Developing Primary and Human Resource Business Processes Based On EQUIS

Mursyid Hasanbasri School of Business and Management

Institut Teknologi Bandung Bandung, Indonesia

mursyid@sbm.itb.ac.id

Andri School of Business and Management

Institut Teknologi Bandung Bandung, Indonesia

andri_iesmail@yahoo.com

Abstract—To face that global competition, Indonesia higher education institutions must improve the quality of their service. Without an international quality standard, Indonesian higher education institutions will find it hard to compete against international higher education institutions. European Quality Improvement System (EQUIS) is an international accreditation that has an objective to increase the quality of management education worldwide. There are 10 standards and criteria that will be assessed by EQUIS. An appropriate business process design is required to meet that 10 standards and criteria.

The business process design methodology, named Integrated Business Process for Higher Education System (IBEST), starts from analyzing the 10 standards and criteria of EQUIS. The next step is to design a process with an appropriate input and output that will answer that certain standard and criteria. After each standard and criteria has an appropriate process, those processes will be classified by its type (Planning, Preparation, Execution, and Evaluation) and its time cycle (10 years, 5 years, 1 year, and 6 months). In addition to primary business process design, a Human Resources business process design is also needed as one of supporting business processes.

Keywords: business process design, EQUIS accreditation, higher education, HR

I. BACKGROUND Indonesia’s education level is lagging behind compared

to the education level in develop countries. It can be figured on the list of the world best 500 univesities in the statistic of Times Higher Education and QS World University Ranking [1]. Indonesia, represented by Universitas Indonesia (287), Institut Teknologi Bandung (315), dan Universitas Gajah Mada (316). Universities in United States dominate the best 50. However, this is rank list of some universities in ASEAN: • National University of Singapore (NUS), Singapore

(30) • Nanyang Technological University, Singapore (77) • Chulalongkorn University, Thailand (166)

One of the ways to get international recognition is by being internationally accredited. To realize the goal, business processes that aligned to the accreditation standard should be developed.

II. ISSUES

A. Competition WTO (World Trade Organization) manages the entry of

universities from abroad into Indonesia in General Agreement on Trade in Services (GATS). GATS itself is an international agreement concerning service commercial field, and one of the fields included is education.

Education globalization can be delayed, but it cannot be avoided. One of the strategies which can be used by local universities in facing an education globalization is to get international accreditation.

B. Image Management The number of registrants and graduates, graduates

career, university’s history, and the accreditation that is gotten by university become a several things which influence the university image. The higher accreditation that university gets, the image of that university will be better.

Internationally, there are three accreditations which are used in management education field. They are Association to Advance Collegiate Schools of Business (AACSB), Association of MBAs (AMBA), and European Quality Improvement System (EQUIS). Table 1 describes the relevance AACSB, AMBA, EQUIS accreditation criteria to Times Higher Education and QS World University Ranking criteria. Table 2 presents comparison among AACSB, AMBA and EQUIS judgments criteria. From these table, EQUIS has more complete judgment criteria compared to the other three accreditations.

Based on the comparison that has been done, EQUIS becomes a choice of international accreditation which will be used in this paper. EQUIS has strength in criteria completeness, and this accreditation guaranties more increase of Times Higher Education and QS World University Ranking judgment criteria value compared to any other accreditation.

Table 1 The Relevance of Times Higher Education and QS World University Ranking Evaluation Criteria and AACSB, AMBA, EQUIS Accreditation

Indicator AACSB AMBA EQUISAcademic Peer Review Increase Increase IncreaseEmployer Review Increase Increase IncreaseFaculty Student Ratio Increase Increase IncreaseCitations per Faculty Increase IncreaseInternational Faculty IncreaseInternational Students Increase

2009 International Conference on Computer Technology and Development

978-0-7695-3892-1/09 $26.00 © 2009 IEEE

DOI 10.1109/ICCTD.2009.187

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2009 International Conference on Computer Technology and Development

978-0-7695-3892-1/09 $26.00 © 2009 IEEE

DOI 10.1109/ICCTD.2009.187

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Table 2 Equivalent of EQUIS Criteria Compared to AACSB and AMBA

EQUIS AACSB AMBAContext, Governance and Strategy

Strategic Management

The Institution

Programmes Assurance of Learning

Curriculum, Evaluation, Purpose and Outcomes,

Mode and Duration Students Participants Student Faculty Participants Faculty Research and Development

Strategic Management, Participants

-

Executive Education Assurance of Learning (master

degree)

-

Contribution to the Community

Strategic Management, Participants

-

Resources and Administration

Strategic Management

Additional Factors

Internationalisation - Additional Factors Corporate Connections

Strategic Management, Participants

The Institution , Faculty

C. Business Process Due to EQUIS only consists of standard and criteria

which will be assessed, so design of business process becomes important. The definition of a business process is a collection of activities which needs to be done to reach a goal that is decided by organization [2]. A prove on how important a good design business process is the number of technique and method that are used to improve quality are based on the process. Some of these technique and method has been used from decades, such as: flow diagram, control map, Total Quality Management, Business Reengineering Process, and so on.

