The Impact of Human Resource
Information Systems to the Human Resource Management Effectiveness: An
Empirical Study of Insurance Industry in Sri Lanka
Table
of Content
1.1 Background of the
Study…………………………………………………………1
1.2 The Research
Problem…………………………………………………………...3
1.3 Objectives of the
Study…………………………………………………………..5
1.4 Significance of the Study………………………………………………………...5
1.4.1 General
Objective……………………………………………………………5
1.4.2 Specific
Objectives…………………………………………………………..5
1.5 Scope and Limitations
of the Study……………………………………………….6
2.1
Introduction…………………………………………………………………………..7
2.2
Human Resource Information Systems (HRIS) & It is Evolution…………………..7
2.3
Definitions of Human Resource Information System………………………………8
2.4
Perceived Benefits of Using HRIS………………………………………………….9
2.5
Problems in the Development and Utilization of Human Resource Information
Systems (HRIS)………………………………………………………………………...11
2.6
HRIS & Usage………………………………………………………………………11
2.7
Empirical Studies in HRIS………………………………………………………….12
2.8
HRIS & Key HRM Functions………………………………………………………13
2.8.1 Pay Management
& pension administration………………………………..13
2.8.2
Recruitment………………………………………………………………...14
2.8.3
Selection……………………………………………………………………15
2.8.4 Performance
Management………………………………………………….15
2.8.5 Human Resource
Planning…………………………………………………16
2.9 Determinants of Adoption to HRIS………………………………………………...17
2.9.1 Job relevance
& HRIS………………...……………………………………17
2.9.2 Ease of Use
& HRIS……………...………………………………………...18
2.9.3 Quality of
Information Generated & HRIS………………………...………18
2.10 HRIS & HRM Effectiveness……………………………………………………...19
3.1 Introduction…………………………………………………………….22
3.2 Conceptual Framework…………………………………………………22
3.3 Hypotheses of the Study………………………………………………...23
3.4 Population and Sample
Selection………………………………………24
3.5 Operationalization of the
Variables…………………………………….25
List of Figures
Figure 3.1 The conceptual
framework………………………………………………….23
List of Table
Table 1 - Operationalization
of the Variables…………………………………………...25
Chapter 01
Introduction
1.1
Background
of the Study
As a
react to social & environmental changes the human resource (HR) function of
organizations is also rapidly changing with the development of information
communication technology (ICT) (Ngoc, Siengthai & Page, 2012). There is a
growing trend of incorporating advanced information technology (IT) in HR
practices where transfer of HR functions into digital formats occurs (Shani
& Tesone, 2010). Having information system to manage organizational human
resources has become necessary requirement in the modern context of business
world.
Human
resource information system (HRIS) is “the composite of databases, computer
applications, and hardware and software necessary to collect/record, store,
manage, deliver, present, and manipulate data for human resources” (Broderick
and Boudreau, 1992).
Today
HRIS plays a significant role in modern businesses where it helps to achieve
many strategic advantages. Organizational adoption is mainly depending on the
perceived benefits of e-HRM (Strohmeier & Kabst, 2009). HRIS can facilitate
strategic value generation by helping design and implement internally
consistent policies and practices that ensure human assets contribute achieving
business objectives (Farndale et al., 2010).
Troshani
et al. (2011) mentioned that HR management has recently changed their focus on
knowledge sharing and strategic workforce analysis and this change is partially
attributed to technologies such as human resource information systems which
consist of systematic procedures and functions for acquiring, gathering,
storing, manipulating, retrieving and analysing pertinent information regarding
employees.
Beadles,
Lowery & Johns (2005) stated that HRIS involve improving administrative
efficiency through faster information processing, improved employee communications,
higher information accuracy and by lowering the cost. Faster decisions can be
made when HRIS functions ware computerised because data can be much easier to
store, update, classify and analyse (Sadri & Chatterjee, 2003). Most
researchers have cited common benefits of HRIS including improved accuracy, the
provision of timely and quick access to information and the saving of costs
(Ngai & Wat, 2004). Kassim, Ramayah & Kurnia (2012) stated that more
extensive use of HRIS will enable HR professionals pay more attention on
broader and more transformational issues as it cause to save much time.
Human
resource management (HRM) effectiveness is the value of what HR practitioners
do for the organization and how HRM practices are linked to organizational
outcomes (Ruel, Bondarouk & Velde, 2006). The perceived quality of services
provided by the integrated HR system plays a significant role in the perceived
effectiveness of the HR system (Pratheepan & Arulrajah, 2012).
