How to Capture Employee Service Agreement Bonds in SAP ERP HCM

  • by Raghavendran Parthasarathy, Principal Consultant, Hexaware Technologies
  • September 16, 2014
Organizations often offer new skills or technology training to their employees. One question that comes up regarding this is how can companies safeguard their investment in these employees? One way companies can protect their exposure is requiring employees to sign employee service agreement bonds that specify how long they must stay employed with the company after they’ve been trained. Learn a simple and straightforward approach for configuring company-specific employee service agreement bonds in standard SAP ERP HCM.
Learning Objectives

By reading this article, you will:

  • Map talent retention requirements  in SAP ERP HCM
  • Configure talent retention requirements in SAP ERP HCM
  • Understand the complexities of retaining talent in the IT industry
  • See how talent retention is addressed and practiced in some organizations
  • Learn how to configure infotype 0035 (company instructions), infotype 0021 (family and dependents), and infotype 0703 (document on dependents) to synchronize the HR process of capturing employee service agreement bond details
Key Concept

An employee service agreement bond is a binding agreement signed by the employee and employer that guarantees the employee will stay and work for an agreed-upon period after training, or be liable to pay back the cost of their training to the company. In the US, a comparable example would be a non-compete clause in an employee contract.

In India and other developed nations, IT is one the fastest growing industries; as a result, the demand to provide new technology and skills training to employees has increased the training costs incurred by companies. One way companies can protect themselves is by limiting attrition rates for employees once they’ve been trained. To that end, some of the top Indian companies use employee service agreement bonds to help retain highly skilled professionals. These service agreement bonds, signed by both the employer and the employee, require employees to work for a company for an agreed-upon period after any training provided or paid for by the company.

Note
The average attrition rate in the Indian IT industry for 2014 was estimated to be approximately 19 percent at the high end, and around 12.8 percent at the lower end. Follow these links to learn about the attrition rates at different organizations and to read about the results of a survey done on attrition rates across different industries in India in 2014:

http://www.thehindubusinessline.com/features/smartbuy/attrition-on-the-rise-in-it-firms/article5730053.ece

http://www.deloitte.com/view/en_IN/in/services/consulting/human-capital-advisory-services/bc30cd09c073e310VgnVCM1000003256f70aRCRD.htm

For these types of jobs, organizations invest a lot of time and resources in these employees in terms of salaries paid during training, and the cost of the training itself (such the cost of the external trainer, materials, and travel and accommodations if the training is at an off-site location).

Raghavendran Parthasarathy

Raghavendran Parthasarathy works for Hexaware Technologies as a Principal Consultant,where he manages SAP solution design for customers across the globe. He has worked in SAP ERP HCM for over 14 years in various capacities, including payroll projects in the Middle East, Europe, and Asia/Pacific. In addition to payroll, Raghavendran has experience in negative time management, personnel administration, and recruitment. He has also been a part of portal implementations. Currently, he is involved with cloud-based HCM applications such as SAP SuccessFactors and Workday.

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