Theories And Practices Of Hrm Management Essay

2.1 Introduction

The previous chapter has set out the aims and objectives of this study. Based on it, this chapter will review the relevant literature for the study and discuss some key issues from the secondary data. Firstly, the concept, theories and practices of HRM will be reviewed to understand conventional HRM and the background on which e-HRM depend to develop and become more advanced. Then the concept, evolution and practices of e-HRM will be presented. Finally it will revisit the research questions.

2.2 Understanding of HRM

2.2.1 Emergence and definition of HRM

In the last two decades, as the business competition changed to the competition of talents, the value of people in an organization is upgrade and became significant. Since people are considered as the most valuable assets in the organization, human resource management frequently becomes evident and at the heart of the business management to respond to new types and levels of competition.

At the beginning, management of people emerged with the development of industry and then turned into mature with the theory of human resource was built. There are three phases in general, personnel management, human resource management (HRM) and strategic human resource management (SHRM) which is more preferable recently.

At personnel management stage which is before 1980s, it was only a marginal task which was separate and subsidiary in corporate plan (Storey, 1993). It was limited in some insignificant tasks including recruitment, selection, assignment, payment and file management. All these activities were short-term oriented and implemented within the personnel management department that never related to corporate strategies or higher management. Managing people is just makes them work in order and always comply with the manager or organization. In early 1980s, strategists recognized that employees are not only the factor of production as land and capital, but more as the valuable assets (Odiorne, 1985 cited in Storey, 1993, p.29), so the term “human resource management” flourished and personnel management increasingly given way to human resource management. Moreover managers paid more attention on the integration of the separate functions. Afterward, in the mid 1980s, in order to achieve competitive advantage, mere integration within the HR department is not sufficient. Employees should be better regarded and involved into the corporate strategy to seek commitment, retain them and make them contribute to the corporate performance more directly (Boxall & Purcell, 2000). Therefore, the term strategic human resource management which is a linkage of HR functions with strategic goal and organizational culture that fosters innovation and flexibility (Mabey, 1998) replaces HRM. Since then, SHRM became the key task which at the central to the corporate plan and was integrated with other parts of the organization in forming the corporate strategies (Storey, 1993). It facilitates the corporate to achieve more and better.

Scholars defined HRM from different points of view. US scholars gave the explanation that the new HRM model “is composed of policies that promote mutuality – mutual goals, mutual influence, mutual respect, mutual rewards, and mutual responsibility. The theory is that policies of mutuality will elicit commitment which in turn will yield both better economic performance and grater human development.” (Walton, 1985 cited in Legge, 2005, p.102) Foulkes (1986) suggested that “Effective human resources management does not exist in a vacuum but must be related to the overall strategy of organization.” Most personnel managers are tending to operate HRM in their own little worlds, but forgetting that their primary value is supporting top managers to achieve the goals of the organization.

Storey (2001) defined that “HRM is a distinctive approach to employment management which seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce using an array of culture, structural and personnel techniques.” He also summarized the meaning of HRM compared with personnel management. Firstly in the broadest scopes, it was used as a synonym of personnel management. Furthermore, it integrated the separate functions of personnel management such as selection, appraisal and reward into a unitary system and it is more business-oriented and takes people as resources of the organization which alongside of other factors of production. Finally it is more focused and specific in managing people in the organization, but not simply links the personnel management with the organizational strategy (Storey, 1993). According to these four positions of HRM, Storey (1993) indicated that HRM has its “hard” and “soft” versions. The hard version focuses on the “resource” while the soft version puts the stress on the term ‘human’. This ‘hard’ and ‘soft’ theory of HRM has an extensive impact on the HRM research and practice that how to treat employees has been the crucial issue.

These scholars argued that HRM is a specific and minority form of approach to employment management and it has some particularity.

