In the corporate world of ours, managers are being constantly persuaded to change how they manage their employees. They are urged to do more than simply rethink their relationship with their employees. With the cut-throat competition prevailing in the corporate world, businesses have realized the importance of investing in their most important assets, the Human Capital.
The rapid advancement in technology has a major impact on the corporate world particularly in technology intensive industry. The human resource function was not an exception to this revolution. It is now transforming into a strategic function as HR assumes the role of a business partner. As a result Human Resource Information System (HRIS) is becoming a key component of Human Resource Management. Today, organizations have their own databases carrying tonnes of information from across the globe leading to availability of timely information for decision making. The concept of shared services is leading to cost reductions and training and development is being seen as a value adding retention tool. However, there is still lot of work to be done on issues like linking reward mechanism to corporate growth, leadership development and Organizational Culture.
This paper is an effort to analyze the benefits and impact of HRIS on organizational development. Some major areas discussed in which an effective HRIS can play its role are:
Expanding Self service i.e. employees having access to HR database on their desktop.Role of HRIS in selecting people with right competencies for the right job.Taking account of what specific knowledge and skills the jobs involve, what the individuals already possess, and what gaps in such knowledge and skill, training can fill.Changing how HR professionals, managers and employees interact.
Since the advent of Scientific Management theory, there has been a lot of work done on different disciplines of Management Sciences. The idea was to determine the most critical factor, the factor that makes an enterprise a success or failure. Today the management gurus call this factor Competitive Advantage. The question at this point is who makes this competitive advantage work for an organization? It IS the employees that are the primary force behind it.
Today Human Resource function assumes the role of Strategic partner and like all other functions it is transforming by the advent of information technology. Today HR is about improving processes and changing behaviors not just implementing technology and if technology is to play significant role in human resource development, it must achieve the following objectives:
Strategic Alignment with corporate strategy.Business Intelligence must provide the user with relevant information and data, new insights and learning.Efficiency and Effectiveness must change the work performed by the Human Resource Personnel by improving their level of service, allowing more time for work of higher value and reducing cost.
The challenge for Human Resource Function is to:
Consolidate, Streamline, re-engineer and automate manual HR processes.Gather, manage and deliver business related information to decision makers.Enable employees to access HR information and services.Change how HR professionals, employees, job applicants and managers interact.
WHY HUMAN RESOURCE INFORMATION SYSTEM (HRIS)?
With the changing face of business dynamics, it is inevitable for HR professionals to play a strategic role rather than just supporting the corporate function. The problem is that they very often the involvement of HR has no purpose but to validate the process. Here is the example how personnel staff spends time and money.
Survey: How Personnel Staff Spends Time and Money
74 for data entry, process coordination, re-work——
14 for consultation task: job design, performance planning—–
12 for strategy related task: compensation and benefit design, succession planning—-
The role of HRIS is to reduce normal cycle time for routine tasks to enable HR to focus on its role as a business partner.
NEED FOR HRIS
Businesses are being challenged as never before to find new ways to remain competitive in the fast-paced, globally expanding and rapidly changing environment. With the changing dynamics of businesses, Human Resources now assume the role of strategic partner. The challenge is to transform the function into proactive business partner and change agent with a direct impact on bottom line, profits.
Compounding this challenge is an explosion of technology that is changing the concept of work and enabling organizations to create competitive advantages in ways that were not possible about 5 years ago.
These changes are causing businesses to fundamentally rethink basic processes, procedures, systems and organizations. Work is being redefined, organizational hierarchies are being eliminated, employees are being empowered and new business structures are emerging. The new processes and organizations are leaner, flatter and more responsive to customer needs.
The underlying objectives have not changed – achieve competitive advantage through lower cost, customer satisfaction, flexibility, speed and quality. The difference is that emerging technology, effectively deployed can enable dramatically different business processes that are responsive to business challenge. Traditionally, a typical HR professional gets involved with one step in many different flow of work. Very often the involvement of HR has no purpose?except to validate the process in some way and acts as an interruption to the flow of work. Over the last couple of years, Human Resource Professionals have been under the whip to save money, be more efficient, automate as much as possible, and to still make time for strategic thinking. The pressure is on for proactive HR innovations that contribute directly to the bottom line and improve employee morale and efficiency.
In today’s world, we can no longer function the way we do…
Manual processes that do not leverage today’s technology.Multiple non- integrated processes that accomplish the same thing.Too many hands touching what should be simple processes (or transactions).Too much time being spent by HR, employees and managers on basic transactions and related follow up.Confusion about where to go to get things done.Employee and manager frustration with processes and the associated impact on satisfaction and productivity.
