Do We Need An HRIS?

Success in the human resources profession requires fast and easy access to information — and that requires an automated HR information management system. Too many times companies think they are too small of an organization to justify an HRIS.

To this, I must say that a company is never too small to automate processes. If a company develops sound processes early on, they are poised for growth and may potentially be able to avoid or prolong hiring additional resources in the future.

Selecting an HRIS is a major decision. Getting approval for such a system is often difficult as well.

To start, HR managers should assess and outline how activities are currently being performed within the organization, and, in particular, within the HR department.

An HRIS generally should provide the capability to more effectively plan, control, and manage HR costs; achieve improved efficiency and quality in HR decision making; and improve employee and managerial productivity and effectiveness.

When conducting an analysis, I suggest looking at looking at the business challenges that you are trying to solve FIRST as opposed to the features and functions of a particular software application.

The following questions are designed to assist HR professionals in putting together the facts, the figures, and the business case to convince senior management that the expenditure for an HRIS makes sense.

• What information are people requesting?
• How do you, line managers, the chief executive officer, and the chief financial officer obtain needed personnel information?
• How long does it take you to respond to a new request for information?
• What HR management needs are not being addressed and handled properly?
• How effective is your support to the budgeting and planning processes?
• Where do you stand in complying with COBRA, ERISA, FLSA, OSHA, and other statutes and regulations?
• What tasks are you being asked to do today? How well are you performing these tasks?
• What programs, services, and management support must you provide to help your organization meet its goals?
• What are the major tasks that you intend to accomplish and the results you plan to achieve in order to have a successful HR operation?

Answering these questions will provide you a solid foundation for evaluation of various HRIS products on the market. Because there are so many HRIS providers including in-house, outsourced, hosted, non-hosted, hybrids of these etc., it may make sense to look for an additional resource outside the company to help with your evaluation.

FLSA – Regulations around Bonuses and Overtime

Many employers offer their employees various types of bonuses—including performance awards, gain-sharing systems, and profit sharing. While bonuses are generally used to reward performance, awards are not always directly tied to job performance and are usually offered for perfect attendance, for providing new hire referrals, to recognize an outstanding employee, to motivate employees to work safely, or to reward employee suggestions or participation. There are various legal and tax considerations for employers giving awards or bonuses to their employees. The Fair Labor Standards Act (FLSA) requires employers to count non-discretionary bonuses in an employee’s regular rate of pay for the purpose of calculating overtime.

Discretionary Bonus – Discretionary bonuses provide a mechanism for rewarding performance, attendance, quality, productivity, etc. without increasing the employee’s regular rate. To maintain discretionary status, (i) the fact that the bonus will be awarded, and (ii) the calculation or amount of the award must be determined at the sole discretion of the employer and not announced to employees until at or near the end of the period for which the bonus is given. In other words, it cannot be announced or known in advance such that it serves as a motivator for superior performance. Accordingly, if you give a discretionary bonus on such a regular basis that your employee has an expectation of receiving it, you risk the bonus losing its excludable status. Of course, if your employees have a right to the bonus, whether through promise, contract, or agreement, the bonus is not discretionary, and in such a case must be included in the regular rate. There are no restrictions on how you may calculate a discretionary
bonus; thus, you may base it on the achievement of corporate goals, or, at the individual level, an employee’s productivity or hours worked.

Gift / Holiday Bonus – The FLSA provides that bonuses given as gifts, such as at the holidays, may be excluded from the regular rate as long as the amount of the bonus is not dependent on hours worked, production, or efficiency. In other words, it should not serve as a motivator for increased or more efficient performance. In addition, a gift bonus may not be so significant that your employees consider it part of their wages rather than a gift. Notably, you may give holiday bonuses on a regular basis such that your employees have an expectation of receiving a bonus without losing its excludable status.

Percentage of Total Earnings Bonus – In contrast to the gift and discretionary bonuses, which are excludable from the regular rate, a percentage of total earnings bonus incorporates the overtime into the bonus itself. By calculating the bonus on total earnings during the specified timeframe, which includes overtime pay for that time frame, the overtime component is built into the bonus, so no additional overtime is required. Understanding ahead of time whether a bonus is excludable is critical to accurately valuing the overall cost of the bonus to your company. To the extent your non-exempt employees are working significant amounts of overtime, the award of a non-excludable bonus will require the additional payment of overtime for the weeks covered by the bonus. If this additional overtime is not calculated and factored into the overall cost of the bonus, you could be faced with potentially significant unexpected overtime liability.