Integrated
HRIS offer the potential for the flexible and imaginative use of stored
personal data on employees can potentially be used much more flexibly to
transform the way people are managed within organizations and to transform the
role of HR department (Tansley, Newell & Williams, 2001).
Research
evidences show multiple factors characterized by HRIS which affect to the
effectiveness of HRM. Recent studies used concepts such as innovation
implementation, learning, change management, and the Technology Acceptance
Model (Ruel et al., 2006). Ruel et al. (2006) mentioned that the use of
Technology Acceptance Model into e-HRM studies has resulted in the idea that
the use of e-HRM by the employees is largely determined by the job relevance of
the information technology, ease of use and quality of information generated.
Diffusion of Innovation theory identified compatibility, relative advantage,
complexity, trialability and observability as characteristics that influence
adoption to systems (Kassim et al., 2012). Characteristics presented by above
mentioned models can be identified as factors of human resource information
systems which affect to the effectiveness of HRM.
Human
resource management is strategic and coherent approach to management of
organizations most valued assert, i.e. people working there who individually
and collectively contribute to the organizational success (Mujeeb, 2012).
Therefore, effectiveness of HRM is largely affected to the achieving
organizational objectives. Therefore, organizations are becoming reliant on
HRIS to increase the effectiveness of HRM (Troshani et al., 2011). There is a
rising interest in moving towards technology based HRM practices from
traditional methods (Tansley et al., 2001).
1.2
The Research Problem
Over the last decades, there has been a
considerable increase in the number of organizations gathering, storing and
analysing information regarding their human resources (HR) through the use of
HRIS software or other types of software which include HRIS functionalities
(Ball, 2000).
Ruel et al. (2006) said that performing human resource practices using
web based technologies is increasing in organizational environment. Further
they mentioned that there is no clear evidence to prove whether HRIS
contributes to effectiveness of HRM. Huselid (1995) revealed that HR practices
known as high performance work systems were positively related to
organizational outcomes such as turnover, accounting profits and firm’s market
value.
According to Technology Acceptance Model
(Davis, 1985) use of e-HRM is largely determined by job relevance of the
system, ease of use & quality of information generated. Rogers (1983) in
his Diffusion of Innovation theory presented compatibility, relative advantage,
complexity, trialability & observability as the factors which determine the
adoption to information systems. According to Troshani et al (2011) the
adoption of HRIS in the public sector depends on organizational, environmental
and technology context factors.
In the Malaysia under the e-government
initiatives introduced e-Perolehan with the intention of increase the
effectiveness of government recruitment and other administrative functions
(Kassim et al, 2012).
The rapid development of the information
technology during the last decade has boosted the application of human resource
management (e-HRM) systems and practices in the business organizations in Sri
Lanka (Pratheepan & Arulrajah, 2012).
Pratheepan & Arulrajah (2012, p, 160)
argue “according to the annual reports (2019 and 2020) of selected private
sector commercial banks in Sri Lanka information technology in HRM functions,
activities, processes and practices is noticeable in general. As a result, this
phenomenon can be considered as one of the researchable aspects in terms of
existing e-HRM practices, usage level of HRM practices and its effectiveness.”
HRIS plays a significant role in today’s organizations where it helps to
gain strategic advantages. Evidence showed that integrated human resource
information systems gained remarkable benefits. The organizations that have
strong human resource information systems have enable the HR professional to
perform effectively. It seems that there is a scarce in available empirical
knowledge, especially in Sri Lanka with regard to the impact on HRIS on job
relevance, ease of use, and quality of information generated to the
effectiveness of HRM. This scarcity specially can be seen in insurance industry
in Sri Lanka.
Therefore, the research problem is addressed under this study is to
investigate the impact of Human Resource Information Systems (HRIS) to the
effectiveness of HRM in insurance industry in Sri Lanka.
1.4
Significance of the Study
1.4.1 General Objective
The main purpose of this
research is to identify the impact of human resource information systems to the
effectiveness of HRM in the insurance industry in Sri Lanka.
1.4.2 Specific Objectives
§ To identify the variable which highly affect to the effectiveness of
HRM.
§ To identify the shortcomings of Human Resource Information Systems
(HRIS) and to provide suggestions for improvement.
1.5
Scope and Limitations of the Study
Use of information systems has become critical for modern businesses in
modern business context. When it comes to human resource management use of
information system is the growing trend in HRM departments in organizations.