The solution for all these problems is Human Resource Information System (HRIS). HRIS is about improving processes and changing behaviors not just implementing technology.
It is about;
Consolidating, streamlining, re-engineering and automating manual HR processes. Gathering, managing and delivering business related information to those who need it, when they need it. Personalizing and web-enabling employee and manager access to HR information and services. Changing how HR professionals, employees, job applicants and manages interact.
Looking at all functional areas of business, the Human Resource (HR) function has most lagged behind in terms of effective use of technology. Manufacturing, distribution, finance and even payroll, have been the beneficiaries of some technological innovations. Human Resources have generally been slow to adopt technology or automate existing processes. Interestingly enough, the domain of Human Resources is one of the most rapidly changing business areas and is in dramatic need of technology enablement.
Integrated HR Information Systems (HRIS) have a profound effect on firms that implement them. Most often these firms are replacing several related systems, such as a personnel database, payroll system and benefits system, with one HRIS that does it all. Many people focus on the improved reporting and processing that will be realized from the new system, and those are the reasons most firms choose to implement a new HRIS. But what many people don’t focus on is that the new HRIS will most likely affect the company much more deeply – it will challenge the operating structure and principles of all the HR-related departments.
AIMS OF HRIS
The primary objectives of HRIS is to function as an efficient and responsive system for managing the human resources of the organization, providing complete, timely and accurate information for HRM and analysis.
Principal goals to be achieved by the HRIS are:
Determination of the needs of personnel information in each functional area. Design of a comprehensive database to support these needs. Development of complete functional specifications for the HRIS. Design of necessary transaction processing and updated information. Identification of information retrieval and reporting needs. Development of relevant supporting documentation.
HRIS must link and incorporate all the HR functions and design it to be a total HRIS system for the HR development and the organization.
TYPES OF HRIS
- EDP LEVEL- ELECTRONIC DATA PROCESSING
Automation of routine information Focus on data, storage, processing and flows at the operational level Often a mainframe system managed by MIS Most common – payroll and basic personnel information
- MIS LEVEL- MANAGEMENT INFORMATION SYSTEM
Emphasis on integration and planning of the information system Defined as having and information focus aimed at middle managers Most common- EE/PE, time and attendance, turnover
- DSS LEVEL – DECISION SUPPORT SYSTEMS
Focus on decisions made at the higher level by senior management and executives
Interactive system capable of analysis and able to forecast (what if) Most common – succession planning
A proper HRIS should be a summary of all 3 types of HRIS.
Some important implications of HRIS on major human resources functions are;
A company’s workforce should be seen as an important investment. Consequently, decisions relating to human resource issues are critical to the company’s success and competitiveness. Staying competitive means setting up an effective recruitment strategy for finding and hiring people who will contribute to the company’s continuing success. HRIS can provide optimum support and help to;
Optimize the recruitment procedure and reduce administrative overheads. Reduce the time and money spent on handling job applications. Provide concrete assistance in making staffing decisions.
This can be illustrated with the help of following example.
The personnel department receives hundreds of applications on a prescribed format available on the website in response to any job advertisement. Several of these applicants may have already applied for positions in the organization. When the basic data is being entered, HRIS program recognizes these “multiple” applicants immediately, and proposes the data that has already been entered for them. This data can be accepted / rejected by the user. When applicant data is entered, HRIS program also checks to see if any of the applicants are former employees, or are currently employed in the company. The personnel administrators can then decide to accept this information and process these records further. If applicants do not fulfill the minimum requirements of the organization, their applications are rejected. Each of these applicants receives a letter of rejection generated automatically by the system. During the applicant screening process, the personnel officer uses HRIS program to compare applicants’ qualifications profiles with the requirements profiles of the position advertised. The system then displays detailed information on how suitable the various applicants are. This helps the personnel officer to decide who to pass on to the next step in the selection process. The personnel officer prints and mails the letters of invitation generated automatically for every applicant selected to come for an interview. The dates and times of the individual interviews are sent by e-mail to the department manager. The department manager holds the interviews with the individual candidates. Once they have all taken place, he/she looks at the application documents and the short profiles in Recruitment Module again, and on the basis of these and the outcome of the interviews, makes a decision. A contract of employment is offered to a suitable applicant. The personnel officer uses Recruitment Module to perform this task also. He/she prints out a contract of employment for the successful applicant and sends it off. The other applicants are put on hold, pending the successful applicant’s decision. The successful candidate decides to accept the offer, and signs the contract. At this point, the remaining Candidates for the vacant position are rejected. When the new employee is hired, existing data in Recruitment Module is transferred automatically into Personnel Administration Module. Once the data has been transferred, the personnel officer only has to enter data that is missing (payroll ac-counting and tax information, for example).
