You are on page 1of 29

Making HR Technology

Decisions

Making HR Technology
Decisions
A Strategic Perspective
Janet H. Marler
Sandra L. Fisher

Making HR Technology Decisions: A Strategic Perspective


Copyright @ Business Expert Press, LLC, 2017
All rights reserved. No part of this publication may be reproduced,
stored in a retrieval system, or transmitted in any form or by any
meanselectronic, mechanical, photocopy, recording, or any other
except for brief quotations, not to exceed 250 words, without the
prior permission of the publisher.
First published in 2017 by
Business Expert Press, LLC
222 East 46th Street, New York, NY 10017
www.businessexpertpress.com
ISBN: 978-1-60649-814-9 (paperback)
ISBN: 978-1-60649-815-6 (e-book)
Business Expert Press Human Resource Management
and Organizational Behavior Collection
Collection ISSN: 1946-5637 (print)
Collection ISSN: 1946-5645 (electronic)
Cover and interior design by S4Carlisle Publishing Services
Private Ltd., Chennai, India
First edition: 2017
10987654321
Printed in the United States of America.

Abstract
This book examines how companies can use HR technology to extract
value and potentially gain competitive advantage in a global marketplace.
When HR technology was originally introduced, it was fairly easy for
companies to see how using this technology could help them perform
better than other companies. However, now that HR technology is so
widespread, this distinctive value proposition is less clear. The goal of this
book is to help HR managers and decision makers recognize where there
is opportunity to capture value from HR technology, learn how to demonstrate that value, and navigate the many strategic decisions that must
be made when choosing to implement an HR technology. We address
topics such as how HR technology may deliver strategic value; whether
to outsource HR processes, HR technology, and implementation project
management; training and change management; how to measure value
through conducting ROI analyses and using HR analytics; and, finally,
how to evaluate and manage future HR technology innovations.
We recognize that the landscape of HR technology solutions is
constantly changing, and we had that in mind as we wrote this book.
We do not focus on detailed technical reviews of specific HR software
functionality or specific products or vendors. Instead, our approach is
to introduce theoretical frameworks from various fields of management
science to serve as a guide for decision making about HR technology.
These theoretical approaches provide a scientific basis and structure to
analyzing business challenges and increase the likelihood of making better
decisions compared with using intuition or relying on vendor best practices. The theories and frameworks used in this book come from many
different disciplines, including strategic management, economics, accounting, finance, organizational behavior, and information systems. This
breadth helps managers understand the many different ways in which HR
technology decisions can increase value by taking a strategic perspective.

Keywords
e-HRM, HR analytics, HRIS, HR innovation, HR technology, strategic
HRM

Contents
Preface...................................................................................................ix
Chapter 1 Introduction......................................................................1
Chapter 2 The Value Proposition: A Strategic Perspective.................15
Chapter 3 Organizational Boundaries: Insourcing
orOutsourcing Decisions.................................................31
Chapter 4 Training and Change Management..................................57
Chapter 5 Measuring Value Creation................................................83
Chapter 6 Innovation: The Next Big Thing.....................................113
Index..................................................................................................135

Preface
The use of information technology in the practice of human resource management (HRM) has come a long way in a relatively short period of time.
It wasnt long ago that each employee had a fat, paper personnel file that
included all documentation about the employment relationship, from the
initial written cover letter and rsum to the offer letter, documentation of
performance reviews, raises given, and promotions awarded. The primary
role of the HR professional in an organization was to manage the quality of
the information by meeting with employees and managers to get updates
on the information and giving information out as needed. How things
have changed over the years! Most organizations now maintain all of their
HRM information in databases available to employees and managers, at
any time from any place. Employees update their own information and
search for information about available promotions, benefits, or retirement
options from databases managed either internally or by an outsourced provider. Managers and HR professionals have access to more data than they
know what to do with, and sometimes struggle to use these data to make
good decisions about the human capital within the organization.
Many writers, researchers, and organizations seem to recognize that
all of these advances in technology provide potential for strategic value.
As we have conducted research in the area of human resource information systems (HRIS, also known as e-HRM) over the past 10 years, we
have also been attracted to the idea of e-HRM providing strategic value
for companies. And when e-HRM was in its infancy, it was fairly easy for
the early adopters of the technology to claim such value. It was hard work
in the early days of e-HRM to implement such a system, requiring years
of analysis, data cleaning, and business process reengineering to get everything in place. But once it was up and running, managers could access
data about all of their employees, track performance over time, and make
more informed decisions about who should be promoted and how much
of a raise employees deserved. HR professionals could more easily track

