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International Journal of Research in Management and Business (ISSN: 2395-4329): Volume 2 Issue 4

Impact of Human Resource Information Technology on HR Function Improvement

Muhammad Hamid Cheema

Department of Business Administration, University of Sargodha, Pakistan

Syeda Tahira Maryem


Syeda Rida Zainab


Nimra Iqbal


Abstract

The increasing revolution in the field of Information Technology has improved the working

performance of human resource management by transferring its focus from personnel

management to strategic HRM. This strategic role of HRM adds their value to improvement in

HR function. This study focused on improvement of HR function by using application of IT while

this relationship is partially mediated by resistance to HRIT. The population for the study covers

all Private Banks employees including Bank Al Habib Limited (BAHL), Bank Alfalah Limited

(BAL), Habib Bank Limited (HBL), Allied Bank Limited (ABL) in Sargodha. A sample size of 200

respondents including both male and female employees was randomly selected. Primary and

secondary data has been collected to run the structural equation model on AMOS. The results

confirms that an increase in IT application by 1 standard deviation causes improvement of HR to

increase by 0.87 standard deviation and resistance to increase by .76 indicating a positive

relationship while resistance is declining by 0.75 standard deviation leading to improve HR

function. It is recommended that the foreign banks and other sectors such as manufacturing and

private educational organizations should be included for future research.

Keywords: Improvement of HR, Application of IT, Resistance

1. Introduction

The market exposes that the competition between the companies is in real the competition of

human resource. To gain market share, the profit-pursuing organizations always facing a

pressure for providing new products. A profit pressure can hardly sustain by company and they

follow its long term business policy without high quality human resources and its effective

functioning. Now-a-days, effective human resource management plays a vital role in the success

of business (Schuler, 1990).

Currently, business world is suffering a substantial change: the employee turn-over rate

becomes high, and both the business structure and administration arrangement transform as well.


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Such swift changes are not catch up by traditional HRM: the outdated style mainly concentrates

on supportive employees activities for a company, for example, gathering employee information,

observing individual performance, and executing organization policies. It is a passive,

submissive implementation, without self-motivated involvement into strategic problem to predict

the trials of tomorrow. Therefore, new HRM comes in demand that should help to recognize the

business strategy, formulate the matching management strategy on human resources to increase

provided service, and performance as a strategy partner with top management team (Beer, 1997;

Mohrman and Lawer, 1997).

By using the Information technology, Human Resource Management (HRM) emphasis

on strategic HRM instead of administration or personnel management, HR function is supposed

to enhance the strategic role of HRM and lead the essence of HR function to improve. This study

examines improvement of Human Resource function caused by application of Human Resource

Information Technology (HRIT) and the interrelationship among them, and the role of resistance

as a mediator in the application of IT and improvement of HR Function.

By using the HRIT, HR software helps the HR to execute their activities and process

electronically. A software solution of HRIS or Human Resource Information System help the

small to mid-sized businesses to automate and organize their HR, work force, management and

bookkeeping activities. A HRIS generally should have the ability to provide more productively

plan, control and manage HR expenses; achieve high quality in HR decision making and

improve efficiency ; and develop managerial and employees output and effectiveness.

Improvement in HR function, HRIT and resistance are conceptualized. Initially, the HR

specialized is moving from operational level to strategic and managerial levels. An important

part of HR function has taken by line manager. Secondly, HR function makes HRM focus more

on strategic, value-creating activities for the long-term business goals by increasing the

participation of performers in HR function and changing the HR tasks. Thirdly, HRIT is helping

and pushing the traditional HR function to change, and alter the mode of management. Fourthly,

HR specialists need to focus their attention to deal with the resistance and weaknesses carried by

HRIT, which might leads undesirable effect on both information accuracy and social interface

and becomes a barrier in the successful improvement of HR Function.

According to Appelbaum (2000), Svoboda (2001), and Knapp (2004), reinvention,

relocation and re-establishment of the HR task, role and responsibility are included in the HR

function’s improvement.HR functional process is supported by HR experts by taking part in

activities related to improvement such as redesigning of the work practices and Human resource

management system, restructuring delivery procedures related to service and dealing change

occurring in culture (Wohl and Appelbaum, 2000).

Currently businesses have an eager for IT to improve the quality of the service, decrease

cost and accomplish effectiveness and efficiency (Ulrich et all, 1994). Customers, managers and

employees can rapidly react to control cost of the risk and change in the market by having

appropriate tools of the information. In order to know the adding value of IT application in

human resource management (HRM) it is essential to make clear that how IT supports HR

function e.g. in administrative and strategic tasks.

