Pratigya Sharma

Chapter 10

HR Administration and Human Resource Information Systems

Human resource management (HRM) administration deals with the efficient performance of the
transactional activities. Record keeping, updating policy and informational materials for a self-
service portal, generating and disseminating internal reports, complying with governmentally
mandated external reporting, and administering labor contracts are all examples of HRM
administration associated with managing an organization’s workforce. Approximately 65% to
75% of all HR activities are transactional. Human resource information systems (HRIS) are vital
tools in managing these increasingly complex transactional requirements.

For this reason, it is absolutely crucial that the employee database, frequently referred to as the
employee master file, be carefully constructed so that the information is accurate and timely. The
employee master file is a record and repository for all relevant employee information and must
be created prior to any other modules for programs, such as recruiting and applicant tracking.
Before this module can be developed, though, an analysis of the jobs in the firm must be
conducted, and specific job descriptions for each position in the organization must be developed.

Technical Support for Job Analysis

A primary goal of an effective HR department is to ensure that the organization has the best
available people working in the proper jobs at the appropriate time to maximize the
organization’s productive capacity. To do this, however, the organization must know not only
what each job entails but also what knowledge, skills, and abilities (KSA) are necessary to
perform the job successfully. Job analysis provides both types of information.

Job analysis is the process of systematically obtaining information about jobs by determining the
duties, tasks, or activities of jobs, from which KSA can be estimated. From this analysis, job
descriptions can be developed. Job descriptions define the working contract between the
employee and the organization. Job descriptions uses include:

(1) Evidence for any litigation involving unfair discrimination in hiring, promoting, or
terminating employees
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(2) Development of all the HRM programs, especially talent management in organizations, and
other important HRM programs including recruitment, selection, training and performance
appraisal

(3) Development of compensation structures

(4) Employee disciplinary programs and union grievances.

Approaches and Techniques

Job analysis involves the following phases or considerations:

1. Identify the sources of information about the job. The best sources are usually job
incumbents and their supervisors; however, professional job analysts can be used for newly
created or complex jobs. Company records and the Internet, specifically the U.S. Department of
Labor’s O*Net database (http://onetonline.org), are also good sources of information about jobs.

2. Identify the types of job information needed. This information can include tasks, duties,
responsibilities, the knowledge required, performance standards, job context, and the equipment
used. A determination of what specific information will be used for the analysis of all jobs must
be made to maintain consistency across the final job descriptions.

3. Determine the appropriate methods of collecting the job data. Techniques include
interviews, questionnaires, observation, and focus groups. The choice of technique(s) depends on
the number of jobs to be analyzed and the funding available.

4. Consider using one or more of the standardized techniques for conducting job analysis to
enhance the final job description, for example, functional job analysis, the position analysis
questionnaire (PAQ), task inventory analysis, or the critical incident method (see Ghorpade,
1988).

Regardless of the approach or technique used to analyze the jobs in an organization, the outcome
must obtain accurate and timely job descriptions.
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HRIS Applications

The utilization of technology, including Web-based job analysis tools, has increased the
availability of information supporting job analysis, reduced costs of collecting information, and
enhanced convenience of collect and analyzing information.

Completing job analyses and deriving job descriptions can be accomplished through online
survey techniques. Job analysis questionnaires can be administered online to job incumbents and
supervisors, and the resulting job descriptions can be analyzed statistically to finalize job
descriptions. This online questionnaire capability can be part of an integrated HRIS software
package covering multiple programs (e.g., SAP, PeopleSoft) or purchased as stand-alone
software.

Maintaining accurate job descriptions can also be aided by an HRIS. Later in this chapter,
service oriented architecture (SOA) with self-service portals for employees (ESS) and managers
(MSS) will be discussed. These portals can be used to make sure that job descriptions remain
accurate and timely. For example, if work procedures or new equipment are introduced, it would
be easy to request that the persons affected by the change, both employees and supervisors,
access their current job descriptions via portals to make necessary updates to the job
descriptions.