x PREFACE

applications and new hires, figure out who had been trained and who
needed training, and easily determine who was approaching retirement.
However, as more and more companies gained access to the technology,
the early strategic advantages that could be gained from greater efficiency
and access to HR data faded. Once everyone can get these tools, the comparative advantage gained by the early adopters is no longer there.
We recognize that the landscape of e-HRM vendors and solutions is
constantly changing, and we had that in mind as we wrote this book. The
purpose of this book, therefore, is to help managers recognize where there
is opportunity to capture value from e-HRM technology in a changing
environment and help them navigate the many decisions involved in deciding what human resource information technology to implement into
an organization and how to implement it effectively. Thus, we address
issues of internalizing or externalizing HR processes, using external vendors to support e-HRM systems, training and change management for
e-HRM systems, how to measure value and performance from e-HRM,
and how to manage innovation in this space.
Writing a book such as this is a process that requires support from
a wide network of people. The ideas in this book are based on a large
research literature on e-HRM, strategic management, and innovation, to
name just a few of the topic areas. In particular, we are indebted to the
group of e-HRM researchers who first began meeting in 2006 at the University of Twente in the Netherlands, and then every 2 years thereafter in
France, Germany, the United Kingdom, and the United States for a conference of like-minded scholars from around the world. This community
of researchers has helped us develop and refine our ideas over the years.
Any errors in interpretation or accidental omission of related work are our
own, and we apologize in advance. We want to acknowledge Stan Gully
and Jean Phillips, earlier editors of the series, who invited us to contribute
a volume, helped us develop ideas for the book, and convinced us (especially Sandy) that we could do it. We thank the people at Business Expert
Press for their guidance through the process and their patience when life
got in the way of our original manuscript deadlines. Most of all, we thank
our spouses and life partners, Bryan Marler and Mike Wasserman, for
their continued love and support.
Janet Marler and Sandy Fisher

CHAPTER 1

Introduction

To achieve great things, two things are needed: a plan, and not quite
enough time.
Leonard Bernstein

The growth in capabilities of information technology (IT) in the past


50 years parallels, and in many ways supported, the growth and sophistication of human resource management (HRM) in companies. As this
amazing trend of revolutionizing technological innovation continues,
HRM professionals in organizations face many exciting opportunities to
enhance the practice of HRM and also many challenges as they ponder
how to engage with an array of IT innovations. A brief history of the past
50 years illustrates clearly both the opportunities and the challenges faced
by HRM professionals in organizations.

Historical Context
In the 1960s, IT and HRM (more often called personnel management
[PM]) were stand-alone specialized functions concerned primarily with
processing standardized transactions correctly and accurately. For PM,
there was limited interaction with other organizational functions such
as sales and marketing, manufacturing, or accounting except on an asneeded basis. Similarly, there was little interaction within areas of PM
specializations such as workforce planning, recruiting and selection, compensation, training, and performance management. In IT, mainframe

MAKING HR TECHNOLOGY DECISIONS

computers processed large transactions such as payroll, purchasing, accounts receivable, billings, and bookkeeping independently and inflexibly. IT capabilities began to change, however, in the 1970s, paving the
way for greater integration between processes. These increasing computing capabilities began with Manufacturing Resource Planning and Management Information Systems (Romero & Vernadat, 2016). As the labels
suggested, these early forerunners of enterprise resource planning (ERP)
systems were primarily located in manufacturing. However, these software
capabilities that included automation of processing transactions as well as
providing increased reporting information to support decision making
eventually spread to other administrative functions such as HRM. The
introduction of the early versions of ERP systems in the 1990s made
possible rudimentary integration of administrative databases in manufacturing, accounting, marketing, and human resources. This integrated
capability interestingly coincided with the growth in strategic management and, soon after, strategic HRM. In the 1990s, the notion of strategic HRM was just taking shape (Kaufman, 2014). Early conceptions
of strategic HRM introduced notions of alignment, both internal and
external. Internal alignment involved aligning or integrating the specialized areas of HRM, which included recruiting, selection, training, performance management, and compensation into reinforcing configurations
of HRM practices. External alignment involved becoming knowledgeable
about the companys business strategy and making sure each specialized
area of HRM supported this strategy. HRM professionals were slow to
embrace these strategic alignment practices (Kaufman, 2010), and early
ERP systems were also not quite up to this task either, despite marketing
rhetoric to the contrary.
Pushed by the increasing evidence supplied by academics using
early versions of data analytics, that having strategic HRM was associated
with better financial performance (e.g., Delery & Doty, 1996; Huselid,
1995), IT vendors promoted their ERP software as enabling HRM to become strategic business partners. This was when major HRM IT vendors
such as PeopleSoft, Oracle, JD Edwards, Lawson, and SAP, first emerged.
One way in which IT vendors claimed HRM could become strategic
was to automate HRM processes so that HRM professionals would have
more time to design strategically aligned HRM practices (Marler, 2009;

