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The Role of Human Resource Information Systems (HRIS) in Strategic Human Resource Management (SHRM) Asafo-Adjei Agyenim Boateng Master of Science Theses in Accounting Swedish School Of Economics and Business Administration 2007
HANKEN-Swedish School of Economics and Business Administration Department: Accounting Type of Work: Master of Science Thesis Author: Asafo-Adjei Agyenim Boateng Date: 4th August, 2007 Title of Thesis THE ROLE OF HRIS IN STRATEGIC HUMAN RESOURCE MANAGEMENT Abstract: Information technology is expected to drive Human Resource (HR)’s transition from a focus on Human Resource Management (HRM) to Strategic Human Resource Management (SHRM). This strategic role not only adds a valuable dimension to the HR function, but also changes the competencies that define HR professional and practitioner success.
The study aims at investigating what role if any do Human Resource Information Systems (HRIS) play in SHRM. It attempts to examine how HR professionals and managers in different organizations see the effects of HRIS on strategic HR tasks and job roles. It also tries to find out if there is any significant difference in the usage of HRIS between Small/Medium (SME) size and Large size companies. A survey questionnaire was sent to 170 companies and a response rate of 15. 9% was received. The target group of the questionnaire was HR managers, HR directors, and HR professionals in companies based in Finland.
The scope was widened to include both large and small/medium sized organizations across all the business sectors. The results of the survey reveal that HR professionals not only consider HRIS usage as a support for strategic HR tasks but also perceive it as an enabling technology. The study also indicates that large sized firms are most likely to experience considerable HRIS usage in support of strategic HR tasks. Moreover, there was no significant difference in proportion to the size of a company regarding HRIS usage in support of commitment management and managing trade union relations with organizations.
Low response rate of this study makes generalization rather difficult however, future research would benefit from higher response rates for more generalized results. Key Words: Human Resources, Human Resource Management, Strategic Human Resource Management, Human Resource Information Systems, Strategic Human Resource Tasks, Enabled Technology TABLE OF CONTENT List of Tables………………………………………………………………………………………………………. iv List of Figures …………………………………………………………………………………………………….. v 1 INTRODUCTION……………………………………………………………………………………………… 1 1. 1 Study background………………………………………………………………………………………… 1 1. 2 Research Objective………………………………………………………………………………………. 4 1. 3 Structure of the study …………………………………………………………………………………… 4 2 THE CONCEPT OF HUMAN RESOURCE MANAGEMENT (HRM) …………………… 5 2. Human Resource management (HRM) …………………………………………………………… 5 2. 2 HRM definition …………………………………………………………………………………………… 5 2. 3 HRM processes …………………………………………………………………………………………… 9 2. 3. 1 Planning process……………………………………………………………………………………. 9 2. 3. 2 Recruitment process …………………………………………………………………………….. 0 2. 3. 3 Selection process …………………………………………………………………………………. 10 2. 3. 4 Orientation, training and development process………………………………………… 11 2. 3. 5 Career planning and development process………………………………………………. 11 2. 3. 6 Performance appraisal process ………………………………………………………………. 12 2. 3. 7 Employee Compensation and benefits process ………………………………………… 2 2. 3. 8 Occupational health and safety process ………………………………………………….. 13 2. 4 Chapter Summary………………………………………………………………………………………. 14 3 THE CONCEPT OF STRATEGIC HUMAN RESOURCE MANAGEMENT (SHRM) …………………………………………………………………………………………………………………………. 15 3. 1 SHRM development…………………………………………………………………………………… 5 3. 2 SHRM definition ……………………………………………………………………………………….. 15 3. 3 Dimensions of SHRM ………………………………………………………………………………… 19 3. 3. 1 Re engineering and strategic human resource management ………………………. 19 3. 3. 2 Leadership and strategic human resource management …………………………….. 20 3. 3. 4 Workplace learning and strategic human resource management ………………… 20 3. . 5 Trade unions and strategic human resource management………………………….. 21 3. 4 Chapter summary ………………………………………………………………………………………. 21 4 HUMAN RESOURCE INFORMATION SYSTEMS (HRIS) IN ORGANIZATION . 23 4. 1 Development of HRIS………………………………………………………………………………… 23 4. 2 Definition of HRIS …………………………………………………………………………………….. 24 4. Components of an HRIS …………………………………………………………………………….. 24 4. 4 Users of HRIS applications …………………………………………………………………………. 25 4. 5 HRIS functions………………………………………………………………………………………….. 26 4. 5. 1 Integrating the Technologies of HR ……………………………………………………….. 26 4. 5. 2 Increased Efficiency…………………………………………………………………………….. 26 4. 5. Increased Effectiveness ………………………………………………………………………… 26 4. 5. 4 IT-Enabled Processes …………………………………………………………………………… 27 4. 6 Cost and benefit of HRIS ……………………………………………………………………………. 27 4. 7 Chapter summary ………………………………………………………………………………………. 29 5 HRIS ROLE IN SHRM…………………………………………………………………………………….. 31 5. Previous research……………………………………………………………………………………….. 31 5. 2 HRIS usage……………………………………………………………………………………………….. 31 ii 5. 2. 1 Ball (2000)………………………………………………………………………………………….. 31 5. 3 The role and impact of HRIS ………………………………………………………………………. 33 5. 3. 1 Hussain et al. , (2006)……………………………………………………………………………. 3 5. 3. 2 Florkowski (2006) ……………………………………………………………………………….. 34 5. 3. 3 Gasco, Llopis and Gonzalez (2004) ……………………………………………………….. 34 5. 3. 4 Ordonez de Pablos (2004) …………………………………………………………………….. 36 5. 3. 5 Buckley, Kathleen, Joy and Michaels (2004) ………………………………………….. 37 5. 3. 6 Gardner, Lepak and Bartol (2003) …………………………………………………………. 37 5. . 7 Baran, Karabulut, and Pekdemir (2002)………………………………………………….. 38 5. 3. 8 Tansley, Sue and Hazel (2001) ……………………………………………………………… 40 5. 4 HRIS Implementations……………………………………………………………………………….. 41 5. 4. 1 Ngai and Wat (2004) ……………………………………………………………………………. 41 5. 4. 2 Shrivastava and Shaw (2003)………………………………………………………………… 2 5. 4. 3 Lado and Wilson (1994)……………………………………………………………………….. 43 5. 5 Analysis of the previous research…………………………………………………………………. 