Human resource information systems: Backbone technology of contemporary human resources

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<ul><li><p>Human Resource Information Systems: Backbone Technology of Contemporary Human Resources </p><p>ANTHONY R. HENDRICKSON </p><p>Iowa State University, Ames, IA 50011 </p><p>I. Introduction </p><p>The Human Resource (HR) function of organizations is changing rapidly, reacting to a changing social and organizational environment and rapidly evolving information technologies. Social and organizational changes exert pressure on HR professionals to provide expanded services, of a higher quality, faster, and seamlessly linked with other corporate functions (Pfeffer, 1997). Information technologies (IT), which pro- vide enabling technologies to assist HR professionals in the delivery of services, have also simultaneously increased the expectations that employees, managers, customers, suppliers, and regulators have for the HR function. </p><p>While all of Human Resources practice is affected by information technology (see Lengick-Hall et al., this issue), Human Resource Information Systems (HRIS) and HRIS administration comprise a distinct, supporting function within HR. As informa- tion technologies have permeated the HR function, some confusion has arisen in the definition of what constitutes an HRIS. HRIS's can be briefly defined as integrated sys- tems used to gather, store, and analyze information regarding an organization's human resources. But, as is the case with any complex organizational information system, an HRIS is not limited to the computer hardware and software applications that com- prise the "technical" part of the system; it also includes the people, policies, proce- dures, and data required to manage the human resources function. Thus, a functional HRIS must create an information system that enables an assimilation of the policies and procedures used to manage the firm's human capital as well as the procedures nec- essary to operate the computer hardware and software applications. </p><p>The Evolution ofHRIS. HRIS has very humble historical origins. Although there were some exceptions, prior to World War II HR professionals (then referred to as "personnel" staff) performed basic employee record keeping as a service function with limited interaction with core business missions. Initial efforts to manage information about personnel were frequently limited to employee names and addresses, and per- haps some employment history, often scribbled on 3x5 note cards (Kavanaugh et al., 1990). Between 1945 and 1960, organizations became more aware of human capital issues and began to develop formal processes for employee selection and development. </p><p>JOURNAL OF LABOR RESEARCH </p><p>Volume XXIV, Number 3 Summer 2003 </p></li><li><p>382 JOURNAL OF LABOR RESEARCH </p><p>At the same time, organizations began to recognize the importance of employee morale on the firm's overall effectiveness. While this period of change in the profession did not result in significant changes in HRIS (although employee files did become some- what more complex), it set the stage for an explosion of changes that began in the 1960s (Kavanaugh et al., 1990). </p><p>During the next twenty years (1960 to 1980) HR was integrated into the core busi- ness mission, and governmental and regulatory reporting requirements for employees also increased significantly. The advent and widespread use of mainframe computers in corporate America corresponded with this regulatory increase and provided a tech- nological solution to the increased analytical and record-keeping requirements imposed by growing regulation of employment and a host of new reporting requirements (e.g., affirmative action, EEO, OSHA, etc.). The Human Resources department became one of the most important users of the exceptionally costly computing systems of the day, often edging out other functional areas for computer access. Although HRIS systems were computerized and grew extensively in size and scope during this period, they remained (for the most part) simple record-keeping systems (Kavanaugh et al., 1990). </p><p>Over the last two decades, firms have increasingly relied on the HR function to provide management solutions that increase the effectiveness of human capital. Addi- tionally, the regulatory requirements and competitive pressures to effectively manage human assets are no longer limited to large firms with mainframe computing systems. Fortunately, as smaller and mid-size firms have come to rely on more complex HR practices, personal computers have made modern HRIS systems affordable and avail- able (Kavanaugh et al., 1990). Regardless of firm size, HRIS systems have evolved into complex tools designed not only to manage a rich variety of information about the firm's human capital, but to also provide analytical tools to assist in decision making about the management of those assets. </p><p>II. HRIS Functions </p><p>Multiple Stakeholders. Contemporary HRIS is (at its best) an organizational bound- ary spanner that must meet the needs of a number of organizational