A good designed and well documented process will support Knowledge Management. The knowledge transferring in this way does not need to rely on the information exchange from one senior to the junior.

D. Human Resource The human resource department generally has one task in

an organization, which is to provide appropriate human resource so that the organization strategy can be run well. For now, the function of a human resource is demanded to provide a traditional transaction of a good human resource function, also a transaction that gives margin strategically [3]. If a function of human resource only provides a traditional transaction, the function will be considered to be complement.

While, if a function of human resource provides a strategic transaction without ability in providing traditional transaction, the function will be considered to be incompetent. To keep those two tasks run well and balance, it needs an approximate business process design.

III. CHALLENGE The conclusion of a business situation analysis can be

seen in Fig. 1. This paper will focus on the main business process design and the human resource function business process based on EQUIS.

Figure 1. Business Situation Analysis

IV. A DESIGN OF MAIN BUSINESS PROCESS PLAN A design of business process is worked in two parts.

First, the design of main business process. Second, the design of human resource function business process. The result of business process design is named IBEST (Integrated Business Process for Higher Education System). Methodology of IBEST can be seen in Fig. 2.

Figure 2. The Methodology of IBEST Design

After getting the business processes which are suitable

with EQUIS standard and criteria, the processes are classified by period when they will be conducted. There are 4 periods that are used: 1. 10 years generally, the vision and mission of an

organization is spaced in 10 years.

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2. 5 years generally, the curriculum is changed every 5 years.

3. 1 year generally, the application of new students is done in once a year.

4. 6 months (1 semester) generally, students learn subjects for 6 months before exam.

Beside classified according to the period, the processes

are classified by the stage. There are 4 stages which have been identified:

1. Design (P1) The process in arranging strategy and

system to be used in coming period to fullfill stakeholder’s needs.

2. Preparation (P2) The process in organizing and allocating recources (finance, human resource, facility, student, etc) for a certain period to fullfill the strategy and system that had been designed before.

3. Implementation (P3) The process in fullfilling the market’s needs for a certain period. For education field, market’s needs are to produce qualified students by a teaching-learning activity, also the contribution to the community.

4. Evaluation (P4) To enclose the output of the work, then evaluate the school’s work for a certain period.

Both classifications are shown in Fig. 3.

Figure 3. Classification of the Processes

A. To Analyze Standard and EQUIS Criteria There are 10 standards and criteria that EQUIS uses. The

connection among those 10 standards and criteria can be seen in Fig. 4.

Figure 4. The Framework of the EQUIS Connection

The detail explanation about EQUIS standard and

criteria can be found at http://www.efmd.org.

B. To Desig Input, Process, Output that matched to Standard and EQUIS Criteria In this stage, identification of processes, input, and

output that are needed to fill the EQUIS criteria are done. For example:

EQUIS: 1.a.1.5 Criteria: Degree certification procedures and the status

of the degrees granted by the School within the existing hierarchy of existing national degrees

Input: The National Education System Process: To analyze the procedure of school

accreditation Output: The school accreditation procedure document

C. To Classify Type of Process After every EQUIS criteria has had a suitable process,

the processes which has been defined, then classified according to the type of process and period. As an example, the process of “Doing cooperation with business school and another academic web in delivering program” is included in the type of implementation process and during 6 month (semester) period.

D. To Arrange the interrelation among Processes Then, the classified processes are analyzed to map the

relationship among those processes. For example, the process of “Faculty member assignment” can be categorized as a sub-process of “Allocating resource”.

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E. To Determine Work Function for Each Process After the entire processes have been classified and

cascaded, then the activity resemblance analysis is done. From that analysis, there are 7 functions that are needed: a. Academic: To make sure the teaching-learning activity,

activity of sending students to the business world, activity of research and development, also contribution to the community run well. There are 4 sub-functions in academic function, which are research and development, alumnus, contribution to the community, and legal.

b. Facility: To make sure physically facility and infrastructure that are needed to support the academic activity.

c. Finance: To manage financial resource that is needed to make sure the school activity run well.

d. Human Resource: To manage the human resource that is needed to make sure the achievement of the school.

e. Information Technology: To plan and arrange facilities related to the information technology to assure the school activity runs well.

f. Marketing: To arrange the communication of school positioning to the market place.

g. Internal Controller: To manage risks that school faces. In addition, the function of the internal controller is to control and give suggestion about activity that is done by the other functions.

V. THE DESIGN OF THE HUMAN RESOURCE FUNCTION BUSINESS PROCESSES

The methodology of the making of the human resource function business process can be seen in Fig. 5.

Figure 5. The Methodology of Human Resource Function Business

Process

A. To Indentify the Main Business Process related to the Human Resource Function As it has been mentioned before, the main business

process is not done completely by the Academic function.