Introduction

Marler & Fisher, 2013a; Parry & Tyson, 2011). However, the promises
and expectations associated with adoptions of early ERP systems were
frequently not met as the reality of the limitations of early-stage software
capabilities and the expense associated with implementing on-premise
software systems sank in (Bondarouk & Rul, 2009; Rul, Bondarouk, &
Looise, 2004). These concerns, however, were soon addressed by the next
wave of technological innovation.
In the 2000s, with the increasing diffusion of networking, initially
within company boundaries but with the introduction of communication
protocols that enabled the Internet and the World Wide Web, networking extended outside company boundaries. The widespread diffusion of
Internet-based technology accelerated intra- and interorganizational sharing of data and computing. With the ability to share data and computing
using Internet-based technology came the notion of cloud computing, a
term popularized when Google CEO Eric Schmidt introduced it in 2006
(Daylami, 2015). The National Institute of Standards and Technology defines cloud computing as a model for enabling convenient, on-demand
network access to a shared pool of configurable computing resources (e.g.,
networks, services, storage, applications and services) that can be rapidly
provisioned and released with minimal management effort or service provider interaction (Daylami, 2015, p. 41).
Cloud computing along with business intelligence (BI) software systems touted a new approach that would enable HRM to better manage
talent and human capital. Talent management best practices embedded
in software modules that would augment ERP HRM software could be
acquired quickly and easily through Software as a Service (SaaS). SaaS, a
cloud computingenabled innovation, lowered the cost of implementation
compared with on-premise ERP HRM by outsourcing the software and its
management to the software suppliers. This newer generation of software
also had a new name, talent management applications. Talent management
applications software promised to provide improved and integrated best
practice HRM processes to better support HRM professionals increasing
desire to become strategic business partners, all for a lower implementation price tag. Rather than buy HRM software and hardware, companies
could once again time-share as was done in the 1960s (Daylami, 2015)
and lease their technology solution.

MAKING HR TECHNOLOGY DECISIONS

In the past 10 years, HRM professionals are being challenged to be


both strategic business partners and show their value added. To be truly
strategic, HRM must be able to link HRM processes to business outcomes
such as employee productivity, customer satisfaction, and employee engagement and profitability. To meet this new demand (or perhaps driving this new trend), software vendors are introducing BI that enables
HR metrics, but with a new name, HR analytics (Lawler, Levenson, &
Boudreau, 2004).
Another trend HRM professionals are grappling with in the advent of
cloud computing solutions is the strategic responsibility of protecting the
security of their data and their intellectual capital. Here, HRM is pushing IT for a new wave of innovation by asking, How much of my EIS
must be open to partners or stakeholders while protecting the security of
my data or my intellectual property rights? (Romero & Vernadat, 2016,
p. 9). Finally, other IT trends pushing HRM include the growing use of
mobile computing, social media, and data from the Internet of Things
(IoT). These emerging innovations are sure to influence how HRM is
practiced in the future as the implications for the traditional employment relationship between the sharing economy and intelligent robots
and devices play out.

A Strategic and Scientific Perspective


As this brief historical review suggests, HRM professionals in organizations face opportunities and challenges in deciding when to adopt and
how to adapt to HR IT innovations. Fortunately, there are decision-
making frameworks that HRM professionals can use to make this process
more transparent, reduce uncertainty and improve outcomes. In this volume, our goal is to provide you with new perspectives concerning the
intersection of IT and the practice of strategic HRM. To do this, we take
a strategic perspective, which is a current gap in the literature (Marler &
Fisher, 2013b). We also apply other theoretical frameworks developed by
leading academicians and whose efficacy has been scientifically tested over
the years by management scientists.
Our strategic perspective is based on the premise that companies seek
to achieve competitive advantage in order to maximize shareholder or

Introduction

owner value. Competitive advantage is achieved when there is a greater


difference between what the companys customers are willing to pay for
the companys product/service and what it costs to produce the product/
service compared with rivals. In short, the company creates more value
than do its rivals, which ultimately translates into greater sustained profitability and shareholder/owner returns. We develop this perspective in
greater detail in the next chapter. Given the companys goal to produce
greater value, managers and employees are charged with making decisions
and taking actions that will increase the likelihood of achieving this goal.
We apply this perspective to decisions about adopting and implementing IT innovations that involve the practice of HRM. We start with
the initial strategic decision, whether to adopt a new electronic HRM
(e-HRM) innovation or not. We assume that this decision is largely made
by senior or executive managers, particularly when adoption involves
committing significant organizational resources. We then focus on
operational decisions associated with implementation, which we assume
involve middle-level HRM, IT and financial managers, and ultimately the
end user. Each of these decision makers has different responsibilities and
self-interests, which bear on how decisions are ultimately made. In addition to these various decision makers who we assume have an arguably
overrationalized overriding goal to achieve competitive advantage, we also
acknowledge that IT innovations represent the encoding of the software
developers goals. There is therefore goal conflict that occurs throughout
the adoption and implementation process. This conflict should not be
underestimated. Finally, in our volume, we use major theoretical frameworks to provide scientific approach to analyzing the adoption and implementation decision.

