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In a global competitive business environment, where product lifecycles have shortened, businesses need managers and employees that are highly capable, multi-skilled and competent to maintain their competitive advantage. Additionally, in the electronic and information age where systems, software, and databases manage vast pool of data, it has brought business intelligence to a new meaning. Information technology has transforms the human resource (HR) to the Human Resource Information System (HRIS). HRIS is a computerized system that organization collects, analyses and report information about people and jobs (Goel & Kakkar, 2003). It is one of the software being invested by organization.
Benefits of Human Resource Information System
Human Resource Information System is an integration between human resource management and information technology. Human resource management technology has become an important tool for both large and small companies to stay competitive in the marketplace. An effective HRIS aims to enable management and managers to use precise, comprehensive, and up-to-date workforce information to make the right decisions in order to support their business and operations (Tsui & Lai, 2009).
Integrating the technology of HR
The information technology has changed the traditional human resource functions in carrying out daily activities, planning of human resources and training of staffs. Reengineering process took place to assimilate the procedures to effectively manage the firmââ‚¬â„¢s human capital. The integration of technology towards human resource had provided an opportunity for human resource professionals to become strategic partners with top management. Hence, it is believes that the integration should be strategically aligned with the business objectives. The alignment allows organization to better planning for future staff as well as to monitor turnover, productivity, and labor and benefits costs.
Increase efficiency and effectiveness
According to Overman, he claimed that HRIS processed information faster, provides greater accuracy of information, improved planning and program development and enhanced employee communication (cited in Sharma). This is concluded as a type of administrative efficiency. Besides increased in efficiency, HRIS also increased the effectiveness of work procedures. A better work culture when HRIS is linked to the organizationââ‚¬â„¢s intranet and internet. The linkage allows employees to access to their personal information, apply for leave and enables managers to confirm and approve request online.
Cost and benefit of HRIS
It is a large investment decision for companies to invest in HRIS. Empirical studies showed that the use of HRIS would reduce the human resource costs by automating information and reducing the needs for large number of employees. Organization that embraces in HRIS strategy can reduce the time of HR processes such as payroll, benefits administration and employee data capture (Tsui & Lai, 2009). Furthermore, it also allows the managers to access relevant information and data to provide data on strategic level. The reduction in duplication no doubt has save costs and save time for employees.
Factors Preventing Company to Invest in Human Resource Information System and Its Effects on Return on Investment
Often, organization top level management and human practitioners has a misconception about investing and installing information technology in human resource management. This misperception has prevents company to invest in HRIS. In addition, there was also debate about effects on the return on investment (ROI) in human resource (Phillips et al,).
HRIS does not significantly improve productivity and profits
Some firms argued that investing in HRIS is a waste of money and it does not show significant result on productivity and profits. Contrary, some firms do not think so. Companies that invested in HRIS experience reduced operating costs, more efficient services, improved communication in all levels and elimination of costly duplication (Pattanayak, 2005). A study shows that firms that invested in human resource technology demonstrated high performance practices which achieved $ 27,044 more in sales, $ 18,641 more in market value and $ 3,814 more in profits on a per employee basis (cited in Mayer). This has a positive impact on ROI and enables HR practitioners to further develop the human capital.
HRIS is complex and expensive
The cost of HRIS is very wide spread. The more expensive the system, the more complex the system is. According to Auxillium West- a human resource software company, a basic low end desk top system can cost $300 whereas the highest end client-server systems can exceed $ 1,000,000. The enormous cost involves may hinder organization to invest in HRIS. To reduce the cost incurred and have a good ROI, firms can choose to customize the system to best suit their company needs. The HR department has to analyze its information technology needs carefully before making decision on which systems to acquire. They have to bear in mind that customization options allow flexibility.
There are no technical supports available for HRIS
Technical supports are one of the factors preventing firms to invest in HRIS. Organization does not know whether the HRIS system be supported internally or host by the vendor. The selection of support will has an impact on the ROI.