Electronic Human Resource Management

Chapter one: Introduction

1.1. Background:

Since the mid 1990s, organizations increasingly introduce electronic Human Resource Management (HRM). It has different names, for example e-HRM, digital HRM and web-based HRM. The rapid development of the Internet during the last decade has also boosted the implementation and application of electronic Human Resource Management (e-HRM). Surveys of HR consultants suggest that both the number of organizations adopting e-HRM and the depth of applications within the organizations are continually increasing (e.g. CedarCrestone, 2005) in world wide. In addition, an escalating number of practitioner reports provide anecdotal evidence that e-HRM is becoming increasingly common and may lead to remarkable changes (e.g. Anonymous, 2001). Consequently, academic interest in e-HRM has increased, as several special issues of HR-related journals demonstrate (Stanton & Coovert, 2004; Townsend & Bennett, 2003; Viswesvaran, 2003). In the interim, there is an initial body of empirical research in e-HRM. However, since this research stems from several disciplines and is scattered throughout numerous journals and since initial reviews are not encompassing (Anderson, 2003; Lievens & Harris 2003; Welsh, Wanberg, Brown, & Simmering, 2003), the results of these studies remain unclear at present.

Furthermore, changes in the role that HR fulfills in the organization and the implementation of e-HRM are related to each other, and should not be considered separately (Gardner et al., 2003; Fletcher, 2005). The implementation of e-HRM should fit well with strategic organizational needs regarding personnel in general and HR redesign in specific. Little is known about this fit, however. In relation to this point, the possible perception of e-HRM as an attempt by the strategic level within the organization to offload operational HR work onto employees respectively managers should be taken into account when analyzing acceptance of e-HRM systems.

In the last decade the Internet has radically changed our social and economic lives, and has had a profound effect on the way organizations are managed. For example, it has altered human resource (HR) practices and changed strategies for attracting and retaining employees. The same strategies have become particularly important because organizations increasingly depend on workers’ knowledge, skills, abilities, and other attributes (KSAOs) to compete in today’s economy (Ulrich, 2001) in Oman. In addition, the Internet has enabled organizations to become more collaborative, connected, and responsive to the changing needs of the workforce. For instance, new electronic human resource (e-HR) systems allow individuals to apply for jobs, change their job-related benefits, and enhance their knowledge, skills, and abilities (KSAs) through web-based training systems. The type of information technology adopted by HRM has been phrased, as it has evolved, differently over the years, for example: Human Resource Information System (HRIS), Human Resources Management System (HRMS), Human Resource Development And Information Technology (HRDIS), and the most current and popular “electronic HR” (e-HR). The use of IT by HRM is growing especially critical to the business nowadays when discontinuities (mergers, acquisitions, restructuring and downsizing) are altering the industry landscape in a drastic way. HRM executives, the key figures in organizations responsible for fine-tuning a capable workforce, must have the right and real-time information to measure, manage, and predict how workforce should be allocated and reconfigured effectively. With the analyzed information produced by the IT, HR professionals, more than ever, are able to align their management goals and the goals of individual employees with corporate strategy to deliver strategic plans with quantifiable results, and, ultimately, be able to deal with changes proactively. With the help from the information technology, HRM professionals are also able to demonstrate the HRM’s benefit to the bottom line by effectively managing knowledge, skills and abilities (KSAs) that create winning companies.

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Human resource management (HRM) departments using information and communication technologies (ICTs) is becoming an increasingly important phenomenon commonly referred to as e-HRM. Automating HR tasks and practices is transforming the traditional paper-and-pencil, labor-intensive HR tasks, into efficient, fast-response activities that enable companies to anticipate and profit from environmental shifts to create a much needed competitive advantage (Marler, 2006; Watson Wyatt, 2002).