Today the success and growth of an organization is inextricably linked with the performance of its employees. This makes it imperative that the employees keep up with the organization’s dynamic development. The HRIS program ensures that employees develop in line with organization’s goals, and at the same time enables the management to take the individual preferences of their employees into account.
HRIS program provides a lasting personnel development concept that will enable organizations to;
Keep the employees qualified, and provide a dynamic training solution to prevent any qualification deficits arising. React swiftly and effectively to any organizational or structural changes. Meet future demand for specialized personnel and managers from within the organization. Increase employees’ productivity and motivation to work. Build up strategic company goals that are customer-oriented and performance-oriented.
Effective personnel development means that the data used for planning must reflect the real-life situation in the organization. HRIS program makes it easy to generate a detailed view of the qualifications that already exist and the qualifications that are still missing in the organization.
The specialized, analytical and social skills required for a particular job can be defined in the Personnel Development qualifications catalog, and assigned to the jobs and people in the Organization. Each qualification is given a proficiency scale of choice to evaluate and compare requirements and qualifications with each other. If a qualification expires after a certain period of time, it can be assigned validity. Similarly, if a qualification can be forgotten quickly, it can be assigned depreciation value. This allows the system to calculate the qualification proficiencies of each person dynamically, and gives a realistic assessment of a person’s skills at any time. One can also obtain information on how a person is expected to develop, create a career plan for this person, and record the person’s personal preferences. Personnel development can be an area of conflict because it has to consider both a company’s business goals and the individual aspirations of employees. Using HRIS program this can be resolved giving due consideration to both sides.
Individual preferences and dislikes for each person can be recorded for planning scenarios. Career planning can be used to show employees what career opportunities are open to them if they perform well and prove suitable. Predefined careers provide employees with information on how they can progress within the organization. By taking individual preferences into account, HRIS program provides the following benefits:
You increase your employees’ motivation and willingness to work, and thus improve the working atmosphere. You avoid a high turnover of qualified staff. You enhance the organization’s image on the labor market, and can recruit qualified people with potential.
CAREER AND SUCCESSION PLANNING
Personnel Development has two chief aims. One is to ensure that there are always enough qualified employees and managers in the organization; the other is to show all employees the career opportunities that are open to them, and to promote their work-related and social skills. The Career and Succession Planning component of HRIS program provides a powerful planning tool that helps in achieving the following aims.
In order to safeguard the organization’s goals, it is essential that top-qualified successors are available for all the important posts in the organization immediately. Only in this way critical staffing shortages can be prevented. Ensure that the posts in the organization are always held by the best-qualified people. React swiftly and effectively to organizational and structural changes in the organization.
The HRIS program enables the organization to plan and forecast future staffing requirements with regard to the qualifications and the headcount required. Succession Planning identifies candidates who are qualified in all respects to occupy a post either at the present moment, or in the foreseeable future.
In addition to the detailed information obtained on the suitability of potential successors, HRIS program also provides concrete proposals for the training measures that need to be taken for individual candidates. It can also simulate a succession planning scenario to see what the knock-on effects will be if someone is transferred to a different post. The Succession planning component HRIS program provides dependable information and a steadfast basis for medium-term and long-term personnel plan.
The organization’s productivity depends on employees’ motivation and willingness to work. It is also important that employees possess the necessary qualifications and skills. HRIS program helps to give employees something to aspire to, and prepare them to face the requirements of the future.
Individual career planning identifies the posts in the organization that would be suitable for a particular person, and informs about any training measures that might be needed.
The Career Planning component of HRIS program enables organization to:
Ensure that employees are qualified and remain qualified Increase the motivation of employees Avoid a high turnover of qualified personnel
EMPLOYEE SELF SERVICE
Self service for employees and managers allow information to be pushed out to the levels needed, with one time data entry and less maintenance. Today, HRIS integrate the employees into the Human Resource Equation via Intranet, Internet and employee Portals. This helps to save time and money, empower employees and free the Human Resource Staff from the administrative treadmill of paper work and delays.
Routine administration and delivery of services represent a large proportion of HR Departmental Cost. Using HRIS program; substantial decrease in cost can be achieved by reducing the cost of paper, postage and data entry time. It helps in eliminating the unwieldy bureaucratic processes that devour resources. Not surprisingly, the use of employee self-service systems for records, information, payroll and other functions is becoming increasingly common. Libraries of forms can be kept online to be downloaded as and when required. Systems can be enhanced to include streaming video and other new software providing wide access to corporate videos, training, etc. Obviously, e-mail announcements and newsletters can also be used to alert employees to new developments or urgent requests.
