Chapter 8 Information Technology for Human Resource Planning
Introduction
Information technology (IT) potentially is a powerful way to accomplish HR record keeping, HR
transactions, and many other administrative tasks more quickly, efficiently, and accurately,
thus enabling HR managers to save money and have more time to spend on strategic business
support. IT can be a way to deliver expert advice to managers and employees in areas such as
selection, career development, and compensation. It can also facilitate change efforts by
assessing the capabilities of the workforce and by providing information and training that
supports change. Finally, it can support the development of business strategy by providing
important information about the capabilities and core competencies of the organization.
Table 8.1 shows the state of IT-based human resource processes, current and past. In 2004
over 60 percent of companies were using IT for most or all of their human resource systems, a
relatively high level of IT use. It represents a significant increase in use from 2001. This increase
is not surprising, particularly in light of the great amount of activity occurring in the HR IT world.
In many respects, the increase almost had to occur, given the increased popularity of ERP
software and the fact that the major ERP vendors have HR applications (e.g., SAP, ORACLE).
Table 8.1: State of HR Information Technology
Overall, it is clear that organizations are making greater use of self-service IT systems in the
HR function, at least in the number of activities that are carried out on them. There will likely
be continued growth both in the areas where individuals can service themselves via IT
systems and in the number of companies that use such systems. The relationship between
the use of IT and HR’s role in strategy is shown in Table 9.2. As a general rule, the
relationships here are not strong, but some are statistically significant. Somewhat
surprisingly, scheduling training, posting job openings, and changing addresses are all
significantly related to HR’s role in strategy. One explanation for this finding is that putting
these operations on an IT self-service platform
frees up HR to play an important role in strategy. It may also add credibility to HR, because
HR has found a low-cost way to get some of this traditional work done. It is surprising to find
that some of the management tool items are not associated with HR playing a strategic role.
Putting these types of tools in an IT system would, on the surface, appear to be a way to help
HR
play a bigger role in strategy because it makes human capital information much more
accessible. It may be that the level of development in these areas is not high and, as a result,
doing so would not enhance HR’s role in strategy. It may also be that the level of
sophistication required to be effective in these areas outstrips the capability of current IT
systems and applications to deliver them effectively, so whether they are computerized has
little relationship to HR’s role in strategy.
Finally, it is interesting to note that the use of IT for performance management is significantly
correlated with HR’s role in strategy. This finding suggests that shifting more responsibility for
performance management to managers and employees via IT tools is associated with HR’s
being more of a strategic partner. Not only may doing so enhance the general capability of
employees and managers in this area, but it may provide a database of performance
information that is helpful in strategy development and execution.
8.1 The benefits of information technology (IT) solutions for human
8.2 Identify specific IT applications for HR planning.
Typical HR programs involve things such as record keeping, recruiting, selection, training,
employee relations, and compensation. However, all these programs involve multiple
activities, and these HR activities can be classified into three broad categories: transactional,
traditional, and transformational (Wright, McMahan, Snell, & Gerhart, 1998). Transactional
activities involve day-to-day transactions that have to deal mostly with record keeping—for
example, entering payroll information, employee status changes, and the administration of
employee benefits. Traditional activities involve HR programs such as planning, recruiting,
selection, training, compensation, and performance management. These activities can have
strategic value for the organization if their results or outcomes are consistent with the
strategic goals of the organization. Transformational activities are those activities that add
value to the organization—for example, cultural or organizational change, structural
realignment, strategic redirection, and increasing innovation.
8.2.1 Interface between HR and technology
The IT-driven automation and redesign of work processes certainly help reduce costs and
cycle times as well as improve quality. Management information systems (MIS) can further
help decision makers to make and implement strategic decisions. However, IT is only a tool
and can only complement, not substitute, the people who drive it. Often, organizations
mistake IT as a message and not the messenger and divert time, effort, and money away
from long-term investment in people to developing and deploying information technologies
(Thite, 2004). In fact, the critical success factors in information systems project
implementation are nontechnical and are due more to social and managerial issues
(Martinsons & Chong, 1999). With the increasing use of information technologies in HR
planning and delivery, the way people in organizations look at the nature and role of HR itself
may change (Roehling et al., 2005). With HR data and reports now being readily available on
their desktop, would managers interact less with the HR department and see it as being less
important? If that is so, how would it affect the attitude of HR professionals toward their jobs
and profession? Would they resist adoption of technology if they perceive that technology
lessens their status? In traditional organizations with silo mentalities, turf wars between
departments and functions acting as independent entities are common. Therefore, top
management needs to be mindful of organizational politics in managing change. Through
most of its evolution, HRM has had an administrative and caretaker focus in its delivery. With
technology significantly decreasing the time required for administrative tasks, many HR
professionals may find it difficult to redefine their jobs and may thus resist the change to an
HRIS. This calls for redefining and transforming the role of HRM through value-added,
strategic initiatives and interventions. This also involves learning new skills for HR
professionals and rethinking the way the HR department is organized and delivers its
services. With the improved job skills of HR professionals, technology will be seen as HR’s
“partner in progress.” While having an advanced, full-fledged system will not automatically
make HR a strategic business partner, it acts as a building block and an effective aid in the
process (Lawler & Mohrman, 2003).
