The Role Of Information Technology In Human Resource Management

Executive Summary

This dissertation set out to investigate the roles played by information technology in human resource management. In achieving this, it adopted a qualitative research methodology that narrowed down its scrutiny on one company: Wipro Limited, an IT company based in Bangalore, India but with distribution centres in over seventy countries. By using questionnaires as well as direct retrieval of data from the company official websites and other authentic sources the dissertation found out that indeed IT plays a huge role in shaping an organization’s HRM strategy and by extension the overall competitive strategy. Essentially, Wipro employs a wide range of IT-powered HRM programs which include Six Sigma, Employee Performance Management (EPM), Software as Service (SaaS), and Business Process Outsourcing (BPO) among others, all which assist in the streamlining of the company’s HRM and IT strategies as part of mission to being the leading IT products distributer in the whole world. Even so, the study finds the integration of IT tools with HRM processes is costly and usually consumes a lot of time. In this regard, organizations can only start enjoying its benefits once a full implementation is realized. The study also, recommends for future research particularly in the areas of appraisal of the exact cost-benefits analysis as well as the time frame within which organizations can fully implement IT-HRM integrated services.

Table of Contents

Executive Summary. 2

Acknowledgements. 3

1.0. CHAPTER 1: INTRODUCTION.. 6

1.1. Overview.. 6

1.2. Structure of the Dissertation. 7

1.3. Problem Statement 9

1.4. Aims and Objectives. 11

2.0. CHAPTER 2: LITERATURE REVIEW… 12

2.1. Introduction. 12

2.2. General Overview of the Realm of HRM… 14

2.3. Modern Trends in HRM… 15

2.4. IT and Hiring/Staffing. 17

2. 4. IT and Employee Training. 20

2.5. IT and Employee Development 22

2.6. IT and Employee Rewarding. 24

3.0. CHAPTER 3: METHODOLOGY.. 26

3.1. Introduction. 26

3.2. Research Design. 28

3.3. Research Context 29

3.4. Participants and Sampling Criterion. 29

3.5. Data Collection. 32

3.6. Rationale for Questionnaire Items. 33

3.6. Data Analysis. 34

3.7. Ethical Issues. 35

3.8. Study Limitations. 36

4.0 CHAPTER 4: RESULTS. 37

4.1. Introduction. 37

4.2. Company Profile. 38

4.3. Overview of the Questionnaires Responses. 40

4.4. Hiring. 42

4.5. Employee Training and Development 43

4.6. Employee Rewarding System.. 44

4.7. General Results. 45

5.0. CHAPTER 5: DISCUSSIONS. 48

6.0. CHAPTER 6: CONCLUSIONS and RECOMMENDATIONS. 52

7.0. REFERENCES. 56

8.0. APPENDICES. 61

8.1. Study Questionnaire. 61

The Role of Information Technology in Human Resource Management 61

Contact Information: 61

1.0. CHAPTER 1: INTRODUCTION

1.1. Overview

The Human Resource Management (HRM) is undeniably the most important department in an organization. This is because it encompasses the critical processes of hiring, training, development, and rewarding of the most critical organizational resource of human capital (Nagadevara, Srinivasan & Valk, 2008). The extent that these tasks leverage the smooth running of an organization’s operations cannot be downplayed given they directly influences the overall utility of the most important organizational resource – human capital (Barney & Wright 1998). In this regard, stakeholders as well as theorists alike have all along explored a gamut of headways aimed at streamlining these critical tasks. No doubt such efforts a real-time as they are aimed at revitalizing the HRM strategies adopted by organizations to mitigate contemporary organizational and marketplace challenges such as absenteeism, employee turnover, and pressure from labor unions among others (Florjancic, Bernik, & Bernik, 2003). It is for these reasons that the realm of Information Technology (IT) has emerged as the most explored field capable of inducing efficiency in HRM processes (Bernik et al, 2007). For example the realm of knowledge management, itself a facet of IT (Wang & Noe, 2010), and as commonly applied in conventional HRM practices holds that, “[t]he people are the knowledge carriers and the IT enables them to amass the knowledge, organize it, access it and use it” (Bernik et al, 2007, p.130).

