds of forms be filled“Credit card and social security num- out by hand.bers, dependents, payroll, bankaccounts, and other information are now “I knew that the next step in the processavailable over an Internet connection. was the manual entry of the handwrittenBefore implementing HR self-service portals and information into a software solution by anproviding remote access to a company’s HR, payroll, and administrative person. The likelihood of making anfinancial management applications, a company must ensure error and not being able to catch or correct it prior to bene-that certain business processes are established, in addition to fits and payroll processing was very high, especially whenthe detailed assessment of the solution’s security itself.” hundreds of applicants were being processed.” The unfortunate fact is that the number of manual processesRECRUITMENT MANAGEMENT that support HR administrations among construction compa- nies remains surprisingly high and can make it difficult toContractors experience ongoing recruitment, hiring, and lay- address the many challenges of daily operations.offs as adjustments are made to balance the available laborpool, needed skill sets, and active projects. While current When capturing information from a manual form, the appli-projects and forecasted backlogs determine the mix of work- cant’s handwriting may be difficult to read, the answers toers needed at any given time, the resource pool can be very the questions may be incomplete, and/or the incorrect formsdiverse to meet a company’s particular needs. could be used.This can be further complicated by the combination of full- All of this leads to administrative errors as the information istime and contract workers, union and nonunion employees, entered into a database application, which leads to additionaland the many different skill sets and classifications needed man-hours spent making follow-up calls to get the neededCFMA BP March-April 2011
  7. 7. Human Capital Managementinformation. Or, the applicant may have previously applied flows and standardize processes, which can improve produc-for a job or was employed by the company, leading to dupli- tivity and overall operational efficiency.cate information being entered. In a world of tightened margins and increased regulation, aApplicant Tracking solution specifically designed for construction companiesThe ability to track the application process, the applicant’s that fully integrates with other key enterprise applicationshistory with the company, his or her skill set, certifications, can make the difference between success and failure. nand other pertinent information are some of the things thatdeliver considerable efficiencies to contractors.HR managers and PMs can benefit tremendously from thewealth of easily accessible information in an automated sys-tem as they open job requisitions and begin the recruitmentprocess. Applicants can be prescreened for specific qualifi- VICTORIA SATRAN is the Director of Marketing forcations and the number of interviews required can be Computer Guidance Corporation in Scottsdale, AZ, areduced to find the right applicant based on the readily avail- provider of construction financial and project manage- ment software for the commercial construction industry.able information. Victoria began her career at IKON Office Solutions, Inc.,When recruitment management is part of a larger HR solu- where she served numerous project management roles fortion, the benefits are enormous, as the information is easily the corporate marketing department. She was latertransitioned from applications to personnel files and then responsible for business development, product strategy,maintained over the course of employment with the company. and marketing communications for a division of Electronics for Imaging, Inc., a California-based software development company. Most recently, Victoria was the VPTURNING A PROBLEM INTO A SOLUTION of Marketing at MWA Intelligence, Inc., an entrepreneur- ial M2M software solutions provider in Scottsdale, AZ.Workers are critical to construction companies, and theirdevelopment and management are directly linked to a com- Victoria earned a BS in Business Administration andpany’s overall performance. To sustain efficiency and gain a International Marketing from Northern Arizona University,competitive edge in today’s challenging marketplace, how Flagstaff, AZ. She continued her education at Thunderbirdthe vast amount of employee data is managed dictates a com- American Graduate School of International Management in Glendale, AZ, where she received her Global Leader-pany’s bottom-line success. ship Certificate. She is a member of CFMA’s Valley of the Sun Chapter and the AGC.A technology solution that manages your company’s humancapital can alleviate much of the administrative burden that Phone: 480-444-7028contractors face on a daily basis. A comprehensive solution E-Mail: vsatran@computerguidance.comthat streamlines access to information can automate work- Website: www.computerguidance.com Endnotes: 1. Ceridian, “Dependent Eligibility Audits Bring Employers ‘Immediate, Often Staggering’ Savings,” February 22, 2010. 2. Deloitte Consulting LLP and the International Society of Certified Employee Benefit Specialists, “2010 Top Five Total Rewards Priorities Survey,” 2010, an online survey of 292 employers jointly sponsored by Deloitte Consulting LLP and the International Society of Certified Employee Benefit Specialists. For purposes of this survey, the phrase “total rewards” is defined as all compensation, benefits, perquisites, and any other direct or indirect payments to employees. 3. Unum, “Employee Education and Enrollment Survey,” January 2010. March-April 2011 CFMA BP
  8. 8. Copyright © 2011 by the Construction Financial Management Association. All rights reserved. This article first appeared in CFMA Building Profits. Reprinted with permission.