44 6 HYPOTHESES DEVELOPMENT AND RESEARCH METHODOLOGY ……………. 49 6. 1 Research Objective…………………………………………………………………………………….. 49 6. 2 Research questions and Hypotheses……………………………………………………………… 50 6. Hypotheses development…………………………………………………………………………….. 51 6. 4 Data and Sample collection methods ……………………………………………………………. 57 6. 5 Chapter summary ………………………………………………………………………………………. 58 7 EMPIRICAL RESULTS AND ANALYSIS ……………………………………………………….. 60 7. 1 The Response rate ……………………………………………………………………………………… 60 7. Characteristics of the Statistics ……………………………………………………………………. 61 7. 3 Presentation of the research findings ……………………………………………………………. 63 7. 3. 1 Hypotheses 1 ………………………………………………………………………………………. 63 7. 3. 2 Hypothesis 2………………………………………………………………………………………. 64 7. 3. 3 Hypothesis 3……………………………………………………………………………………….. 6 7. 3. 4 Hypothesis 4……………………………………………………………………………………….. 68 7. 3. 5 Hypotheses 5 ………………………………………………………………………………………. 70 7. 4 Evaluation of the Empirical Results……………………………………………………………… 72 7. 5 Validity, Reliability and Generalizibility………………………………………………………. 75 7. 6 Chapter Summary………………………………………………………………………………………. 6 8 CONCLUSION ……………………………………………………………………………………………….. 77 8. 1 Analysis of the Contribution ……………………………………………………………………….. 77 8. 2 Recommendations and Suggestions for Further Research ……………………………….. 81 Reference…………………………………………………………………………………………………………… 83 Appendices ………………………………………………………………………………………………………… 1 Appendix A ……………………………………………………………………………………………………. 91 (i) Cover Letter……………………………………………………………………………………………. 91 (ii) Questionnaire…………………………………………………………………………………………. 92 Appendix B (Frequencies) ……………………………………………………………………………….. 96 Appendix C (One sample T-tests)…………………………………………………………… ……….. 97 Appendix D (Independent sample T-test) …………………………………………………………. 101 Appendix E (Graphs) …………………………………………………………………………………….. 103 iii List of Tables Table 1: The extent of HRIS role in strategic HR tasks (T-test)………………………… 63 Table 2: The extent of HRIS use in support of strategic HR tasks performance……….. 65 Table 3: Ratings of professional standing in organization after using HRIS…. ………….. 7 Table 4: Type of organization and HRIS usage in respondents’ organizations…………68 List of Figures Figure 1: Fields of HRM…………………………………………………………………. 7 Figure 2: The Supportive and strategic Role of HRM function…………………………18 Figure 3: Frequency distribution of the role or title of respondents…………………….. 62 Figure 4: Frequency distribution of years of experience as HR Specialist………………62 Figure 5: Frequency distribution of the extent of HRIS role in strategic HR tasks……… 64 Figure 6: Frequency distribution of the extent of HRIS usage in support of strategic HR tasks performance. ……………………………………………………………….. …… 65 Figure 7: Frequency distribution of Type of Organization and HRIS usage in…………… respondents’ organizations………………………………………………………………69 iv 1 INTRODUCTION The subject of the strategic relevance of human resource management in organizational plans and models provides a deep foray into one of the core success factors that effectively underpins the achievement of leadership and managerial objectives. This insight drives the current inquiry into one of the principal levers of modern human resource management identified as Human Resource Information System.
This research begins with the background of the study, the objective and a snapshot description of the structure of this presentation. 1. 1 Study background Invariably, human resource management (HRM) issues have been major concern for managers at all levels, because they all meet their goals through the efforts of others, which require the effective and efficient management of people (Dessler et al. , 1999). The spacious array of HRM activities for example, planning, recruiting, selection, and training just to mention but few place enormous responsibilities on supervisors and managers alike.
These embrace analyzing jobs, planning labour needs, selecting employees, orienting and training employees, managing compensation, communicating (which includes counselling and disciplining), and maintaining employee commitment. In addition to the already mentioned activities are, ensuring fair treatment, appraising performance, ensuring employee health and safety, building and maintaining good employee/labour relations; handling complains and grievances, and ensuring compliance with human rights, occupational health and safety, labour relations, and other legislation affecting the workplace.
Regardless of field of expertise, from accounting to production control, learning about employee rights, employer responsibilities, and effective HRM practices may provide all managers with knowledge that enables them to perform more effectively (Ibid). 1 However, according to Stewart (1996), the human resource management function has faced a scuffle in justifying its position in organizations. Firms easily justify expenditures on training, staffing, reward, and employee involvement systems in favourable conditions, but when faced with financial difficulties, such Human Resource (HR) systems become prime target for cutbacks.
Nonetheless, introducing strategic human resource management (SHRM), in exploring HR’s supportive role in business strategy, presented a possibility for demonstrating its value to the firm. Consequently, Walker (1978) called for a connection between strategic planning and human resource planning marking the commencement of the field of SHRM, but it was not until early 1980s before extensive work was carried out on this proposed linkage. For instance, a comprehensive study by Devanna, Fombrum and Tichy (1984) was devoted to exploring the link between business strategy and HR.
Since then, SHRM’s evolution has consistently been followed by a few years of developments within the field of strategic management. A very good example is Miles and Snow’s (1978) organizational types that were later expanded to include their associated HR systems (Miles and Snow, 1984). SHRM researchers used Porter’s (1980) model of generic strategies later to explain the specific HR strategies that one would expect to observe under each of them (Jackson and Schuler, 1987; Wright and Snell, 1991).
