Human Resources and the Utilization of Information Technology - Literature review Example

HUMAN RESOURCES AND THE UTILIZATION OF INFORMATION TECHNOLOGY: LITERATURE REVIEW By Ron Steele Presented to Dr. John Smith Human Resources Management 500 XYZ University London, England October 16, 2010 As organizations make advancements in leveraging Information Technology (IT) for strategic management purposes, benefits can be derived from expanding uses of IT beyond company Operations into key support roles as Human Resources. This paper examines how organizations today are impacted by IT in regards HRM. First, hindrances as to why companies may be reluctant in expanding use of Human Resource Information Systems (HRIS) are examined. Next, capabilities of strategic HRIS are investigated. Finally, the challenges companies encounter while expanding use of IT functions in HRM are examined. I take the position that HRIS can assist companies to gain strategic competitive advantages. Many companies do not yet see the full potential of HRIS. Broderick and Boudreau (as cited in Foster, 2008) found that companies often invest in HRIS to cover a small range of HR administrative functions. Additionally, Ball (as cited in Foster, 2008) states how HR systems are used more for traditional HR administrative functions than for strategic purposes. Foster (2008) states that a desirable goal for HRIS is to go beyond simple automation and focus more on employee management by being a strategic partner in the organization. The author conducted 38 interviews with both HR and line managers to determine what issues might stand in the way of traditional companies to switch over to the more advantageous use of information technology in providing strategic HRM. The most overriding theme was that public sector HR is under pressure to do ‘more with less’, and that HR tends to be ‘risk adverse.’ A second issue that Foster (2008) found in the surveys was that line managers see employee or people management as not of critical importance, as compared to budget management and operational demands of the company (Foster, 2008). Other research into why companies hesitate in using HRIS for strategic HRM was performed by Dery, Grant, & Wiblen (2006). Their findings included three key reasons for a lack of the full use of HRIS. These items were: (1) difficulties in getting management’s attention; (2) HRIS’s complex functions being underestimated; and (3) failure to realize the importance of change management. One small but important scenario that often happens from organization to organization is mentioned by Dery, Grant, & Wiblen (2006) when they performed research at a newly acquired company called TechOrg. The parent company saw the need to upgrade both the financial and the engineering management information systems, but passed over Human Resources. The authors stated: “based on the empirical research to date, it could be argued that all of the organizations, and specifically the HR function within them, have faced challenges regarding their ability to maintain momentum towards the selection and implementation of a new or upgraded HRIS.” (p. 5). An examination is next given of the capabilities of a strategic HRIS. To get a background on the current use of HRIS, a questionnaire analysis of companies specific to the UK was performed by Hussain & Prouse (2004). The authors sent 50 questionnaires out to UK organizations, and had 34% of the questionnaires returned. Of the questionnaires returned, 94% of companies said that they were either using HRIS or intending to use such a system in the near future. Further, of the companies currently using HRIS, 88% were using it at the operational level, while only 44% were using it at a strategic level (Hussain & Prouse, 2004). A further study was conducted by Beadles, Lowry, & Johns (2005) where it was found that strategic HIRS is a developing area that is far from its full potential. The idea that many hold with HIRS is that evolution first occurs from processing information over into automation. From there, automation can lead to a transformation of the HRM function. If information systems can create substantial efficiencies in organizations, then the HR department can switch from merely providing services over to being involved in the strategic planning of the company. The authors note that this full transformation has only occurred in a small number of companies (Beadles, Lowry, & Johns, 2005). Beadles, Lowry, and Johns (2005) sent surveys out to HR directors of 30 universities in the southeastern United States who were all using the same information system. Of the surveys returned, 90% of respondents said that they were satisfied with the HIRS system, but 70% said that the system could be better utilized. The surveys showed that at least half the institutions believed that time savings occurred with having to process less paperwork or in correcting mistakes. The area with the most improvement was in sharing of information organization wide. 80% of HR directors felt that the information system increased ability to share information while 70% of the HR directors said that their ability to give higher level administrators useful information increased. The area with most room for improvement was in strategy. A full 80% of the directors in HR believed that information generated by HIRS could be better utilized in making strategic decisions for the organization (Beadles, Lowry, & Johns, 2005). The need of change for the 21st century is outlined by Schoonover (2003) in his article Human Resource Competencies for the New Century. Schoonover states: “the next few years represent a critical period for the human resource community as new roles and responsibilities in organizations are being re-negotiated” (p.3). The author found that HR departments could be better at being active in contributing to the business team strategy. This involves the capture and distribution of knowledge and applying technology in order to more fully utilize human assets (Schoonover, 