The establishment of human resource information system (HRIS) is called an application

of IT. HRIS can be defined as the combination of information technology and human resource by

using software applied in HR. By using this technology HR processes and activities can be

perform electronically. HRIS should be generally capable to make more effective planning,

controlling and managing costs related to HR, enhancing HR decision making process’s quality


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and efficiency and increasing managerial and employee productivity and effectiveness.

Generally, HRIS provides HR, employee payroll and benefits, recruiting, training and

compliance solution.it also offers communication methods and set aside paper cost by facilitating

an easily available, centralized location for organizational policies and rules , and links to

external URL’s.

Ansoff (1990) studied that the term “resistance to HRIS” is considered and analyzed

when the concept of change is familiarized in the business organization. In other words

resistance can be defined as a phenomenon that has an effect upon a change process, hindering

its application, postponing its beginning and enhancing its costs. Piderit (2000) considered that in

order to effectively implement the change organization should collaborate with their employees.

It is hard to define what resistance actually comprises upon but it is sure that it has an ability to

end the implementation of change. According to Piderit (2000) human beings respond differently

with their emotional feelings upon resistance. These feelings can be viewed in a form of

aggression, excitement, fear and happiness. The main reason of employee resistance to change is

information deficiency, misunderstandings, and different characteristics of individual and

emotional effects. Dent and Goldberg (1999) studied that the main reason of resistance to change

is the job insecurity in the light of literature.

Svoboda and Schroder (2001) argued that in order to cope with these challenging

activities, employees should improve their management skills and abilities so that they can

promote the HRIT application process with using appropriate policy or strategy. According to

Knapp (2004) management should develop leadership to control and overcome resistance in

order to effectively advance the HR function.

2. Literature Review

2.1. Application of IT

The researchers have examined HRIT form its functions like the e-recruiting system, e-selection

system, e-performance system, and e-compensation system, and pointed out that HRIT can have

both positive and negative effects on HR function when they consider the impact of HRIT on

daily activities of HR (Stone, Romero, and Lukaszewski, 2006). To manage the workforce data

using IT is the higher level application of HRIT which is called the automation.

The information flows change considerably by the application of HRIT, due to the fact

that the system enables users more efficiently to collect, disseminate and access the information

(Stone, Romero, and Lukaszewski, 2006).

Employees were controlled and monitored by traditional personnel management. It is

uncertain that whether the controlling of individuals becomes more effective than before or not

with the application of HRIT. Freedom on management of employee is given more by such

decentralization, in this sense (Ashbaugh and Miranda, 2002).

The real organization’s situation and the end-users need are met by the application of

HRIT. Otherwise, the benefits of organizations can damage by negative effect on both quality

control and information accuracy and decreased social interactions (Stone, Romero, and

Lukaszewski, 2006).


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2.2. Improvement of HR

Large amount of information management with great accuracy by HR professionals is allowed

by HRIT. To improve the effectiveness the best way is thought to be the automation of HRIT and

it becomes a valued contributor of HR function. But the system may not be as useful as

traditional methods in some cases (Haines and Lafleur, 2008). The face to face interactions in

organizations are reduced by the HRIT. Only when done effectively, and use technology

productively and ethically or when combined with other resources effectively by human

resources these information technologies can lead to improve performance or increase

productivity (Dauda and Akingbade, 2011).

Many studies concluded that for performance of employee, advancement in technology is

important and also many studies have shown repeatedly a positive relationship between a firm’s

advancement in technology and performance of HR (Foster, 1986).

2.3. Resistance

Beckers and Bsat (2002) studied that HRIS huge amount of maintenance and institution cost was

the most important barrier in its implementation (SAP Business one review, 2013).According to

Brown (2002) there could be high software package’s expense and infrastructure installation cost

in order to implement HRIS. In addition, workers requires internet connection and availability of

personal computers to take advantage from all HR possibilities.so the result was that there is high

transitional costs from old HR to an HRIS.

Kovach and Cathcart (1999) argued that lack of finances and insufficient support from

upper management are considered as a major barriers in acquiring maximum benefits.

Additionally. They identified that system designers have a lack of sufficient knowledge about

HR processes so that is why they have a difficulty to deliver appropriate solutions to the

problems.

