Three Specific Advantages of the HR Information Systems - Coursework Example

Human Resource Management Information Systems: Advantages and Disadvantages Introduction There are a wide variety of theories regarding how best to accomplish meeting the needs of a contemporary workforce from a human resources professional perspective. As the business environment becomes more and more complicated, including legal obligations, business expansion, and records maintenance (among many others), the need to integrate all of these human resources functions becomes paramount. Many companies have adopted HR information systems, such as SAP or other software which links internal communications systems, in order to streamline the HR function and improve efficiency. This paper describes three specific advantages of the HR information systems as well as a discussion of three challenges these new systems create in today’s companies. Advantages of HRMIS One significant advantage of human resource information systems lies in the ability to automate many functions which traditionally required manual HR labor to achieve. Payroll systems and benefit systems, specifically, are improved exponentially by such systems (Mathis and Jackson, 2005). In some organizations, the accounting department was responsible for entering the new employee taxation information or managing the physical distribution of employee salaries. Any changes to current policy or structure of payroll required accounting to communicate with HR divisions, requiring a significant volume of work to ensure that payroll-related issues were in-line with legal or corporate guidelines. In a busy or large-scale organization, such as one with well over 100 employees, having to coordinate these efforts manually would theoretically take away from the HR division’s ability to manage more soft approaches to HR such as employee coaching and development. The automation of these functions provided by new integrated HR information systems would then allow HR managers to focus on fulfilling the needs of a diverse employee community. Some organizations also find significant advantage of HR information systems in improving the efficiency of inter-company communications. Hurley-Hanson and Giannantonio (2008) describe the utilization of these types of information systems in crisis or disaster communications. Coastal companies, such as those which were affected by Hurricane Katrina, have found an advantage in these systems by being able to implement and update various disaster plans and tying these systems into the company’s intranet for instant communications to all employees in the event of an impending disaster or other corporate crisis situation. After such a disaster occurs, businesses must be able to coordinate and resume business functions and having electronic systems, specifically tailored to the HR role, allow for operations to continue by providing an electronic plan of action and simply to keep employees informed of events which directly impact their job roles. Without such a system, a business which has experienced a significant crisis would rely on human resources professionals (and other company leaders) to attempt to coordinate business efforts or adjust staffing needs with extensive meetings or the distribution of basic memorandums, which would not guarantee that all members of staff are aligned to resume business functions. From a cost perspective, a business without a thorough HR information system could experience a significant financial dilemma by being unable to coordinate staff efforts in the pursuit of returning the business back to servicing its clients or customers successfully. Ngai and Wat (2006) further identify another significant advantage of HR information systems as that of increased competitive advantage over other firms in similar industries. Many companies with more sophisticated systems have been able to inter-link HR planning with recruitment objectives, improve succession planning for career development, update health and safety regulations, and even develop electronic auditing records or maintain exit interview templates at the touch of a button (Mathis and Jackson). Firms which have been able to establish sophisticated systems like these, such as SAP or other enterprise resource planning, can find benefit from reduced turnover, perhaps due to the ability to analyze electronic exit interview surveys, and make rapid changes to current HR policy. Again, from a cost perspective, the HR information systems establish the ability to recruit and retain qualified and competent employees and build the HR focus around satisfying the needs of employees. The aforementioned advantages of having an integrated series of systems related to HR appears to build this competitive advantage further by also having the means to communicate information from HR managers to other line managers in the form of training to assist line management in understanding modern theory regarding employee coaching and development. In many cases, HR managers can link specific HR activities with the company intranet so that manager’s have first-hand and instantaneous access to various forms such as the performance management assessment and organizational charts. These systems can also provide templates for specific employees’ skills inventories or provide online staffing projections for upcoming business development projects (Mathis and Jackson). What these information systems provide is the ability to review a wide variety of HR tools and provide employees with accurate job-matching responsibilities which clearly fit their unique knowledge and abilities. This represents how firms utilizing these systems have found significant competitive advantages by aligning all members of staff with long-term business strategy to improve total organizational efficiency. Disadvantages of HRMIS One challenge which human resource information systems creates are those related with cost, as the implementation of these systems often requires IT support and labor and special project teams in order to determine how best to integrate electronic systems into the overall business function (Ngai and Wat). When employees and managers within a company are expected to devote considerable time and resources to completing the integration of various HR systems, this can theoretically remove them from their regular job responsibilities which could lead to ineffective divisional support for business goals. From the aforementioned cost perspective, special internal project groups or the recruitment of external information technology support can be a strain on company budget if the HR information systems project is extensive. Depending on the specific goal of the new HR information systems project, the costs associated with development and integration into existing functions could outweigh the long-term goal of the project. Another significant challenge proposed by these systems is the time investment necessary to