While two other American scholars Byars and Rue (2004) simply defined HRM is “those activities designed to provide for and coordinate the human resources of an organization”. They stressed that HRM encompasses a several functions as personnel management and explained HRM by the model of Human Resource Wheel which contains a consecutive activities of HRM such as HR planning, recruitment, selection, development, compensation and benefit, labour relation, and safety and health. They consider HRM as a generic term that simply denoting any approach to employment management.

Although there were some controversies about the meaning of HRM, all the definitions above believed that HRM is not as narrow as personnel management. The Storey’s definition is more popular and most of the scholars and managers accepted the most significant feature of HRM in the last two decades and at present is that it is involved in the corporate strategic management and is considered as a key part which is the source of profit and any success. Hence the value of HRM in the organizations and management system has been upgraded greatly.

2.2.2. The HRM functions

HRM functions are the tasks and duties human resource managers perform and they constitute the distinctive approach of HRM. The four major functions which are acknowledged by most of the literatures are HR planning, recruitment and selection, training and development, performance and rewards. On the one hand, they reflect the way it evolutes from personnel management which has the similar components, on the other hand, they are integrated to make a full use of human capital to contribute to the better performance.

HR planning is the process of “getting the right number of qualified people in the right jobs at the right time” (Byars and Rue, 2004). Put another way, it is a system of matching people with what the organization expect to carry out the organization’s goal. First of all, it requires translating the corporate mission and objectives into a schedule of people requirement. This is not only in the number and position but more important the quality and how could make them work effectively that contribute to themselves and the organization (Dowling, 1999). Obviously it links to the HRM strategy or even corporate strategy tightly. In the detail, it should define the skills and expertise required to meet the demand and determine additional requirements in light of current HR situation. Finally develop the action plan to implement other HR functions. The key point here is that HR planning and organization planning and strategy are closely connected– they interact circularly.

Recruitment and selection is the essentials of HR strategy and practice after planning. Recruitment is the process of seeking, attracting and generating a pool of capable people to apply for employment to an organization (Hussain, Wallace and Cornelius, 2006). Selection is the process by which managers and others choose from among available applicants the individuals who are most likely to successfully perform a job (Hussain, Wallace and Cornelius, 2006). The typical recruitment steps are advertising of a position vacancy, preliminary contact with potential job candidates and screening to obtain a pool of candidates. There are two main recruitment sources: internal and external. The organization may fill a job vacancy with someone already employed by the organization, this is the internal recruitment. Or else seek someone outside of the organization which is external source. Next is to select using some reliable and validity tools including interview, in-tray exercise, psychometric testing, aptitude testing and presentation. To be successful in recruitment and selection step, it is important to have a good design of the process. Nieto (2006) suggested an integrated approach that firstly it should involve HR staff and any advisers in the strategic planning and under the recognition of the organizational culture. Moreover the use of external providers and consultancies may help. Another crucial prerequisite is the job analysis and evaluation which decide what kind of candidates should be hired and the efficiency after employment.

Training and development is one of the value adding processes due to its content of knowledge management. Training is a process which improves employee performance through skills, concepts, rules and attitude learning (Byars and Rue, 2004). Development is a continuous process by which employees enhance their knowledge and skills to meet the potential opportunities and new challenges (Nieto, 2006). After this stage, the capable employees will be trained to adapt to the corporate environment and fit for the particular job much better. The basic types of training consist of on-the-job training and off-the -job training. Some commonly used training methods are classroom training and job rotation which trains individuals to learn several different jobs within a department. Nowadays web-based training increasingly turn to hot. It provides self-service training courses and long-distance courses which cater to the advanced requirement of the social development. The personal development program is always designed according to individual aspirations and interests as well as the corporate needs (Nieto, 2006). There should be some options for different employees. Although this might increase the difficulty, complexity and cost of HRM, organizations need this investment to ensure that these valuable human resources are well trained and effectively developed to contribute to the organization. This is because the organization is the sum of the knowledge and skills that its people have.