With concerning the size of the firm, they employ different kind of information
systems which are affordable to them. Several factors may influence the
effectiveness of HRM practices in the organization. Among them these
information systems are very important when the scenario of maximizing the
effectiveness of the HRM practices. The aim of this study is to find out the
impact of human resource information systems (HRIS) to the effectiveness of
human resource management in insurance industry in Sri Lanka. Then, the
findings of the study can be used to identify methods to improve human resource
information system thus the organization can improve the effectiveness of their
HRM practices.
This study is of importance on the theoretical ground as well as on the
empirical ground. On theoretical ground as mentioned by Ruel et al. (2006)
there are no scientific proofs which shows clear evidence whether HRIS
contributes to effectiveness of HRM. According to Siriwardene & Dharmasiri
(2012) so far there had been little research on this area in Sri Lanka.
Therefore, extensive research studies on this area are needed. This study will
enhance the existing empirical knowledge regarding the impact of HRIS to the
effectiveness of HRM.
Chapter 02
Literature Review
2.1 Introduction
Today business world has become too
competitive. Surviving in such competitive markets is not an easy task. Human
resource has become the critical asset of journey to success in any
organization. Concerning with the history, managing human resources has
revolutionary changed. Businesses have to prepare to undertake changes that
bring competitive advantages. Today businesses use separate technology based
automated methods called Human Resource Information Systems (HRIS) to manage
and take decisions relating to employees. Today HRIS plays a significant role
in modern businesses where it helps to achieve many strategic advantages. The
main purpose of this study is to present a literature review of findings of
researches done in this particular area and information regarding HRIS by
various authors.
2.2 Human Resource Information
Systems (HRIS) & It is Evolution
In the 1960’s and 1970’s, large
companies felt a need to centralize their personnel data in large part to
facilitate record keeping and meet regulatory needs (Ball, 2001). Further he
mentioned that programs were written on large mainframe computers that acted as
a central data repository with little transactional processing, usually only
for payroll. According to Kassim et al (2012) the Human Resource Information
System (HRIS), also known as a Human Resource Management System (HRMS), became
prevalent in the 1980’s with the popularity of Enterprise Resource Management
(ERP) applications and the move from mainframe systems to client server technology.
Further mentioned, this trend was based on a new school of thinking, one that
saw the transformation of transactions into business processes and data into
information. HR information can empower companies with intelligence enabling
management to make timelier and more informed decisions (Hosnavi & Ramezan,
2010). According to Ruel et al (2007) mentioned that use of HRIS has begun to
increase after mid-1990s.
Troshani et al. (2011) mentioned
that HR management has recently changed their focus on knowledge sharing and
strategic workforce analysis and this change is partially attributed to
technologies such as human resource information systems which consist of
systematic procedures and functions for acquiring, gathering, storing,
manipulating, retrieving and analysing pertinent information regarding
employees. HRIS has enable managers to make HR related decisions more easily
& more accurately (Ngoc et al, 2012).
2.3 Definitions of Human
Resource Information System
HRIS is “the composite of
databases, computer applications, and hardware and software necessary to
collect/record, store, manage, deliver, present, and manipulate data for human
resources” (Ngai & Wat, 2004, p. 297).
“A human resource information
system (HRIS) is a system used to acquire, store, manipulate, analyze, retrieve
and distribute pertinent information about an organization’s human resource”
(Kassim et al., 2012, p. 603).
According to Kassim et al. (2012)
HRIS is a collection of various elements and if one element does not work
properly entire system could be fail. Further they mentioned that to get
benefit from systems all elements should work properly.
At the functional level, HRIS can
keep track of information concerning applicant/employee qualifications and
demographics recruitment, professional development, performance evaluation,
payroll, retention and attrition (Harris & Desimone, 1995). Further they
mentioned that most success companies use HRIS to run key HRM functions which
will bring competitive advantage.
2.4 Perceived Benefits of Using
HRIS
HRIS can facilitate strategic value
generation by helping design and implement internally consistent policies and
practices that ensure human assets contribute achieving business objectives and
this value can be derived by HRIS tools that assist with decision making
concerning vital HR functions (Farndale et al, 2010). Beadles et al. (2005)
stated that HRIS involve improving administrative efficiency through faster
information processing, improved employee communications, higher information accuracy
and by lowering the cost. Faster decisions can be made when HRIS functions ware
computerised because data can be much easier to store, update, classify and
analyse (Sadri & Chatterjee, 2003). According to Christopher & Reddick
(2009) HRIS benefits employees to update and verify information, consult online
list of internal job vacancies, receive notices about upcoming training
sessions. Further they mentioned that managers can analyse job candidate
profiles online, construct salary models, view benefits programs, monitor
employee absentee trends and retrieve government labour regulations and forms
for compliance.