8.2.2 HRIS
After reviewing the many definitions of an HRIS, Kavanagh et al. (1990) defined it as a system
used to acquire, store, manipulate, analyze, retrieve, and distribute information regarding an
organization’s human resources. An HRIS is not simply computer hardware and associated
HR-related software. Although an HRIS includes hardware and software, it also includes
people, forms, policies and procedures, and data. (p. 29) It is important to note that a
company that does not have a computerized system still has an HRM system; that is, the
paper systems that most companies used before the development of computer technology
were still comparable with an HRIS, but the management of employee information was not
done as quickly as in a computerized system. If a company did not have a paper system, the
development and implementation of a computerized system would be extremely difficult. For
the purpose of this book, however, we will use the term HRIS to refer to a computerized
system designed to manage the company’s HR. The purpose of the HRIS is to provide service,
in the form of accurate and timely information, to the “clients” of the system. As there are a
variety of potential users of HR information, it may be used for strategic, tactical, and
operational decision making (e.g., to plan for needed employees in a merger); to avoid
litigation (e.g., to identify discrimination problems in hiring); to evaluate programs, policies,
or practices (e.g., to evaluate the effectiveness of a training program); and/or to support daily
operations (e.g., to help managers monitor time and attendance of their employees). All
these uses mean that there is a mandatory requirement that data and reports be accurate
and timely and that the “client” can understand how to use the information. Because of the
complexity and data intensiveness of the HRM function, it is one of the last management
functions to be targeted for automation (Bussler & Davis, 2001/2002). This fact does not
mean that an HRIS is not important; it just indicates the difficulty of developing and
implementing it compared with other business functions— for example, billing and
accounting systems. Powered by information systems and the Internet, today almost every
process in every function of HRM is being computerized. The systems and process focus helps
organizations keep the customer perspective in mind, since quality is primarily defined and
operationalized in terms of total customer satisfaction (Evans, 2005). Today’s competitive
environment requires organizations to integrate the activities of each functional department
while keeping the customer in mind. An effective HRIS helps by providing the technology to
generate accurate and timely employee information to fulfill this objective.
Why Do We Need HRIS?
There are several advantages to firms in using HRIS (Beckers & Bsat, 2002). They include the
following:
• Providing a comprehensive information picture as a single, comprehensive database; this
enables organizations to provide structural connectivity across units and activities and
increase the speed of information transactions (Lengnick-Hall & Lengnick-Hall, 2006)
• Increasing competitiveness by improving HR operations and improving management
processes
• Collecting appropriate data and converting them to information and knowledge for
improved timeliness and quality of decision making
• Producing a greater number and variety of accurate and real-time HR-related reports
• Streamlining and enhancing the efficiency and effectiveness of HR administrative functions
• Shifting the focus of HR from the processing of transactions to strategic HRM
• Reengineering HR processes and functions
• Improving employee satisfaction by delivering HR services more quickly and accurately to
them
8.3 What is a Big Data, and it implications for HRM.
‘Big Data’ is going viral. With the dimension of the term ‘big’ changing from gigabytes and
terabytes to petabytes and exabytes, big data is presenting an enormous challenge to
manage and use this gigantic data. Earlier, people having information were considered kings,
but now people who interpret and use the information well will rule. By 2020, one third of
the data will live in or pass through the cloud; and the data production would be 44 times
greater than it was in 2009[1] Big data is all set to change the rules of the game by expanding
customer intelligence, improving operational efficiencies, and making information
transparent and digital; and is being viewed as the new competitive advantage. After years
of talking, people are finally serious about applying numbers to the people side of
organisations. It is expected to have control over attrition, employee behaviour, motivation,
people driven results and so on. In the world where everybody is leveraging the benefits of
‘big data’, the paper takes a sneak peak of the pros and cons of big data for managing human
resources.
Big data for HR is the use of qualitative and quantitative data to bring in a predictive insight
for the purpose of making decisions to manage people in organisations. Even though it may
look at the past data, it essentially helps make predictions for future. Big data can be used in
most of the functions of HR department such as:
Job analysis and Job design
Incentives and benefits
compliance
Use of big data for managing people offers the following benefits:
Better insights: Big data serves as a window into the professional lives of the employees. It
can be used to track employee behaviour with peers, customers and it can be used to boost
employee motivation, increase performance and increase employee engagement. Companies
like The Container Store are using wearables to track employees when they are at work
helping to gather a lot of performance data.
