Functional Perspective Of Hrm - Nouman Ali

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Functional Perspectives of Human Resources Wassim Boustani Management Information Systems Professor V. Friedman 10 March 2006

Boustani2 Functional Perspectives of Human Resources Executive Summary Information technology can shift the focus of HR functions to allow professionals to attend to other issues, and change how organizations manage and deliver HR; it can also become a partner to develop and implement responses to competitive pressure, and help a company achieve its strategic goals. Introduction Torres-Coronas defines e-democracy as the technological advances in communication media that provide employees with more information and more direct access to other employees than previously existed. Knowledge is a primary resource for workers, and the sharing of this knowledge through technology is an important tool for an organization. However, empowerment through knowledge creates decentralization and information access in companies that are still organized in a hierarchy of small management groups, where employee empowerment is limited (Torres-Coronas, 2004). Exposition The impact on HRM and e-democracy An e-democracy takes advantage of participatory management practices, organizational citizenship, and communities of practice. This encourages a more democratic organizational shape to a company’s structure; forcing a change in employee views of their role in the organization. Social identity theory is based on how our identities are defined by our interactions with others in a group, which gives us a sense of where we fit in society. Because organizations are structured networks of groups and inter-group relations, and because employees favor their workgroup more than other workgroups, changes that affect these workgroups and their relations

Boustani3 can have serious effects on individual employees in terms of their identities and loyalties (TorresCoronas, 2004). Although technology can successfully increase access to information across an organization, employees may see technology changes to be about their job satisfaction and commitment; including the status, power, and resources of their workgroups. HR practitioners need to consider these perceptions and inter-group relations for smooth transitions during changes. Otherwise, the high expectations for change when new technologies are implemented may result in a failed adoption of a complex technology, and expensive IT systems may be abandoned without reaching their full potential (Torres-Coronas, 2004). Studies of implementation at a metropolitan hospital have shown that instead of increasing input and knowledge, failure to train and support employees can actually lead to frustration and reduced efficiency. The same studies also show that employees involved in the implementation and monitoring of changes received them more positively than those who were suddenly confronted with them. However, the redistribution of authority did not change as expected and staff empowerment did not increase. Furthermore, those identifying with specific workgroups, or in-group, were threatened by the fact that the implementation was being managed by another workgroup, or out-group. They were mostly concerned with changing roles, but group relations and status remained mostly unchanged (Torres-Coronas, 2004). Hospital staff members were concerned about the effects of new technologies on face-toface communications and ultimately relationships with others. While some enjoyed having information at their fingertips, others feared that not having it handed to them with instructions by a more qualified person would reduce efficiencies and education. The most common concerns were about being forced to use a new system without training or compensation; of role

Boustani4 changes and potential staff losses; that the technology was introduced for budgetary reasons, rather than improved patient care; all these undermining a legitimate and valuable system that brought numerous sophisticated functions (Torres-Coronas, 2004). The study concluded that an organization will choose parts of a new technology that best suits its predefined structure or arrangement, reinforcing its normal practices. HR practitioners must be aware that new technologies bring changes to employees’ focus on their roles and identities, and that group identities are an important part of a successful e-democracy. HR must create focus groups and workshops to ensure the participation of key groups in the planning and implementation of changes, and to encourage personnel to engage in the technology. Effective training procedures should be established and timed to integrate smoothly with the implementation (Torres-Coronas, 2004). Statistics of IT usage in HRM Forty-four percent of companies use IT for most or all of their HR systems, whereas 92 percent have at least some IT-based processes. Surprisingly, there was no increase of IT use from 1995 to 2001. The lack of growth may be due to investments being made in technologies that improve preexisting IT processes, rather than adding new ones. The amount of IT used does not seem to be related to an organization’s configuration or size. Single-business companies and the largest companies were least likely to use IT for most HR processes, compared to multiplebusiness companies and several-sector companies (Lawler, 2003). Tasks that employees and managers perform most frequently on eHR systems were job openings, applying for jobs, arranging for travel reimbursements, and changing benefits. Salary administration has seen the greatest growth, because of its scalability. Meanwhile, the eight most common managerial activities were not accessible on eHR systems of over 50 percent of