2003). The author mentions that HR efforts need to be more in line with strategic outcomes, and the HR role will be changing to encompass organization strategy rather than isolated functions. Guiding principles that Schoonover (2003) mention focus on adding value for business partners, and HRIS plays a role in this. Two examples mentioned are creating performance development systems to maximize the growth for both the employee and company, and also producing and tracking items to improve the core processes of the organization (Schoonover, 2003). Another investigation into HRM and IT made by Plessis, Brewer, & Nel (2006) summarized HRM’s future role well. The authors stated that the degree to which operations and Human Resources partner to solve organizational issues can be found in how well HRM is integrated with the company’s business strategies (Plessis, Brewer, & Nel, 2006). A third area is with the challenges companies face in using IT for improved HRM. Kanthawongs (2004) shows how HRIS plays an important role in HRM today. An example is presented where the University of Minnesota at Rochester can now produce basic administrative functions such as payroll distribution reports in a matter of minutes by the end-users. This is in large contrast to the approximately 30 hours it took before the latest university IT system was implemented (Kanthawongs, 2004). The next step beyond streamlining the administrative functions of HR is having more information available so that advanced decisions can be made in regards everything from recruitment to company strategy. The author mentions however that individuals must be aware of the value-added capabilities of HRIS, or it will not succeed (Kanthawongs, 2004). Ruel, Bondarouk,& Looise (2004) looked at five large international corporations who attempted to more fully implement IT with HRM. Since the companies involved were global in nature, one important component was to centralize policy at the corporate level, but leave the responsibility for applying the policies to line managers and employees. Other points noted in the implementation was a reduction in HR staff as administrative functions become more efficient. The authors’ state that technical aspects of implementing IT are secondary since the most important hurdle to overcome with the use of strategic HRIS is a change in the mindset of the HR staff, operations managers, and employees (Ruel, Bondarouk, & Looise, 2004). A final study by Zafar, Shaukat & Mat (2010) show that challenges exists for HR to be more proactive. Many possibilities exist for IT and HRM to partner for progress. Some of the items mentioned include: (1) online recruitment; (2) e-learning in order to custom training provided to be specific to the employee; (3) performance appraisals using capabilities of IT to monitor traditional problem areas given the nature of the position; and (4) having more time available to partner with operations and other departments to meet the recruitment and strategic employee needs of the organization (Zafar, Shaukat, & Mat, 2010). The field of HRM has been impacted for the better by automating many administrative functions such as payroll, yet best practices show that companies of the future are moving toward more extensive and strategic use of IT in regards HRM. A critical step is often overcoming the reluctance to use HRM as a strategic organizational partner. Once that decision has been overcome, then the company needs can be examined and proactive education and engagement can occur company wide. By doing this, Human Resources will meet the needs and requirements of business as we move well into the 21st century. References BEADLES, N., LOWERY, C. and JOHNS, K. (2005). ‘The Impact of Human Resource Information Systems: An Exploratory Study in the Public Sector’ [WWW] Communications of the IIMA, 5 (4), pp. 39-46. Available from: http://www.iima.org/CIIMA/11%205.4_Beadles_39-46.pdf [Accessed 16/10/10]. DERY, K., GRANT,D., and WIBLEN, S. (2006). ‘Human Resource Information Systems (HRIS): Replacing or Enhancing HRM’ [WWW]. University of Sydney. Available from: http://sydney.edu.au/business/__data/assets/pdf_file/0003/72273/IIRA_Dery_et_al_HRIS_Replacing_or_enhancing_HRM_final.pdf [Accessed 16/10/10]. FOSTER, S. (2008). ‘An Exploratory Analysis of E-HRM in the Context of HRM ‘Transformation’ [WWW]. University of Hertfordshire. Available from: https://uhra.herts.ac.uk/dspace/bitstream/2299/1405/1/S86.pdf [Accessed 16/10/10]. HUSSAIN, Z. and PROWSE, P. (2004) ‘Human Resource Information Systems (HRIS) as Means of Fulfilling Job Roles more Professionally for Human Resource (HR) Managers’. [WWW] University of Bradford. Available from: http://www.brad.ac.uk/acad/management/external/pdf/workingpapers/2004/Booklet_04-07.pdf [Accessed 16/10/10]. KANTHAWONGS, P. (2004) ‘Does HRIS Matter for HRM Today?’ [WWW] Bangkok University. Available from: www.bu.ac.th/knowledgecenter/epaper/jan_june2004/penjira.pdf [Accessed 16/10/10]. PLESSIS, A.J., BEAVER, B., and NEL, P.S. (2006) ‘Closing the Gap Between Current Capabilities and Future Requirements in Human Resource Management in New Zealand: Some Empirical Evidence.’ [WWW] Journal of Global Business and Technology 2 (1), pp33-47. Available from: http://www.gbata.com/docs/jgbat/v2n1/v2n1p4.pdf [Accessed 16/10/10]. RUEL, H., BONDAROUK, T., and LOOISE, J. (2004). ‘E-HRM: Innovation or Irritation?’ [WWW]. Utrecht School of Governance. Available from: http://www.nwo.nl/files.nsf/pages/NWOP_5Y9BY2/$file/MES_eHRM_samenvatting.pdf [Accessed 16/10/10]. SCHOONOVER, S. (2003). ‘Human Resource Competencies for the New Century’ [WWW]. Available from: http://www.schoonover.com/pdf/HR_Competencies_for_the_New_Century_Final.pdf [Accessed 16/10/10]. ZAFAR, J., SHAUKAT, M. and MAT, N. (2010) ‘An Analysis of E-Human Resource Management Practices: A Case Study of State Bank of Pakistan.’ [WWW]. European Journal of Social Sciences 15 (1) pp18-26. Available from: http://www.eurojournals.com/ejss_15_1_02.pdf [Accessed 16/10/10]. Read More