Performance and reward are another point that combines HRM with organizational strategy and performance. Traditionally, HR performance focused on individual performance which was evaluated through employee appraisal and then determined the reward. However this long established area within HRM system is now changing because of the changes of management and control practice. It focuses on the overall performance and the achievement of the organization which consists of individual and team performance (Hussain, Wallace and Cornelius, 2006). At this stage, the major work of HRM is appraisal. The performance will be appraised in many ways and then the relevant reward will be given. Some of the classic appraisal methods are listed: management by objectives (MBO), 360-dgree feedback, upward appraisal, custom appraisal, team-based appraisal and competency-based appraisal and so on (Hussain, Wallace and Cornelius, 2006 and Byars and Rue, 2004). An excellent performance and reward system depends on an appropriate appraisal technique, while a successful HRM and great corporate performance depends on the excellent performance and reward system to motivate and retain valuable employees.

These main HRM functions are interacted and all link to organizational strategy that make HRM turn into strategic and integrated approach that never be separated and will be effective in business management.

The linkage between HRM and firm performance

As the status of HRM in organizational management has been enhanced, most of the emphasis has been given to the question whether HRM really relates to corporate performance and if it is how it affects the performance.

Guest (1997) introduced a ‘box model’ which shows the linkage between HRM and performance. Leede and Looise (2005) translated this as shows in Figure 1. It is a sequence system that organization strategy is reflected through HRM practices, while HRM behavior and performance outcomes influence the organization’s financial outcomes.

Figure 1

Organization strategy

Differentiation

Focus

Cost

Organization outcomes

Productivity

Quality

Profit

Return on investment

Customer

satisfaction

HRM outcomes

Motivation

Commitment

Cooperation

Involvement

Flexibility

Turnover

Conflict

HRM practice

HR planning

Recruitment&

selection

Training&

development

Performance&

reward

Source: Leede and Looise, 2005

Hoque (1999) researched on the relationship between HRM and performance in the UK hotel industry and show the result that it is dependent upon the strategy. When HRM practices and functions are took as an integrated and coherent package that relates to the organization’s strategy, it contributes to competitive success more evidently. Though this research tested the relationship between HRM and firm performance only in one industry, it demonstrated a common phenomenon in the whole economy to a large extent.

Some other literatures show the similar outcomes that this relationship indeed exists, but always depends on some variables. For example, Chang and Huang (2005) reported that product market strategy will moderate the relationship between SHRM and firm performance. In this innovation oriented market environment firms which implement SHRM may perform better because in this situation SHRM promotes team work, incentive reward, and flexible workforce and so on. All of these promote innovation in organizations. Thus any innovation including product and market innovation will lead to better performance.

The linkage between HRM and firm performance has been acknowledged according to many research based on test and analysis as well as evidence from practices. Nieto (2006) drew a conclusion from HR professionals’ report that 70% of them showed that CEOs consider HRM as the key to achieve corporate goals and performance.

2.3The Introduction of E-HRM

2.3.1 Definition and aims of e-HRM

As the popular term of e-commerce and e-business, e-HRM is short for electric human resource management. Just as its name implies using electronic techniques in HRM is called e-HRM (Zhang & Wang, 2006). Or it refers to conducting HRM transactions using the internet and intranet along with other technologies (Lengnick-Hall and Moritz, 2003; Roberts, 2006). Some other exact definitions are available. Singapore researchers defines e-HRM as ‘the use of electronic media and active participation of employees to provide technology that helps to lower administration costs, improve employee communication, provide quicker access to information and reduce processing time’. (Osman and Hashim, 2003) Hooi (2006) indicated that ‘e-HRM is basically connecting staff and managers with the HR department electronically through the HR portal’. (Hooi, 2006) All of them described the key features of e-HRM in the definitions.