A Scientific Orientation
In our chapters, we introduce theoretical frameworks from various fields
of management science to serve as a guide for decision making. These
frameworks allow us to think about what important factors to consider
when deciding what actions to take. Theoretical frameworks also provide
scientific basis and structure to analyzing business challenges that increase
the likelihood of making better decisions compared to using intuition or

MAKING HR TECHNOLOGY DECISIONS

copying what others are doing without fully understanding why. The theories and frameworks used in this book come from many different disciplines, including strategic management, economics, accounting, finance,
organizational behavior, and information systems. This breadth helps
managers understand the many different ways in which e-HRM affects
an organization.
Given the strategic orientation of this book, it should come as no
surprise that we use three theories from the strategic management literature: the five forces and competitive positioning framework, resourcebased view theory, and competitive dynamic theory. These theories were
developed in the 1980s and 1990s and have been very influential in guiding companies competitive strategies. We use these theories to inform us
about how to think about creating and capturing value with respect to the
adoption and implementation of e-HRM systems within organizations.
Later in the book, we explore the concept of organizational ambidexterity
as it relates to strategic innovation. Firms that are able to both explore and
exploit are ambidextrous and enable them to better survive and thrive in
a rapidly changing external environment.
We also use several theories from the field of economics. Transaction
cost economics (TCE) is a theory first introduced by the Nobel Prize
winner Ronald Coase in his transaction cost-based theory of the firm in
the 1930s but largely ignored until the 1980s. TCE speaks to the factors
organizations should consider when deciding whether to make or buy a
service or product. Transaction costs determine when one or the other
is more favorable. Agency theory addresses the challenge organizations
face when the individual performing the work is not the same individual
who either owns the organization or is responsible for the outcome of the
work. In these situations, there is inherent conflict of interests between
both parties. We apply these two theories to thinking about how whether
to make or buy an e-HRM system, how to structure the organization to
best utilize an e-HRM system, and finally how to consider the conflicts
of interests that inevitably arise when the party who is using the e-HRM
system is different from the party that owns the e-HRM system.
We use several theories and frameworks drawn from different a spects
of the HRM and organizational behavior fields. One is the instructional

Introduction

design model of training, which provides a clear structure on how to approach any kind of training intervention in an organization. This framework guides the development and implementation of training from
beginning to end, and helps ensure that the training for e-HRM enhances the overall value of the system. We also introduce Kotters model
for change management, as getting employees to effectively use a new
e-HRM system often involves more than just teaching them the skills
needed for the new system.
Two other theories we used are often found in the information systems literature but have been used to understand a wide spectrum of
innovation and system adoption issues. Diffusion of innovations (DOI)
theory comes from Everett Rogers decades-long research on how innovations of all kinds spread, and what factors contribute to innovation
adoption or abandonment. The theory, which is documented in Rogers
book, Diffusion of Innovations, represents a seminal contribution to our
understanding of how new ideas, products, and services eventually are
adopted and become commonplace in society. The technology acceptance
model (TAM) focuses on two attributes of systems that are likely to affect their adoption: ease of use and usefulness. The general idea is that
information systems that are easy to use and that help employees get their
jobs done will be more readily accepted in organizations. We employ this
theory to help understand some of the content that should be communicated during the training and change management phases of an e-HRM
implementation project. Both DOI and TAM help us better understand
how to think about the future of e-HRM and how to make decisions in
a context where there are always new ideas and opportunities that may
threaten the status quo.
From the fields of finance and accounting, we use two primary
frameworks. Capital budgeting theory is premised on the existence of a
quantitative algorithm, which maximizes the firms value. There are several different capital budgeting quantitative algorithms that can be used
to evaluate investment decisions, and these are described and illustrated
using a decision about whether to adopt and implement workforce analytics software. The second framework in this area is the balanced scorecard
(BSC) framework, first introduced in the late 1980s by two accounting

MAKING HR TECHNOLOGY DECISIONS

professors. The original purpose of the BSC was to shift decision makers focus on organizations away from purely financial accounting data,
which represented largely historical data, and toward other organizational
data related to operations and customers. A key insight from using this
framework is to understand the difference between leading and lagging
indicators of performance.