Ngai and Wat (2006) study highlighted that institute of management and Administration

conducted a survey in 2002 which identified that inadequate budget, insufficient IT support,

deficiency of staff, Poor management of time and the requirement for collaboration with other

divisions are the main hurdles in HRIS management.

2.4. Gap of the Study

In our research study, HRIT developers and researchers only recognize the technological aspect,

such that information system development or IT, while only some of them recognize the business

aspect, HRM. On the other hand the professionals who are aware of the key HRM issues to some

extent, lack the knowledge of technology. For this reason, the research theme should be

established so technology side researchers and business side researchers can attempt to learn

from one another to eradicate knowledge gap, and to find out the new possibility of technology

application to boost human resource (HR) function.

2.5. Objectives of the Study

The objectives of our study are to find that:


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Does the application of IT have the impact on the HR function improvement?

Does the application of IT gives rise to resistance among employees?

Does the resistance hinder in the way to HR function improvement?

3. Hypothesis

There are many factors which bring improvement in the improving capability of human resource

management but we want to check the impact of our independent variable such as application of

IT on the dependent variable such as Improvement in HR, while the Resistance to HRIT is

playing the role of mediator in our study.

Following hypotheses are drawn on the basis of literature review and the model drawn

below:

3.1. Relationship between the Application of IT and the Improvement in HR function

The world of business is becoming very much demanding to gain the market share by

productivity improvement, for long-term survival the requirement of developing capability,

business world globalization and increase in competition. Organizations were forced by such

demands to reconsider how they can attain or keep competitive advantage in frequently changing

business environment by making use of people the best (Beer, 1997; Appelbaum and Wohl,

2000; Stockport, 2000; Sagie and Weisberg, 2001; Knapp, 2004).

The HR function was forced to put and shift the function into important status by major

changes in the business world (Schuler, 1990). To improve business competence by different

aspects the technology enables the organizations. E.g. the information management is changed

by the technology, and HR department’s burden of information publishing releases. The HR

professionals asked to get latest skills by education due to speedy technology changes, or the

professionals who have IT ability are sourced.

Yeung et al. (1994) reported that more-then-half of companies interviewed have integrate

their databases by using HRIT, and the information system provide better access for employees

and managers. Furthermore, Sagie and Weisberg (2001) did research for HR function in

companies of Israel and find that HR departments have divided in two parts by technology levels

that are low-tech sectors and high-tech sectors. The traditional task are dealt by low-tech sectors

and strategic issues are focused by high-tech sector. To maximize the benefits of using HRIT the

HR function needs to adjust itself.

H1: There is positive relationship between application of IT and improvement of HR.

3.2. Relationship between Application of IT and Resistance

If organizations have a competitive advantage then they are prepared to adapt changes. But many

organizations have a resistance to implement new technology such as HRIS although they admit

its benefits. High cost and funds are required for the implementation and adaptation of HRIS so

that’s why it is considered as a main cause for reluctance. Albert (2002) concluded in his study

that resistance and skepticism to happen with employees are caused by application of IT and it

makes the organizational change more difficult or impossible. To realize the phenomenon is

important for managers and for the change process undermines the effort that the company has


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made. Otherwise, unexpected problems caused and even efforts are undermine that has made by

the company for the application of IT. An understanding lack of the reasons underlying for

change in relation to the context of organizational factors is very important factors for resistance

to change (Judge and Douglas, 2009). A factor that is crucial might aid in lowering of barriers to

resistance to organizational change, the process of communication are defined as how messages

are produced, transferred or delivered, shared and decoded or understood by the receiver.

Positive or negative information may communicated by employees depending on performance of

the organization and in their employees, if the company lost the ambitions and faith, it will face a

fight to rebuild their credit (Finbarr et al, 2003).

H2: There is positive relationship between application of IT and Resistance.

3.3. Relationship between Resistance and Improvement of HR function

To store and repetitively use the information as electronic database, the HRIT provides the

possibility, which could be available to anyone, anytime and anywhere within the organization.

The implementation of HRIT is easiest and simplest, for instance, information publishing, it is a

kind of communication which is one-way form the higher level of management to the lower ones

(Gardner, Lepak and Martol, 2003).

The automation is the higher level application of IT to manage the workforce (Gardner,

Lepak and Martol, 2003). The automation of HRIT can decrease the amount of routine work,

such as maintenance of business records which must be done previously by HR professionals

manually. Employees themselves can update their information now, from the time consuming

task HR professionals can be freed, and interpreting the information is the main focus (Gardner,

Lepak and Bartol, 2003).

