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 Introduction. 1

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 Literature Review.. 7

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. Research Methodology. 22

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

Conclusion. 28

References. 29

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.”

1.3 Objectives of the Study

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.

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).

2.9 Determinants of Adoption to HRIS

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).

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.

Chapter 03

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

Figure 3.1: The Conceptual Framework

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.

List of References

Beadles, N., Lowery C. M., and Johns, K. (2005) ‘The impact of human resource information systems: an exploratory study in the public sector Communication of the IIMA’, pp. 39-46.

Bernardin, H. J. (2007) ‘Human Resource Management: An experimental approach. Journal of Management’, pp. 120-135.

Caliskan, E. N. (2010) ‘The impact of Strategic Human Resource Management on Organizational performance’, pp. 100-116.

Dharmasiri, S., and Fernando, S. (2012) ‘HRIS in Sri Lanka. Paper presented at the ICBM, Colombo’.

Hosnavi R., and Ramezan, M. (2010) ‘Measuring the effectiveness of a human resource information systems in National Iranian Oil Company: An Empirical Assessment. Education, Business and Society., pp. 28-39.

Huselid, M. A. (1995) ‘The impact of human resource management practices on turnover, productivity, and corporate financial performance’, pp. 635-672.

Kassim, N. M., Ramayah, T., and Kurnia S. (2012) ‘Antecedents and outcomes of human resource information systems (HRIS) use. International Journal of Productivity and Performance Management’.

Mujeeb, L. M. (2012) ‘Importance of Best Human Resource Practices and the need for a Human Resource Information Systems (HRIS) for the Public Health Sector in Sri Lanka’, pp. 55-62.

Ngai, E. W. T., and Wat, F. K. T. (2006) ‘Human resource information systems: a review and empirical analysis’, pp. 297-314.

Pratheepan, S., and Arulrajah, A. A. (2012) ‘Application of Electronic Human Resource Management (E-HRM) Practices and its Effectiveness in Selected Private Banks in Sri Lanka: An Exploration’.

Ruel, H. J. M., Bondarouk, T. V., and Velde, M. V. D. (2007) ‘The Contribution of e-HRM to HRM effectiveness: Results from a quantitative study in a Dutch Ministry’, pp. 280-290.

Siriwardene, A. S., and Dharmasiri, A. S. (2012) ‘Factors Impeding Effective Use of HRIS in Local Banks of Sri Lanka’.

Strohmeier, S., and Kabst, R. (2009) ‘Organizational adoption of e-HRM in Europe: An empirical exploration of major adoption factors’, pp. 482-501.

Tansley, C., Newell, S., and Williams, H. (2001) ‘Effecting HRM-style practices through an integrated human resource information system: An e-greenfield site?’, pp. 351-370.

Tansley, C., and Watson, T. (2000) ‘Strategic exchange in the development of Human Resource Information Systems (HRIS)’, pp. 108-122.

Troshani, I., Jerram, C., and Hill, S. R. (2011) ‘Exploring the public sector adoption of HRIS’, pp. 470-488.

Wright, P. M., McMaham, G. C., Snell, S. A., and Gerthert, B. (2001) ‘Comparing line and HR executives’ perceptions of HR effectiveness: services, roles, and contributions’, pp. 111-122.

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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

List of Figures

Figure 3.1 The conceptual framework………………………………………………….23

List of Table

Chapter 01

Chapter 02

Literature Review

Table 1 - Operationalization of the Variables

Chapter 04

Conclusion

List of References

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