Essentially, the contemporary marketplace has gone global – goods and services produced in one part of the globe can easily find their way to far destinations courtesy of the gains from modern IT innovations where buyers and sellers can easily communicate, carryout transactions through a variety of money transfer services on offer and easily arrange for quick delivery through a variety of delivery services available online or otherwise (Wang & Noe, 2010). In this regard, it is only fair to assert that organizations need to work on their internal and external communication systems if they are to remain competitive at the global marketplace (Marchand et al., 2001). No doubt, they can only achieve this through investing in modern IT tools on offer in the market – this can take a host of processes which goes beyond the mere launching of expensive IT-powered HRM programs (Wang & Noe, 2010). As a matter of fact, organizations should engage highly qualified and motivated personnel capable of enabling the maximum utilization of modern IT-enabled HRM tools. Again, organizations should formulate practical plans of action with realistic objectives whose achievability can be realized either as short-term goals or even as long-term goals that can easily be measured and reported (Marchand et al., 2001).

This paper intends to carryout an explorative qualitative research methodology to find out the roles of Information Technology (IT) in the management of human capital. In doing this, the dissertation adopts a two-pronged approach where it will first conduct an intensive literature review of the existing research work on the study topic and then it adopts a case study approach on an IT-based multinational company that has its services spread across the globe. The selected study company is Wipro Limited, a Bangalore, India based IT corporation with support centres in over seventy countries worldwide.

1.2. Structure of the Dissertation

The manner in which a research study is presented and/or reported emboldens the validity and reliability of its findings. Drawing from conventional wisdom, most research studies are succinctly and neatly presented so that its audience can easily get a glimpse of what the study’s main findings are. As a matter of fact, research studies should be structured into various chapters that clearly delineate how data was collected, where it was collected, who were involved in the actual collection, how it was analyzed, what are the findings, what are the implications of such findings vis-à-vis the study topic, the conclusions, and lastly the literary works consulted in the overall preparation of the study. In a nutshell, these chapters are meant to induce clarity and easy flow of ideas, hence making it easy to read and understand.

Essentially, the presentation of the various sections as well as the findings and the discussions of this dissertation are done in a manner that clearly delineates the roles played by IT tools in the core tasks of HRM. In this regard, the various chapters and sub-chapters recruitment of new employees, training and orientation of such employees, development of employees skills and knowledge in respect to their current and future job tasks, as well as the evaluation of employees potentials and rewarding and/or reinforcing of such.

Precisely, this dissertation is structured into a number of chapters which are successfully built from each other. They are:

• Introduction – it is the most informing part of the dissertation given that it gives vivid descriptions about the study topic, the study company, the aims and objectives as well as the research problem.
• Literature review – offers a comprehensive literary analysis of the existing studies touching on the study topic. It acts as a strong platform on which the dissertation findings and discussions were based.
• Methodology – offers a step-by-step breakdown of how the study was conducted, where it was conducted, who were involved, what methods of collecting, analyzing, and reporting data were used as well as the limitations experienced during the study.
• Results – provides a succinct report of the data collected during the study – the results are broken down into units for easy understanding.
• Discussions and theory construction – provides a detailed discussion of the study results. The discussions are linked to various theoretical postulations on the realm of HRM.
• References – details all sources consulted in the overall preparation of the research proposal well formatted in Harvard style.

1.3. Problem Statement

Many research studies have been dedicated to studying the roles that IT plays in various aspects of human lives (Florjancic et al, 2003). As it will be seen later in the literature review chapter, there is substantial evidence from existing literary works discussing the impacts of blending IT tools with HRM processes in an organization (Bernik et al, 2003; Florjancic et al, 2003; Laudon & Laudon, 2003). In this regard, it is conventionally held that IT tools occupy a prime position in the overall modernization and strengthening of core HRM processes to levels capable of meeting modern organizational and marketplace challenges (Florjancic et al, 2003). It is conventionally held that since its inception the field of IT has significantly revitalized how organizations manage their human capital as it has brought with it precision, speed, coherence, reliability, as well as efficiency in how key HRM processes are carried out at the organizational level (Bernik et al, 2003). Even so, as Nagadevara et al (2008) argue, the state of events in HRM among organizations shows that these benefits are yet to be fully utilized.