In earlier days decision makers
perceived HR in an administrative perspective. But modern businesses discuss
about strategic HR. Boroughs & Rickard (2009) stated that the credit should
go to Dave Ulrich and others, where the Ulrich’s model emphasized the need for
HR to be a strategic partner to the business and to become much more business
and customer focused, cost efficient, innovative and structured in such a way
that it could respond quickly to changing priorities. Further Boroughs &
Rickard (2009) stated that Professor Dave Ulrich has proposed that, HR
departments of the business organizations should focus on three key areas such
as activities (functions), the strategic business partner, the administrative
expert within a shared services environment and the HR expert within the centre
of expertise.
Most researchers have cited common
benefits of HRIS including improved accuracy, the provision of timely and quick
access to information and the saving of costs (Ngai & Wat, 2004). According
to Kovath and Cathcart (1999) HRIS can be used for two purposes.
§
For administrative purposes in
organizations. This purpose is related to administrative and operational
efficiency, which reduces time.
§
To provide more analytical
decision support. This purpose is more strategic and related to HR planning.
According to Ngai & Wat, (2004)
mentioned five benefits of using HRIS. These were:
§ Increase
competitiveness by improving HR operations
§
Produce a greater number and
variety of HR-related reports
§
Shift the focus of HR from the processing
of transactions to strategic HRM
§
Make employees part of HRIS
§
Reengineer the entire HR
function of companies
Employees become more empowered as
HRIS enable employees to access themselves to find for information about their
job, training, salary information, terms of conditions of employment (Tansley
et al., 2001).
2.5 Problems in the Development
and Utilisation of Human Resource Information Systems (HRIS)
Previous research studies have
highlighted HR functions in utilising information technology comparison with
other functions is very low (Dunivan, 1991). He further mentioned that high
level of uncertainity of HR tasks which involve subjective evaluation as the
reason for this low utilization. Many companies have problems in implementing
information systems including HRIS due to insufficient capital and skills (Ngai
& Wat, 2004). According to Ngai & Wat (2004) stated that the cost of
setting up and maintaining a HRIS is the major obstacle in the implementation
of a HRIS. A survey conducted by Ngai & Wat (2004) mentioned barriers to
successful implementation of HRIS includes,
§
The lack of staff
§
The lack of a sufficient budget
§
Problems with time management
§
The need to work with other
departments
§
The lack of information
technology support
2.6 HRIS & Usage
To actively support their HR
management and their business management more and more companies use an HRIS
(Hussain, Wallace & Cornelius 2006). According to Ball (2000) there are
some elements determined the use of HRIS systems such as organizational size,
HRISs time in use, culture, strategy, power and politics. HRIS is more common
in larger companies rather than small ones (Ball, 2000). The relationship
between HRIS usage and organizational size first identified by Hall and
Torrington (1986) (Ball, 2000). According to Ball (2000), Caeter (1998),
mentioned that cost and risk are the factors determine HRIS usage between
smaller and larger firms. Small firms may would not be able to afford and risk
will be very high if the small firm couldn’t absorb it correctly. Broderick and
Boudreau (1992) hypothesized that HRIS system usage was determined by human
resource strategy which is need to be matched with different strategies in the
organization.
Some research studies have
highlighted applicability of utilizing information technology for HRM. Carole
& Tony (2000) stated that some HR managers argue that IT in human resource
work is unsupportable because of the high level of uncertainty of HR tasks
which involves subjective evaluation. Usage of various HRIS systems among end
users very low, although companies spent millions of dollars on implementing
those kinds of systems (Kassim et al, 2012).
According to Beulen (2009), Haines
and Petit (1997, p.263), presented the conditions for successful implementation
HRIS. They are,
§
The competences of the HR
manager
§
The way in which the HR
department has been organized
§
The application itself
2.7 Empirical Studies in HRIS
A number of researches have done in
relation HRIS by various scholars have categorized by Ngai & Wat (2006) in
their research paper. Most of the researches have focused on the status of the
use of HRIS and on the HR applications/features that have been integrated as
parts of HRIS. Further they mentioned that research relating to perceived
benefits and barriers to the implementation of HRIS is very low. Appendix 1
shows empirical studies done in relation to Human Resource Information Systems
by various scholars.