Boustani5 companies. Transactional activities were more likely done using computers, while those that require expert advice and decision making were seldom done on a computer (Lawler, 2003). Another popular usage of eHR was for gathering and managing performance data throughout an organization. Processes are more likely to be computerized depending on the magnitude of their size and complexity, the economies of scale that is provided, and their value to the organization. Companies with knowledge management initiatives are more likely to make computerized solutions available for HR, with tools being more effectively used. These systems were found to be the most effective when they involve personnel records, salary administration, and job information; rather than management tools. This was especially true in large organizations; partly because of the cost savings they experienced (Lawler, 2003). Increasing the use of IT for transactional HR services can shift the focus of HR professionals to more value-added business activities. Applications that are most related to these changes focus on management tools that emphasize compensation, benefits, and employee development. The relationship between the use of IT and changes in HR activities may become more significant as more companies use IT for HR functions (Lawler, 2003). Trends and challenges in HRM If current trends continue, it is predicted that the future of HR could become an administrative function that manages an IT-based HR system, organizational effectiveness, and business strategy. HR has to focus on adding value and helping companies deal with human issues, while it also improves its competencies and develops new ones. These new developments will require HR to distance itself from its present control and audit role and place itself in a management and development role, having the HR function take a business partner approach (Verweire, 2004).

Boustani6 By using the business partner approach, the HR function develops systems and practices that provide employees with the needed capabilities to perform effectively; focusing on the effectiveness of these practices, as well as process improvements. As a key partner in strategic planning and change management, the main responsibility of HR is to recruit, develop, and retain employees. The knowledge economy has increased the importance of talent management, which has become crucial to competitive advantage as knowledge-based resources replace financial capital, natural resources, and unskilled labor. The fact that it is more difficult to imitate human capital becomes a determinant of performance (Verweire, 2004). The value of these knowledge workers lies in their general knowledge, as well as the tacit knowledge that they have gained through experience in the specific firm. As demographic trends shift towards a retired baby-boomer generation, the market for skilled knowledge workers will be smaller, increasing the competition for talent and the importance of HR as a business partner. An important contribution by HR will be to develop a talent strategy, and focus on its recruitment and development responsibilities (Verweire, 2004). Ninety-seven percent of firms use tuition reimbursement and 41 percent used a corporate university approach, offering e-learning and traditional courses internally. However, most companies rely on their employees to take responsibility for their own education. Forty-three percent of senior management was shown to be extensively involved in talent management, whereas only 24 percent of these systems are linked to HR practices. HR has to increasingly provide integrated systems that enable efficient approaches to talent decisions (Lawler, 2003). Large companies were more likely to have talent reviews, provide development opportunities, and invest more in building their human capital. The focus for firms is on having the most talented performers possible in the workforce. Fifty-seven percent of companies were

Boustani7 said to have special programs for employees that have the highest potential to add value. These programs included special development and assessment activities 88 percent of the time, and special career development activities 82 percent of the time. Large companies and those with a growth strategy or in the process of restructuring invested more in the identification and development of their high-potential talent (Lawler, 2003). Handheld computers for HRM research and practice Although handheld technologies have not been a prevalent integration into HR systems, the advancements in hardware, performance, and wireless capabilities, as well as the development of HR-related applications will increase their utilization. The successful use of handheld technologies requires integration into the organization’s IT system as an enterprise solution, and they must be part of its strategic business plan (Torres-Coronas, 2004). Currently, the most popular handheld applications are for personal information, such as calendars, contact lists, to-do lists, and email. Organizational applications are available for time management, complex work rules, time billing, scheduling, and capability allocation. HR can make forms and documents available on handhelds, which can be completed and returned electronically. Traveling employees can have capabilities such as time management, project management, sales and expense tracking, and immediate access to quick reference material (Torres-Coronas, 2004). The use of handhelds reduced medical errors across the medical profession by making correct information available; it also saved nurses hours per day and allowed for early patient discharges by eliminating the need to transcribe handwritten notes into desktop computers. Healthcare costs were lowered by decreasing prescription inaccuracies and insurance billing errors that are often caused by poor penmanship. The use of a handheld saved time in 81 percent

Boustani8 of entries and saved effort in 73 percent of entries (Torres-Coronas, 2004). The most desired applications were those that automated the daily workflow. In the medical organization; patient and staff schedules could be downloaded to the calendar, point-ofcare data could be input and extracted while interfacing with the patient information system, and notifications of laboratory results could be received wirelessly. Professional and personal customization of any handheld application was important to most users, and digitized forms should resemble their paper-based versions (Torres-Coronas, 2004). Workers were able to use handhelds with little training and organizational support, and job analysis and device usage data was easily collected. The primary issue was the lack of integration of the handhelds with the organization’s IT system, and they hindered personal interaction where it was important. Providing wireless access, compared to stand-alone applications, increased the use of digitized forms and communications (Torres-Coronas, 2004). Handheld technologies must be introduced with attention to existing processes, and HRrelated data should be collected and utilized to rate usage. Security is also important when considering access to data and personal privacy, especially with the increase of wireless access. Although handhelds have become affordable and many applications are already available on the IT system, cost will remain a major factor in handheld usage for HR research and practice. However, the benefits of increased job accuracy and performance may outweigh these costs (Torres-Coronas, 2004).