For instance, many organizations still run the same HRM programs that have been in operations for decades despite the apparent realization that the contemporary organizational and marketplace challenges have greatly changed (Nagadevara et al, 2008). It is a reality that despite the obvious gains brought about by efficient HRM departments there is still a serious imbalance between the supply and demand forces in regard to the number of qualified HRM experts the market can offer at any given time against the organizational capability to absorb such (Moore & Burke, 2002). As a matter of fact, there is a serious problem of lack of enough HRM personnel endowed with the appropriate IT skills to fill the available opportunities. An industry analysis concede that this is a real challenge that is facing organizations in both developing and developed countries alike particularly among the large capital intensive organizations with operations that spans many jurisdictions (Nagadevara et al, 2008).

Precisely, though it is evidential that there is a significant number of research studies discussing the impacts of IT on HRM, very little concern has been given to the credible analysis on how different types of organizations (profit and non-profit) can entrench IT tools into their HRM processes with substantial success. Again, though it is worth noting that a number research works have been dedicated to the evaluation of the costs involved in implementing IT-enabled HRM programs, very little concern has been given on the cost-benefit analysis of entrenching IT tools into mainstream HRM processes particularly among multinational organizations with complex IT and HRM processes spanning several countries. Moreover, some of the existing research studies’ findings do not meet pertinent validity test probably due to a number of glaring hitches in the way they were conducted such as the length of time it took to conduct them, nature of study sample, methods of sampling of study participants, methods of data collection and analysis, method of reporting as well as the credibility of the persons who carried out the research. In connection to these validity snags the findings presented by such studies may not be reliable when making critical decisions regarding how best organizations can switch from traditional HRM practices to IT-supported ones.

In essence, this phenomenon is certainly a sad one given that it is taking place at the backdrop of a wide range of modern innovations made in the realm of information technology. In regard to this, it may be wondered why organizations continue to experience gross inefficiencies with their HRM departments despite of all the evidential benefits from IT. No doubt, this is a pertinent question whose answer(s) demands an empirical analysis of closely collected data from a large organization (probably a multinational entity whose operations spans a number of countries) with complex IT-enabled HRM programs. Basing on the complexities inherent in the HRM realm, it is only fair to assert that there may be a host of causes leading to this phenomenon. Even so, an analytical view of a number of possible causes to this trend adopted by this dissertation leads to the conclusion that it is partly brought about by lack of full utilization of the IT tools on the part of organizations. Perhaps this is as a result of biased or even inadequate reporting on the part of authors and researchers alike on this sensitive realm of organizational management. These generalizations will be fully elaborated later in the discussions chapter in this study.

Consequently, this study embarks on a mission to fill these glaring empirical gaps by narrowing down its concern on an IT-based multinational company whose operation spans more than seventy countries. It does so by adopting a closely coordinated explorative qualitative research design that utilizes a two-pronged data collection methodology on twenty senior-level and long serving employees of the study company.

1.4. Aims and Objectives

The main aim of this research study is to fill the empirical gap left by prior studies particularly in delineating the cost-benefit analysis of entrenching IT tools into the mainstream HRM processes particularly among multinational organizations with complex IT and HRM processes spanning several countries. Moreover, it will seek to address some of the existing research studies’ findings such as pertinent validity snags that have been noted in some prior research studies. As hinted in the title, this research study main objective is to establish through exploration the roles played by IT tools in the management of human capital. In essence, from this main objective a number of other smaller objectives can as well be drawn. In this regard the study also seeks to explore the following objectives:

• Analyze empirical evidence collected from the study company in view of establishing the costs (benefits versus cost) involved in restructuring HRM departments to accommodate IT tools.
• The relationship between the study company’s HRM and IT departments with view of establishing IT tools are applied in key HRM processes.
• Juxtapose the study company’s core HRM strategies before the entrenchment of the IT tools vis-à-vis
• The possible changes in human resource management when the information technology is integrated in the work processes.
• The role of information technology in determining the value of HR services.
• Time needed for human resource to appreciate the new information technology processes.