There are some processes related to the human resource function. This completeness of the processes will be analyzed related to the activities that have to be done by human resource function in general organizations. The processes that have not been mentioned in main business process will be designed in the next step.

B. To Design Input, Process, and Output that are required by Human Resource Function The activities generally are done by human resource

function that has been grouped according to the type of the process as shown in the Fig. 6. The processes of these activities will be merged with the main business process related to the human resource function.

Figure 6. The Processes of General Human Resource Function

C. To Classify the Type of the Process After every process of human resource function has been

definite, and then those processes are classified according to the type of the process and period. For example, the process of “Doing the recruitment of the faculty member who expert in individual development” included in the type of the preparation process and have one year period.

D. To Arrange interrelation among Processeses Then, the processes that have been classified are

analyzed to map interrelation among those processes. For example, the process of career planning can be categorized as a sub-process of “Making the internal management system”. The process of “Making school organization structure” itself has to be done before career planning process.

IBEST is put in order so that the business process among functions are integrated well each other, especially by the academic function.

E. To Determine Key Performance Indicator for Human Resource Function KPI for human resource function is gotten from the

metrik which is made by Saratago Institute dan Society for Human Resources Management [4]. Some of the Saratoga metrics that are suitable with education field:

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1. Operating cost per FTE (Full Time Employee)

Operating cost/FTE 2. Net operating cost per FTE (Full Time Employee)

Net Operating cost/FTE 3. Profit per FTE (Full Time Employee) (Revenue-

Operating Cost)/FTE 4. Human Capital ROI (Revenue-(Operating Cost-

(Compensastion Cost+Benefit Cost))) / (Compensation Cost+Benefit Cost)

5. Span of control Headcount/Management Headcount 6. Pipeline utilization Key or Critical Positions Filled

by Succession Planning Candidates / Key or Critical Positions Filled

7. Executive stability ratio The number of executives who has the work experience more than 3 years/the total number of the executive.

8. HR FTE Ratio FTE / HR FTE 9. HR Cost/Operating Cost HR Cost/Operating Cost 10. HR Cost per FTE HR Cost/FTE 11. Learning & Development Investment per FTE

Learning&Development Cost/FTE 12. (Compensation Cost + Benefit Cost)/Revenue

(Compensation Cost + Benefit Cost)/Revenue 13. External cost per hire External recruiting

cost/External recruits 14. Turnover rate turnover/headcount 15. Absence rate The total number of the absence day in

one month/the avarage total number of the labors in certain month x the total number of work day x 100

16. The time in setting the position The total number of time that are needed to fill certain position/the total of persons who are recruited

VI. SOLUTION ANALYSIS The validation of the elementary process will be used in

Table 3.

Table 3. The Criteria of the Elementary Process Validation (Province of British Columbia, 1996)

Question Result Example

Does the process need only one incident in one time to push that process?

If more than one incident in one time is needed, so that process must be decomposition.

Giving compensation is influenced by time and also employee performance report, however not in one time, so the process does not need to be decomposition.

Does the process use all possible data?

If not, the process is under the intermediate level.

Analyzing environment, has a lot of data, however not all of those are used. It means the process of environment analyzing can be decomposition.

Does the process produce information flow for or modify or both?

If not, so this probability is not process.

The exception is only for controlling process.

Does the process figure: - Document handling? -Conditional Situation? -How is something done?

If yes, so decomposition has been too far.

In the list below are not an intermediate process: -To print the final report; -The amount is more than Rp500,000; -To make a copy.

The result is the design that fullfills the criteria in the

list. Therefore, the process design is valid. In addition to that validation, validation by interview with several experts is done as well, which are: • Vice President of Human Resource and Administration

section in PT. Pertamina Hulu Energi: Setyo Wardono • Manager of Human Resource Development and Policy

in PT. Pertamina Hulu Energi: Hidayat Habibie. • Consultant ERP-Oracle PT. Jati Piranti Solusindo:

Roynaldo and Gerry Tunggajaya. • Consultant ERP-SAP Accenture Indonesia: Hosana

Konstansius. From the interview that is done, there is a conclution that

for IBEST human resource function business process applicable in general organization, also in education world. However, need to be done a procedure planning in detail spesifically for universities that will apply this IBEST.

REFERENCES [1] QS Top Universities. (2008). Retrieved April 1, 2009, from QS

World University Ranking: www.topuniversities.com [2] Bandor, M. (2007). Process and Procedure Definition: A Primer.

Pittsburgh: Carnegie Mellon University. [3] Lawler-III, E. E., Ulrich, D., Fitz-enz, J., & Madden-V, J. C. (2004).

Human Resources Business Process Outsourcing. San Fransisco: Josey Bass.

[4] PriceWaterhouseCoopers. (2007). Retrieved Oktober 28, 2008, from Human Capital Measurements: www.pwc.com

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