The aim of e-HRM is making information of each HRM functions available to everybody from top executive to line managers and employees at any time and any where (Panayotopoulou, Vakola and Galanaki, 2007). At the same time, it could provide connections with external resource such as the recruitment information to applicants. By extensive using of computers, IT and network, it achieves self-service management that allows employees to control their own personal data, communicate both upward and downward instantly, analyze their situation and make decisions, without bothering the HR department (Panayotopoulou, Vakola and Galanaki, 2007). Simultaneously it helps people work without any paper. To accomplish these great achievements, an important medium is the e-HRM software or e-HRM system which evolutes with the HRM demands increasing.

2.3.2 The Evolution of E-HRM

The term e-HRM was first used in 1990s (Panayotopoulou, Vakola and Galanaki, 2007). This is an era marked by the increased globalization and intensification of competition which facilitated by the speeding up of worldwide communication and the emergence of multinational companies on account of the extensive using of IT. (Eplee et al., 2002; Farndale and Brewster, 2005) As a result, the international division of labour asked for better HRM solution (Legge, 2005; Frauenheim, 2006) and HRM faced a challenge that it was required new competencies to adapt to the new information age (Ulrich, 1997; Spanos et al, 2002).

Using of computer in business management was the first step that management evolutes from conventional style to the e-style. Firstly, the role of management should be understood, according to classical management scientists such as Taylor and Mintzberg, managers have to fulfill interpersonal roles as a leader, informational roles as monitor and disseminator, and decisional roles as entrepreneur and resource allocator (Barnatt, 1994). To help managers in accomplishing these roles, primary computer-based information system emerged with the naissance of computers. Then with the popularity of internet, the web-based information system appeared. These advantaged information systems may make managers easier to achieve their goals in management. (Gupta and Kohli, 2006) When the strategic HRM has expanded, researchers and practitioners began to interest in operating information system to enhance the efficiency of strategic management (Powell and Dent, 1997; Manley, 1996). Thus information systems have been broadly employed in management.

Here Barnatt (1994) defined information system as a set of interdependent, interacting elements which are united to perform some functions by using the data that has been processed into a useful form. He classified information system as well into five types: data processing systems, management information system, decision support systems, executive information systems, and office automation systems. A data processing system (DP) is the lowest level which could used to keep records. Its usage in management was the personnel record system. A management information system (MIS) is ground on a data processing system, in addition it allows managers to extract and summarize information. It has been applied in many fields when the computers are widely used and was used as a control and decision assistant. A decision support system (DSS) based on MIS with an additional function of analysis and modeling to assist in making decisions. It is commonly used in strategic planning, and upgrade and flexible than MIS in supporting the decision process. An executive information system (EIS) is considered as a specialized form of DSS. It provides access to both internal and external information to support the needs of senior executives. An office automation system (OAS) refers to a computer based applications package which makes the office activities easier for both managers and employees. It could be downsized into simple DP, MIS or DSS.

Watson (2004) listed the eras of computing according to Harvard lecture series on IT as in figure 2. It displays the IT focus, the generic systems primary IT and their different purposes in different decades.

Figure 2

Era

IT focus

Generic systems

Purpose

Primary IT

1960s-1970s

Organization

MIS

Efficiency

Mainframes

1970s-1980s

Individual

DSS

Effectiveness

Minicomputers

1980s-1990s

Intra-industry

EIS CRS (Customer reservation system)

Strategic/

competitive systems

Proprietary

network connections

1990s-present

Inter-industry

Ultimate

Consumers

Browsers

WWW

Page application

Market penetration,

new marketing

channels,

integrated and strategic management

Internet servers

Client software

Source: Watson (2004)

As management gradually becoming specialized, different information systems appeared to meet particular needs. In 1990s, specific human resource management information system (HRIS) was introduced to companies (Linden & Parker, 1998). It contains all the functions of MIS, DSS and OAS, and takes HRM software as its central feature (Bocij, al., 2003). The use of HRIS make HRM changed a lot that HR professional became a strategic player and much more functional (Hussain, Wallace & Cornelius, 2006). Nevertheless, some HRIS have not connected all the HR functions together and most of the companies just buy the off-the-shelf package of HRIS (Bocij, al., 2003). As a result, it could not fully achieve the strategic purpose and might not fit for the actual situation and demand.