Lately, the increasing pressure to support strategic objectives and the greater focus on shareholder value have led to changes in both job content and expectations of HR professionals (Storey et al. , 2000; Ball, 2000). Similarly, Schuler et al. , (2001) and Mayfield et al. , (2003) noted that one such major changes included contemporary use of Information Systems (IS) in support of the HRM process. More so, a careful analysis indicated that increased human resource information systems (HRIS) usage enabled improved professional performance and thus facilitated involvement in internal consultancy activities (PMP (UK) Ltd 1997).
In addition, according to Ulrich (1997), using HRIS provides value to the organization and improves HR professionals’ own standing in the organization. In another development, Brockbank (1999) suggested the need for HR to become a strategic partner. 2 HRIS provides management with strategic data not only in recruitment and retention strategies, but also in merging HRIS data into large-scale corporate strategy. The data collected from HRIS provides management with decision-making tool. Through proper HR management, firms are able to perform calculations that have effects on the business as a whole.
Such calculations include health-care costs per employee, pay benefits as a percentage of operating expense, cost per hire, return on training, turnover rates and costs, time required to fill certain jobs, return on human capital invested, and human value added. It must be noted though, that, none of these calculations result in cost reduction in the HR function (Gerardine DeSanctis, 1986: 15). The aforementioned areas however, may realize significant savings using more complete and current data made available to the appropriate decision makers.
Consequently, HRIS are seen to facilitate the provision of quality information to management for informed decision-making. Most notably, it supports the provision of executive reports and summaries for senior management and is crucial for learning organizations that see their human resource as providing a major competitive advantage. HRIS is therefore a medium that helps HR professionals perform their job roles more effectively (Grallagher, 1986; Broderick and Boudreau, 1992). Further, various studies had offered a conclusive evidence to affirm the role HRIS plays in support of strategic decision-making.
There has been a dramatic increase in HRIS’s usage. For example, Lawler and Mohrman (2001) in Hussain et al. , (2007) established that the use of HRIS had consistently increased over the previous years, irrespective of the degree of strategic partnership held by the HR function. Definitely, HRIS usage had increased substantially even in firms where HR had no strategic role. They cautioned, however, that HRIS usage and, in particular, fully integrated HRIS systems, did not necessarily ensure that HR would become a full strategic partner.
Even though, numerous studies in this area have provided substantial empirical and theoretical contributions to the field of HRIS this area of investigation is still in its infancy. Interestingly, little however is known about the role of HRIS in SHRM. As the pressure to shift from HRM to SHRM keeps on mounting, coupling with severe global 3 competition, and in conjunction with the ever-increasing demand for HRIS, further research is still needed in this field. 1. 2 Research Objective This study explores the role of human resource information systems (HRIS) in strategic human resource management (SHRM).
The question to address in this study therefore is “What role if any do HRIS play in SHRM? ” 1. 3 Structure of the study The first five chapters are reserved for the theoretical part of the study. Chapter 1 is the introductory part. It consists of the study background, the research objective, and the research methodology. This is just to give a snapshot of the subject matter and the premise of the study. Chapter 2 presents an in-depth discussion on the HRM concept by touching on the various definitions, processes and other related issues.
Chapter 3 also throws more light on SHRM, its development, the various definitions, and other related issues. Chapter 4 however, is dedicated for the HRIS. Here, issues like HRIS definitions, processes, and others will be considered. Moreover, chapter 5 is designed to review previous literature on the study, based upon which hypotheses are developed. Consequently, chapter 6 presents hypotheses development and the research methodology. This is to illustrate how the research questions and the hypotheses were developed, including the questionnaire.
In addition, the chapter illustrates how the data will be collected, sample technique to be used, statistical methods, and discussion of validity and reliability of the data. Consequently, chapter 7 evaluates the empirical results by analysing the findings of the individual hypothesis taking into consideration the various questions allocated for each hypothesis. Finally, chapter 8 presents, the implication of the results, conclusion, and offers suggestions for future research. 4 2 THE CONCEPT OF HUMAN RESOURCE MANAGEMENT (HRM)
The HRM concept is elaborated from different and varying view points. More so, the various definitions of the concept, context and scope of HRM and its associated processes are presented. The chapter ends with a summary. 2. 1 Human Resource management (HRM) The term ‘Human resource management’ has been the subject of considerable debate, and its underlying philosophy and character are highly controversial. Much of this controversy stems from the absence of a precise formulation of and agreement on its significance and definition (Storey, 1989; and 1995a), as cited by Bratton and Gold (2003: 7).
Obviously, definition of the subject matter is needed for analysis and understanding of HRM theory and practice. 2. 2 HRM definition HRM has a variety of definitions but there is general agreement that it has a closer fit with business strategy than previous models, specifically personnel management. In all the debates about the meaning, significance and practice of HRM, nothing seems more certain than the link between HRM and performance (HRM Guide October 2006). Below are some of the definitions of HRM, although it can be argued that these will only be ones of several possible definitions.
De Cenzo and Robbins (1996: 8) defined HRM as the part of the organization that is concerned with the people dimension, and it is normally a staff or support function in the organization. HRM role is the provision of assistance in HRM issues to line employees, or those directly involved in producing the organization’s goods and services. Acquiring people’s services, developing their skills, motivating them to high levels of performance, and ensuring their continuing maintenance and commitment to the organization are essential to achieving organizational goals.
This is much the case regardless of the type of 5 organization, government, business, education, health, recreation, or social action. The authors proposed an HRM specific approach as consisting of four functions- staffing, training and development, motivation, and maintenance. In addition, Bratton and Gold (2003: 7) define HRM as the strategic approach to managing employment relations which emphasizes that leveraging people’s capabilities is critical to achieving sustainable competitive advantage. This is achieved through a distinctive set of integrated employment policies, programs and practices.