Even though the e-HRM concept is widely used today, there are hardly any explicit definitions. The few detectable definitions (Lengnick-Hall & Moritz, 2003; Ruël, Bondarouk, & Looise, 2004) are rather general and emphasize the Internet-supported way of performing HR policies and/or activities. Leaning on these intensions, the following definition of e-HRM can be specified: e-HRM is the (planning, implementation and) application of information technology for both networking and supporting at least two individual or collective actors in their shared performing of HR activities. This concept highlights several crucial aspects of e-HRM. At the outset, e-HRM utilizes information technology in a twofold manner: First, technology is necessary to connect usually spatially segregated actors and enable interactions between them irrespective of their working in the same room or on different continents, i.e. technology serves as a medium with the aim of connection and integration. Second, technology supports actors by partially – and sometimes even completely – substituting for them in executing HR activities. Hence, information technology serves additionally as a tool for task fulfillment. The planning aspect accentuates the systematic and anticipated way of applying information technology. The shared performing of tasks through at least two actors’ points out that the sharing of HR activities is an additional feature and underlines the aspect of interaction and networking. The consideration of individual and collective actors takes into account that e-HRM is a multilevel phenomenon; besides individual actors, there are collective actors like groups, organizational units and even whole organizations that interact in order to perform HR activities. Beside e-HR(M), there are some further concepts which obviously refer to the same phenomenon. Widely accepted are such terms as virtual HR(M) (e.g., Lepak & Snell, 1998), web-based HR(M) (e.g., Ruël et al., 2004), or business-to-employee (“B2E”) (e.g., Huang, Jin, & Yang, 2004). “Virtual HRM” refers to technological mediated networks of different internal and external actors providing the firm with the HR services needed without the further existence of a conventional HR department which therefore becomes “virtual”. E-HRM is additionally open to less developed varieties of technology application, e.g. the shared performing of an application process by a conventional HR department and an applicant via the Internet. “Web-based HRM” couples the concept to Internet technologies. E-HRM, as well, is particularly web-orientated, but also comprises additional technologies like networked ERP-Systems. Finally, “business-to-employee” reduces the concept to the internal actor categories of “business” (presumably line managers and HR professionals) and “employees”. In contrast, e-HRM is open to further relevant actor categories like applicants or consultants. To sum up, these further terms undoubtedly direct attention to main characteristics of the same phenomenon but are of somewhat narrower intensions. Thus, in order to comprehensively embrace relevant aspects, the e-HRM term is used.

Fundamental definition of HRM offered by numerous scholars remains to be “the managing of people who work in an organization” (Gomez -Mejia, Balkin & Cardy, 2001). Another popular definition of HRM specified the “top management of the corporation” as the only employer of the HRM staff (Renckly, 1997). Based on this thinking, HRM is “to essentially establish, develop, maintain, and communicate personnel policies to the entire company”, and thus, “to represent, help, advise, and consult with the employees of the organizations”. It is apparent that HRM was defined from an employer perspective, and was expected to serve and represent “first, last and always” the best interests of their “only employer”: top management.

Beer and Spector (1985), representing another group of researchers and HRM practitioners, defined HRM from the “relationship” perspective as the management of this relationship between employees and the organization which, more specifically, “involves all management decisions which affect the nature of the relationship between the organization and employees— its human resources”. Nadler (1990), on the other hand, defines HRM from an organizational learning point of view as: the “organized learning experience in a definite time period to increase the possibility of improving job performance and growth”.

As human resource (HR) management departments continue to move to internet or web-based technology (The Hunter Group, 2001), more research evaluating the use of web-based HR, or electronic human resource management (e-HRM) is needed. The fastest growing trend in the delivery of HR information is employee self-service (ESS) (Gueutal, 2003). These applications give employees the ability to access and maintain their personal HR information via the web. Another growing trend is the adoption of managerial self-service (MSS) which provides managers access to a variety of HR tools and information via the web (Gueutal, 2003). Most manager HR-related tasks can be completed via MSS applications including pay administration/compensation, performance management, staffing, and employee development (Gueutal, 2003). Another term used to describe these tools utilized within a given organization is human resource information systems (HRIS), which Kavanagh and Thite (2008) define as “the system used to acquire, store, manipulate, analyse, retrieve, and distribute information regarding an organization’s human resources.”

