Leveraging HR Technology for Competitive Advantage

SHRM Foundation Executive Brieﬁng

Leveraging HR Technology

for Competitive Advantage

Richard D. Johnson, Ph.D. and Hal G. Gueutal, Ph.D.

Sponsored by ADP

Effective management of a ﬁrm’s human resources is a key source of competitive advantage

for organizations. Increasingly, the delivery, support and management of HR all depend on

technology—speciﬁcally, human resource information systems (HRIS).

Research shows that implementing HRIS can enhance a company’s long-term productivity

and proﬁtability. And HRIS are not only increasing efﬁciency, they are also transforming

the HR function. To help business leaders understand and manage these changes, this

executive brieﬁng highlights ﬁve keys to leveraging HR technology, an overview of

challenges to be managed and a list of ﬁve trends to watch.

SHRM Foundation Executive Brieﬁng

Five Keys to Leveraging

HRIS Technology

Today’s HR technology is moving rapidly to web-

based systems to deliver data and services such

as employee self-service (ESS), online recruiting,

web-based training, online applicant testing and

online beneﬁts management. Many organizations

now support HR portals, which provide one point

of contact for a range of HR services. To better

leverage this technology, leaders must focus on

the underlying HR processes supported by HRIS.

Keys to pairing powerful technology with solid

HR processes include the following:

1. Use new technology as an

opportunity to change HR.

When

new or improved functionality is added to an

HR system, it is an opportunity to reexamine

the way a process is done. For example, HR

workﬂow technology can reduce the cycle

time of processes and streamline decision-

making. Fewer people in the loop usually

means greater efﬁciency and lowered cost

per transaction. Very often, processes built

into HR vendor offerings are more efﬁcient

than an organization’s existing HR processes.

Although it may be tempting to view

technology as the solution to an organization’s

problems, most ﬁrms will see more

productivity and proﬁtability gains by seizing

the opportunity to improve HR processes.

2. Make employees self-reliant for

HR services.

Organizations using HRIS

to delegate HR transactions and data

maintenance to employees will outperform

those using these systems solely as an HR

compliance or reporting tool. Employees have

become data consumers in their non-work lives

and want that same level of access and control

in their work lives. Giving employees access to

their information increases the transparency

of HR processes and helps employees

better understand the role HR plays in the

organization. Increasing employees’ perception

of control over their information can also

lead to an increased sense of fairness and job

satisfaction.

Three Strategies for Adopting HR Technology

Strategy Approach Sample Vendors

1. Integrated system from a single vendor. Addresses multiple areas such as

administration, talent acquisition, talent

management and workforce planning.

PeopleSoft

Lawson

2. “Best of breed” approach. The best applications in each area are

selected from multiple vendor offerings.

Multiple

3. Outsource HR technology

infrastructure to a third-party vendor.

Vendor maintains both the employee database

and the applications drawing data from it.

ADP

Leveraging HR Technology for Competitive Advantage

3. Communicate with employees when

monitoring performance.

Computer-

based performance monitoring can be

a valuable component of a performance

management system, but it is important

to inform employees about the aspects of

performance being monitored and the reasons

they are being monitored. Research has

shown that communicating with employees

in this way leads to increased acceptance of

monitoring and to improved performance.

4. Use more data to get more answers.

The implementation of HRIS lets HR answer

new questions with newly available data.

Forward-looking organizations can use these

data to ask and answer basic questions like:

“What information on job applications predicts

long-term performance and retention?” HR

managers commonly report that one of the

most dramatic effects of third-generation HR

systems is the ability to analyze HR data and

respond quickly and accurately to questions

from the C-suite.

5. Pay attention to appearance and

functionality.

Web design has evolved into

an art form, and users’ expectations are very

high. We expect web sites to be intuitive and

work in a logical ﬂow. Unfortunately, not many

HR professionals have experience in design

and user interfaces. When moving to online

HR services, it is important to carefully test

and evaluate ease of use and functionality of

the HR portal or ESS application. Employees

will form a revised opinion of HR based on

their experiences with the web site. Remember,

for many employees, the HR web site is

HR. A sophisticated, well-designed site will

communicate a sophisticated and well-run

HR team, while a site that is cumbersome

or difﬁcult to use could detract from the

department’s image.