Definitions of Concepts
There are a lot of terms used in the area of HRM, and sometimes it is hard
to keep them all straight. Often there are multiple names for essentially
the same concept. This happens when new labels are created for existing
concepts to give a sense of innovation or newness. Unfortunately, this
contributes to miscommunication and confusion. In our book, we try to
minimize the number of terms used. However, because we are often reporting on research conducted by other scientists who use different terms,
we also need to point out concepts that largely overlap but, for various
reasons, have different labels. For example, HR function, HR practices,
HR processes, HR capabilities, and HR activities refer generally to the same
thing and are used interchangeably. They represent the tasks, actions, and
policies that are intended to create HRM outcomes such as a new hire, a
new job, improved knowledge or skill, base pay, individual incentives, a
performance appraisal, a promotion, or a termination. Human resources,
human capital, and talent are also used interchangeably and refer to people with particular knowledge, skills, and abilities who perform tasks or
jobs that contribute to producing the companys product or service. They
can be employees, independent contractors, temporary agency workers,
or contract workers.
With respect to information systems, the terms human resource information systems (HRIS), e-HRM, human resource IT (HRIT), and human
capital management (HCM) ERP module, or HCM Applications are all
used by different writers in the field. We believe these terms have more
in common with each other than differences, and therefore they can be
used interchangeably. At the core of these terms is an underlying concept
of computer hardware, software, and networks used to transmit and receive data and information in support of HRM processes. Compare this

Introduction

general definition with an early definition of HRIS from a textbook by


Kavanagh, Gueutal, and Tannenbaum (1990):
A system used to acquire, store, manipulate, analyze, retrieve,
and distribute information regarding an organizations human
resources. An HRIS is not simply computer hardware and associated HR-related software. Although an HRIS includes hardware
and software, it also includes people, forms, policies, and procedures, and data. (p. 29)
Compare it with a more recent definition of e-HRM proposed by
Marler and Fisher (2013a):
e-HRM consists of configurations of computer hardware, software, and electronic networking resources that enable intended
or actual HRM activities (e.g., policies, practices, and services)
through individual and group-level interactions within and across
organizational boundaries. (p. 21)
The differences between these definitions are small and reflect in some
sense the different time periods in which they were developed. In 1990,
networking was still an emerging innovation, and therefore the notion of
interactions within and across organizational boundaries was not in the
definition. In 2016, with the advent of the IoT, the e-HRM definition
could be updated to include objects and things in addition to organizations. Nevertheless, the common themes are the intersection of IT as a
physical entity (hardware) with intangible entities that include software,
data, information, and knowledge along with the social environment that
includes people and groups all related to or in service of HRM processes.
Consequently, in this volume, we consider these terms interchangeable,
but for consistency we will most frequently use the term e-HRM.
In addition to multiple terms for the information systems, there are
multiple terms for electronic networking that include the Internet, the
Cloud, and the World Wide Web. These terms are generally attached to
the word based, where the IT is cloud based, web based, or Internet based.
We believe these terms are largely interchangeable and denote that the

10

MAKING HR TECHNOLOGY DECISIONS

technology in question is connected to a large network of individuals and


organizations that is outside an organizational boundary.
Finally, we use the term organization, company, and firm interchangeably throughout this book. The term organization has many definitions.
In the academic literature, these definitions vary depending on the underlying theoretical perspective taken (Scott, 1998); however, it is arguably the most general term of the three terms we use interchangeably. We
define organizations as collectivities oriented to the pursuit of relatively
specific goals and exhibiting relatively highly formalized social structures
(Scott, 1998, p. 26). This definition allows an organization to consist
of two or more individuals on one end of a spectrum, on the one hand,
and on the other hand at the other end of the spectrum to consist of a
consortium of public and private entities, such as the State University of
New York that consists of over 64 colleges and universities located in New
York State.

Overview of the Book


Chapter 2 begins with defining value, a key concept, and goal in strategic management. The chapter then introduces three different theoretical
frameworks drawn from the strategic management literature to evaluate
how an e-HRM innovation might add value by contributing to a companys competitive advantage. Drawing from Porters model of competitive
strategy first introduced in the 1980s, a company must do things differently from its rivals to achieve competitive advantage. A company must
either provide greater value or operate at lower cost compared to their
rivals. To support achieving competitive advantage, therefore, e-HRM
should enable HRM activities that align with or support the companys
business strategy. A second theoretical framework known as the ResourceBased View, introduced in the mid-1990s, focuses on building value and
competitive advantage through focusing on internal tangible and intangible resources and capabilities or competencies. To create competitive
advantage, a company must have resources and capabilities that produce
value, are rare, are not easily imitated, or are not easily substituted. Given
this framework, e-HRM must enable HRM capabilities that produce
productive and not easily copied human capital. Also emerging in the