2.0. CHAPTER 2: LITERATURE REVIEW

2.1. Introduction

So as to shed more light on this dissertation’s topic this chapter adopts a “what should organizations do to induce efficiency in their HRM departments” approach. Ideally, this approach enables the chapter to consult several theories and notions regarding how IT tools can best be utilized in HRM processes to bring about efficiency and a sense of focus in the pursuit of the set organizational goals. To achieve this, the chapter utilizes a wide range of literary sources (at least thirty). Essentially, the chapter is structured into a number of sections that help to address the four main functions of HRM, that is, hiring, training and orientating, motivation and development, and rewarding. These sections include:

1. Introduction – gives a general overview of the entire chapter and also delineates important issues to be discussed in the chapter.
2. General overview of the realm of HRM – gives a brief analysis of existing literature on the basic elements espoused by HRM with a keen concern accorded to the functions of HRM in an organization.
3. Modern trends in HRM – presents an intensive literary analysis of a wide range of transformations brought about by modern IT innovations in the realm of HRM.
4. IT and hiring – delineates the roles of IT tools in the hiring and staffing needs of an organization.
5. IT and employee training – offers an analytical account on how IT tools have impacted the process of orientating and training of employees.
6. IT and employee development – gives a literary analysis on how IT tools influence employee enrichment practices.
7. IT and rewarding – accords a substantial review on existing literature regarding the roles of IT in evaluating organizational strength/weaknesses and rewarding/reinforcing those who deserve such.

All realms of human life have in one way or the other been influenced by the emerging technologies particularly, in the way information is gathered, processed, shared and managed (Bartlett, & Ghoshal, 1997). In essence, and as Baloh and Trkman (2003) assert, the gains made in the IT realm particularly on internet services have positively impacted on the “way of life” of the human beings, as today people can use IT in a wide range of their normal daily activities such as learning, work, leisure, networking, socializing, as well as communication with much ease than ever before.

Perhaps this phenomenon can better be explained by Barley (1996) opinion that, “the future will depend more on brain than brawn” as organizations are switching off from labour intensive operations to capital intensive operations, and indicator that “… prosperity is likely to hinge on the use of scientific and technical knowledge, the management of information and the provision of services (p. xvii). From this postulation it is arguable that the future of HRM solely rests on how best organizations invest in transforming their HRM departments from the traditional practices that involved manual and sometimes lengthy processes of hiring, training, development, and rewarding to vibrant outfits capable of addressing the 21^st century human capital management challenges.

2.2. General Overview of the Realm of HRM

The realm of HRM is multifaceted (Jackson, & Schuler, 1997). It encompasses a wide range of organizational tasks such as hiring, training, motivating, and rewarding (Huselid, Jackson, & Schuler, 1997; Nagadevara et al, 2008). In their respective studies, Bartlett and Ghoshal (1997) and Barney and Wright (1998) assert that, HR experts in an organization play the crucial roles of making and implementing the critical policies on the staffing needs of the organization and how such needs can be fulfilled. In essence, HR experts directly participate in the overall process of engaging new employees, taking them through the set organizational goals, imparting them with the necessary skills and knowledge to achieve such goals, identifying potential organizational shortcomings and devising methodologies for mitigating them, identifying hardworking employees and devising methodologies for regarding them, and acting as the link between the junior level employees and their senior level counterparts (Barney & Wright, 1998; Nagadevara et al, 2008).

Such decisions are very critical to organizations as they directly impact on their competitive advantage (Nagadevara et al, 2008). This is true given that the human capital is the most important organizational resource that plays the core role of leveraging other resources towards the achievement of the set goals (Huselid, Jackson, & Schuler, 1997; Bartlett & Ghoshal 1997; Barney & Wright, 1998).