According to Baker (1989), by providing the proper information about application of IT

and consider the fear of employees when they reveal the information, managers should have

correct their action. They should also try to convince employees with real reasons for application

of IT to ease the transition process and reduce employee’s frustration. What is more, managers

have to create an encouraged work atmosphere to motivate employees try out new ideas related

to change and these actions are connected to an effective communication.

H3: There is negative relationship between Resistance and improvement of HR

4. Theoretical Framework

5. Methodology:

Improvement

of HR

Application of

IT

Resistance


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4.1. Type of Research

Qualitative Research is used in this study. In this Qualitative research data regarding what

people do and say is observed, gathered, analysed and interpreted. The nature of this research is

open ended exploratory. Qualitative research uses various techniques of gathering data, mostly

individual, focus groups and in depth interviews and it’s much more subjective.

4.2. Data Sources

Primary and secondary sources are used to collect data of this research work. Research papers,

journals are used to collect the Secondary data where’s the primary data is collected from

questionnaire. The questionnaire used in this study for the data collection purpose about

Application of IT and resistance was already used in research of Altarawneh and Shqairat

(2010). The questionnaire used in this survey to measure the Improvement in HR function was

adopted from a study completed by Khan et al. (2013) and which is filled by the Acting Human

Resources Manager, Human Resources Manager, Information Technology Manager, and the

Employees of private banks of Sargodha and Training Officer (Skills Development Facilitator).

4.3. Population

Private Banks employees including bank al Habib limited (BAHL), Bank Alfalah Limited

(BAL), Habib Bank Limited (HBL), Allied bank limited (ABL) in Sargodha are the population

of this research. Human Resource Manager, Training Officer (Skills Development Facilitator),

Acting Human Resource Manager, and Information Technology Manager are included in these

employees.

4.4. Sample Size

Sample size of this research are 200 respondents including both male and female employees of

Bank Alfalah Limited (BAL), Habib bank limited (HBL), Allied Bank Limited (ABL) which are

involved in the functioning of Human resource information system directly or indirectly.

4.5. Sample Method

In research, simple random sampling method is taken. Each employee who work in private banks

of Sargodha are chosen randomly .In other words, during sampling process each employee has

the same probability of being selected.

4.6. Data Collection

To collect the data for this research, Questionnaire are planned using five point likert scale

which contained Private details of employees. Questionnaire is filled by Human Resources

Manager, Training Officer (Skills Development Facilitator) Acting Human Resources Manager,

and Information Technology Manager who are employees of private banks in Sargodha.


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4.7. For Data Analysis

Endnote software is used for references and citation purpose. IBM SPSS AMOS 21.0.0 is used in

this research to analyse the model. It is specifically used for estimating structural equation

modelling. Model is drawn graphically by using drawing tools on AMOS.

5. Statistical Analysis and Results

5.1. Testing Structural Relationships

Statistical analysis is done by using structural equation model (SEM) on AMOS to estimate the

hypothesized relationship among variables. This is used because it simultaneously calculates a

series of relationships which have inter-related dependence.it evaluates the relationship between

unobserved variables. In order to calculate a SEM coefficients, Maximum likelihood, squared

multiple correlation, and standardized estimates are used. After performing the analysis this path

diagram has been obtained.

The squared multiple correlation of Improvement in HR (IMHR) is .74 which explains

74% of its variance. It means 26 percent is its error variance. Similarly AIT1 explains 50 percent

of its variance and IMP1 explains 54% of its variance and so on. All factors are perfectly


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meeting the criteria of 0.50 there is not any factor whose loading is less than .50 so that’s why

not any factor is excluded from the analysis.

5.2. Standardized Regression Weights

Standardized estimates provide us to calculate the relative impact of each regressor variable on

each regressed variable. The standardized loadings given by path diagram to fit the model are as

follows:

Standardized items

loadings

IMPHR <--- AIT .870

Resis <--- AIT .760

Resis <--- IMPHR -.750

AIT10 <--- AIT .710

AIT9 <--- AIT .710

AIT8 <--- AIT .793

AIT7 <--- AIT .810

AIT6 <--- AIT .763

AIT5 <--- AIT .850

AIT4 <--- AIT .720

AIT3 <--- AIT .750

AIT2 <--- AIT .793

AIT1 <--- AIT .704

IMHR1 <--- IMPHR .740






Resis1 <--- Resis .860





Above table provided standardized regression coefficients of the hypothesis tested.it

shows that If AIT rises by 1, improvement of HR (IMHR) goes up by 0.870 it means the

regression weight of application of IT (AIT) to predict improvement of HR (IMHR) have a

significantly positive relationship between each other showing that the alternative hypothesis is

being accepted.