The authors presented HRM functions as planning, recruitment and selection, appraisal and performance management, reward management, development, employee relations, health and safety, and union-management relations. Moreover, to Alan Price (2004: 32) HRM aims at recruiting capable, flexible and committed people, managing and rewarding their performance and developing key competencies. Contributing to the working definition of HRM is Abecker et al. , (2004). They see HRM as a strategic and target oriented composition, regulation and development of all areas that affect human resources in a company.
Efficient and effective management of these resources to a large extend, affects human resource behavior, and consequently the performance of the organization as a whole. Moreover, the authors identified HRM with the field it covers. These include planning aspects- personnel requirements analysis and personnel asset analysis, and change aspects- recruitment, personnel development and labor displacement (Ibid). Next, is the diagrammatic representation of the said field. 6 Figure1: Fields of HRM (Source: Abecker et al. 2004) It is however, somehow strange, that, an important aspect of HRM, payroll or compensation/payment is missing from the field in figure 1 above propounded by the authors. Abecker et al. , (2004) like the previous other authors, did not present a conclusive and detailed definition of HRM including the other concepts (HR processes). Lastly considered are the opinions of various management scholars who have taken a more in-depth look at the whole concept of HRM. These opinions should be given the greatest weight, since they reflect more in-depth research on the subject than is done by most textbook authors.
Few such authors are Dessler et al. , (1999), and Torrington et al. , (2005). According to Torrington et al. , (2005: 5) HRM is fundamental to all management activity and has evolved from a number of different strands of thought. It is best described as a loose philosophy of people management rather than a focused methodology. Thus, distinction has been made between HRM as body of management activities on one hand (generically described as personnel management) and then on the other as a particular 7 pproach to execute those activities (carrying out people-oriented organizational activities than traditional personnel management). An organization gains competitive advantage by using its employees effectively, drawing on their expertise and ingenuity to meet clearly defined objectives. Torrington et al. , (2005: 5) identified the role of the human resource functions with the key objectives. These four objectives are the corner stone of all HR activities. These include Staffing, Performance, Change-management and Administration.
Staffing objective focuses on finding the appropriate pool of human resources needed to ensure fully and timely supply of work force (Ibid). It therefore involves designing organizational structures, identifying working conditions for different groups of employees followed by recruiting, selecting and developing the personnel required to fill the roles. Performance objective aims at ensuring workforce motivation and commitment for effective performance. Consequently, employees training and development remain important. Moreover, managing change effectively and efficiently remains one of the core objectives in almost every business.
Key issues here include recruiting and/or developing people with the required leadership skills to drive the change process. Change agents are employed to encourage acceptance of change by coming out with reward systems associated with the change process. Employees’ involvement is also paramount here and is encouraged. The aim is to avoid resistance to change, more especially where it involves cultural changes (attitude, philosophy or long-present organizational norms). Administration objective aims at facilitating the smooth running of the organization.
Hence, there is the need for accurate and comprehensive data on individual employees, records of achievement in terms of performance, attendance, training records, terms and condition of employment and personal details are (Ibid). However, for the purpose of this study, literature on the HRM concept will be based on the opinions of Dessler et al. , (1999). The authors defined HRM as the management of people in organizations. It consists of the activities, policies, and practices involved in obtaining, developing, utilizing, evaluating, maintaining, and retaining the appropriate number and skill mix of employees to accomplish the organization’s objectives. The goal of HRM is to maximize employee’s contributions in order to achieve optimal productivity and effectiveness, while simultaneously attaining individual objectives and societal objectives Dessler et al. , (1999: 2). To the authors, the function of HRM include assisting the organization in attracting the quality and quantity of candidates required with respect to the organization’s strategy and operational goals, staffing needs, and desired culture.
Helping to maintain performance standards and increase productivity through orientation, training, development, job design, effective communication, and performance appraisal. Helping to create a climate in which employees are encouraged to develop and utilize their skills to the fullest. Helping to establish and maintain cordial working relationship with employees. Helping to create and maintain safe and healthy work environment. Development of programs to meet economic, psychological, and social needs of the employees.
Helping the organization to retain productive employees and ensuring that the organization complies with provincial/territorial and federal laws affecting the work place such as human rights, employment equity, occupational health and safety (Ibid). 2. 3 HRM processes This sub section illustrates the processes involved in executing the HRM functions. Each of the functions: planning, recruitment, selection, orientation and training, performance appraisal etc. goes through a process. Unless otherwise stated, the rest of this section will be drawn from (Dessler et al. 1999)’s literature based on pages 165 to 533. 2. 3. 1 Planning process Human Resource Planning (HRP) process reviews human resources requirements to ensure that the organization has the required number of employees, with the necessary skills, to meet its goals, also known as employment planning. HRP is a proactive process, which both anticipates and influences an organization’s future by systematically forecasting the demand for and supply of employees under changing conditions, and developing plans and activities to satisfy these needs. Key steps include forecasting 9 emand for labor considering organizational strategic and tactical plans, economic conditions, market and competitive trends, social concerns, demographic trends, and technological changes. 2. 3. 2 Recruitment process Recruitment is the process of searching for and attracting an adequate number of qualified job candidate, from whom the organization may select the most appropriate to field its staff needs. The process begins when the need to fill a position is identified and it ends with the receipt of resumes and completed application forms.
The result is a pool of qualified job seekers from which the individual best matching the job requirements can be selected. The steps in recruitment process include identification of job openings, determination of job requirements, choosing appropriate recruiting sources and methods, and finally, generating a pool of qualified recruits. Job openings are identified through human resource planning or manager request. Next is to determine the job requirements. This involves reviewing the job description and the job specification and updating them, if necessary.