Perhaps the roles played by the HRM department in an organization can better be described using the words of Nagadevara et al (2008) who assert that:

Human resources are not only the drivers and principal value creators of the output of the knowledge industry, but they are also the intellectual capital or the ‘infrastructure investment’. Therefore, attracting, training, retaining and motivating employees are the critical success determinants for any knowledge based organization (p.1).

Indeed the HRM “arm” of an organization encompasses more than just a hiring, training, and rewarding entity, it serves as the manufacturer of critical knowledge and skills, disseminates such knowledge, and most importantly manages such knowledge so that it fulfils the organizational needs. As it will be elaborated later on in the dissertation HR experts in an organization acts as the custodians and managers of critical knowledge (whether formal or informal) and always endeavour to ensure that such knowledge fully utilized for productive gains (Barney & Wright, 1998). In fact, Baloh and Trkman (2003), Florjancic et al (2003) and Bernik et al (2003) postulate that one of the most practical ways for organizations to maintain a strong competitive advantage is through instituting strong HRM teams responsible for among other things, the constant monitoring of both the external and internal trends that may affect the normal running of the organization, and most importantly, provide necessary response measures to such trends.

2.3. Modern Trends in HRM

A critical analysis of the modern practices of managing human capital employed by various companies reveals significant changes (Marchand et al., 2001). Today many organizations have realized that in order to succeed they need to do more than merely hiring persons with colourful resumes – they need to put in place modern information technology tools to supplement what their employees can offer (Bartlett, & Ghoshal, 1997). Perhaps this new trend has been advised by the conventional wisdom that organizational success is largely determined by how a company organizes its social, human, and information resources rather than how it invests in material resources (Wang & Noe, 2010). In this regard, organizations need to integrate their human and information technology capital in a way that will ensure the maximum sharing of information between employees, as well as the timely reaction and management of such information (Marchand et al., 2001).

Laudon and Laudon (2003) opine that, contemporary HRM systems must meet the objectives of the highly dynamic organizational tasks as well as marketplace challenges. In this regard HRM systems need to be highly flexible, adaptable, enduring, as well as focused so as to address these changes (Huselid et al, 1997). In extension, the HRM experts need to grasp modern professional skills capable of effectively making sound organizational decisions in mitigation of potential organizational challenges (Baloh & Trkman, 2003). All these prerequisites bear a direct impact to an organization’s overall competitive edge and hence they need to be addressed with utmost concern.

Due to these changing organizational trends particularly regarding the HRM realm, human resource experts need systems capable of handling these new changes as well as other conventional tasks (Bartlett, & Ghoshal, 1997). In this regard, the realm of Human Resource Information Systems (HRIS) has been developed to provide a highly interactive interface that enjoins IT and HRM processes in an organization (Ngai & Wat, 2006). Precisely, HRIS occupies a central position in the overall positioning of an organization at the market ladder. This postulation is based on the espoused notion that, linking key departments in organization helps to reduce duplication of services, redundancy, and above all it eliminates unnecessary bureaucracies (Kovach et al., 2002). As a matter of fact, a well coordinated HRIS is capable of transforming a HR department from a mere administrative unit to a vibrant division forming a paramount part of an organization’s strategic plans (Ngai & Wat, 2006).

As Kovach et al. (2002) argue applying HRIS practices streamlines the HRM department hence making it more effective in the contribution of services towards the achievement of on an organization’s goals. This is possible through the growing technological innovations where new software capable of handling complex HRM tasks such as hiring and training have been successfully entrenched into the mainstream HRM practices. For instance, a streamlined HRM system makes it easy for tasks planning, task equipping, as well as overall workplace coordination among employees. Ngai and Wat (2006) assert that HRIS imparts a greater control of HRM practices by making it possible for experts to easily follow through critical organizational processes. Consequently, through streamlined HRM systems, experts are capable of diagnosing organizational anomalies and hence embarking on the necessary measures to mitigate such.