By enabling employees to take control of their human resource transactions, it empowers them to take responsibility for and ownership of their own data. By providing information to and accepting information from employee, their satisfaction level increases. The intranet is an effective means to reach widely dispersed employee population. Employees can access it from their desktop, a centrally located kiosk or even from a remote location. Use of HRIS program means human resources process is streamlined and errors are reduced. This liberates human resource staff from routine tasks and enables them to focus on more strategic work, such as organizational development and planning. This increases productivity and puts the organization’s resources to intelligent use.
In-depth knowledge of the company’s organization and business processes is an essential prerequisite for the value-added process. As demands grow for companies to make their business processes and structures more flexible while remaining customer oriented and competitive, companies cannot underestimate the importance of having and using this knowledge.
The Organizational Management Module enables to map company’s organizational structure exactly and puts the facts at fingertips when required. It also allows simulating and experimenting with future organizational changes in any number of planned scenarios on a decentralized basis.
By incorporating the plan scenarios into the overall productive plan, HR can keep pace with the growing trend in business to shift certain personnel management tasks to line managers. This shift toward decentralization has distinct advantages. The personnel department can concentrate on core tasks of personnel management, and its staff can focus on other personnel tasks.
Organizational Management puts a powerful tool at HRD disposal. The extensive range of performance it incorporates becomes evident in the variety of organization models it offers for productive use.
As an analysis and reporting tool, Organizational Management Module provides a sound foundation for making personnel decisions in areas such as personnel development or budgeting. Its comprehensive reporting functions along the organization’s structure provide the facts needed when required.
With such a powerful too at disposal, HRD can swiftly and efficiently determine current staffing requirements. Then, when reorganization changes core business processes, which in turn necessitates staffing adjustments, HR can dynamically adjust the organizational model to reflect the new situation.
Thus it provides the current organizational and personnel structure of your organizational plan, keeping you well informed about staffing needs.
SYSTEM EVALUATION AND IMPLEMENTATION
An HRIS is a system with five basic components.
Database Data Entry Information Retrieval HRIC-Human Resource Information Centre-the staff responsible for day to day activities of the HRIS system and who are subject-matter experts. Data quality and integrity
An HRIS system is made up of distinct yet interconnected modules that perform specialized functions. Each module is an “umbrella” term covering a group of related personnel activities. Some modules in a system may include some or all of these:
Basic module containing basic, vital information. Career development module. Benefits module. Job evaluation module. Position control. Safety/OSHA module. Recruitment module. Payroll module. Employee self-service module. Training module. Labor relations module.
Having an HRIS means costly investment, besides all the advantages discussed so far, bottom line questions are:
How much does it cost to implement HRIS? What is the Return on Investment? And What are the justifications for going into such a costly investment?
During this period of slow economic growth, HR is under more pressure to prove that its systems are an investment that will pay off, and not just an additional cost.
The most important thing to consider when developing cost justification is to relate the justification to the business strategy or mission. “A proposal that is founded on the needs of the business will have a better chance of being funded than one that simply focuses on technical requirements. This is also one of the first places to begin gathering critical management support demonstrating an understanding of the business needs and how the HR function fits into the larger picture of the organization will help gain support and, most important, will lead to a system that provides maximum pay offs to the company.”
ROI is not always easy to figure out for HRIS and there are even situations where calculating ROI makes little sense. However, there are number of factors that justify the investment.
Cost Avoidance: elimination of future spending
Avoid or minimize costs associated with recruiting-succession planning/applicant tracking. Legislative compliance- failure to comply (fines, contract losses) Reduction of benefit administration fees. Avoid/postpone staff increases, overtime and temporary employee costs. Eliminate duplication of work (staff lists, organizational charts). Reduction in turnover/training costs Increased morale of staff. Improve the performance of a measured activity and reduce time and cost required to complete an activity.
Value Added: qualifies rather than quantifies the benefits gained from the HRIS
Faster access to information not available before and more meaningful information. Reduction of Human Resources administrative workload. Better tools equate to better productivity. Perform “What If” modeling- forecasting ability. Better employee communications. Better decision-making. Competitive advantage.