HR Technology:

Managing the Challenges

HR technology can increase productivity, sales

and proﬁtability; however, there are potential

challenges that could have legal, ethical and

ﬁnancial implications for the ﬁrm if not managed

correctly.

New skills and roles for HR staff. With

the implementation of HR services online, the

roles of HR professionals are changing. In smaller

organizations, the HR generalist will need to

increase technical skills and vendor relationship

skills as his or her responsibility increases for

managing the HR information system and

the growth in services it supports. In larger

organizations, the HR staff will focus on more

complex HR policy decisions and exceptions,

many of which may have ﬁnancial implications for

the organization. Managers need to remember

that an HR information system performs well

on routine tasks, but cannot handle complex

or sensitive employee issues, such as threats to

employee safety. The level of education and

experience required for success in HR careers will

increase, and HR professionals will increasingly

be divided into two groups: the content experts,

who work with the HR system and provide

SHRM Foundation Executive Brieﬁng

the company-speciﬁc knowledge base for that

system, and the HR generalists, who focus on

organizational effectiveness and one-on-one

coaching with managers. This points to a future

with fewer but more highly skilled and educated

HR professionals.

Increasing expectations and demand

for data.

Employees continue to expect more

data and more accessibility than ever before. As

employees are able to manage more personal data

and use the systems to answer questions and make

decisions, they will begin to ask new questions

and seek broader information. Consider the

following training example: An organization may

choose to post training schedules online. Once

this basic information is provided, employees may

ask for the opportunity to review their current

training needs and register for the new class

online. Next, the employees may expect that

the results of training are immediately posted

to the system so that they can be included in

an upcoming performance evaluation. Finally,

employees may come to expect course resources

to be available online and eventually expect on-

demand, web-based training to support their

learning needs.

HR distance and isolation. The

implementation of an HRIS can dramatically

affect the relationship between HR staff and

employees. Employees used to working with

an HR professional face to face may ﬁnd it

challenging to use the computer to complete tasks

or answer questions. They may miss the “high-

touch” feeling of working with HR staff. As more

HR content is made available online and more

basic administration is pushed to employees to

manage, the need for personal contact between

HR staff and employees is reduced. This increased

distance can make it more difﬁcult for effective

communication to occur and can weaken the

relationship between HR and employees. HR

executives should consider the impact of this

“distancing” and take measures to mitigate it.

Faster may not mean better. HRIS

will reduce time and cost per transaction. In

addition, HR staff and line employees will have

access to a growing volume of data to support

E-Recruiting: What Research Tells Us

Web-based recruiting increases applicant volume but not applicant quality. To reduce

the number of poor-ﬁt applicants, customize the display of information so that candidates

see the information most relevant to them ﬁrst. Make job requirements clear and provide

examples of “best ﬁt” applicants. Recruiting is a marketing task. Try using multimedia

presentations and videos and learn from large retailers how to direct customized

information to speciﬁc groups of customers.

Leveraging HR Technology for Competitive Advantage

decision-making. Although the goal is more

effective decision-making, a typical result is that

decision quality does not improve measurably,

though time-to-decision is reduced. Another

unanticipated impact of the increased use of HR

technology in decision-making is that the logic

behind the decision can become less transparent.

Organizations need to ensure that process and

policies embedded in ESS and managerial self-

service (MSS) applications are clearly explained to

the employees they affect.

Adverse impact. Research has shown

that individuals from lower socio-economic

backgrounds have less computer experience and

less access to computers in their communities.

Thus, there is a risk that minorities will be less

represented in applicant pools than they are when

using traditional recruiting channels. In addition,

since the marginal cost for submitting online

applications is so low, multiple applications from

a single unqualiﬁed individual—from either a

majority or minority group—have the potential

to either mask or create the mistaken appearance

of adverse impact. Organizations must effectively

manage their talent acquisition processes to

accurately assess the potential of adverse impact

and to encourage applications through a variety

of channels.

