Other Business Processes Chapter 8 Other Business Processes

Chapter Objectives Identify the characteristics of other business processes and related IT applications. Identify the weaknesses of the traditional processes and their IT application architecture. Develop REAL models of the various business processes. Identify opportunities to improve the business processes.

Traditional, Manual Payroll Process 1 3 n 2 Job time tickets Cost Accounting Post to job order cost sheets Personnel 1 Authorize Rate and Deductions Employee Records 1 3 n 2 Job time tickets Factory Supervisor Reviews 2 1 3 n Job time tickets Time cards Timekeeping Reconcile & approve time 4 1 3 n 2 Approved time cards Payroll Verify pay rates & deductions Register 4 5 Accounts Payable Payroll Register Prepare cash disbursement documents Payroll register pay voucher, check 5 1 3 n 2 Individual Checks Cashier/Cash Disbursement Sign check & deposit in imprest fund 6 Prepare employee pay checks Bank Imprest payroll account Deposit check in imprest fund Employees Paycheck 6

Human Resource Business Process Strategy & Objectives To provide the human labor and expertise that an organization needs to function efficiently and effectively. Traditional Manual Payroll Process Uses an extensive amount of paper to capture, convey, store and report information. Traditional Computerized Payroll Process Collection of personal and payroll data entered into an employee payroll master file.

Traditional Automated Payroll Process Flowchart From Timekeeping Attendance time cards Performed by a payroll clerk Prepare batch total Batch total Performed in the Data Processing Department Attendance time cards Key-to-disk & edit Exemption and summary report Personnel Department Payroll action records Time data Performed by personnel clerks as soon as changes are approved Enter change data Run 1 - Sort by employee number Exemption and summary report Sorted time data Access employee records & make changes Run 2 - Update employee file & prepare paychecks Employee payroll master file A

Traditional Automated Payroll Process Flowchart Employee payroll master file Run 2 - Update employee file & prepare paychecks Exemption and summary report General Ledger transaction file Payment register Paychecks To Payroll Department To general ledger procedure To cashier

Information Needs in the Human Resource Business Process Approve headcount In many organizations approved headcount is a key tool for controlling labor cost. For example, a supervisor wishing to increase headcount must prepare the necessary paperwork to identify and justify the need for a new position. There is an extensive review process that requires the division manager, area controller, and executive vice president to approve the request. Only when all these approvals are obtained can the position be opened for hiring.

Information Needs in the Human Resource Business Process Hire employees Organizations continue to need professional, support staff, and technical personnel in today’s competitive, advanced business environment. Individuals agree to work in exchange for wages, benefits, and other rewards. Hiring is the process of matching the skills and interests of people with the needs of the organization. Important in the hiring process is an accurate description of the organization’s needs. Not only must accurate projections be made of the number of individuals needed, but also organizations must develop job descriptions and skill requirements associated with each job position. Those responsible for hiring use the job descriptions and skill requirements as a basis for selecting new hires.

Information Needs in the Human Resource Business Process Training Training requires: an understanding of the current knowledge and skills of the people to be trained, identifying the desired skills and knowledge, and a program to provide what is currently lacking. Maintaining a record of each employee’s training can provide important information in assigning employees to new jobs.

Information Needs in the Human Resource Business Process Assigning Part of management’s responsibility is to organize and direct the work of employees. Organizing involves identifying the activities to be performed, structuring the activities into jobs, and positioning the jobs into departments, project teams, or divisions. Competent individuals who have the skills, abilities, and training necessary to perform them must fill jobs. To effectively assign people to jobs, management must receive information on the operating events that must be performed, the skills required to perform them, and the skills, abilities, and training of each employee.

Information Needs in the Human Resource Business Process Compensating Employee compensation may come in the form of a salary, commission, salary plus commission, rate per hour, or rate per piece (based on units of work). Most managers and top‑level executives are paid a salary and perhaps a bonus depending on the profitability of the company. Manual-type work is typically paid by the hour with a premium rate for overtime hours. Overtime pay may be computed on a daily basis (any time over eight hours per day), or on a weekly basis (any time over 40 hours per week).

Information Needs in the Human Resource Business Process Evaluating Performance evaluations serve several important functions in an organization: They provide a basis for recognizing and rewarding performance. They guide personnel actions such as hiring, firing, and promoting. They provide individuals with information for their own personal development. They identify training needs for the organization.

Information Needs in the Human Resource Business Process Terminating Terminating employees is the most undesirable of all operating events. Unfortunately, this has become an important event as many companies attempt to “downsize” or “rightsize.” Effectively performing each of the aforementioned events is important in avoiding problems with this event. Doing a quality job of hiring and training employees can reduce the likelihood of having to subsequently terminate them.

REAL Model of the Human Resource Business Process Propose Headcount Supervisor Headcount List Review/ Approve Headcount Planning Committee Hire Employees Hiring Officers Train Employees Employees Trainers Assign Employees Pay Employees Payroll Employee Cash Terminate/Retire Employees

Sample Process Relationships Acquisition/Payment Process Human Resource Sales/Collection Financing Business Other Alternatives Conversion Cash Goods and Services Materials Labor

Sample Equity Company Financing REAL Model Approve New Loans (0,*) (1,1) (1,1) (1,1) Executive Committee (0,*) (1,1) (1,1) Debt Financial Instruments (1,1) (1,1) Borrow Money (1,1) (1,1) Finance Employee (0,*) (1,1) (0,*) (1,1) (1,1) Sell Stock (0,*) (1,1) Financing Institution (1,1) (1,1) (0,*) Receive Cash (1,1) (0,*) (1,1) Accounting Clerk (1,1) Cash (0,*) (1,1) (0,*) (1,1) Invest Excess Funds (0,*) (1,1) Asset Financial Instruments Approve Principal & Interest Payments (1,1) (0,*) (0,*) (0,*) (0,*) (0,*) Disburse Cash

Sample Conversion Process Data Flows Inputs Outputs Conversion Process Raw Materials Equipment Labor Products Services Acquire Input through: Sell Outputs through: Acquisition/Maintenance/Payment Process Human Resource Process Sales/Collection Process

Flow of Resources - Manufacturing Process Raw Materials Acquired Used Labor Costs Work In Process Materials Labor Overhead Units Completed Finished Goods Units Completed Sold Equipment and Other Allocated Amount

Nichol’s Bottles Conversion Process Model Raw Material Inventory (1,*) (1,*) (0,*) Heat Glass Compound (0,*) (1,1) Furnace Operators (1,*) (0,*) Work in Process Inventory (1,1) (1,1) (1,1) (1,1) (1,*) Pour Glass into Molds (0,*) Pourers (1,1) (1,*) (0,*) (1,*) Equipment (1,*) (1,*) (1,*) Finish and Label (0,*) (1,1) (0,*) Finishers (0,*) (1,*) Package Bottles (0,*) (1,1) (0,*) Packagers Finished Goods Inventory (1,*) (1,*)

Generic Overview of an Entire Business Acquire Financing Financial Instruments Investors & Creditors Hire & Use EmployeeServices Customers Convert/Build Products Employees Sell Goods/ Services Goods/Services Resources Receive Cash Property, Plant, & Equipment Purchase Resources Vendors Cash Disburse Cash