incorporate HR information systems into the business model. For example, companies which have implemented SAP systems have found that this investment can take over two years (Torres-Coronas and Arias-Oliva, 2005), including the preliminary planning, designing the information systems architecture for the project, assessment of progress, and testing of the new software systems prior to launch. During the design process for developing these systems, training can be quite extensive as many end users need to be familiarized with the new processes and how these systems will change current business activities. The HR manager, line managers, and even employees (when appropriate) require a firm understanding of how to utilize these systems which can be a strain on staffing capability within the firm. The time to implement these new HR information systems appears to be one of the greatest challenges which should make company leaders ask themselves whether or not the investment is worth the long-term gain of the project. If it is determined that several years are required before an appropriate HR system is developed, however after implementation the new system will not achieve significant improvement of the HR function, these projects may wish to be abandoned for a more small-scale information systems project which utilizes existing company software or ERP systems. Further, many companies also utilize some form of employee portal, such as the intranet or extranet, which, by themselves, create value from an HR perspective. With this in mind, another challenge to creating a new HR information systems project is the inability to link intranet communications technology with new HR software packages. Tatnall (2005) provides a case study of an Australian telecommunications company, Auscom, which invested significant resources into developing new HR information systems technologies only to discover, after well over a year of planning and development, that it would be impossible to link the intranet to the new systems because the intranet was managed within a different business unit. This would be a significant drawback, especially for multi-national companies or those with multiple domestic business divisions, as it would limit the potential success of blending existing software with new HR systems designed to provide a more efficient HR management structure. Additionally, the same disadvantage would be found if a company had their intranet systems managed by an external organization, which would require recruiting external business professionals into the project, leaving HR managers unable to control implementation and ensure 100 percent compliance during the development phases. Managers at a company cannot extend their authority to other organizations, unless obligated by contractual agreements, to ensure that members of staff which support the intranet system are giving the project the attention it requires. Despite the best planning efforts on behalf of the company leaders, it is likely that there would be problems with the new systems architecture without having to devote costly payroll obligations to having a company representative on-site at the intranet support company to ensure compliance and cooperation. If the long-term goal of the new HR information systems project is to ensure that all existing systems are integrated into the new HR software packages, the availability of resources toward making this goal a reality could be a costly and even frustrating situation. Conclusion and Discussion There are clearly a wide variety of advantages to implementing an HR information systems project as it serves to automate complicated and time-consuming HR functions, enhance communications, and improve overall competitive advantage. Having a system of electronic databases appears to give HR professionals unlimited abilities to store information and ensure rapid retrieval in the event that changes to existing policies and procedures need to be made. The advantage of automation also appears to be able to isolate the entire HR function into a single, independent business unit which no longer requires routine interaction with different departments (such as accounting) in order to update payroll and other cost-related issues associated with the management of people. Additionally, the ability to streamline communications should be recognized as a major business improvement due to these systems’ ability to coordinate staff efforts and provide plans of actions in the event of crisis as well as provide an online version of contingency plans in the event of any potential business disruption. Having these types of HR information systems available would seem to be highly important at a business which maintains a great deal of risk or is dependent on various external entities to ensure that business runs smoothly, such as an investment firm. It would seem that these systems could also benefit HR, from a communications perspective, in the event of a company crisis leading to staff layoffs to communicate the rationale behind impending layoffs and use electronic databases or other necessary forms to assist current workers with finding adequate employment prior to layoff. Though this is only a hypothetical example, it does seem that there are a wide variety of advantages potentially provided by these systems in terms of communicating business activities. The major disadvantages were highlighted as cost related, time investment, and the inability to link existing technologies into new HR-related information systems projects. Cost, for any business, is a major concern and is generally at the top of business priorities for companies which operate at a profit. Finding the talent, or developing the necessary talent, to successfully utilize HR information systems represents a significant investment on behalf of the company and should be measured based on the goals of the project. However, despite the aforementioned drawbacks, it does appear that HR information systems projects provide more positive results than negative and should be considered by today’s companies to improve overall business effectiveness. References Hurley-Hanson, A.E. and Giannantonio, C.M. (2008). ‘Human Resource Information Systems in Crises’. Allied Academies International Conference, Academy of Strategic Management. Cullowhee, 7(1): 23-28. Retrieved 12 Mar 2009 from http://www.proquest.com. Mathis, R. and Jackson, J. (2005). Human Resource Management, 10th ed. Thomson South- Western: 57-60. Ngai, E. and Wat, F. (2006). ‘Human resource information systems: A review and empirical analysis’, Personnel Review, Farnborough. 35(3): 297-313. Retrieved 11 Mar 2009 from http://www.proquest.com. Tatnall, Arthur. (2005). Web Portals: The New Gateways to Internet Information and Services. Hershey PA, Idea Group Publishing: 178-181. Torres-Coronas, T. and Arias-Oliva, M. (2005). E-Human Resources Management: Managing Knowledge People. Hershey PA, Idea Group Publishing. Read More