2.4. IT and Hiring/Staffing

Staffing forms one of the critical tasks of HRM (Zane, 2002). Through the application of proper staffing practices companies can fill positions with the right persons (Davenport, Long & Beers, 1998). However, when poorly coordinated staffing can be expensive and unyielding. In this regard, organizations need to keep databases of academic and job-specific qualifications for potential employees’ so that when there is a recruitment drive a lot of time is not wasted in trying to search who is qualified for which position and who is not (Baloh & Trkman, 2003). Apparently, this is an area that is gaining substantial popularity among large organizations. According to the Global 500 Web Site Recruiting (2000), 79% of companies in the Global 500 Group were noted to employ IT tools (internet) in their recruiting drives. The trend has been noted to be on a rapid growth as more organizations continue to embrace modern IT innovations. Perhaps the benefits of cost cutting, time management, diversity, and efficiency are responsible for this change (Baloh & Trkman, 2003, p.299).

With the inception of the internet as a form of communication the management of human capital has taken a completely new shape (Warhurst & Thompson, 1998). Today many organizations have reverted to outsourcing as an alternative to the traditional methods of managing human capital – organizations also share the same workers as professionals (particularly the high qualified) find it difficult to fully commit themselves to a single employer (Drucker, 2001). This postulation is advised by the notion that organizations engage new employees purposely to tap in their skills in a more cost effective manner – and hence the traditional belief that engaging workers directly makes workplace planning and allocation of tasks easier as HRM experts are spared the hassles of having to spend time and extra resources coordinating workers stationed at far places (Baloh & Trkman, 2003).

Even so, with the inception of internet organizations’ have found an alternative staffing solution that is more cost effective than the traditional methods. The new staffing method is outsourcing.  Ideally, outsourcing carried out online with persons who are linked to potential employers through internet connections can be reached at a short notice by organizations when employment opportunities arise is more economical and efficient (Warhurst & Thompson, 1998). These people who are popularly referred to as “virtual” employees are flexible in their qualifications and scheduling – they can handle a wide range of tasks at odd hours. Most importantly, as Warhurst and Thompson (1998) assert outsourcing as well as the reliance on internet services by organizations has led to the blurring of the boundaries dividing companies courtesy of the virtual community where organizations are linked to other organizations, the suppliers, customers, as well as other service providers. From these virtual communities organizations can save much from labour costs as they only “recruit” when there is the need to do so unlike in the traditional method of recruiting where workers are mostly engaged on permanent basis particularly on social benefits as well as healthcare costs (Drucker, 2001). Again, organizations stand a better chance of tapping in the industry talented persons who find it hard to work for a single organization on permanent basis (Warhurst & Thompson, 1998).

The concept of using computers as well as telecommunication equipments to carryout organizational tasks at flexible venues has over the years gained substantial ground among HRM teams (Baloh & Trkman, 2003). Perhaps this is as a result of the contemporary labour market trends where organizations have resolved to methods that enhances maximum productivity (Laudon & Laudon, 2003). Telecommuting entails flexibility on the part of the employees where they can carryout organizational tasks from anywhere including their own homes (Nilles, 1998). This is made possible through highly interactive IT systems that allow for both intra and internet services linking employees and their organizations (Johnstone & Nola, 2001). No doubt telecommuting leads to higher productivity as employees are able to dedicate themselves to work chores for relatively long hours than it would be in conventional workplace engagements (Nilles, 1998). Moreover, cases of employees absenting themselves for no good reasons are greatly reduced as they tend to gain satisfaction when they draw their own schedules (Telework, 2000). In the long run, telecommuting helps to reduce employee turn-over rates as employees are discouraged to look for new opportunities if the current ones are motivating, rewarding, and flexible (Dash, 1999). Consequently, if employee turn-over is very low then the company competitive advantage is likely to increase as talented employees are retained for long periods.

2. 4. IT and Employee Training

Part of the core tasks of HRM entails the orientation and training of newl.............