The HRIS Environment and Other Aspects of HR Administration

HRIS can assist managers charged with improving the efficiency of HR administration by
reducing costs, enhancing the reliability of reporting, and improving service to internal
customers. First, an HRIS can help improve data accuracy by (1) reducing the need for multiple
inputs, (2) eliminating redundancies in data, and (3) reducing the opportunity for human input
errors and associated corrections. . Finally, a properly designed HRIS permits secure global
distribution of data while providing the desired privacy for employee data, facilitating
consideration of alternative methods of consolidating, and improving services to internal
customers.

HR managers face a variety of other administrative requirements in the rapidly evolving HRIS
era. The HRM administrative issues highlighted in this chapter include (1) organizational
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approaches for providing HR in a global economy (i.e., self-service portals, SSCs, outsourcing,
off shoring); (2) compliance mandates for record maintenance and report requirements (e.g.,
Employer Information Report EEO-1), which are associated both with government laws in the
United States (e.g., Occupational Safety and Health Act [OSHA]) and with the labor laws of
other countries; and (3) the measurement of HRM contributions to an organization’s strategic
goals via a balanced scorecard.

HRM Administration and Organizing Approaches

Today, computer hardware and the accompanying software packages offer considerable support
for daily HR transactions and make it possible to move beyond the limited administrative
approaches available to the HR managers of the 1950s (PricewaterhouseCoopers, 2006). Modern
HR professionals use technology to more effectively support administrative activities and reduce
organizational costs while improving data accuracy, employee productivity, and customer
service (Bender, 2001; Ulrich, 1997). Indeed, 92% of the companies worldwide included in the
2012–13 CedarCrestone HR technology survey indicated the use of some type of HR
administrative technology (CedarCrestone, 2012). Moreover, global companies reported that,
even with challenging economic conditions, they anticipated growing their technology
commitment for strategic human capital talent management, as well as for workforce
management, service delivery, and business intelligence.

Service-Oriented Architecture and eXtensible Markup Language

Service-oriented architecture (SOA) is a paradigm for organizing and utilizing distributed

[computing] capabilities that may be under the control of different ownership domains …
providing a uniform means to offer, discover, interact with, and use capabilities to produce
desired [business] effects. It is focused on providing overall service that is well defined, self-
contained, and context and platform independent; in other words, it is focused on adding value to
the organization’s business purpose rather than simply adding technological value.

SOA is a collection of internal and external services that can communicate with each other by
point-to-point data exchange or through coordination among different services to achieve a
business purpose. The principles of SOA include loose coupling, flexibility, autonomy,
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standards-based computing, reusability, modularity, and services discoverability and

optimization. The architectural benefits of SOA include (Campbell & Mohun, 2007)

• IT consolidation opportunities and standards-based integration, using a standards-based

approach to integration for IT systems that are very complex and heterogeneous to reduce both
cost and complexity over time;

• Faster implementation and change management through reuse, modeling, and composite
development; and

• Improved alignment of business processes and IT implementation.

SOA is enhanced by eXtensible Markup Language (XML). XML combines text and other
information about the text, such as its structure, allowing data sharing across different
information systems via the Internet.

Advantages of XML-Enhanced SOA

 Security is improved—this is especially important because of the privacy protection

issues associated with HR data and applications
 Performance is enhanced—this aids in reducing transaction costs and increasing customer
satisfaction; • auditing capabilities are added—this supports the growing demand to
demonstrate compliance with corporate quality and policy mandates
 Change capabilities are enhanced—this improves reaction time to better meet business-
driven change requirements
 Alternative HR administration structures (e.g., self-service portals, SSCs, outsourcing)
are facilitated—this encourages HR managers to consider multiple approaches to meeting
the HR administration goals of cost reduction and service improvement.

There are four structural approaches to HR administration facilitated by technology. Each has
opened paths to increased efficiency and effectiveness, improved service, and cost controls,
possibilities unimagined by HR professionals a decade ago.

The self-service portal is an electronic access point to an organization’s HRM information, such
as company policies, benefits schedules, an individual’s payroll data, or other records; access
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may be via the organization’s computers and intranet or remotely from other locations via the
Internet.

A shared-service center (SSC) is a technology-enabled HRM group focused on value creation

by providing excellent service to internal customers while reducing costs through increased
efficiency and continuous improvement.

Human resources outsourcing (HRO) is the practice of contracting with vendors to perform
HR services and activities.