Five Trends to Watch

HR technology has already been instrumental

in transforming the ﬁeld of HR, and changes on

the horizon have the potential for an even greater

impact in the future. Some of the most important

tech trends to follow are listed below.

1. Growth of social networking. One

of the next challenges for HR executives

is learning to integrate information from

social networking sites. Potential beneﬁts

exist alongside problems of privacy and data

accuracy. Challenges are evolving as new

legislation and applications develop. German

politicians have already proposed to outlaw

the use of social networking information in

employment decision-making.

E-Learning: What Research Tells Us

Trainees who interact with peers during training will outperform those who do not,

and will be more likely to re-enroll in future courses. Design training programs that

encourage employees to participate together. For example, supplement e-Learning

programs with face-to-face modules. Keep trainees engaged in learning through

techniques such as web-based games and interactive multimedia.

SHRM Foundation Executive Brieﬁng

2. Expansion of compliance and

reporting requirements.

Organizations

will increasingly need to adapt their HRIS

in order to remain compliant with state and

federal requirements. Pending changes in tax

codes, ﬁnancial reports, EEO compliance

and health care all suggest that compliance

and reporting demands will increase. For

example, the new Patient Protection and

Affordable Care Act will signiﬁcantly increase

the amount of corporate reporting required by

the federal government. It is hard to imagine

organizations without strong HRIS effectively

navigating this new environment.

3. More renting, less buying of services.

The use of hosted approaches, in which

organizations rent services and software from

vendors, is booming. The growth of the

Internet and web-based systems has enabled

organizations to consider approaches such as

cloud computing and software-as-a-service

(SaaS). Such approaches can provide beneﬁts,

especially for smaller organizations that would

like to access the capabilities of complex HR

systems but are unable to afford a large system.

Cloud computing and SaaS are likely to

grow in market share and will provide added

ﬂexibility to organizations’ HRIS strategies.

4. Greater use of business intelligence

(BI) and dashboards.

One of the key

challenges for HR professionals is how to

turn HR data into a form that managers

can use to measure HR’s contributions to

organizational proﬁtability. To address this

problem, organizations will begin to use more

sophisticated BI applications to analyze the

large amount of data available through HRIS.

HR dashboards, which present high-level, real-

time, graphically formatted data to managers,

will become an integral part of the human

capital management. In addition, ﬁrms will

adopt more sophisticated web-based workforce

analytic tools and will push data farther out to

managers. This will enable managers to use the

organization’s personnel policies and practices

to make better employee-related decisions.

5. Increasing HR data transparency,

increasing privacy concerns.

As noted

above, HRIS can make increasing amounts of

HR data more accessible to employees, along

with more transparent policies and procedures.

But with greater transparency come greater

concerns about privacy. News reports of data

compromises and identity theft surface almost

daily, and few entities manage more personal

information than employers. As employers

make data easier to access, risks of jeopardizing

employees’ privacy increase. Managing this

risk is becoming even more complex as HR

applications often link to systems outside the

organization (e.g., beneﬁts vendors, online job

search sites, distance learning providers, etc.).

Leveraging HR Technology for Competitive Advantage

About the Authors

Hal G. Gueutal is a co-author of The Brave New World of eHR: Human Resources in

the Digital Age. An associate professor of management at the University at Albany, he

serves as director of the MBA concentration in eHR. He has consulted with a wide range

of organizations on HR technology issues as well as business and HR strategy, and his

research focuses on eHR trends and success factors.

Richard D. Johnson is an assistant professor in the School of Business at the University

at Albany. He teaches courses in human resource information systems, and his research

interests include HRIS, e-learning, psychological and sociological impacts of technology,

psychology and computer use, motivation, and the digital divide.

Conclusion

Human resource information systems have dramatically altered how HR services

are delivered and managed by organizations. Used effectively, these systems make

the HR function more efﬁcient, better informed and better able to accurately

communicate how it adds value to the organization. However, to reap the

full beneﬁts of implementation, HR executives must combine the best of HR

technology with effective HR management processes, and they must be ready to

manage the challenges created.

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