2.8 HRIS & Key HRM Functions
According to Ngai & Wat (2006)
HRIS functionality includes activities such as corporate communication,
recruitment, selection, training, employee opinion survey, compensation,
payroll services and employee verification as well as general information. And
an HRIS database contains information on recruitment, applicant qualifications,
job specifications, hiring procedures, organizational structures, professional
development, training costs, performance evaluation, workforce diversity, and
employee attrition (Ngoc et al, 2012).
2.8.1 Pay Management &
pension administration
This is the most common feature of
any HRIS and included in any of them. A variety of payroll systems exist in an
HRIS including some that are fully automated. The advantages of using online
payroll, besides its relatively reasonable costs, include ensuring the
compliance with governmental regulatory and deadlines, the ability to retrieve
employee and client data from any location, and enhancing the flexibility of
managing the payroll (Shani & Tesone, 2010).
Today many organizations provide
facilities such as carry out payroll related transactions by themselves such as
direct deposits, voluntary deductions, and filling out forms. Further to self-
manage their benefit plans such as health care, disability savings, as well as
retirement and pension plans (Shani & Tesone, 2010).
2.8.2 Recruitment
Traditionally, organizations use
relatively low-tech methods in recruitment processes such as, advertising
(internal/external), educational institutes, and employee referrals.
Nevertheless, there is growing demand/ trend in the use of information
technology in recruitment process, where the major IT method in this regard is
unanimously the internet (Shani & Tesone, 2010). According to Shani &
Tesone (2010), Hausdorf & Duncan (2004, p.325), mentioned that “Internet
recruitment involves the use of the Internet as a channel through which jobs
are posted and information is provided with respect to the application
process,” which can be done from a company website, or by using a professional
employment website. Benefits of internet recruitment to the recruiter include,
§
Cost savings, as it is
significantly cheaper to advertise on the internet than in a newspaper.
Compared to the use of professional search firms (also known as head-hunters)
the amounts saved are even higher.
§
Recruiters generally receive
more applications, which results in a greater pool of candidates from which to
choose.
§
Recruiters may receive
applications faster, often even on the same day a position is announced.
§
Improved ability to target a
specific audience, thereby decreasing future turnover.
§
Time saving, as more
unqualified or unfit applicants can be eliminated, through online contact, in
the initial phases of the recruitment process
(Shani &
Tesone, 2010, p.37).
2.8.3 Selection
Procure right people at right time
is one of objective of HRM. Selecting the most suitable candidate is the next
step after recruitment process has been carried out. Traditionally candidate
visited to the organization, to an assessment centre for an interview. But in
recent years use of advanced technology for selection process which gives many
advantages has increased (Shani & Tesone, 2010). According to Shani &
Tesone (2010), Kwiatkowski (2003), mentioned that some organizations use
telephone interviews and computer-based testing procedures as key methods in
selection processes while other organizations are using more sophisticated
technological platforms are available today to assist in employee selection. As
mentioned by Targowski and Deshpande (2001), resumes sent through the internet
and by e-mail scan and sort out applicants who have required knowledge, skills,
competence, and experience. Further this reduces manual process and possible
errors.
2.8.4 Performance Management
It is the responsibility of maintaining
a performance appraisal at a certain standard where it ensures the performances
of the employees are met with expectations of the organization (Shani &
Tesone, 2010). According to Shani & Tesone (2010), Miller (2003), mentioned
in the latest technological developments in the field performance appraisal are
Computer Performance Monitoring (CPM) and on-line evaluation of employees and
the CPM is considered as the most prominent method. Every employee’s individual
development objectives are outlined in HRIS applications (Beulen, 2009).
Managers trust on HRIS and its capabilities to provide first class data
collection & analysis exclusively for performance appraisal and performance
management (Ankrah & Sokro, 2012).
According to Shani & Tesone
(2010), Miller (2003), stated the latest technological developments in the
field of performance appraisal are Computer Performance Monitoring (CPM) and
on-line evaluation of employees and the CPM is considered as the most prominent
method. Advantages of CPM can be identified as follows.
§
No physical presence of
supervisors is required to provide detailed feedback to the employees
§
CPM greatly expands the amount
and frequency of feedback provided to the employees
§
CPM can improve perception and
sense of control and fairness among employees, as it evaluates on the basis of
objective standards, rather than the subjective assessment of managers
(Shani &
Tesone, 2010, p.42)
2.8.5 Human Resource Planning
Human resource planning is an
important aspect and it allows the company to assign employees to work in a
manner that facilitate their development and use of HRIS to perform HRP helps
managers to do their work decisively (Beulen, 2009). An HRIS may also be taken
as a planning tool in finding labour force needs such as supply and demand,
human requirements, and future employee forecasts (Ngoc et al., 2012).