To accomplish the integrated strategic goal of corporations and provide flexible solution, the trend of HRIS was to do a lot all at once (HR focus, 2005). The driver of technology and sourcing choices could promote HRIS to be successful in improving processes, communication and cost, and meeting the majority of corporation goals. Under this circumstance, advanced HRIS and the term e-HRM emerges as the times require based on popularization of internet that optimizes HRIS greatly. It is more specialized while furthermore is more integrated with the strategy of the corporation. It makes HR available to put in additional strategic value to the organization (HR focus, 2007).

Now it can be said that all kinds of information systems used for HRM is e-HRM. The upgrade cycle of e-HRM evolution, on the on hand, is due to the continuously enhanced demands for HR role in management, on the other hand, is as a result of rapidly renewed IT and widely used internet.

2.3.3 Features of e-HRM

Literatures of research and practices demonstrated the features of e-HRM. Depending on the research of Lengnick-Hall and Moriz (2003) and Walker (2001), Panayotopoulou, Vakola and Galanaki, (2007) identified three levels of e-HRM and the features. The primary level is publishing of information which helps managers to communicate with employees by delivering information through intranet. The second level is automation of transactions with integration of workflow. This combines the intranet and extranet to accomplish integration of different parts of HRM as well as the whole management of the organization. Meanwhile electronic input substitutes for paperwork. The highest level is transformation of the HR function. E-HRM promotes the functions of HRM from operational to strategic level that makes the role of HRM turn to a partner, creator and administration supporter. They also defined that e-HRM aims to make information of each HRM functions available to everybody from top executive to line managers and employees at any time and any where. Employees could manage their personal information, training plan, holiday and some other daily affair, and managers and employees could communicate with each other directly and instantly. These release the burden of HR department and increase management efficiency.

Moreover, Runy (2006) has the same opinion that e-HRM helps to eliminate much administrative burden and makes managers and employees focus on more important tasks. This not only reduces the cost but also enhance the employee satisfaction and financial performance.

Li and Wu (2002) pointed out that e-HRM system could build an objective norm for appraisal and performance in order to reduce the subjective and unfair factors in evaluating. Hence the complexity of HRM in today’s society has been simplified and turns to more standardization, more efficiency, high transparence and more participation.

Another important characteristic of e-HRM as Lengnick-Hall and Moritz (2003) noted is that e-HRM will involve more strategic and managerial purposes. At the meantime, to adopt it requires large investment both in money and intangible rebuild of management concept within the organization. This is a great challenge because e-HRM is based on the popularity of computer and internet, and intent to make the work system become whole. Therefore to implement e-HRM needs more courage to change the whole system in the organization (Barnatt, 1994; Safran, 2006).

Besides Ruel et al. (2007) indicated that e-HRM could help to moderate employment relationship. The changing of labour market such as supply shortage, individualization and higher educational level, causes the shift of power from employer to employee. E-HRM offers the better service for employees who are the internal customers by which increase the satisfaction of employees and their commitment.

Integrating all these features, implementation of e-HRM contributes a lot to gain corporate competitive advantages. Researchers suggested that organizations could acquire or increasing competitive advantage via IT implementation. For instance Porter (1985) and Hoppszallern (2005) recommended that corporations should have a comprehensive understanding of all technologies which could be used in value adding process, so that information technology could be applied to improve performance and enforce competitive advantages. In today’s knowledge economy environment, to gain competitive advantages from IT systems is in the mainstream. This is also depends on the attitude changes across the organization which is really a big challenge for any corporations. However this is the trend that sooner or later it will be accepted by all kinds of corporations (Barnatt, 1994).

To sum up these notions, the typical features of e-HRM are as below:

Based on internet and intranet

Strategic involved

Self-serviced

Electronic input replaced paperwork

Expedite and speedy communication channel

Objective appraisal system

Enhancing the employee satisfaction through higher level of internal service

Improving employment relationship

Cost reduction

Changing the centre of HRM from operational management to strategic management.