Appropriate recruiting sources and methods are chosen because there is no one, best recruiting technique. Consequently, the most appropriate for any given position depend on a number of factors, which include organizational policies and plans, and job requirements. 2. 3. 3 Selection process Selection is the process of choosing individuals with the relevant qualifications to fill existing or projected openings. Data and information about applicants regarding current employees, whether for a transfer or promotion, or outside candidates for the first time position with the firm are collected and evaluated.
The steps in the selection process, in ascending order include preliminary reception of applicants, initial applicant screening, selection testing, selection interview, background investigation and reference checking, supervisory interview, realistic job previews, making the hiring decision, candidate notification, and evaluating the selection process. However, each step in the selection process, from preliminary applicant reception and initial screening to the hiring decision, 10 is performed under legal, organizational, and environmental constraints that protect the interests of both applicant and organization. . 3. 4 Orientation, training and development process Employee orientation is the procedure of providing new employees with basic background information about the firm and the job. Is more or less, considered as one component of the employer’s new-employee socialization process. Socialization process is an ongoing process of initialing in all employees the prevailing attitudes, standards, values, and patterns of behavior that are expected by the organization. Training however is the process of teaching new or present employees the basic skills/competencies needed to perform their jobs.
Whereas training focuses on skills and competencies needed to perform employees’ current jobs, employee and management development is the training of long-term nature. The aim is to prepare current employees for future jobs with the organization or solving an organizational problem concerning, for example, poor interdepartmental communication. Training and development processes include needs analysis, instructional design, validation, implementation, and evaluation and follow-up. 2. 3. 5 Career planning and development process
It is the deliberate process through which persons become aware of personal careerrelated attributes and the lifelong series of activities that contribute to their career fulfillment. Individuals, managers, and the organization have role to play in career development. Individuals accept responsibility of own career, assess interests, skills, and values, seek out career information and resources, establish goals and career plans, and utilize development opportunities. The career stage identification entails career cycle (the stages through which a person’s career evolves).
These stages include the following: growth, exploration, establishment, maintenance, and decline stages. Occupational orientation identification is the theory by John Holland. This theory enumerates six basic personal orientations that determine the sorts of careers to which people are drawn. They include realistic orientation, 11 investigative orientation, social orientation, conventional orientation, enterprise orientation, and artistic orientation. 2. 3. 6 Performance appraisal process
Performance appraisal may be defined as any procedure that involves setting work standards, assessing employee’s actual performance relative to these standards, and providing feedback to the employee with the aim of motivating the worker to eliminate performance deficiencies or to continue to perform above par. Processes in performance appraisal contain three steps: defining performance expectations, appraising performance, and providing feedback. First, defining performance expectation means making sure that job duties and standards are clear to all.
Second, appraising performance means comparing employees’ actual performance to the standards that has been set, which normally involves some type of rating form. Third, performance appraisal usually requires one or more feedback sessions to discuss employees’ performance and progress and making plans for any required development. Some of the appraisal methods include graphic rating scale, alternation ranking, paired comparison, forced distribution, and critical incident methods. 2. 3. 7 Employee Compensation and benefits process
Employee compensation involves all forms of pay or rewards accrued to employees and arising from their employment. This however consists of two main components: direct financial payments, and indirect payments. While direct financial payments are in the form of wages, salaries, incentives, commissions, and bonuses, indirect payments are in the form of financial benefits like employer-paid insurance and vacations. Moreover, legal considerations in compensation, union influences, compensation policies, and equity and its impact on pay rates are the four basic considerations influencing the formulation of any pay plan.
Benefits are indirect financial payments given to employees. These may include supplementary health and life insurance, vacation, pension, education plans, and 12 discounts on say company products. Furthermore, income and medical benefits to victims of work-related accidents or illness and/or their dependents, regardless of fault are all part of employees’ compensation. The processes in establishing pay rates involve the following five steps: First, conducting wages/salary survey to determine the prevailing wage rates for comparable jobs, which is central in job pricing.
Second, determine the relative worth of each job (job evaluation) by comparing the job content in relation to one another in terms of their efforts, responsibility, and skills. This eventually results in wage or salary hierarchy. Third, group similar jobs into pay grades, a pay grade comprises of jobs of approximately equal value or importance as determined by job evaluation. Forth, price each pay grade using wage curves. A wage curve is graphical description of the relationship between the value of job and the average wage paid for the job.
However, if jobs are not grouped into pay grades, individual pay rates have to be assigned to each job. Fifth, fine tune pay rates. This involves correcting out-of-line rates and usually developing rate ranges. 2. 3. 8 Occupational health and safety process Occupational health and safety process aims at protecting the health and safety of workers by minimizing work-related accidents and illnesses. Laws and legislations to ensure and observe general health and safety rules bound employers.
More so, rules for specific industries, for example, mining and rules related to specific hazards, for instance, asbestos have to be adhered to. The following steps are important in this process. Checking for or removing unsafe conditions by using checklist to audit a company’s adherence to safety rules that are guarded against hazards, which cannot be removed. Next, through selection, screening out of employees who might be accident prone for job in question without compromising the human right legislation.
More so, establishing a safety policy, this emphasizes on the importance of practically reducing accidents and injuries. Setting specific loss control goals by analyzing the number of accidents and safety incidents and then set specific safety goals to be achieved. Enforcing safety rules through discipline and conducting health and safety inspections regularly by investigating 13 all accidents and near misses, and by having a system in place for letting employees notify management about hazardous conditions. . 4 Chapter Summary There is no clear-cut definition of HRM. However, the common ground settled by different HR professionals and academicians is that they recognize that HRM is closely fitted with business strategy than personnel management. HR processes starts by planning labor requirements. This include, resource specifications, long range planning, forecasting supply and demand of labour, staffing, applicant qualification, training programs, costs analysis, salary, contract type, and other related issues.