Research evidences show multiple
factors characterized by HRIS, which affect to the effectiveness of HRM. Recent
studies used concepts such as innovation implementation, learning, change
management, Diffusion of Innovation theory and the Technology Acceptance Model
to identify factors which determine the adoption to systems (Ruel et al.,
2006). Diffusion of Innovation theory identified compatibility, relative
advantage, complexity, trialability and observability as characteristics that
influence adoption to systems (Kassim et al., 2012). Ruel et al. (2006)
mentioned that the use of Technology Acceptance Model into e-HRM studies has
resulted in the idea that the use of e-HRM by the employees is largely
determined by the job relevance of the information technology, ease of use and
quality of information generated. Characteristics presented by above mentioned
models can be identified as factors of human resource information systems which
affect to the effectiveness of HRM. Technology Acceptance Model has been the
only one which has captured the most attention of the information system users
(Chuttur, 2009). Usefulness and ease of use are always primary determinants of
adoption in information system in organizations (Hosnavi & Ramezan, 2010).
2.9.1 Job relevance & HRIS
Job relevance is the extent to
which an individual believes that using a particular system would enhance his
or her job performance (Davis, 1980). People’s tendency to use or not to use
information systems depend on the support given by system to make their work
easier (Chuttur, 2009). According to Bonderouk & Ruel (2005) job relevance
is the extent to user finds that using HRIS application is critical for their
work. Further they mentioned that job relevance consist two dimensions called
increase of efficiency and increase of productivity. There is a high
correlation between job relevance and system usage (Chuttur, 2009). Job relevance
did not have a significant impact on effectiveness of HRM whether it has shown
to be important determinants of HRIS (Ruel et al., 2006). Further they
mentioned that users do not link job relevance of e-HRM application for their
job.
2.9.2 Ease of Use & HRIS
Ease of use is the extent to which
an individual believes that using a particular system would be free of physical
and mental effort (Davis, 1980). The effort required to use a system can
directly affect to the system usage behaviour (Chuttur, 2009). According to
Bonderouk & Ruel (2005) ease of use is the extent to which a user finds
that HRIS application as uncomplicated when deal with it. Design features of a
system directly influence job relevance and ease of use (Davis, 1980).
According to Ruel et al. 2006 ease of use did not have a significant impact on
effectiveness of HRM. Further, they believed that job relevance & ease of
use aspects are necessary preconditions to implement new system but are not
associated with improving HRM effectiveness through e-HRM application.
2.9.3 Quality of Information
Generated & HRIS
Quality of information generated is
the degree to which an individual believes that using a particular system would
match with job goals (Chuttur, 2009).
And it is the extent which users of
HRIS application finds that application as well designed and well set up in its
content (Bonderouk & Ruel, 2005). Quality of information generated through
e-HRM applications has a significant impact on both technical and strategic HRM
effectiveness (Ruel et al., 2006).
2.10 HRIS & HRM
Effectiveness
HRM effectiveness is the values of
what HR practitioners do for the organization and how HRM practices are linked
to organizational outcomes (Huselid, 1995). The perceived quality of services
provided by the integrated HR system plays a significant role in the perceived
effectiveness of the HR system (Pratheepan & Arulrajah, 2012).
As per Ruel et al. (2006) HRM
effectiveness can be mentioned as strive to demonstrate the value of what HR
professional do for the rest of the organization, and how HRM practices are
linked to desired organizational outcomes. Further, they have mentioned that,
there are no clear evidences to answer the question as to whether e-HRM
contributes to HRM effectiveness.
Human resource management is
strategic and coherent approach to management of organizations most valued
assert, i.e. people working there who individually and collectively contribute
to the organizational success (Mujeeb, 2012). Therefore, effectiveness of HRM
is largely affected to the achieving organizational objectives. Therefore,
organizations are becoming reliant on HRIS to increase the effectiveness of HRM
(Ball, 2001; Lippert and Swiercz, 2005, cited Troshani et al., 2011). There is
a rising interest in moving towards technology based HRM practices from
traditional methods (Tansley, et al., 2001).