Offshoring is an extension of outsourcing that involves contracting with vendors outside a

nation’s boundaries to affect additional cost savings or gain other benefits over domestic
outsourcing alone.

Self-Service Portals and HRIS

The first structural approach to HR administration, employee self-service (ESS) HR portals,

provides an electronic means for a company’s employees to access its HR services and
information. Such portals provide a single sign-on capability for employees, who can
individually complete transactions for their personal data. ESS portals can range from simple
intranet websites that allow employees to access static HR policies, such as safety requirements,
to sophisticated Internet websites that allow employees to access and change their individual
records. In addition to providing an interface for current employees, ESS portals are also
available to prospective employees. For example, individuals who have applied for jobs online
through an employer’s Internet website have accessed the HR portal to complete the application
and forward their resumes.

Manager self-service (MSS) portals are becoming more prevalent in organizations as well. MSS
portals are specialized versions of ESS portals designed to allow managers to view extensive
information about their subordinates and perform many administrative tasks electronically,
including traditional HR functions
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Advantages of Self-Service Portals for HR Administration

(1) Improved speed and quality of service to employees and managers

(2) Simplified routine inquiries and changes.
(3) Reducing the number of inquiry transactions requiring direct HR staff involvement helps
keep information current.
(4) Self-service portals also enhance employee satisfaction by permitting employees to
control when and where such access activities occur, empowering employees, increasing
their productivity, especially for those who travel frequently, and offering privacy for
those who prefer to handle such matters without the presence of coworkers.
(5) Self-service portals help reduce the number of transactions for HR employees and,
correspondingly, overall HR costs.

Disadvantages of Self-Service Portals for HR Administration

(1) Permitting employees to access company data through self-service portals may increase
the possibility of security breaches and the associated negative outcomes, like identity
theft, for affected employees.
(2) Employees are concerned that even having their data in a company’s HRIS can lead to
misuse of such information by others in the organization and may feel their privacy is
invaded when organizations fail to limit access to personal data housed in HRIS.
(3) Unions may argue that employees are “doing HR work” when they enter data and make
changes online via an ESS portal. Union members who perform such transactions on their
own time may request overtime pay for completing such functions or may choose to do
such functions at work, thus reducing productivity.
(4) MSS portals would not only require more actual work for the managers but also enforce
standardized interfaces that might lead managers to perceive a reduction in their status
and power in the organization.

Shared-Service Centers and HRIS

Shared-Service Centers appeared in response to the increasing globalization of competitive

markets occasioned by the proliferation of multinational enterprises. To compete successfully,
organizations were pressured to reduce costs through the consolidation of administrative
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transactions while still providing excellent service. Such a challenge involved balancing the
desire for control inherent in centralized administrative structures and the desire for flexibility
inherent in decentralized administrative structures—a constant organizational conflict within
large and expanding corporations.

Shared services is a collaborative strategy whereby [one or more] staff functions of a firm are
concentrated in a semi-autonomous organization and managed like a business unit to promote
greater efficiency, value generation and improved service for internal customers.

Common elements of SSCs:

• Centralizing or decentralizing of business processes.

• Using economies of scale to reduce unit costs.

• Developing customer relationship models (CRMs) to better meet the needs of customers.

• Concentrating on cost reduction to enhance competitive positioning.

• Deploying quality tools to ensure continuous process improvement.

Several principles to embrace when considering the use of SSCs:

 Establish a “global good” vision for the SSC that includes its definition and benefits to
ensure that business units “losing” functions are willing to make the commitment to
transfer their work.
 Identify leaders, in all the affected groups, to sponsor the SSC vision, promote the
center’s value to the organization, and serve as responsible change agents.
 Support transparency regarding who (e.g., affected employees), what (e.g., which
functions), when (e.g., transition plans), and where (e.g., location of the new center). This
openness is essential to building the trust needed to initiate and maintain the center’s
effectiveness.
 Conduct initial and ongoing customer “values and requirements” meetings to build trust,
establish performance and service expectations, and solve problems. Implementing
jointly acceptable measures facilitates SSC success and internal customer satisfaction.
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 Focus on viewing the SSC’s processes in the context of the overall business functions.
Examine the process behind each function from “end to end.” Understanding the context
of all processes in each function encourages the recognition of the interdependencies
inherent in the SSC concept and bolsters the value-creating goal of SSCs.