Lepak and Snell (1998) refer to the four ‘pressures’ of virtual HRM. First of all, HRM departments are asked to focus on strategic questions. Secondly, these departments need to be flexible in terms of policymaking and practices. Thirdly, HRM departments should work efficiently and be aware of costs. Fourthly, HRM departments should be service-oriented towards management and employees. In short, HRM departments must be strategy-focused, flexible, efficient, and client oriented; and all at the same time (Lepak and Snell, 1998). Ruël et al. (2004) highlighted an aspect that is fairly well covered by the above but that is nevertheless interesting to spell out, namely the changing nature of the employment relationship. With the supply shortage in the labor market (during the economic upturn of the 1990s), the individualization of society, and the increased educational level of citizens (and thus of employees), the power balance in the employment relationship has shifted in the direction of the employees: they want to steer their own career paths. In the view of Ruël et al. (2004), a move towards e-HRM can provide the tools to support this development. This aspect fits into earlier-mentioned drivers such as improving service towards internal clients, but has an external societal drive. Yet another goal of e-HRM was stressed as the outcome of the case study research conducted by Ruël et al (2004): it is necessary to recognize that to improve a company’s global orientation can become a strong drive to start with e-HRM. Theoretical debates suggest three goals of e-HRM are cost reduction, improving of HR services, and improving strategic orientation (Brockbank, 1997; Lepak and Snell, 1998; Stanton and Coovert, 2004). Few empirical findings supplement these goals with globalisation as a driving e-HRM force in international large organisations, but also show that those goals are not clearly defined in practice, and that e-HRM mostly directed at cost reductions and efficiency of HR services, and least – at strategic orientation of HRM (Gardner et al, 2003; Ruël et al, 2004; Ruta, 2005).

HRM effectiveness is often mentioned as HRM contribution to firm performance (see, for ex., Kane et al, 1999; Ostroff and Bowen, 2000; Wright et al, 2001). Especially during the past decade the HRM literature made attempts to show that progressive HR practices result in higher firm performance (Wright et al, 2005; Hope Hailey, 2005). Huselid’s (1995) pioneering study has shown that a set of HR practices labelled High Performance Work Systems were related to turnover, accounting profits, and firm market value. Since then, a growing number of studies have attempted to empirically test the relationships between HR practices and firm performance (see elaborated overviews by Delery and Doty, 1996; Ostroff and Bowen, 2000; Boselie et al, 2001; Tsui and Wang, 2002; Wright et al, 2005). For example, MacDuffie (1995) has found that bundles of HR practices were related to productivity and quality in his sample of auto assembly plants. Delery and Doty (1996) found significant relationships between HR practices and accounting profits among a sample of banks. Youndt et al (1996) discovered that certain combinations of HR practices in their sample of manufacturing firms were related to operational performance indicators. More recently, the study of Batt (2002) examined the relationship between HR practices, employee quit rates, and organizational performance in the service sector, and revealed that quit rates were lower and sales growth was higher in call centers that emphasized high skills, employee participation, and human resource incentives like high employment security.

1.2. Problem Statement

One of the principal and most integral objectives of Oman’s Vision 2020 is the development of Human Resources. The importance of Human Resource Development (HRD) has been given top priority throughout the Sultanate of Oman’s successive Five-Year Development Plan. In Oman’s vision 2020; economic conference held in Muscat in June, 1995, His Majesty’s address to the nation clearly emphasized the need for the private sector to undertake an active role in the development of the economic process and in the achievement of the national goals. Nonetheless, this was not considered in isolation from the development of the national human resources, but rather in conjunction as proclaimed by His Majesty Sultan Qaboos Bin Said:

“Development is not a goal in itself rather; it exists for building man, who is its means and producer. Therefore, development must not stop at the achievement of a diversified economy. it must go beyond that and contribute to the formation of the citizen who is capable of taking part in the process of progress and comprehensive development.” (Vision 2020 Conference, June, 1995).

In Oman, now as never before, the training and development of national (Omani) human resources to a high level of efficiency & competency is a must. This is due to a number of reasons including less dependence on oil resources, less dependence on foreign (expatriate) workers, Omanization, implementation of a successful privatization program, diversification, industrialization, technological innovation and an increasingly competitive global market.