Employee retention and predicting turnover risks: Various tools like employee satisfaction
surveys, team assessments, exit interviews can be used to essentially predict and prevent
attrition. By tracking employees on the job, analysing their behaviour, gathering performance
data organisations can more accurately identify why employees leave and the data can also
be used to improve employee job satisfaction. Xerox managed to reduce its attrition rate in
call centres by 20% by using big data. [8] Google in 2009 started crunching data in a
mathematical formula from employee reviews, pay histories and promotions and it was able
to identify 20,000 most likely employees to quit. [5]
Effective trainings: Organisations spend a considerable amount of money on trainings and
hence it is important that the money is wisely utilised. CEB’s 2014 Global Assessment Trends
Report revealed that only 45 percent of its 1,400 respondents use measures of potential to
guide development and succession plans. Companies can use big data to make wise training
investments, track employee participation in trainings, their feedback, to see whether
employees apply what they have learnt in trainings, correlate trainings and performance
reviews.
The right hires: Bad hires can be huge costs to companies. Big data prevents mistakes in
hiring by making them more analytical and strategic. With the help of social media profiles,
online resume databases, employment applications and tests, and by sorting all this
information into trends, the talent pool can be narrowed down and great choices could be
made.
Performance Measurements: It is highly difficult to investigate as to why some employees
outperform the others or predict how would be the performance of employees at certain
jobs. We tend to correlate employee’s success with their grades, experience and references
which do not turn out to be accurate most of the times. Linking performance to employee
cost is one way to measure ROI. Big data can help probe into the matter and help employers
make better decisions and
With the growing amounts of employee, customer, and transactions, Human Resources are
compelled to divert themselves towards the newer technologies to aid faster decisionmaking amid a volatile business environment. A huge amount of talent or people-related data
ranging from skills to performance ratings, age, tenure, safety record, sales performance,
educational background, manager, prior roles, and so forth! Understanding these aspects can
assist in knowing the current composition, performance, and risk to improve the
development of employees, products, and services. With such a huge bunch of data
resources, HR professionals can evaluate and enhance practices including recruitment,
training and development, performance, compensation, and overall business performance.
Now when it’s about converting data into useful information: all you require doing is follow
these three steps procedure
1. Predictive analysis- As the name implies, it is the clear attempt to forecast what
could happen in the future based on past data.
2. Analysis and monitoring- Gathering data related to why events have happened
and what is happening now
3. Reporting- Outlining what has happened in a clear way that can be used for
comparison in the future.
Some of the standard HR metrics include recruitment, compensation and benefits, training,
workforce, organization effectiveness, retention, performance/ career management and so
forth. Further below I would like to mention a few pointers stating how big data impacts
Human Resource Management.
#1 Hiring process streamlined– Salaries, the value of sales data, and benefits packages and
such data are quite easy to collect. With the emergence of big data in the field of HR,
gathering and examining data after, during, and before the process of hiring becomes
relatively easy. As a result, organizations are able to make smarter hiring decisions and
develop a more efficient workforce. Have you heard about the Talent acquisition software- it
allows teams to collect and store information of the relevant candidates with an attractive
benefits package that is tailored perfectly for their needs. In addition to this, one can also
monitor and track the efficiency of recruitment efforts. This allows HR teams to come up with
highly efficient recruitment strategies that yield top-tier candidates. Being a functional
business unit, it is always advisable to do more with less; shortening the power to
recruitment costs by making the hiring process effective and appealing.
#2 Enhancing Employee Motivation and Engagement– It may quite interest you to know that
by tracking the activity of employees, HR can locate and reward the top performers. In case
of ineffective behavior and violations of policies or expected standards, activities that always
impact the growth of a company in some way- these stats can aid professionals in taking
prompt action at the right time.
Data analysis can also disclose if any employee is facing performance issues. For exampleextra training can be implemented to boost that candidate in particular. After all, every
employee requires job satisfaction and creating a win-win situation you can leverage their
talent and skills in such a way that benefits them as well as business.
#3 Appropriate Resource Utilization– Currently looking at the present scenario, human capital
management seems into big focus. Those who make effective use of their resources can
attain much more than their competitors. For instance, if someone lacks in scheduling, other
professionals might face hardships by not arriving within the scheduled service window.
Big data allows HR to leverage data for better resource utilization and workforce
management. Starting from the tools that enable data-driven scheduling to dispatching to
the ones that help balance the tasks as well as generate adequate revenue. It is all about
improving efficiency in the modern enterprise.
#4 Increased Employee Retention- Satisfying employees means you are directly experiencing
high employee turnover. Being an HR, one can easily locate patterns and trends, implement
data-driven programs; this will eventually lead to improvement in loyalty and won’t allow
employees to leave the organization.
Overall, big data isn’t just a tool – it is a strategic opportunity that is highly valuable. People
happen to be driving force in any business- make the most of it, and big data enables you to
achieve this.
#5 Futurecasting- Last but certainly not the least, Futurecasting from global to political views
can change the fate of your business. Try using predictive analytics and use that information
to make sound and insightful recommendations. So, it’s time to improve HR solutions- time
to invest in big data technology!