Advantages of Shared-Service Centers for HR Administration

(1) Permitting HR administration managers to focus on delivering the timely, high-

quality transactions necessary to fulfill corporate requirements, such as mandated
governmental reporting.
(2) Removing the artificial barriers inherent in the generalist-specialist continuum
common in HR organizations, smoothing work and communication processes.
(3) Combining such transactional responsibilities into a single business unit encourages
the unit to focus on customer satisfaction with specific user interactions.
(4) SSCs also encourage the efficiency and standardization necessary to support strategic
cost-control goals by consolidating individuals responsible for transactions, providing
organizations with greater motivation to redesign procedures and create more
effective ones.
(5) Such centers facilitate development of the measures of efficiency, quality, and
customer responsiveness that are necessary to demonstrate appropriate contributions
to strategic goals.

Disadvantages of Shared-Service Centers for HR Managers

(1) Creating SSCs may lead to unanticipated power shifts in organizations.

(2) SSCs can lead to depersonalization.
(3) Such units are concerned with efficiency and cost controls, individuals working in them
can become more involved with the technology with which they work and less involved
with others who are engaged in the day-to-day aspects of the business.

Outsourcing and HRIS

Outsourcing is not new in HR administration. HR outsourcing (HRO) firms are hardly uniform.
There are many different types of providers, reflecting the diverse needs of organizations
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Outsourcing contracts should include specific pricing agreements (e.g., flat or fixed fee per
process or per employee served, unit prices per transaction levels, hourly and overtime rates,
revenue sharing, riskreward sharing, failure penalties), expected performance and associated
measures (e.g., transaction quality standards, error rates, system availability and downtime,
customer satisfaction levels, hours of operation), and terms and conditions (e.g., start and end
dates, extensions permitted, termination agreements, dispute resolution procedures, audit
procedures). Obviously, HR administration managers would require significant assistance from
multiple groups such as the legal, operations, and information systems departments within the
organization to establish and monitor the contract, ensuring that the organization is adequately
protected from incompetent or unethical outsourcing providers.

Reasons to Pursue HR Outsourcing

(1) Some organizations outsource only discrete or selected functions, pursuing discrete HRO
through niche third-party providers. This outsourcing involves having specialized
external firms deal only with a particular HR function.
(2) Discrete HRO can achieve cost savings by eliminating the company’s need to hire highly
specialized HR professionals (e.g., executive recruiters) or those with the HRIS expertise
necessary to perform infrequent functions.
(3) Discrete HRO can reduce the HR administration costs associated with frequent, high-
volume transactions such as payroll.

Advantages of HR Outsourcing

1. Organizations seeking to increase financial profitability and enhance shareowner value

might employ HRO to reduce ongoing expenses for employees and software, forestalling
capital expenditures for new buildings and equipment.
2. Benefits of such an approach might include redesigned processes, improved quality,
centralized or consolidated operations, access to technology, and enhanced employee
satisfaction.
3. Ability of the organization to better focus on its core business by transforming the HR
function.
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4. Providing the firm with skilled transactional and professional services in HR functional
areas such as compensation and in administrative areas such as governmental compliance
and regulations.

Disadvantages of HR Outsourcing

1. Likelihood that the organization will not achieve its strategic goals.
2. Loss of institutional expertise in the outsourced functions, making an HRO decision
reversal difficult or impossible.
3. Outsourcing organizations may lack the contract management expertise to oversee the
vendor and hold it accountable for contract terms.

Offshoring and HRIS

Offshoring is an expansion of HR outsourcing that includes sending work outside the United
States to vendors located in other countries. Technological capabilities and global competition
have combined to make HRO a global business, and offshoring for MNEs is quite complex.
Offshore ownership is riskier than simple offshore outsourcing. In addition to appropriate
strategic and financial due diligence, organizations considering offshore ownership must pay
particular attention to

• Ready availability of necessary employee knowledge, skills, and abilities such as language; •
information and communication systems compatibility with HRIS;

• Governmental regulations and legal employment requirements such as wage laws;

• Political stability of the country for facility and employee security; and

• Cultural differences such as expectations about participative versus directive supervision.