Introduction

11

mid-1990s is the third strategic framework that has roots in evolutionary economics. A key feature of this framework is the consideration of a
constantly changing external environment, which means companies constantly have to adapt or become extinct; moreover, adaptation can result
in multiple and successful variations. There is no one best way. e-HRM
contributes to organizational value by supporting the companys ability to
be agile and adapt to changing circumstances.
Chapter 3 opens by noting that after an e-HRM solution is adopted
it is rarely implemented without help from those external to the company. Organizations rely on others outside the organizations, such as
software companies, consulting companies, and individual contractors,
to develop innovative new software, sometimes customize that software
for their operations, implement the software, train employees how to use
it, and provide upgrades and postimplementation support. The chapter
therefore discusses a variety of issues related to choices of doing the work
internally versus using external vendors for implementation of e-HRM
solutions and delivering HR services. Drawing on key concepts and scientific findings related to TCE theory, the chapter discusses the notion of
transaction costs associated with deciding whether to make (develop internally) or buy (acquire externally) a service or product. A key trend and
the associated transaction costs discussed in the chapter is the move to
buying (e.g., externalizing/outsourcing) versus making (internally developing) e-HRM software, implementation, and operating services. Once
a decision is made to buy an e-HRM product or service, then another
economic theory, agency theory, is introduced to provide a framework for
thinking about how to manage an ongoing relationship. Agency theory
addresses situations in which one entity or individual engages another
entity or individual to perform work on their behalf. A classic example
of such a relationship is the employeremployee relationship. An e-HRM
example is the relationship between a company and its software service
provider. The chapter elaborates on the conflict of interests that arises and
the implications this has for e-HRM outcomes.
Chapter 4 opens by noting that in order to maximize the value inherent in e-HRM systems, end users such as the companys managers
and employees must know how to use it productively. To that end, three
frameworks are used to guide the discussion of this issue. First, the chapter

12

MAKING HR TECHNOLOGY DECISIONS

applies fundamental training principles such as needs analysis, design of


training methods, and transfer of training to the HR technology implementation process. Within this discussion, the chapter applies the TAM.
The TAM highlights the importance of two key individual perceptions in
predicting effective adoption and use of a new innovation. These perceptions are the perceived usefulness of the innovation and its perceived ease
of use. Following the review of key training issues, we address the more
complex process of change management. To fully capture the intended
value of any e-HRM system, organizations must address the skills needed
to use the new technology and the change management behind why employees should use the technology. We discuss some of the critical principles of change management, including part of John Kotters well-known
eight-step model of change management.
Chapter 5 focuses on how to measure value and performance. It begins by applying well-known theories of capital budgeting from finance
to evaluating whether to adopt an e-HRM system. Methods, steps, and
examples are given to show how to calculate an e-HRM return on investment (ROI). Four widely used calculations are discussed: simple ROI,
net present value, internal rate of return, and payback. In the second half
of the chapter, our focus shifts to data-driven decision making and how
to use the data and information captured by an e-HRM system to make
decisions that will result in better outcomes and competitive advantage.
The source of information for making better decisions is increasingly
coming from a companys vast store of electronic data collected by their
IT system. However, companies face two major challenges in this regard:
first, how to access and transform these data into relevant information
for decision making, and second, how to accomplish this in a way that
adds value. The key to transforming data into information for decision
making is in integrating the capabilities of the IT with the capabilities of
the companys managers who will be using the technology to access information to make decisions. How is this done effectively? We break the
process into five steps. Each step is either performed by experts or automated and performed by IT and builds on sociotechnical principles. The
principles of sociotechnical theory demonstrate how technological processes and people processes are interdependent rather than independent
or substitutable. Effectiveness comes from understanding the importance

Introduction

13

of the interdependence between technology and employees. The chapter


also introduces the BSC and how it can be implemented to link HRM
practices to key business outcomes.
Chapter 6 is all about the next big thing. We know that once this
book is published some of the examples will already seem outdated. In
this chapter, we take a larger view of the changing technological landscape
by introducing the principles behind the DOI theory and the theory of
ambidexterity. Innovations take time to spread across organizations. From
the users perspective, there are five different groups of adopters. There are
early adopters who are willing to take a chance on something new, even
when there is little information available about the value of the innovation. The next group of companies is called the early majority, representing the second quarter of adopters. The last two groups, the late majority
and the laggards, are followers and only adopt the innovation after there is
much more information and certainty concerning the value of the innovation. In order to achieve competitive advantage and superior value creation, companies must be willing to explore and try new things. The idea
behind organizational ambidexterity is that in order to survive and prosper, companies must be able to both exploit current innovations (those
that are already widely adopted) and explore and try untried innovations.
The chapter describes in detail what factors affect decisions about whether
to adopt an innovation and how companies must balance the desire for
certainty by exploiting the tried and true and the need to explore new
things by taking a chance and experimenting with the untried and novel.