Integrated HRIS offer the potential
for the flexible and imaginative use of stored personal data on employees can
potentially be used much more flexibly to transform the way people are managed
within organizations and to transform the role of HR department (Tansley et
al., 2001). High Performance Work Systems positively related to turnover,
accounting profits and a firms market value (Ruel et al., 2006).
Strategic human resource management
researches have mostly used financial measures of performance in order to
assess the effectiveness of human resource management HR practices (Colakoglu,
Lepak & Hong, 2006). Some studies focus solely on financial numbers like
return on investment, assets or equity while others focus on the balanced score
card to gather other data as well as customer and employee indications
(Maatman, 2006).
Maatman, (2006) presented the
following three levels about effectiveness of the HR system:
§
At the highest level there
should be an integration of the HR strategy with the organisation’s business
strategy.
§
At the policy level there
should be consistency of focus, although more research is perceived necessary.
§
At the process level it is
important how different activities are performed.
Huselid, Jackson & Schuler
(1997) introduced HRM effectiveness as a combination of two concepts of
technical & strategic effectiveness. Further they explained that technical
HRM as traditional HRM activities and strategic HRM activities as innovations
done by HR department. Further, they defined strategic effectiveness as
employees’ perception of how well the HRM function promotes the employees’
behaviours that support organizational needs and technical effectiveness as the
employees’ perception of how well the HRM function performs operational HR
activities.
Technical HRM effectiveness are the
more traditional and more common HRM functions in the majority of firms while
the strategic HRM effectiveness comprise of newer concepts and practices, and
they are likely to be less common in firms (Chew & Sharma, 2005). Further,
they mentioned that HRM effectiveness would be the competitive advantage for
the company as it plays a major and pivotal role in deciding firm performance.
Moreover, strategic effectiveness functions are unique and more difficult to be
replicated by other companies. In addition, strategic HRM effectiveness has a
positive relationship with financial performance.
However, if a firm’s technical HRM
effectiveness is low, they may not have the foundation needed to successfully
implement strategic HRM activities. As such, firms need to ensure that their
technical HRM effectiveness is of a certain standard before developing
strategic HRM effectiveness (Chew & Sharma, 2005).
With the increased importance of
HR, HRM is becoming a more outstanding role in the strategic decision-making in
organizations (Markova, 2012). The previous research on strategic HRM
emphasizes the fit between HR practices and the firm’s strategy (Markova,
2012). Further they mentioned that HR practices relate to firm’s strategy
across routine activities.
Research Methodology
3.1
Introduction
In this
chapter, researcher attempts to conceptualize the research study on the basis
of selected variables from the literature review. The purpose of this chapter
is to develop and present a conceptual framework on impact of human resource
information systems (HRIS) to the effectiveness of human resource management
(HRM). It will also explain the definitions of variables and operationalization
which have linked to the conceptual framework.
3.2
Conceptual Framework
Following model (Figure 3.1) has been
developed based on the empirical findings and theoretical explanations on
impact of human resource information systems (HRIS) to the effectiveness of
human resource management. Job relevance, ease of use and quality of
information generated were identified as the major factors of HRIS which affect
to the effectiveness of HRM.
Impact of HRIS (Independent
Variables)
Job Relevance
Ease of Use
Quality of Information
Generated
HRM Effectiveness (Dependent Variable)
3.3
Hypotheses of the Study
Since this paper mainly focuses on assessing
the impact of HRIS to the effectiveness of HRM in insurance industry in Sri
Lanka, it is necessary to provide a conceptual model of the study. Therefore,
based on the conceptual framework following hypotheses have been developed.
This research tests four hypotheses in order
to achieve the research objectives.
Hypothesis 1
H0: There is no significant relationship
between job relevance and HRM effectiveness.
H1: There is a significant relationship
between job relevance and HRM effectiveness.
Hypothesis 2
H0: There is no significant relationship
between ease of use and effectiveness of HRM.
H1: There is a significant relationship
between ease of use and effectiveness of HRM.
Hypothesis 3
H0: There is no significant relationship
between quality of information generated and effectiveness of HRM.
H1: There is a significant relationship
between quality of information generated and effectiveness of HRM.
3.4
Population and Sample Selection
Twenty six insurance companies were
registered under the Companies Act, No. 7 of 2007 and registered as insurers.