Reducing unfairness and dissatisfaction in performance appraisal

Meeting the requirement of IT era

Achieving more competitive advantages

2.3.4 The relationship between conventional HRM and e-HRM

The nature of HRM decided the status of HRM in an organization became more important and the emergence of SHRM indicated that HRM is one of the strategic partners of the organizational management. At the same time with the development of the internet and IT industry, the usage of network and information system in management is popular and the introduction of e-HRM is just meet the requirement in the new era. (Legge, 2005)

The shift from conventional HRM which focuses on the operation of HRM functions with paper-based manual processes, to e-HRM which emphasizes more on strategic, integrated, and automatic approaches based on IT to increase the efficiency and effectiveness of HRM, could be seen as a sequential phenomenon of two general phases of HRM or two types of HRM. Conventional HRM refers to those ways of HR management without IT or just a little using of simple DP, while e-HRM bases on IT, depends on internet and intranet and relates more to strategic management. Nevertheless their foundation is the same, which are the functions of HRM. Both of them achieve their goals and value through operating these functions.

2.4 E-HRM in Practice and its effectiveness

The evidences from several organizations of different countries show the operation of e-HRM in practice and how effective it is. However there is still controversy about whether the e-style of HRM relates to corporate size.

2.4.1 Cases of e-HRM in practice

2.4.1.1 Evidence from Northeast Health in UK

Runy (2006) did a case study about using of e-HRM systems in three hospitals. Northeast Health, a three-hospital system with 4,000 employees is one of the successful cases. It used HRIS in the late 1990s. At first, it operated three distinct systems to manage scheduling, benefits, payroll and other HR functions. But this was not that efficient. In 2000, Medi Solution provided it software that could integrate all HR functions and added online recruiting, salary modeling and training. (Runy, 2006)

Prior to implementation of this system, when a manager wants to know some information, he has to call human resource department to request the data. Then HR department would print the data and manually deliver it to the manager or send it through interoffice mail. By the time these data reached to the manager, it would be late and sometimes even weeks late. The manager said that they reached the glass ceiling and were not meeting HR need in an efficient way, but after implementation of the HR software in 2000, both employees and managers felt it easier to do their jobs. They enter self-service site which allows them to update personal information and sign up for training programs and so on. For managers, the software provides up-to-date details about employees, tracks work history and display new requirement of employees, and evaluates their performance. It can analyze the data as well that aid to decision making. As what the vice president of corporate HR said, e-HRM helps them to assemble a large, multidisciplinary team to achieve more.

2.4.1.2 Evidence from a Dutch Ministry

A qualitative research on e-HRM operation based on the data from a Dutch Ministry by Ruel, Bondarouk and Velde (2007) tested whether e-HRM contributes to HRM effectiveness. They found that “only the quality of the e-HRM application was positively related to technical and strategic HRM effectiveness” (Ruel, Bondarouk and Velde, 2007, p.288). Therefore they listed the factors influence the assessment of e-HRM quality, including the support by employees and managers and their judgments of the information provided.

The conclusion is that the assessment of e-HRM applications has positive relationship with technical and strategic HRM effectiveness. When managers and employees perceive higher quality of an e-HRM application, there will be an increasing of HRM effectiveness. But they do not relate their ease of use and the linkage between e-HRM and their job to HRM effectiveness. For these reasons, to make e-HRM more effective, organizations should obtain good support from colleagues and managers, and better information provision. This research is helpful to HR practitioners to implement e-HRM and once more illustrates that to operate e-HRM is a big challenge for organizations that they need build new concept or even new culture within the organization.

2.4.1.3 Evidence from a Chinese corporation

Another case from Chinese state-owned factory (Zhang and Wang, 2006) revealed several common problems in implementing e-HRM. Plant A is one of the top 500 industrial enterprises in China and has over 10000 employees. In the early 2002 a manag