Although an offshore outsourcing strategy is less risky than offshore ownership, organizations
would still face more risk than they would had they outsourced domestically. HR managers
should always perform due diligence in assessing the reputation and business capabilities of an
outsourcing partner. However, such processes are more complex when dealing with
organizations located halfway across the globe.
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Legal Compliance and HR Administration

Whether the organization pursues a “domestic only” strategy (i.e., doing business in only one
country) or an MNE approach, countries’ government and labor laws are important external
forces in establishing the context for business.

It is important to recognize that U.S. employment laws underpin the general principles used in
the practice of HRM. There are a number of laws in the United States prohibiting unfair
discrimination on the basis of employee sex, race, age, and disability. There are similar laws and
regulations in other industrialized nations that prohibit unfair discrimination (Briscoe & Schuler,
2004). The general principle underlying these unfair discrimination laws and regulations is that
job performance should be the primary basis for employment decisions that change the
employment status of an individual. This is, of course, just one example among many that
demonstrates how governments affect HR administration. There are many laws and regulations
in the United States that require organizations to report to government agencies (Ledvinka,
1982). All these manual reports are tedious and time consuming, and they account for a
significant amount of the transactional activity of the HR department. The processing for these
activities was affected significantly by the introduction of computer technology and has always
been a part of any integrated HR software package.

HR Strategic Goal Achievement and the Balanced Scorecard

HR administration is crucial to effective HRM functioning. HR department has historically been

seen as performing a “paper-pusher” function in organizations and has been thought of as a cost-
only operation. One of the major reasons for this situation was that the HR department could not
easily or accurately generate metrics describing its operations and programs. The paper system
existed, but it was exceedingly difficult to extract HR metrics.

Recognizing that an organization can no longer rely solely on a simple financial measure to
assess its ability to achieve sustainable competitive advantage, devised the balanced scorecard to
facilitate the organization’s efforts to measure its success in achieving the strategic goals
required to meet the needs of its stakeholder groups. A balanced scorecard is both a
management and a measurement system that “enables organizations to clarify their vision and
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strategy and translate them into action, [providing] feedback around both the internal business
processes and external outcomes to continuously improve strategic performance and results.

HRM and the Balanced Scorecard

Each of the items is directly related to the balanced scorecard categories. Specifically, lawsuits
and stock price are associated with financial success, reputation is associated with the customer
category, and innovation is part of the learning and growth category. Certainly, HR professionals
understand the impact effective human capital management has on an organization. However,
unless measures to reflect the value-added nature of HRM in leveraging human capital are
developed and linked to the strategic goals reflected in a firm’s balanced scorecard, it is unlikely
that organizations will view such HRM-linked activities as strategic.

The steps they might take are as follows:

1. Specify the business strategy to be supported (e.g., customer retention).

2. Identify leading (e.g., on-time order delivery) and lagging (e.g., customer satisfaction level)
indicators.

3. Identify associated internal processes (e.g., worker productivity, product quality).

4. Identify HR linkages (e.g., training, rewards).

5. Specify the HR strategy (e.g., offer enhanced productivity training for workers to reduce
product time to market and ensure on-time order delivery).

6. Measure worker productivity increase, on-time deliveries, and reduction in customer

complaints to demonstrate the strategic value of HR training in the “Customer” and “Learning
and Growth” balanced scorecard categories.

Researchers have long recognized the need to ensure goal alignment in organizations. HR
measures should reflect a balance of cost controls (e.g., improved productivity) and value
creation (e.g., increased innovation) consistent with the business’s balanced scorecard and
strategic goals.
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We can see multiple opportunities for HR administration managers to align with the strategic
goals covered by the balanced scorecard. For example, deploying HR portals (i.e., ESS and MSS
portals) can provide simultaneous support for financial goals (e.g., cost control through reduced
employee expense) and learning and growth (e.g., e-learning courses). Similarly, strategic use of
outsourcing can support financial goals (e.g., cost reductions) and internal processes (e.g.,
improved time from vacancy request to hiring). Thus, HR administration managers can make
decisions that support the strategic goals contained in the balanced scorecard.