Therefore, population will be more than 400 managerial & executive level
employees in HR departments in insurance industry in Sri Lanka. But sample
refers to subset of the population (Sekaran and Bougie, 2011). Therefore, some number
of managerial & executive level employees from the above population has to
be selected as sample of this study. In this study managerial & executive
level employees in HR departments in Sri Lanka Insurance Corporation,
Janashakthi Insurance PLC, AIA Insurance Lanka PLC, Ceylinco Insurance PLC,
MBSL Insurance Company Ltd, and Union Assurance PLC in Sri Lanka have been
selected. According to the nature of this research it is advisable to use
convenience sampling method as it is efficient and quick method to gather data.
The selected sample was 90 managerial & executive level employees in HR departments
in Sri Lanka Insurance Corporation, Janashakthi Insurance PLC, AIA Insurance
Lanka PLC, Ceylinco Insurance PLC, MBSL Insurance Company Ltd, and Union
Assurance PLC in Sri Lanka.
Also, this sample was consisted of both male
and female employees in different percentage.
3.5
Operationalization of the Variables
|
Variable |
Dimensions |
Definitions for this research study |
No of Questions |
Measurement |
Source |
|
Job Relevance |
Work
More Quickly |
Ability of reduce time to perform activities of HRM department
by using HRIS which taken higher time if it is done manually |
1 |
5 point Likert Scale |
Davis (1986) |
|
Job Performance |
Extent
to which the use of HRIS application affects to perform job related duties |
4 |
|||
|
Increase Productivity |
Extent
to HRIS application affect to do more work to particular employee than
otherwise would be possible |
1 |
|||
|
Increase Effectiveness |
Capability
of produce desired outcome at expected time |
2 |
|||
|
Ease of Use |
Easy to Learn |
Extent of easy to understand the features attached to system |
3 |
5 point Likert Scale |
Davis (1986) |
|
Skill Level Needed |
Extent
of needed skill level to perform tasks using HRIS |
1 |
|||
|
Easy to Become Skillful |
Extent
of uncomplicatedness of the system to be skillful with the features of HRIS |
2 |
|||
|
User Friendliness |
User
friendliness is the supportiveness of the system to understand the features
of HRIS |
2 |
|||
|
Controllable |
This
is the ability of system to behave in expected ways without producing
unexpected results |
2 |
|||
|
Flexible |
Flexibility
of features attached with the system |
1 |
|||
|
Quality of
Information Generated |
Timeliness |
Extent of producing outputs which are timely update |
1 |
5 point Likert Scale |
Davis (1986) |
|
Accuracy |
Extent
of producing accurate outputs which can be used for decision making |
3 |
|||
|
Validity |
Extent
of producing valid outputs which can be used for decision making |
1 |
|||
|
Reliability |
Extent
of producing reliable output through HRIS |
2 |
|||
|
Technical HRM
Effectiveness |
Staffing |
Extent of human resource planning, recruitment, and
selection through HRIS affect to the effectiveness HRM practices |
7 |
5 point Likert Scale |
Ruel et al (2006) |
|
Training & Development |
Extent
of T & D practices through HRIS affect to the effective of HRM of the
organization |
4 |
|||
|
Performance Evaluation |
Extent
of Performance management practices through an HRIS affect to the
effectiveness of HRM practices of the organization |
4 |
|||
|
Internal Communication |
Extent
to HRIS supports for communication purposes of the organization |
2 |
|||
|
Strategic HRM
Effectiveness |
Strategic Partner |
Extent of designing HR practices through HRIS as that align
with business strategy |
5 |
5 point Likert Scale |
Ruel et al (2006) |
|
Helping to develop business
strategies |
Extent to output of HRIS can be used for developing business strategies |
3 |
|||
|
Management
Development |
Extent of providing opportunities for managers to become more efficient |
1 |
Table 1 - Operationalization of the Variables
Chapter 04
Conclusion
Use
of Human Resource Information System (HRIS) has become essential function for
any entity who practices HRM techniques. Companies use multi facilitated
systems from basics to advanced systems subject to its financial strength.
However, the perceived benefits are higher than the material cost incurred with
these systems.
Primary
objective of purchasing HRIS is to enhance effectiveness of Human Resource
Management which transfers time consuming manual works in to two or three
clicks in the system. All of Human Resource Functions has been laid to a one
system which requires only slight manual interactions.
Use
of HRIS has been remarkably increased even within the Sri Lanka. This has been
spread to even to a small entities from high end companies. However, available
literature on subject is very limited as only few researches had been carried
out within Sri Lanka.
Insurance
industry in Sri Lanka is very successful in implementation of HRIS as all
industry players have been used to practice HRIS at present. Thus, output of
this research will enrich the existing literature and will be influential to
spread the adaptation of HRIS throughout other industries.
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