To meet the goal of Vision 2020, electronic human resource management is the one of the essential part for the development of the human capital. In this sense it is quite difficult for effective e-HRM in firms in Oman. Technologically it will be new to the firms in Oman. Henson (2005) identifies workforce and technology as the “heartbeat and the toolset of the HR business today”. HRM is no doubt the business unit most directly responsible for the managing and the developing of the workforce, therefore, factors and trends that trigger the workforce changes need to be addressed with care. Researchers in 21st century have come to the realization of the greatest workforce crisis: the aging of the industrialized world (Dychtwald, Erickson & Morison, 2006), resulting in an “unprecedented shift in the age distribution of the general population and, specifically, the labor force”.

1.3. Research Question:

1. Does an e-HRM tool affect e-HRM function?

2. Is there any relationship between e-HRM tools and HRM function?

3. Is there any relationship between HRM function and firm performance in e-HRM practice?

1.4. Research Objective:

Main objective of this study is to investigate the e-HRM effectiveness in oil industry in Oman.

* To investigate whether the e-HRM tools and HRM function are related

* To investigate whether e-HRM tools affect the HRM functions

* To investigate whether e-HRM has an effect on firm performance

1.5. Significant of the Study

This study will provide the human resource professional to more effective way to implement the human resource functions implementation in oil industry in Oman. This study also identified e-HRM features that deserve HRM practitioners’ attention and organizational resources. This in-depth examining of the set of e-HRM features can also serve as potential tools for the management to decide on the future adjustments of their e-HR system, and the implementation of the new systems. From a practical perspective, result like performances, either yielded by certain business division like HRM or by organizations, reflects an organization’s capabilities in implementing competitive strategies and tools, and aligning its resources and goals. Therefore, by establishing and learning the relationships among the use of e-HRM system, the perceived importance of e-HRM features, HRM’s functional performances organizational performances, and the perceived importance of the dimensions of the organizational performances, HRM practitioners shall be able to manage IT-related issues more effectively, and benefit better from the use of e-HRM.

Although this study will be based on the oil industry in Oman; but the finding can helps the other organization also such as education, manufacturer etc. to practice human resource function through online more effectively.

1.6. Scope of the study

We only use the technology factors and the HRM function implementation through online for HRM effectiveness in this study. There are some other opportunities for researcher to conduct the research on e-HRM effectiveness in Oman. They can add the strategic part of organization with these variables in future. Strategic variable such as the organization goal, objectives and so on can be considered for further study. . Beside this the technology factors such as system implementation also can be included.

1.7. Limitation of the Study

In this study one of the major problems is about the sample. This study can take larger sample than it will be taken. An also the time is another limitation for conducting this research. Shortage of time make researcher to consider the sample for this dissertation in few firms only. Beside that money allocation is another problem for this research. Researcher is using his own money to conduct this study. So that he cannot cover the wide area of or many more firm for analyze.

1.8. Organisation of the study:

Chapter two: Literature Review

2.1. Theoretical perspectives

Given different interpretations and assessments of theory, there is an ambiguity concerning theories, frameworks and other phenomenological conceptualizations. Even acknowledging a broad intension of theory, only one-fifth of the studies rest on theoretical bases. Corresponding to the diverse disciplines and topics, the theories employed are also quite diverse. Often, several perspectives are employed in an eclectic manner. Predominantly, micro-level theories of psychological and behavioral provenance are adopted. Attribution theory and correspondence inference theory (Elgin&Clapham, 2004), the attraction-selection-attrition and the similarity-attraction paradigm (Dineen, Ash, & Noe, 2002), change management theories (Ruta, 2005), organizational citizenship behavior (Huang, Jin, et al., 2004), privacy theories (Harris, van Hoye,&Lievens, 2003), procedural justice theory (Dineen,Noe,& Wang, 2004), signaling theory (Cober,Brown Levy,&Cober 2003), as well as social cognitive theory (Williamson, Lepak, & King, 2003) are adopted in order to explain individual perceptions and reactions arising from e-HRM. Additionally, a learning theory is adopted to compare instructor-led and web-based learning (Coppola & Myre, 2002). In addition, some theories stemming from information systems research are used. The technology acceptance model (Huang, Yang, Jin, & Chiu, 2004), the unified theory of acceptance and use of technology (Ruta, 2005), and the theory of usability (Williamson, Lipak, & King, 2003) are used to frame again problems of individual reactions and usage. Also, a conceptual IT-framework is used to structure e-HRM impacts on HR-professionals (Gardner, Lepak, & Bartol, 2003). One single study pursues a microeconomic approach to explain e-employment markets (Nissen & Gates, 2004). In brief, current empirical research in e-HRM is mainly non theoretical. The theories applied are micro-level oriented, diverse in nature and often eclectic in application. Interestingly, recognized macro-level theories of HRM (Wright & McMahan, 1992) were not considered.

