Human Resource Information Systems

Chapter 13 Performance Management, Compensation, Benefits, Payroll & the HRIS

Tonya Rudolphsen
April 19, 2009

Performance Management, compensation, benefits, payroll are parts of the HRIS that represent an exchange
between employees and the employers. In the most efficient type of system, these aspects of the HRIS would
be interconnected. This chapter deals with data inputs, data outputs, typical reports and decision support.

PERFORMANCE MANAGEMENT

Unlike traditional performance management, the recent focus has been on improving performance instead of
simply rating performance. It is considered part of the larger are of talent management.

Performance Planning can be designed as part of an HRIS that can be used by any type of manager. For each
performance dimension, the manager will be able to develop specific outcomes and behaviors to measure the
performance. Although each position is unique, an attempt should be made to develop common standards for
the organization. After dimensions and standards are developed, they must be communicated to the
employees. They must be able to understand what is expected of them and be able to establish goals. The
format may vary depending on the type of employee (management, hourly, etc). Although managers should be
evaluating employee performance at all times, most organizations have annual performance evaluations where
the employee is offered a summary of their performance.

Typical Data Inputs: three main levels: organization, job and individual. Organizational level includes goals and
performance plans. Job level includes key tasks and responsibilities and outcomes. Individual level includes
measures to rate employee, performance standards, names of raters, comments, feedback documentation.
Most data in this area is individual.

Typical Reports: performance contract, annual summary, performance data by unit/location, long term trend
per employee or group.

Data Outflows: often linked to compensation for annual raises following performance evaluation for
organizations with merit based pay. Also used for HR planning (promotions, lay-offs, training, etc).

Decision Support: Allows managers to keep track of how employee performance and determine necessary
interventions. Employees can also see this data and use it to determine areas of improvement. Data can
indicate how groups are doing as a whole (this is often useful in some sales jobs). Systems make administrative
tasks easier to track. For example, managers can see who has and who has not completed their performance
evaluation. Data can be used by HR to ensure there are no biases in ratings, promotions, or other decisions.
Web based systems provide additional flexibility.

COMPENSATION

Creating and administering compensation systems is a complex aspect of HR. These compensation systems
usually include base pay, merit pay, short-term and long-term incentives, perquisites, recognition rewards and
attraction/retention awards. To complicate matters further, there are some groups or special populations that
have unique pay that needs to be managed. All of these pieces must be coordinated and interconnected.

Typical Data Inputs: Internal data including information about jobs, people and organizational units. External
Data such as market surveys. Some incentive programs require tracking of data such as customer survey results,
accident data and/or product quality data. Special populations such as unions require contract specific data.

Typical Reports: Compensation related reports contain sensitive information and therefore are only seen by a
limited number of employees. An annual compensation report is generated to show the total amount of money
the organization spent on salary, incentives, etc. Additional reports as mandated by state and federal
regulations such as the OFCCP.

Data Outflows: Most important is to payroll so employees will receive their checks. Budget analysts and
managers preparing budgets will use information from the compensation system. Benefit analyst may also need
compensation information.

Decision Support: most relate back to demining how much the employee should be paid. Examples include: Job
evaluation, use of market data, market pricing, building a salary structure, developing a merit matrix and
running incentive programs. Web based compensation systems are becoming more common, but have some
issues because they are often in real time.

BENEFITS

Basic types of benefit programs exist in the United States (different for other countries):

1. Pension Plans, Individual Savings Plans, Social Security

2. Worker compensation, unemployment insurance, short and long term disability, and life insurance
3. Medical and other health benefits (including dental and vision)
4. Paid Time off (vacation, holidays, sick time, etc)

Typical Data Inputs: Different HRIS record and track different types of data. Potential information includes
vendors, eligibility, demographics, program coverage, cost limitations, usage, employee choices, enrollment,
changes in coverage, changes in employee status, dependants, etc. Laws and regulations will also need to be
tracked and complied with. Some systems allow claims to processed.

Typical Reports: Annual benefits report required as part of ERISA. In addition, many other government
mandated reports relating to benefits are required.

Data Outflows: Benefits information must be obtained by payroll and accounting. Some information is sent to
the vendors and government agencies. Real Time transfer of data is a time and cost savings measure.

Decision Support: Reporting in this area overlaps with decision support systems. Most important is compliance
with government regulations and keeping track of employee choices. Some companies offer a systems that will
help employees decided which plans to choose.

PAYROLL
This is the process by which compensation is transferred from the company to the employee via a paycheck.
Taxes and benefit deductions are withheld through these paychecks. Direct deposit is done through payroll. For
efficiency, Compensation, benefits and accounting systems should be linked to Payroll (even if this process is
outsourced). Payroll is usually administered by finance or accounting and not HR.

Typical Data Inputs: Internal organizational data may include: Compensation, benefits, raise or monetary reward
data, other deductions data (ex: union dues or child support). Data external to the organization may include
information related to income or payroll tax laws. Some of this information, such as COBRA, may be related to
ex-employees. Most of the data inputs to payroll are changes (new benefits, position transfer, status change
part time to full time, etc).

Typical Reports: Standard payroll reports include information about total dollar amount of company payroll,
amount paid to individual employees over certain time periods, total deductions for certain types of benefits or
programs.

Data Outflows: Most payroll data goes to the accounting department or government agencies.

Decision Support: Auditing purposes only.