DATA SECURITY CONSIDERATIONS
Organizations information systems are accumulating more and more information about individuals. Access to computerized information continues to expand through personal computers, e mail and decentralized databases. HR professionals should carefully consider which individuals need access to information, as well as whether access should include reading the information, writing or changing the information or both. These are critical considerations as;
Unauthorized entry into a system for entering, changing or just “looking” becomes a bigger and bigger issue as a system becomes bigger and more accessible. Security and accessibility are incompatible concepts……the greater the balance on one side the more forfeited on the other side (high security, low accessibility, etc.). A highly secure system will not be very convenient…..by design! Virus protection systems are a critical element in any interactive system allowing up-loading or down-loading of data. Data and System Safeguards such as password protection, system backups, off-site backup storage, and data entry error protection are all considerations necessary on any system designed and/or selected. Security considerations must always keep in focus the reason for having/maintaining the information.
HRIS IN PAKISTAN
HRIS has not really established a foothold in Pakistan as yet. According to a survey conducted by Price Waterhouse Coopers in 2002;
Most organizations have not yet implemented an HRIS. 17 have an ERP solution. 8 run an HRIS developed in-house. 65 of respondents said they plan to implement a new HRIS. 21 stated that the implementation is in process. 14 said they have not yet planned for its implementation.
The survey also revealed that;
HR systems are mostly used for general administration. Salary administration, compensation and benefits accounts for 15 of HR system usage. This percentage is considerably low for training & development, recruitment and HR planning i.e. 7 9 and 6 respectively.
Although some of these findings are very encouraging but there is still lot of work that needs to be done. HR in Pakistan needs to focus on becoming more proactive to understand the current and future business needs. Unfortunately it is still considered as administrative function in most organizations in Pakistan. There is a large number of general and support staff mostly involved in routine assignments. This is primarily because of lack of HR Process automation and technical know how. It is now up to the HR professionals to bring about revolutionary changes in their function and provide their organizations with sustainable competitive advantage in the form of human capital.
FUTURE OF HRIS
The HRIS could transform the Human Resource function:
Assistant Strategic Partner
Administration Policy Maker
VIRTUAL HUMAN RESOURCE (VHR)
The concept of Virtual Human Resources is simple: Allow an employee to interact with information directly without the need to rely on either paper or HR administrative assistance. A number of current technologies are being used to enable employees to interact directly with their HR information:
Interactive Voice Response (IVR) Systems allow employees to make and change simple data elements through the use of a Touch-Tone phone. Kiosk-based systems allow employees to interact with HR information through centrally-based, high-performance workstations. Network-based distributed computers allow employees to access HR information through personal or shared desktop computers. Internet-based HRMS connectivity. This is an emerging area where everyone from line managers to employees can access their HR information via the World-Wide WEB (Internet) allowing greater access to HR data as we move administrative burden from centralized staff. Placing control of information accuracy at the data source will have a positive effect on quality and timeliness of information.
Over the next 25 years, control of not only information, but decision support activities will continue to move to the employees from centralized administration. Technology will not only provide information but advise on human resource issues. Examples of these capabilities could be:
Provide advice on classes or courses to qualify for promotions or other positions. Assist with retirement planning and retirement investing. Help manage performance review and goal setting
Employees will have various access points for human resource information including: phone, computer (internet and desktop). Front line managers will become more important for employee as advisors and advocates. These managers will interact with information within the workflow based technology discussed above. Individuals with specialized HR expertise may be located centrally to provide support for the entire employee population via video conference technology. In some cases, these individuals may work out of their homes or could be third party providers.
INTRA – HRIS
Historically, Human Resource systems have focused on single employers. It was common for a single employer to have multiple human resource systems running on a decentralized basis in numerous departments or divisions. In the future, HR information will not be strictly centralized or decentralized. It will be distributed not only within the employer’s organization, but in many cases, across several different entities that need to provide services to employees. HR systems will support electronic data connectivity with outsource payroll vendors, insurance carriers, outside training services, local colleges and universities, etc. Future HR?and payroll systems will need to provide open front-ends and open back-ends that will allow seamless exchange of information, yet provide an appropriate level of security.
Technology is completely changing the way we do things. The role of HR is becoming of strategic importance. HR practitioners have to constantly challenge themselves to find ways of adding value to their processes and systems. Organizational development is being directly linked to HR development. Availability of timely information with regard to human resources has gained crucial significance, whether it is your present work force or the one you are going to hire. Developments in HR Information Systems have made it possible for organizations to have employee portals for employee self service, e-cruitment, employee development and so on. These systems are continually evolving and the shape of things to come seems even more fascinating. However, investing in a HRIS requires careful analysis and evaluation. Whatever organizations achieve in the short run will be outdone by the organizations which run an effective HRIS. HRIS and its maximum utilization will be their competitive advantage in the long run.
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