2.2. HRM Effectiveness

To know the effectiveness of e-HRM, HRM functions are relatively come to the picture. The American Society for Personnel Administration (ASPA), the predecessor to SHRM, first defined HRM functions in 1975 as the technical competencies in the following areas (HRCI, 2006):

* Employment, placement and personnel planning.

* Training and development.

* Compensation and benefits.

* Health, safety and security.

* Employee and labor relations.

* Personnel research.

Smith and Mazin (2004) reports the scope of the HRM functions covers the following areas of functionality:

* Employee selection

* HR policies, performance management

* Performance Management

* Training and development

* Employee relations and retention

* Compensation

* Benefits

* Regulatory Issues

* Workforce violence and investigation

* Termination and discharge

Researchers also observed other dimensions to HRM as well, for instance, Huselid, Jackson and Schuler (1997) reports that HRM effectiveness has two essential dimensions. The first, the technical HRM, includes the delivery of HRM basics such as recruiting, compensation, separation etc. The second, strategic HRM, involves “delivering those services in a way that directly supports the implementation of the firm’s strategy”. Other academia and HRM professionals are also inclined to analyze HRM functions from various perspectives, for example: from the areas of activity (Nadler,1990), and from the areas of service rendered. Nadler (1990) first groups the HRM functions into three specific areas of activity: (1) training, which implies “learning related to present job”, (2) education, which implies “learning to prepare the individual for a different but identified job”, (3) development, which implies “learning for growth of the individual, but not related to a specific present or future job”. This further reinforces the thinking of HRM being learning-driven.

2.3. Implementation e-HR

Kehoe, Dickter, Russell and Sacco (2005) points out that the organization’s overall culture and HRM strategy determine the manner in which organizations will implement their e-enablement systems. The e-enabled programs can either be implemented as part of a broad e-enablement of HR processes and systems, or implemented independent of other HR processes and systems. It is even possible that specific e-enabled assessment applications may be implemented independent of each other. No matter what, organizations need to develop guiding principles regarding the following issues on the management of an e-enabled HR environment:

* Risk management relating to employment discrimination

* Buy versus build and the roles of internal HR IT and third party providers

* HR expertise versus automaticity in the e-enabled assessment process

* Whose functions the system will be designed to support

* Ownership

* The integration of e-enabled assessment with other HR systems and process

* “Free market” versus “regulated” processes

E-recruitment

In terms of the organization’s objectives, the primary goal of the recruitment process is to attract potential applicants (prospects) who have the KSAOs needed to meet the requirements of organizational roles. Thus, organizations are increasingly using the Internet to advertise job openings and attract qualified prospects. The web-based advertisements often provide prospects with information about (a) job vacancies, (b) job descriptions, (b) the organization’s culture and its “brand identity,” and (d) the inducements (e.g., pay, fringe benefits, learning opportunities, promotion prospects) offered its employees. Interestingly, some estimates indicate that 100%of large firms currently use the Internet to announce job openings, and 82% of large firms use intranet systems to post openings or identify qualified employees within the organization (Cedar, 2002). For example, organizations have developed sophisticated web-based recruiting systems to convey information about job opportunities and give applicants the ability to complete applications online (Stone, Johnson, Navas, & Stone- Romero, 2005; Stone, Lukaszewski, & Isenhour, 2005). In addition, organizational intranet systems are often used to search employment records to determine if the KSAOs of current employees are consistent with the requirements of vacant or soon-to-be vacant roles. Such systemsmay automatically provide managers with lists of qualified employees, and notify individuals about new job opportunities. In addition, the same systems may send messages to employees that ask about their interests in job openings. Overall, e-HR-based recruiting systems are thought to reach a much wider set of prospects than traditional recruiting systems (Gueutal & Stone, 2005; Stone, Lukaszewski et al., 2005).