Social network mapping software in HRM Human decisions are mostly functions of the ties between people in a social network. Much of the individual’s support, information, and power come from this network structure, and

Boustani9 from their position in that network. Social network mapping software helps discover, visualize, and analyze network structures within an organization, which could have effects on HR activities (Torres-Coronas, 2004). Social network analysis functions include data collection, descriptive modeling, and decision support. During data collection, members of the network are surveyed about themselves and their relationships to others, including the measure of activity between members. Descriptive modeling maps the structure of the network, while quantitative models can measure properties to represent centrality and prestige of a network group. Other models can measure criticality, cohesion, inclusiveness, correspondence analysis, and regressions. Visualization models can use graphs and diagrams to display useful patterns of the network. The decision support function is useful for those that want to alter or manage the social network. Reports are used to detect trends or unusual activity, to analyze various what-if scenarios, and to predict the long-term evolution of the network (Torres-Coronas, 2004). Information on knowledge, power, communication, and status flow help HR managers make better decisions about managing people. Knowledge flow shows how human, social, and intellectual capital is produced. Power and status flow identifies the sources of motivation and productivity. Information related to a position can be collected over time to reveal a profile of its skills and social requirements; helping HR make management, training, knowledge distribution, and recruiting decisions. Social network mapping is especially relevant for managing groups; giving HR a picture of a group’s members, internal and external interactions, operations, and leadership. This can help optimize reachability, compensation, and the inclusiveness of a group in a network (Torres-Coronas, 2004). Recruiting on career Web sites

Boustani10 E-recruiting is one of the most successful applications for reaching potential job seekers. According to Forrester Research, online recruiting costs $183 per hire compared to $1,383 for traditional methods. 46% of companies polled by Recruiters Network indicated that e-recruiting was best for getting the most hires and the best resumes, followed by referrals (35%) and newspaper ads (11%). According to iLogos’ research, 91% of Global 500 companies had their own career Web sites and 9% posted openings on third-party job boards in 2001. This is a large shift compared to 1998, when it was 29% and 57%, respectively (Torres-Coronas, 2004). Traditional recruiting processes have been burdened with task delays and miscommunications, increasing the length and cost of the hiring process. Unlike the batch processes of traditional recruiting, e-recruiting is a continuous online process with activities that can be performed in tandem. Benefits of e-recruiting include a centralized job database, Webenabled applications, electronic submissions of applications to division managers, resume search by criteria and keywords, candidate qualification screening, and online background checks (Torres-Coronas, 2004). There are six main e-recruiting sources. General-purpose job boards provide solutions to employers and job seekers across different industries. Niche job boards serve specific markets by profession, industry, education, location, or specialties. E-recruiting application service providers develop and market services in recruitment software, process management, education and training, management expertise, and the hosting of corporate career Web sites. Hybrid recruiting service providers are traditional firms that provide e-recruiting services such as electronic versions of their newspaper ads, resume builders, search engines, job market research reports, salary information, career news, and industry trends. An e-recruiting consortium, often created by a non-profit organization and colleges, simply drives traffic to corporate career Web

Boustani11 sites; saving up to ten times the costs paid to job boards (Torres-Coronas, 2004). Corporate career Web sites are most widely used by Fortune 500 companies, while 64% of all companies use a combination of job boards and their own career Web site. Ninety-four percent of Fortune 100 companies have corporate Web sites, 72% posted opportunities on their homepages with hyperlinks to their career sites, and 96% subscribed to third-party job boards. Only 5% of companies used online pre-screening tools to eliminate unqualified candidates, while 88% of job seekers were willing to answer questions about their skills to find appropriate job matches. Information on job training was provided only 23% of the time. Many job seekers may prefer job boards because they can search for jobs provided by multiple companies, and apply to multiple jobs by submitting only one résumé (Torres-Coronas, 2004). Employee self service portals Employee Self Service (ESS) is a Web-based solution that provides employees with relevant HR data and transactions. The system has a high potential return for business-toemployee human resource use. Studies show that transforming paper-based HR forms to digital format reduced transaction costs by 50%, administrative staffing by 40% and management’s HR duties by 80%, including a 10-fold speed-up of HR processes (Torres-Coronas, 2004). Employee Relationship Management (ERM) can be a platform for information delivery, process execution, and collaboration in the organization. It can also focus on issues such as recruitment, development, retention, progression, and succession. A Customer Service Representative (CSR) and Interactive Voice Response (IVR) were used in 20-30% of employee inquiries, whereas ESS Web applications were used 50% of the time. Manager Self Service (MSS) is used for processing travel and expenses, purchase orders, and leave requests (TorresCoronas, 2004).