This relationship is partially mediated by Resistance. An Increase in application of IT by

1 leads to .760 increase in resistance. The results proved that the resistance and application of IT

have a significant positive relationship this indicates that the null hypothesis is being rejected. It

shows that the model significantly fits the data.


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The regression coefficient of improvement of HR (IMHR and resistance (Resis) to HRIS

is also statistically significant. The results indicated a negative relationship between these

variables. This implies that one percent rise in improvement of HR (IMHR) causes resistance to

decrease by 0.75 percent.

All other items have perfectly standardized loadings because these are meeting the

criteria of .70.

Estimate S.E. C.R. P Label

IMHR <--- AIT 1.052 .137 7.681 ***

Resis <--- AIT .269 .130 2.070 .038

Resis <--- IMHR -.463 .132 -3.507 ***

These are unstandardized regression coefficients showing that the regression weight of

application of IT (AIT) to predict improvement of HR (IMHR) is significantly different from

zero at 0.001 level. It means there is a positive relationship between improvement of HR (IMHR)

and application of IT (AIT) if AIT rises by 1, improvement of HR (IMHR) goes up by 1.052

showing that the alternative hypothesis is being accepted.

Similarly AIT and Resistance are also statistically different from zero at 0.05 level of

significance. While resistance and improvement in HR (IMHR) are statistically significant at

0.001 level (two-tailed).

5.3. Model Fit Summary

Model NPAR CMIN DF P CMIN/DFDF

Default model 66 76.121 187 .000 0.407

The value of chi-square is not significant. The discrepancy (chi-square) divided by degrees of

freedom is 76.121/186 = 0.407 for the default model. Degree of freedom is 187 which represents

over identification of the model. There are 23 observed variables and number of estimated

parameters are 66 so by applying the formula we get 23(23+1)/2=253-66=187 available positive

degree of freedom to test chi-square test of model fit. Over identified model have estimable

parameters less than the variance or covariance of observed variables.

Model RMR GFI AGFI CFI PGFI

Default model .039 .958 .824 .986 .977 .

The RMR (root mean square residual) value is .039 indicating that the square root of the

average squared values through which the sample variances and covariances fluctuate from their

estimates attained below the assumption that this model is accurate. Small value of RMR is

better for good fit as it is less than 0.05 rule of thumb. The AGFI (adjusted goodness of fit index

should >.75) is .824 takes into account the degrees of freedom available for testing the model.

The goodness-of-fit index (GFI) was the very first standardized fit index (Joreskog and Sorbom,

1981).its values are close to and greater than .95 indicating a good fit.


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6. Conclusion

HRIT plays a most important role in strategic HR work. It modifies the controlling technique of

HRM, enables such as without more difficulty, controlling events can carry out at any level –

external agency, top management, worker self-management and line management,. In addition

dealing with the information operation, many strategy HR events such as industry method

reengineering, profession administration and workplace knowledge etc. can be improved and

developed with the HRIT application, which helps HR function on a more appreciated point. The

relationship among application of IT and improvement of HR with mediating effect of resistance

in private banking sector is examined by this paper. This study used primary and secondary data

with 200 sample size. We conclude in our study with the point that application of IT has

significant effect on the HR function. The application of IT brings improvement to the HR

function but this fact is also proved in the study that resistance among employees also arise with

the application of IT to the HR function. The resistance can be controlled by different methods

and once the resistance is controlled the results of application of IT can be maximized and it

brings significant improvements in HR function. It is also concludes that if application of IT rise

by 1 standard deviation will cause improvement of HR to rise by 0.87 standard deviation.

7. Recommendations and Limitations

In this research only local banks are included due to short period of time. The information is only

gathered from directors. In future studies qualified team members in lower positions should also

be involved as they might have a different opinion on the use and benefits of HRIS. In Pakistan

total operating ratio of foreign banks is very low and so in this study their data is not involved.

HRIS is also used in other sectors such as manufacturing, fabric and private educational

organisations therefore in future research studies this can be included.

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