Internet-based e-HR systems are also used to provide job applicants (applicants) with virtual previews of organizations. For instance, some organizations use “real time” cameras to give prospects a preview of what it is like to work in the organization on a daily basis. Other organizations (e.g., Cisco Systems) use such systems to give job applicants the opportunity to “make friends in the organization.” Through the resulting contacts, prospects can gather considerable information about the benefits and challenges of working for the organization. As a result of the availability of information about role requirements and inducements, applicants can determine if their (a) needs can be satisfied by offered inducements, and (b) KSAOs are likely to enable them to meet role requirements.

Though a great deal of organizations believe e-recruiting systems permit firms to cast a wide net across a broad labor market, and is more likely than traditional recruitment sources to uncover individuals with unique talents and skills, researches show that e-recruiting only attracts greater numbers of candidates than other sources, but not necessarily attracts higher quality applicants or candidates who are most suitable for the companies than traditional sources (Chapman & Webster, 2003; Galanaki, 2002). McManus and Ferguson (2003) discovers: given that some types of candidates may be more likely to use e-recruiting than the others (for instance, “job hoppers” or savvy internet navigators), the use of the e-recruiting systems may actually affect the characteristics of new hires in organizations, and influence the overall composition of the workforce. McManus and Ferguson (2003), Galanki (2002), Zusman and Landis (2002) further argue that there are age, gender, and ethnic differences in reactions to and usage of online recruitment sources, therefore, organizations should not use online recruiting as the sole recruitment sources.

E-Selection

There are three purposes for all the HR e-enablement (Kehoe, Dickter, Russell & Sacco, 2005): (1) to minimize cost, (2) to maximize the utilization of the organization’s human capital, (3) to enable sustainability which refers to the organization’s willingness and ability “not only to maintain the e-enabled system, but to progressively evolve the system to satisfy changing requirements, and capitalize on improvements in technology and the science of selection”. The purposes for e-enabling selection are no any different from the above. While conducting the maximizing the utilization of the organization’s human capital, organizations are required to design two measures into the e-enabled selection system: (1) the “capital” represented by each person who goes through the process (including the set of text scores, interview ratings, resum6 quality indices, background check results, drug test results, and any other quantifiable evaluation of the skills, experiences, abilities.. ..etc.), and (2) “the extent to which the process results in decisions that maximize the utilization of that capital” (for example, ratio or difference between average test scores for selected candidates to average test scores for all candidates, percentage of candidates who satisfy minimum requirements such as for drug tests or background checks, retention rates, post-hire, new hire performance management results.. ..etc.). Organizations also need to enable sustainability by emphasizing on: clear ownership, funding strategy, business contribution, user satisfaction, and professional support. As for the implementation, Kehoe, Dickter, Russell and Sacco reports that more and more organizations nowadays prefer to acquire a vendor’s e-selection system because of the appealing features of specialized and flexible system solution products available on the market.

E-Performance Management

Researchers have previously compared online administrations and traditional paper-and-pencil (P&P) administrations of organizational surveys (Thompson et al., 2003), measurement of psychological constructs (Cole et al., 2006), upward feedback ratings (Smither et al., 2004), and item responses to a 3608 assessment (Penny, 2003). Whereas researchers have contrasted online versus P&P groups’ reactions to selection tools (Richman-Hirsch et al., 2000), no research has compared online versus P&P administrations in the context of performance appraisal (PA). Although frequently defined as a measurement instrument or tool, PA is the social and communication process in which a supervisor evaluates an employee’s behavior in the workplace and communicates those ratings and feedback back to the employee (Murphy and Cleveland, 1995). The purpose of this study is to address this gap in the applied research literature and examine the extent to which an online PA system influences employees’ reactions to their PA. We believe this is an important applied research question that HR managers need to know the answer to before implementing e-HRM/HRIS PA tools.

Though Cardy and Miller (2005) argues that “the level of performance made possible by technological advancement has changed the standard for acceptable performance”, appraisal satisfaction remains a relevant concern for organizations even when technology is either a primary mechanism for the feedback process, or already “become” the appraisal process, because high-quality performance feedback is a critical factor that helps organizations retain, motivate, and develop their employees, and, “these outcomes are more likely to occur if employees are satisfied with