Human Resource Information Systems

The purpose of this paper is to identify other companies who have faced
similar human resources issues in regards to information technology.
Through benchmarking different companies we can learn how other
companies have handled certain human resources issues related to
information technology, information systems, new technology, and data
security. An overall analysis has been completed using research on IBM
Europe, Ameriprise Financial, Terasen Pipelines, Shaw’s Supermarkets,
CS Stars LLC, IBM, WORKSource Inc., and Toshiba America Medical
Systems, Inc. This paper also includes eight synopses of companies facing
similar issue to those in the reading.

New Technology

With the changing world and constant new technology that is available,
managers need to be aware of the technology that will increase
effectiveness in their company. Human resource information systems
(HRIS) have increasingly transformed since it was first introduced at
General Electric in the 1950s. HRIS has gone from a basic process to
convert manual information keeping systems into computerized systems,
to the HRIS systems that are used today. Human resource professionals
began to see the possibility of new applications for the computer. The idea
was to integrate many of the different human resource functions. The
result was the third generation of the computerized HRIS, a feature-rich,
broad-based, self-contained HRIS. The third generation took systems far
beyond being mere data repositories and created tools with which human
resource professionals could do much more (Byars, 2004).

Many companies have seen a need to transform the way Human Resource
operations are performed in order to keep up with new technology and
increasing numbers of employees. Terasen Pipelines moved its
headquarters from Vancouver to Calgary to be closer to the oil and
realized a major growth in employees. In the past recording keeping was
done on paper and with spreadsheets. Mangers at Terasen realized that
there was a need to change to a more computerized system and looked into
different HRIS vendors. By making the move to a HRIS system, Terasen
is able to keep more accurate records as well as better prepare for future
growth. Another company that saw the benefits of keeping up with new
technology is WORKSource Inc. To meet the challenge of handling 100
new employees, WORKSource Inc. acquired Web-based technology
programs from GHG Corp. like electronic pay stub, electronic timesheet
software, time-off system, and human resource information system
(“Tips,” 2006). By adapting these new programs, WORKSource was able
to reduce waste and cost.

The Internet is an increasingly popular way to recruit applicants, research

technologies and perform other essential functions in business. Delivering
human resource services online (eHR) supports more efficient collection,
storage, distribution, and exchange of data (Friesen, 2003). An intranet is a
type of network used by companies to share information to people within
the organization. An intranet connects people to people and people to
information and knowledge within the organization; it serves as an
“information hub” for the entire organization. Most organizations set up
intranets primarily for employees, but they can extend to business partners
and even customers with appropriate security clearance (Byars & Rue,
2004).

Applications of HRIS

The efficiency of HRIS, the systems are able to produce more effective
and faster outcomes than can be done on paper. Some of the many
applications of HRIS are: Clerical applications, applicant search
expenditures, risk management, training management, training
experiences, financial planning, turnover analysis, succession planning,
flexible-benefits administration, compliance with government regulations,
attendance reporting and analysis, human resource planning, accident
reporting and prevention and strategic planning. With the many different
applications of HRIS, it is difficult to understand how the programs
benefit companies without looking at companies that have already
benefited from such programs.

One such company is IBM. IBM has a paperless online enrollment plan
for all of its employees. Not only has the online enrollment saved the
company 1.2 million per year on printing and mailing costs, the employees
enjoy working with the online plan. "Since we began offering online
enrollment, we've learned that employees want web access," Donnelly
[Senior Communications Specialist] says, so they can log on at home
rather than through the company intranet. So the company has been
working to put in place a web-based enrollment system that employees
and retirees can access from anywhere (Huering, 2003). By utilizing the
flexible-benefits application HRIS has to offer, IBM was able to cut costs
and give employees the freedom to discover their benefits on their own
time and pace.

Another company that has taken advantage of HRIS applications is

Shaw’s Supermarkets. In order for Shaw’s to better manage its workforce,
the company decided it was time to centralize the HR operations. After
looking at different options, Shaw’s decided to implement an Employee
Self Service (ESS) system. The use of self-service applications creates a
positive situation for HR. ESS gives HR more time to focus on strategic
issues, such as workforce management, succession planning, and
compensation management, while at the same time improving service to
employees and managers, and ensuring that their data is accurate. With
this solution, employees have online access to forms, training material,
benefits information and other payroll related information (Koven, 2002).
By giving employees access to their personal information and the ability
to update or change their information as needed, HR was given more time
to focus on other issues. Understanding the different applications HRIS
has to offer will give companies the chance to increase employee
efficiency and reduce costs.

Measuring the Effectiveness of HRIS

The evaluation should determine whether or not the HRIS has performed
up to its expectations and if the HRIS is being used to its full advantage
(Byars & Rue, 2004). One of the most significant challenges faced by
public personnel executives today is measuring the performance of their
human resources information system (HRIS) In order to justify the value-
added contribution of the HRIS to accomplishing the organization's
mission (Hagood & Friedman, 2002). Implementing an HRIS program
may seem a necessary stem for a company, but unless it will be an
effective tool for HR operations, it will not help increase efficiency and
may hinder it instead.

One company that implemented a HRIS system is Toshiba America

Medical Systems, Inc. (TAMS). TAMS put all employee benefits
information online and created an open enrollment option when TAMS
changed healthcare providers. Almost immediately upon rolling out the
UltiPro portal [new HRIS technology] to employees, TAMS began seeing
improvements, with an estimated 70% increase in open enrollment
efficiency (Wojcik, 2004). By determining the efficiency of the new
program, TAMS was able to realize the benefits of the new HRIS system.