References
Bondarouk, T. V., & Rul, H. J. M. (2009). Electronic Human Resource Management: challenges in the digital era. International Journal of Human Resource Management, 20(3), 505514. doi:10.1080/09585190802707235
Daylami, N. (2015). The origin and construct of cloud computing. International Journal of the Academic Business World, 9(2), 3945.
Delery, J. E., & Doty, D. H. (1996). Modes of theorizing in strategic
human resource management: Tests of universalistic, contingency,
and configurations. performance predictions. Academy of Management Journal, 39(4), 802835. doi:10.2307/256713

14

MAKING HR TECHNOLOGY DECISIONS

Huselid, M. A. (1995). The impact of human resource management practices on turnover, productivity, and corporate financial performance.
Academy of Management Journal, 38(3), 635672. doi:10.2307/256741
Kaufman, B. E. (2010). SHRM theory in the post-Huselid era: Why it is
fundamentally misspecified. Industrial Relations: A Journal of Economy
and Society, 49(2), 286313. doi:10.1111/j.1468-232X.2009.00600.x
Kaufman, B. E. (2014). The historical development of American HRM
broadly viewed. Human Resource Management Review, 24(3), 196218.
doi:10.1016/j.hrmr.2014.03.003
Kavanagh, M. J., Gueutal, H. G., & Tannenbaum, S. (1990). Human
resource information systems. Boston, MA: PWS-Kent.
Lawler III, E. E., Levenson, A., & Boudreau, J. W. (2004). HR metrics and
analytics: Use and impact. Human Resource Planning, 27(4), 2735.
Marler, J. H. (2009). Making human resources strategic by going to the
Net: Reality or myth? International Journal of Human Resource Management, 20(3), 515527. doi:10.1080/09585190802707276
Marler, J. H., & Fisher, S. L. (2013a). An evidence-based review of
e-HRM and strategic human resource management. Human Resource
Management Review, 23(1), 1836. doi:10.1016/j.hrmr.2012.06.002
Parry, E., & Tyson, S. (2011). Desired goals and actual outcomes of
e-HRM: e-HRM goals and outcomes. Human Resource Management
Journal, 21(3), 335354. doi:10.1111/j.1748-8583.2010.00149.x
Romero, D., & Vernadat, F. (2016). Enterprise information systems state
of the art: Past, present and future trends. Computers in Industry, 79,
313. doi:10.1016/j.compind.2016.03.001
Rul, H., Bondarouk, T., & Looise, J. K. (2004). E-HRM: Innovation or
irritation. An explorative empirical study in five large companies on
web-based HRM. Management Revue, 15(3), 364380.
Scott, W.R. (1998). Organizations: Rational, natural and open systems,
Englewood Cliffs, N.J: Prentice-Hall.

Index
Adopters, 12, 114. See also specific
adopters
Balanced scorecard (BSC), 7, 94
Best practices, 2
and value of, 2526
BI software systems. See business
intelligence (BI) software
systems
BSC. See balanced scorecard (BSC)
Business intelligence (BI) software
systems, 3, 106
Business-level strategies, 17
Capital budgeting theory, 7, 8688
Cash flows, projecting, 8990
Centralization, 3740
Cloud computing, 3
Competitive advantage, 10
definition and creation of, 16
HRMs connection to, 127
Corporate performance management
(CPM), 92
Data privacy and security, 4042
Data warehouse, 105
Decentralization, 3740
Diffusion of innovations (DOI)
Theory, 7, 113116
attributes promoting adoption,
116117
attributes slowing adoption, 117118
three dimensions, 118120
Early adopters, 13, 114115, 119
Early majority adopters. 115
e-HRM. See electronic HRM (e-HRM)
e-HRM innovation, 12, 22, 122129
electronic HRM (e-HRM), 512, 15
20, 2227, 3153, 5778,
8393, 95, 102104, 106,
108110, 113, 115121

and innovation, 122130


and training, 59
and values, 15
Enterprise data warehouse (EDW), 105
Enterprise performance management
(EPM), 92
Enterprise resource planning (ERP), 2
ERP. See enterprise resource planning
(ERP)
Exchange value, 15
Externalization, 3234
Historical context, 14
HR analytics, 4
value creation through, measuring,
91111
analyze and report information,
106110
capturing and integrating data,
102106
making decisions and monitoring
results, 110111
metrics identification, 97102
scorecard goals, creating, 9497
value chain, 127
HR capabilities, 21
HR configuration, 21
HRIS and associated pages, 89
HRM
best practice, 2, 46, 129130
competitive advantage, 45
definitions of concepts, 810
ERP softwares, 2
human capital, 3
innovations, 122123
and IT, 113
vendors, 2
scientific orientation, 58
strategic and scientific perspective,
45, 17
talent management applications, 3
theoretical frameworks, 5