stakeholders. Typ- ically, the people in the firm who interact with the HRIS can be segmented into three categories: (1) HR professionals; (2) managers in functional areas (e.g., production, marketing, engineering, etc.); and (3) employees themselves (Anderson, 1997). </p><p>HR professionals rely on the HR1S to fulfill their job functions in the areas of reg- ulatory reporting and compliance, compensation analysis, payroll, pension, and profit- sharing administration, skill development and skill inventory, benefits administration, etc. As the complexity of these analyses and tasks increases, the need for more pow- erful computing capabilities increases commensurately. Thus, for the HR professional there is an increasing reliance on the HRIS to fulfill even the most elementary job tasks. </p><p>As human capital plays a larger role in competitive advantage, functional man- agers expect the HRIS to provide functionality to meet their unit's goals and objec- tives. Managers rely on the HRIS's capabilities to provide superior data collection </p></li><li><p>ANTHONY R. HENDRICKSON 383 </p><p>and analysis, particularly for performance appraisals and performance management, skills testing, assessment, and development, resume processing, recruiting and reten- tion, team and project management, and management development (Fein, 2001). As managers contemplate future performance, there is added emphasis on web-enabled training, career development, training, and skills-management functions available from the firm's HRIS. </p><p>Finally, the individual employees become end-users of many HRIS applications. The increased complexity of employee benefit options and the corresponding need to monitor and modify category selections more frequently has increased the awareness of HRIS functionality among employees. Web-based access and self-service options have simplified the modification process and enhanced the usability of many benefit options and administration alternatives for most employees. </p><p>Integrating the Technologies of HR. Clearly, developments in Information Tech- nology have dramatically affected traditional HR functions in recent years, with nearly every HR function (i.e., compensation, staffing, training, etc.) experiencing some sort of reengineering of its processes due to developments in information technology. This process of change has created significant challenges for HR professionals who must quickly get up to speed in the latest information technologies and simultaneously trans- form traditional processes into on-line processes. Few other disciplines have faced such widespread change in such a short time. </p><p>The extent of IT penetration into the HR function can be seen in the listing of appli- cations in Figure 1 (available from the Commerce Center at ). Each application area has a number of companies that provide software solutions to assist in these traditional HR processes. The 33 functions listed offer links to 480 sep- arate solutions for these application areas. Clearly, an explosion has occurred in both the availability as well as the specificity of IT solutions for HR. </p><p>Most of the activities shown in Figure 1 existed in some form within the organi- zation without any electronic information technology. However, the technology has been used to change the traditional processes, either through increasing their efficiency or their capability (in the sense of greater functionality). Additionally, there are some new processes that only exist because there are now technologies that enable them. Fig- ure 2 briefly summarizes the ways that information technology affects different func- tional activities. </p><p>9 Increased Efficiency. Processes that have experienced increased efficiency are similar to other business processes in which rapid computing technology has allowed for more transactions to occur with fewer fixed resources. Examples of processes that would be typical in this category would be payroll, flexible benefits administration, and health benefits processing. Even the rudimentary technologies of early mainframes provided significant efficiencies in these areas, since most of what they required was powerful record processing (and relatively few analytics). What has changed in more recent years, is that the record processing efficiencies that were once available only to large firms are now readily available to any size organization (Ulrich, 2001). </p></li><li><p>384 JOURNAL OF LABOR RESEARCH </p><p>Figure 1 </p><p> - - Commerce Center: Software Directories </p><p>360 Degree Assessment (14 companies) ADA Compliance (2 companies) Applicant Tracking (36 companies) Benefits Administration (17 companies) Career Development (7 companies) COBRA Compliance (1 companies) Compensation Administration (7 companies) Compliance Tracking/Reporting (9 companies) Consulting Services (13 companies) EEO Compliance (5 companies) Employee Opinion Survey (ll companies) Employee Recruitment (21 companies) Employee Scheduling (13 companies) Employee Self-service (20 companies) Employment Screening (5 companies) Flex Benefit Administration (1 company) Health Claims