Other key HR processes involve recruiting, selecting, performance appraising, training and orientation, career development, occupational health and safety, and compensation and benefits. 14 3 THE CONCEPT OF STRATEGIC HUMAN RESOURCE MANAGEMENT (SHRM) The significant position of HRM in the overall strategy of an organization and its integral function in the strategic planning process is presented. In addition, the various definitions of strategic HRM are explained and a conceptual view of other dimensions of SHRM is provided. The chapter then ends with a summary. 3. SHRM development SHRM has grown considerably in the last years. Schuler et al. , (2001) described the evolution of SHRM from personnel management in terms of a two-phased transformation, first from personnel management to traditional human resource management (THRM), and then from THRM to SHRM. To improve firm performance and create firm competitive advantage, firm HR must focus on a new set of priorities. These new priorities are more business, and strategic oriented and less geared towards traditional HR functions such as staffing, training, appraisal and compensation.
Strategic priorities include team-based job designs, flexible workforces, quality improvement practices, employee empowerment and incentive compensation. SHRM was designed to diagnose firm strategic needs and planned talent development, which is required to implement a competitive strategy and achieve operational goals (Huselid et al. , 1997). 3. 2 SHRM definition In spite of the increasing attention paid to SHRM, the term remains unclear. Some scholars have described SHRM as an outcome, others have described it as a process, and others have considered it a combination of process and outcome.
As an outcome, Wright and McMahan (1992) considered SHRM ‘the pattern of planned HR deployments and activities intended to enable a firm to achieve its goals’. Similarly, Wright and Snell (1991) considered SHRM to be ‘organizational systems designed to achieve sustainable competitive advantages through people. As a process, Ulrich and Lake (1991) described SHRM as a process of linking HR practices to business strategy. Moreover, Bamberger 15 and Meshoulam (2000) argued that SHRM is a competency-based approach to personnel management that focuses on the development of durable, imperfectly imitable, and other non-tradable resources.
Considering both process and outcome together, Truss and Gratton (1994) defined SHRM as the linkage of HR functions with strategic goals and organizational objectives to improve business performance and cultivate an organizational culture that fosters innovation and flexibility. Torrington et al. , (2005: 5) defines SHRM as means of accepting the HR function as a strategic partner in the formulation of the company’s strategies as well as in the implementation of those strategies through HR activities such as recruiting, selecting, training and rewarding personnel.
Whereas strategic HR recognizes HR’s partnership role in the strategizing process, the term HR Strategies refers to specific HR courses of action the company plans to achieve. The authors further presented three theoretical perspectives of strategic human resource management. The first was based on the ‘one best way’ concept of managing human resources to improve business performance. The second was the need to align employment policies and practices with the requirements of business strategy for successful business.
This was on the assumption that different types of HR strategies are conducive for different types of business strategies. The third, which also happened to be the more recent approach to strategic HRM, was resource-based view of the firm, and the perceived value of human capital. The focus of this perspective was on the quality of the human resources available to the organization and ability to learn and adapt more quickly than competitors. Moreover, the Universalist approach on SHRM has also proven popular.
The perception was based on the concept of seeing HRM as ‘best practice’. This is based on the premise that one model of labor management (a high commitment model) is related to high organizational performance in all contexts, irrespective of the particular competitive strategy of the organization (Torrington et al. , 2005: 5). Guest’s theory of HRM is one of the best presentations of such perspective. The Guest’s theory of HRM was based on four HR policy goals: strategic intentions, commitment, flexibility and quality. These policy 16 oals, nevertheless, were related to HRM policies expected to produce desirable organizational outcomes. The four policy goals were described as: Strategic intention: ensuring that HRM is fully integrated into strategic planning by allowing coherent HRM policies, which enable line managers to use HRM practices as part of the day-to-day work Commitment: ensuring that employees feel bound to the organization and are committed to high performance through excellent behavior Flexibility: providing an adaptable organization structure and functional flexibility based on multiple skills.
Quality: enabling a high quality of goods and services through high-qualityflexible employees For, Flint et al. , (2005) the field of Human Resource Management (HRM) has in recent times been seen as moving away from a supportive – selecting, training, and retaining(Porter, 1996) to a strategic role (Bartlett & Ghoshal, 2002). The latter explained that rather than being supportive, focusing on recruiting, training and taking care of benefits, HRM’s role has become strategic building and using human capital to ensure competitive advantage.
This is further explained using a diagrammatic presentation in Figure 2 to illustrate the strategic and supportive roles of HR, and HRM functions. The Arrow 1 indicates that a strategic role for HR moves parallel with a strategic role for HRM. To the authors, strategic role for HR does not necessarily imply a strategic role for HRM. The two are not identical but perform different functions in an organization. HR either may support a firm’s processes or may constitute strategic resources that allow the firm to achieve competitive advantage.
Such a shift in the status of human resources is represented by arrow 2. Similarly, the HRM function may support a firm’s HR by selecting, training, and retaining them or theoretically representing an HRM capacity that gives the firm a competitive advantage over others. Such a shift of HRM function is represented by 17 arrow 3. They however concluded that given the two separate dimensions, where human resources become strategic, the HRM function might very well maintain its supported role. Figure 2: The Supportive and strategic Role of HRM function (Source: Flint et al. 2005) Bratton and Gold (2003: 37) defines strategic human resource management as the process of linking the human resource function with the strategic objectives of the organization in order to improve performance. To the authors, global companies function successfully, if strategies at different levels inter-relate. An organization’s human resource management policies and practices must fit with its strategy in its competitive environment and with the immediate business conditions that it faces. They however cautioned that the human resource-business strategy alignment could not necessarily be characterized in the logical 18 nd sequential way suggested by some writers; rather, the design of an HR system is a complex iterative process. However, in the absence of a consistent definition, scholars broadly agree that the central feature of SHRM involves designing and implementing a set of internally consistent policies and practices to ensure that firm human capital contributes to achieving business objectives (Gratton and Hope-Hailey, 1999; Jackson and Schuler, 1995). Based on the broad agreement among the central features of SHRM, and the determinants of HRM as strategic, this is how this study defined SHRM.