136 INDEX

HR managers, 4850
Human capital, 3, 8
Innovation, 113130
cloud computingenabled, 3
definition, 123, 125126
diffusion of innovation theory (DOI)
attributes promoting adoption,
116117
attributes slowing adoption,
117118
three dimensions of innovations,
118120
models of e-HRM innovation,
122130
new to the organization, 122126
new to the state of art, 126129
organizational ambidexerity,
120121
S-shaped model, 114115
strategic, 6
technological innovation, 3
Insourcing or outsourcing decisions,
3132
Internalization, 3234
Internal rate of return, 8889
International Organization for
Standardization (ISO), 41
Internet of Things (IoT), 4, 9
IoT. See Internet of Things (IoT)
ISO. See International Organization
for Standardization (ISO)
Laggards, 115
Late majority adopters, 115
Manufacturing resource planning and
management information
systems definitions of
concepts, 2
Mobile computing, 4
Net present value (NPV), 8688
Nonadopters, 115
Observability, 117
Organizational boundaries, 3153
centralize versus decentralize, 3740

data privacy and security, 4042


insourcing or outsourcing decisions,
3132
internalize or externalize, 3234
outsourcing, 3537
staffing to manage, 4753
consultants and other contingent
workers, 5053
HR managers, 4850
vendor management, 4247
Organizational ambidexterity, 120121
Organizational change, 7379
and external partners, 79
key principles, 7678
Organizational innovations, 124
Organizational training, systems
model of, 5873
design, 6568
e-HRM, issues in, 73
evaluation, 6970
implementation, 6869
needs assessment, 6065
transfer of training, 7072
Outsourcing, 3537
Personnel management (PM), 1
Potential adopters, 114115, 120
Relative advantage, 116
Resource-Based View (RBV), 10, 20
and values, 2022
Resources and capabilities, 10, 16,
204, 26, 113, 126
Return on investment (ROI)
and value creation
cash flows, projecting, 8990
internal rate of return, 8889
making, 9091
net present value (NPV), 8688
payback, 89
simple ROI, 8586
SaaS. See Software as a Service (SaaS)
Service-level agreements, 35
Simple ROI, 8586
Social media, 4
Software as a Service (SaaS), 3, 33, 40,
4647, 49, 65, 73, 7778, 117

INDEX
137

Talent, 3, 8
Talent management applications, 3
TAM. See Technology acceptance
model (TAM)
TCE. See Transaction cost economics
(TCE)
Technology acceptance model (TAM), 7
Theoretical frameworks, HRM, 56
Training and change management,
5780
organizational change, 7379
and external partners, 79
key principles, 7678
organizational training, systems
model of, 5873
design, 6568
e-HRM, issues in, 73
evaluation, 6970
implementation, 6869
needs assessment, 6065
transfer of training, 7072
Trialability, 117
Transaction cost economics (TCE), 6,
11, 3132, 49
Value creation, measuring, 83111
HR analytics, through, 91111

capturing and integrating data,


102106
making decisions and monitoring
results, 110111
metrics identification, 97102
scorecard goals, creating, 9497
ROI decisions, 8391
cash flows, projecting, 8990
internal rate of return, 8889
making, 9091
net present value (NPV),
8688
payback, 89
simple ROI, 8586
Value, 1527
creation of
lowering costs, 1820
price, 1618
resources and capabilities, 2023
time, 2325
defined, 15, 26
and industry best practices,
2526
and Resource-Based View (RBV),
2022
types of, 15
Vendor management, 4247

OTHER TITLES IN THE HUMAN RESOURCE MANAGEMENT


AND ORGANIZATIONAL BEHAVIOR COLLECTION
Marketing Your Value: 9 Steps to Navigate Your Career by Michael Edmondson
Competencies at Work: Providing a Common Language for Talent Management by
Enrique Washington and Bruce Griffiths
Manage Your Career: 10 Keys to Survival and Success When Interviewing and on the
Job, Second Edition by Vijay Sathe
Youre A Genius: Using Reflective Practice to Master the Craft of Leadership by Steven
S. Taylor
Major in Happiness: Debunking the College Major Fallacies by Michael Edmondson
The Resilience Advantage: Stop Managing Stress and Find Your Resilience by Richard S.
Citrin and Alan Weiss
Success: Theory and Practice by Michael Edmondson
Leading The Positive Organization: Actions, Tools, and Processes by Thomas N. Duening
Performance Leadership by Karen Moustafa Leonard and Fatma Pakdil
The New Leader: Harnessing The Power of Creativity to Produce Change by Renee
Kosiarek
On All Cylinders: The Entrepreneurs Handbook by Ron Robinson

Announcing the Business Expert Press Digital Library


Concise e-books business students need for classroom and research
This book can also be purchased in an e-book collection by your library as




a one-time purchase,
that is owned forever,
allows for simultaneous readers,
has no restrictions on printing, and
can be downloaded as PDFs from within the library community.

Our digital library collections are a great solution to beat the rising cost of textbooks. E-books
can be loaded into their course management systems or onto students e-book readers.
The Business Expert Press digital libraries are very affordable, with no obligation to buy in
future years. For more information, please visit www.businessexpertpress.com/librarians.
To set up a trial in the United States, please contact sales@businessexpertpress.com.