Boustani12 ESS provides employees real-time access to their data, including functions such as updating personal details, applying for leave, viewing their pay details and benefits, viewing internal job vacancies, as well as booking training and travel. The average cost of an ESS implementation range from $32 to $155 per employee. The main motivators were improved service, better information access, reduced costs, streamlined processes, and strategic HR. The applications utilized most by employees were communications, pension services, training, and leave requests (Torres-Coronas, 2004). Successful implementations of ESS were reported 53% of the time, with 43% being somewhat successful. The value included a decrease in transaction costs by 60%, inquiries by 10%, cycle time by 60%, and headcount by 70%. Employee satisfaction increased by 60%, and the return on investment was 100% in 22 months. The main barriers to implementations were the cost of ownership or budget, a perceived lack of privacy and security, the lack of technical skills, low HR priority, and having no HR management system in place (Torres-Coronas, 2004). Web portals are being used to develop employee relationships. Components of an ERM strategy include self-service technology, collaboration tools, communication tools, knowledge management techniques, personalization focus, and access technology. An application-rich portal can become more than an information tool, but also a process tool where business is performed. Portal development must compliment the business, since many processes that can be used in an application-rich portal may not exist in the organization (Torres-Coronas, 2004).

E-learning and the corporate university U.S. companies spent an estimated $56.8 billion in 2002 on education and training of employees in an attempt to keep their skills, knowledge, and abilities updated; and to retain top

Boustani13 employees. Over the past 15 years, the number of corporate universities has increased from 400 to over 2000 in an effort to meet these educational needs. New positions such as Chief Learning Officer (CLO) repositions HR to the highest levels of organizational influence and decision making. The corporate university is becoming a primary method of conceptualizing, implementing, and assessing workplace learning opportunities; as well as being extensively involved in strategic planning processes (Torres-Coronas, 2004). Unlike traditional HR training and development, the corporate university is proactive, has long-term focus, is strategically aligned, is integrated, focuses on corporate growth as a whole, has an expanded role for higher education, is grounded in evaluation, has more Web-based delivery, has effective measures, has managed enrollment, and learning is an employee requirement. The benefits of e-learning include cost savings, greater flexibility, and increased productivity. In 2001, only 4% of the worldwide corporate market used e-learning; however, by 2006, this is expected to grow by 30%. In the banking industry, 91% have adopted e-learning, compared to 45% of pharmaceuticals; showing a gap being industries (Torres-Coronas, 2004). The major trends that have contributed to the growth of corporate universities include the recognition of HR management as a partner in corporate strategy; the emergence of knowledge management concepts and their integration into organizational practices; and the availability and development of technologies that support e-learning. Today’s virtual classrooms can have multiperson audio, the ability to share applications, and provide ways for several students to participate (Torres-Coronas, 2004). The corporate universities’ goal of promoting continuous improvements in organizational performance can achieve this by being the primary delivery mechanism for organizational strategy, HRM, knowledge management, and e-learning. The effectiveness of the corporate

Boustani14 university is limited by the lack of integration, management, and nurturing of its main functions. Systems that support e-learning include learning management systems, portals, communications, and content management systems (Torres-Coronas, 2004). For a corporate university to work there must be a strategic alignment with the organization. Evaluations are needed for organizational assessment, strategic alignment, curriculum development, and program implementation – including related performance improvements. E-learning technologies will influence organizations by expanding their impact on human resource development and workplace learning. Corporate universities will play a key role in this new model for workplace learning, providing competencies for success in a fast changing global marketplace (Torres-Coronas, 2004). Conclusion In the current market, the knowledge workers are always demanding better ways to communicate and collaborate. Many innovative companies have created various solutions for collaboration. These products will replace the current working style and environments for the knowledge workers. HR needs to become a strategic partner and leverage these solutions to provide the most value for their organization, while maintaining harmony in the social network.

References Lawler, Edward E. Creating an Effective Human Resources Organization: Trends and New Directions. Palo Alto, CA, USA: Stanford University Press, 2003.

Boustani15 Torres-Coronas, Teresa (Editor). e-Human Resources Management: Managing Knowledge People. Hershey, PA, USA: Idea Group Publishing, 2004. Verweire, K.(Editor). Integrated Performance Management: A Guide to Strategy Implementation. London, GBR: Sage Publications, Incorporated, 2004.