The degree of participation in core decision-making and partnership played by HRM departments, and the specificity and formality that HRM departments require in planning and implementation, all of which are designed to ensure that firm human capital contributes to achieving firm business goals (Bratton and Gold, 2003: 37). 3. 3 Dimensions of SHRM In addition to focusing on the matching of SHRM and HR strategy, researchers have identified a number of important themes associated with the notion of SHRM (Bratton and Gold 2003: 37).
These are: Re-engineering Leadership Workplace learning Trade unions 3. 3. 1 Re engineering and strategic human resource management All normative models of HRM emphasize the importance of organizational design. For example, the ‘soft’ HRM model is concerned with job design that encourages the vertical and horizontal compression of tasks and greater worker autonomy. The redesign of work organizations has been variously labeled ‘high-performing work systems’ (HPWSs), ‘business process re-engineering’ and ‘high-commitment management’. The literature 19 mphasizes core features of this approach to organizational design and management, including a flattened hierarchy, decentralized decision making to line managers or work teams. This largely enables information technology, strong leadership and a set of HR practices that make workers’ behavior more congruent with the organization’s culture and goals. (Hammer, 1997; Hammer and Champy, 1993), cited in Bratton and Gold (2003: 59). 3. 3. 2 Leadership and strategic human resource management The concept of managerial leadership permeates and structures the theory and practice of work organizations and therefore how SHRM is understood.
Most definitions of managerial leadership reflect the assumption that it involves a process whereby an individual exerts influence upon others in an organizational context. There is however a growing debate over the presumed differences between a manager and a leader. Managers develop plans whereas leaders create a vision (Kotler, 1996) cited in Bratton and Gold (2003: 60). Managers look for leadership style that develop the firm’s human endowment and cultivate commitment, flexibility, innovation and change (Bratton et al. , 1987).
Apparently, most re-engineering shortfalls stem from breakdowns in leadership (Hammer and Champy, 1993: 107), and the organizational change driver is leadership (Kotler, 1996: 32). Moreover, popular leadership models advocated for working beyond the economic contract. Consequently, the transformational leader empowers workers. However, such leadership models shift the focus away from managerial control process and innate power relations towards the psychological contract and individualization of the employment relationship. 3. 3. Workplace learning and strategic human resource management Formal and informal work-related learning represent key lever that can help managers to achieve substantive HRM goals. These include commitment, flexibility and quality (Beer et al. , 1984; Keep, 1989 cited in Bratton and Gold, 2003: 60). From managerial perspective, formal and informal learning arguably strengthen organizational core competencies and acts as a leverage to sustainable competitive advantage- having the 20 ability to learn faster than one ‘s competitors is of essence (Dixon, 1992; Kochan and Dyer, 1995) as reported in Bratton and Gold (2003: 60). . 3. 5 Trade unions and strategic human resource management The idea of embedding worker commitment in HRM model has led to strong argument among writers, that, there is a contradiction between the HRM normative model and trade unions. In the prescriptive management literature, the argument is the collectivist culture, with ‘them and us’ attitude, sabotages the HRM goal of high employee commitment and the individualization of the employment relationship. Moreover, critics argue that, highperformance-high-commitment’ HR strategies provide workers with false sense of job security, by hiding underlying sources of conflict, inherent in employment relations. However, other scholars with pluralist perspective argue that not only do trade unions and ‘high-commitment’ HRM model coexist but are indeed necessary if an HPWS is to succeed (Bratton and Gold, 2003: 60). In addition, other researchers like Sparrow and Hiltrop (1994: 25) in Morley et al. , (2006) identified a shift from the HRM function and its associated terrain to a strategic role in other areas of HRM activity.
Thus, the greater emphasis on the integration of the human resource function into strategic decision-making, a decentralization of much activity to line managers, and pre-occupation with industrial relations and collective bargaining, has made way for a more SHRM activities such as communications, human resource development, workplace learning, career management and human capital accumulation. 3. 4 Chapter summary SHRM has evolved and been transformed from personnel management into traditional human resource management (THRM), and then to SHRM.
SHRM, like HRM, do not have any consistent definition but scholars generally concord to the central feature of SHRM comprising designing and implementing a set of internally consistent policies and practices to ensure human capital contributions to achieving business goals 21 (Gratton and Hope-Hailey, 1999; Jackson and Schuler, 1995). The changes identified in the shift of HRM to SHRM included integration of the human resource function into strategic decision-making, a decentralization of much activity to line managers, effective communications, human resource development, workplace learning, career management and human capital accumulation.
These were in addition to managing organization’s trade unions relations, greater worker autonomy, high commitment management, leadership, and business processes reengineering. 22 4 HUMAN RESOURCE INFORMATION SYSTEMS (HRIS) IN ORGANIZATION The Human Resource Information Systems is introduced by presenting the various definitions, development, costs and benefits, as well as their functions and relationship with HRM. Furthermore, different software providers and their solutions is presented. The chapter then ends with a summary. HRIS shape an integration between human resource management (HRM) and Information Technology.
Even though these systems may rely on centralized hardware resources operationally, a small group of IS specialists residing within the personnel department increasingly manage, support, and maintain them. HRIS support planning, administration, decision-making, and control. The system supports applications such as employee selection and placement, payroll, pension and benefits management, intake and training projections, career-pathing, equity monitoring, and productivity evaluation. These information systems increase administrative efficiency and produce reports capable of improving decision-making (Gerardine DeSanctis, 1986: 15). . 1 Development of HRIS Recent developments in technology have made it possible to create a real-time information-based, self-service, and interactive work environment. Personnel Information Systems have evolved from the automated employee recordkeeping from the 1960s into more complex reporting and decision systems of late (Gerardine DeSanctis, 1986: 15). Today, managers and employees are assuming activities once considered the domain of human resource professionals and administrative personnel.