Administration (3 companies) HRMS/HRIS (71 companies) </p><p>Intranet/Internet-enabled (40 companies) Management Development (6 companies) Organizational Development (12 companies) Payroll Systems (25 companies) Pension/Profit Sharing Administration (3 companies) </p><p>Performance Appraisals &amp; Mgmt (12 companies) Reference Sources (2 companies) Resume Processing and Tracking (14 companies) Skills Testing (5 companies) Succession Planning (6 companies) Teams/Project Management (6 companies) Testing and Assessment (17 companies) Time and Attendance Management (49 companies) </p><p>Training/Skills Mgmt (19 companies) Web-enabled Training (8 companies) </p><p>9 Increased Effectiveness. In many processes the introduction of computer tech- nology is designed to improve effectiveness, either in terms of the accuracy of the infor- mation or by using the technology to simplify the process. This is especially true when large data sets require reconciliation. Onerous manual reconciliation processes can be executed faster (an efficiency consideration), but also with near perfect accuracy using automated systems. Examples in this area overlap many of those for which efficiency gains were noted, but also including pension and profit-sharing applications, benefits administration, and employee scheduling activities. Using computer technology in these processes helps to ensure accurate results and offers substantial simplification and time- liness over manual processing. </p><p>The vast majority of HR functions have had some degree of automation applied in order to gain both efficiency and effectiveness. Information technology has histor- ically offered an opportunity to "have your cake and eat it too" in terms of providing users with increased accuracy and simplification of process steps, while simultaneously providing these benefits in a faster and less costly environment. As with most busi- ness processes, IT in the broad functional areas of HR such as work force planning, job and employee administration, recruitment, training and career development, com- pensation and benefits, and performance management offers significant gains in capa- bility and functionality while simultaneously reducing costs and turnaround time. </p></li><li><p>ANTHONY R. HENDRICKSON 385 </p><p>Figure 2 </p><p>Impact o f iT on Traditional HRProcesses </p><p>Increased Efficiency 9 Increased transactions without increased resources </p><p>9 Increased timeliness due to processing power </p><p>Increased Effectiveness 9 Increased performance (accuracy, precision, completeness, etc.) </p><p>9 Simplification of process due to the use of technology </p><p>IT Enabled 9 Available ONLY via IT applications, i.e., Computer-based training, on-line recruitment, etc. </p><p>9 Self-Service HR </p><p>9 IT-Enabled Processes. While many of the application areas' gains are through increased effectiveness and efficiency over manual processing, some are only possi- ble using contemporary information technologies. Most notably, computer-based (web- based) training is a growing area of HR practice that was not available until computer software was created. Even computer-based training was not as practical for today's geographically dispersed organizations until the training was upgraded from computer- based to web-accessible training. By taking traditional computer-based training pro- grams and making them accessible on the Internet, firms have created a powerful tool to upgrade and assess employee skill sets. </p><p>Many other traditional HR functions have evolved IT-dependent components with the advent of the Internet and ubiquitous desk-top computing. On-line recruitment cen- ters, along with the ability to conduct virtual interviews, background checks, and per- sonnel tests on-line have dramatically changed those processes, increasing the geographic reach of firms for potential employees. This increased reach not only extends the poten- tial employee base, but also enhances access to minority candidate pools, offering firms significant assistance in meeting diversity goals. </p><p>III. HRIS and Firm Size </p><p>Not all HRIS are created equal, nor do they need to be. Different size firms in differ- ing operational contexts require HRIS that meet their specific needs and remain cost- effective. Although a 25-employee firm can install a major HRIS, such as PeopleSoft, such an enormous expense would be difficult to justify. Likewise, a large multi-national could probably make a database program such as Access perform the functions nec- essary to operate, but it would be a cumbersome and extremely limited solution. Effec- tive HRIS requires a balance between technical potential and the critical information needs of the HR function. Figure 3 provides a taxonomy of the different functional requirements of three different sizes of firms. Although there are exceptions to this breakdown, it provides a general sense of the ascending order of complexity of HRIS as firm size and complexity increase. </p></li><li><p>386 JOURNAL OF LABOR RESEARCH </p><p>Small-Firm HRIS. Smal ler f irms typical ly use generic software appl icat...</p></li></ul>