This represents a significant break with the past, but an improvement in overall organizational effectiveness. Consequently, given the authority and relevant accessible information for decisionmaking, both managers and employees respond more quickly to changes (Lengnick-Hall and Lengnick-Hall, 2002). 23 4. 2 Definition of HRIS Tannenbaum (1990) defines HRIS as a technology-based system used to acquire, store, manipulate, analyze, retrieve, and distribute pertinent information regarding an organization’s human resources.
Kovach et al. , (1999) defined HRIS as a systematic procedure for collecting, storing, maintaining, retrieving, and validating data needed by organization about its human resources, personnel activities, and organization unit characteristics. Furthermore, HRIS shape an integration between human resource management (HRM) and Information Technology. It merges HRM as a discipline and in particular basic HR activities and processes with the information technology field (Gerardine DeSanctis, 1986: 15).
As is the case with any complex organizational information system, an HRIS is not limited to the computer hardware and software applications that comprise the technical part of the system it also includes the people, policies, procedures, and data required to manage the HR function (Hendrickson, 2003). 4. 3 Components of an HRIS Kovach et al. , (1999) presented the three major functional components in any HRIS by giving the model below: Input Data Maintenance Output The Input function enters personnel information into the HRIS.
Data entry in the past had been one way, but today, scanning technology permits scanning and storage of actual image off an original document, including signatures and handwritten notes. The maintenance function updates and adds new data to the database after data have been entered into the information system. Moreover, the most visible function of an HRIS is the output generated. According to Kovach et al. , (1999), to generate valuable output for computer users, the HRIS have to process that output, make the necessary calculations, and then format the presentation in a way that could be understood.
However, the note of caution is that, while it is easy to think of HR information systems in terms of the hardware and software packages used to implement them and to measure them by the number of workstations, applications or users who log onto the system, the most 24 important elements of HRIS are not the computers, rather, the information. The bottom line of any comprehensive HRIS have to be the information validity, reliability and utility first and the automation of the process second. 4. 4 Users of HRIS applications HRIS meet the needs of a number of organizational stakeholders.
Typically, the people in the firm who interact with the HRIS are segmented into three groups: (1) HR professionals, (2) managers in functional areas (production, marketing, engineering etc. ) and (3) employees (Anderson, 1997). HR professionals rely on the HRIS in fulfilling job functions (regulatory reporting and compliance, compensation analysis, payroll, pension, and profit sharing administration, skill inventory, benefits administration etc. ). Thus, for the HR professional there is an increasing reliance on the HRIS to fulfill even the most elementary job tasks.
As human capital plays a larger role in competitive advantage, functional managers expect the HRIS to provide functionality to meet the unit’s goals and objectives. Moreover, managers rely on the HRIS’s capabilities to provide superior data collection and analysis, especially for performance appraisal and performance management. Additionally, it also includes skill testing, assessment and development, resume processing, recruitment and retention, team and project management, and management development (Fein, 2001).
Finally, the individual employees become end users of many HRIS applications. The increased complexity of employee benefit options and the corresponding need to monitor and modify category selections more frequently has increased the awareness of HRIS functionality among employees. Web-based access and self-service options have simplified the modification process and enhanced the usability of many benefit options and administration alternative for most employees. 25 4. 5 HRIS functions
Functional HRIS must create an information system that enables an assimilation of policies and procedures used to manage the firm’s human capital as well as the procedure necessary to operate the computer hardware and software applications (Hendrickson, 2003). While information technology affects Human Resource (HR) practices (LengickHall et al. , 2003) HRIS and HRIS administration comprise a distinct supporting function within HR. Some of the HRIS functions include the following: 4. 5. 1 Integrating the Technologies of HR
Is a fact, that developments in Information Technology have dramatically affected traditional HR functions with nearly every HR function (example, compensation, staffing, and training) experiencing some sort of reengineering of its processes. However, this process of change has created significant challenges for HR professionals resulting in the transformation of traditional processes into on-line processes. 4. 5. 2 Increased Efficiency Rapid computing technology has allowed more transactions to occur with fewer fixed resources. Typical examples are payroll, flexible benefits administration, and health benefits processing.
Though technologies of early mainframes provided significant efficiencies in these areas, the difference is that the record processing efficiencies that were once only available to large firms are now readily available to any organization size (Ulrich, 2001). 4. 5. 3 Increased Effectiveness Most often, as with processes, computer technology is designed to improve effectiveness either by in terms of the accuracy of information or by using the technology to simplify the process. This is especially the case where large data sets require reconciliation.
However, onerous manual reconciliation processes may be executed faster, but also with near perfect accuracy using automated systems. For instance, pension and profit sharing 26 applications, benefits administration, and employee activities are just to mention but a few. Using computer technology in these processes ensures accurate results and offer substantial simplification and timeliness over manual processing. Consequently, the vast majority of HR functions have had some degree of automation applied in order to gain both efficiency and effectiveness. . 5. 4 IT-Enabled Processes While many of the application areas’ gains are through increased effectiveness and efficiency over manual processing, some are only possible using contemporary technologies. Most notably, computer-based (web-based) training is a growing area of HR practice that was not available until computer software was created. Even computerbased training was not as practical as it is today because it was geographically dispersed until the training was upgraded from computer-based to web-accessible training.
However, by taking traditional computer-based training programs and making them accessible on the Internet, firms have created a powerful tool to upgrade and assess employee skill sets. Moreover, many other traditional HR functions have evolved Information Technology (IT) -dependent components with the advent of the Internet. Online recruitment centers, along with the ability to conduct virtual interviews, background checks, and personnel tests on-line have dramatically changed those processes, increasing the geographic reach of firms for potential employees. . 6 Cost and benefit of HRIS An HRIS system represents a large investment decision for companies of all sizes. Therefore, a convincing case to persuade decision makers about the HRIS benefits is necessary. The common benefits of HRIS frequently cited in studies included, improved accuracy, the provision of timely and quick access to information, and the saving of costs (Lederer, 1984; Wille and Hammond, 1981). Lederer (1984) di