Security of HRIS

The privacy of employee information has become a major issue in recent

years. With identity theft becoming a common problem, employees are
becoming more sensitive about who sees their personal information, and
the security it is kept in. By making sure employee information that is kept
in the HRIS is relevant to the company and making sure there is limited
access (password protection) to such information, companies can make its
employees more secure with the safety of their information. Whether
electronic or paper, employee files deserve to be treated with great care.
Establishing security and end-user privileges calls for a balance of
incorporating, HR policy, system knowledge and day-to-day operations
(O’Connell, 1994).

One company that faced a major security issue was CS Stars, LLC. CS
Stars lost track of one of its computers that contained personal information
that included names, addresses and social security numbers of workers
compensation benefits. The bigger problem was that CS Stars failed to
notify the affected consumers and employees about the missing computer.
Though the computer was retrieved and no information seemed to have
been harmed, many employees lost their sense of security with the
company. New York's Information Security Breach and Notification Law,
effective in December 2005, requires businesses that maintain
computerized data which includes private information to notify the owner
of the information of any breach of the security of the system immediately
following discovery, if the private information was, or is reasonably
believed to have been, acquired by a person without valid authorization
(Cadrain, 2007).

Another company that experienced a breach in security is Ameriprise

Financial. In late 2005, a computer that contained personal information on
clients and employees was stolen. Because many of the employees at
Ameriprise take their computers between work and home, the company
determined there was a need to put more security into those computers.
Ameriprise made sure all employees had the new security suite installed
on their computers. By responding quickly to the need for more security,
Ameriprise made sure all information is being kept secure. Making sure
employees information is kept as secure as possible there will be more
trust in the company and the HR employees working with that
information.

Conclusion

IBM, Terasen Pipeline, CS Stars LCC, and Toshiba America Medical

Systems, Inc. are good examples of companies facing issues similar to
human resources information technology and human resources
information systems. All of these companies know the importance of new
technology, human resources information systems, and data security. The
remainder of this paper provides synopses of more companies facing
human resources issues, how the company responded to the issues, and the
outcomes of the company’s responses.
Companies Benchmarked

IBM Europe

The Situation:

IBM is a global organization offering research, software, hardware, IT

consulting, business and management consulting, ring and financing. It
employs around 340,000 people, speaking 165 languages across 75
countries, and serving clients in 174 countries. In January 2007, IBM
established a separate “new media” function within its corporate
communication department. IBM main goal is to educate, support, and
promote programs that utilize social media. IBM Europe decided to
expand internal communication by blogging guidelines. The recognition
was that blogging was already happening among IBMers, just in an
unregulated way. In a similar way, institutionalizing a function to deal
specifically with new media is not a corporate move, or establishing from
scratch. It’s a response to the issues already emerging in the company.
Now that those technologies are here, people are using them, they’re
growing and there here to stay-we’re just going to put some structure
around them so that we can try to optimize their use.” The users decide
what technologies they want to use and how they want to use them. That
main idea is that IBM understands that they must remember to respect the
fact that social media are social. IBM had the need to connect its 340,000
global employees more effectively.

The Response:

IBM’s intent around social media has now been officially formalized.
From January 22 2007, the company established a separate “new media”
function within its corporate communication department. “Its remit: To act
as expert consultants inside and outside IBM on issues relating to blogs,
wikis, RSS and other social media applications. The main idea is to
educate, support and promote programs that utilize these tools. IBM has a
history of being a t the forefront of technology based corporate
communication. From the multimedia brainstorming “WorldJam” that
made news headlines back in 2001 in which 50,000 employees worldwide
joined a real time, online idea-sharing session about the company’s
direction. IMB has always prepared itself to use breakthrough
technologies to establish a two-way dialogue with its employees. The need
for social media was necessary and could no longer wait.

The Outcome:
In the last few years IBM has been recognized as being the vanguard of
social-media use: IBM was on of the first Fortune 500 companies to get
behind collaborative wikis, published internal blogging guidelines as far
back as 2003, and is now moving fast beyond RSS and podcasts into
videocasting and “virtual world” technologies like Second Life. The
intranet search facility extends to all areas of the site, including new media
aspects. When an employee logs onto their portal an executes a key word
search, the results they get back not only come from the main intranet
pages, but include results from IBM forums, wikis, blogs and
podcast/videocasts tags. IMB has an understanding that employees are no
longer staying in a company their entire lives. It’s just not like that any
more. In Belgium for example over 50 percent of 2,300 employees have
been there fewer than five years. The company has come to the conclusion
that with an increasingly young and mobile workforce, the likelihood is
that an employee population full of a younger generation, for whom these
tools are part and parcel of life, is not that far away. In years to come IBM
will have to deal with employee base for which blogging is just the natural
way to interact over a web platform. IBM has created centralized
platforms for most tools that fall under its remit, which includes wikis. For
Philippe Borremans, new media lead Europe for IBM, has the potential
business applications of a wiki cover two broad benefits: Collaborating
and knowledge sharing. IBM has scored some notable successes on both
fronts in the near 5000 wiki pages now up and running in the organization.
The company has been a huge pick-up in interest in podcasting over the
last 18 months writing can seem such a technical skill, whereas people feel
they can talk more freely than they can write. One of the most consistently
popular IBM podcasts, with over 20,000 downloads a week.

Ameriprise Financial

The Situation:

The Department of Justice survey estimates that 3.6 million U.S.

households were victims of identity theft in 2004. Trafficking in personal
date goes beyond U.S. borders: the New York Times reports that stolen
financial information is often distributed among participants of online
trading boards, and the buyers are frequently located in Russia, Ukraine,
and the Middle East. One reason clients are concerned about data security
is the widespread publicity generated by breaches at financial services
firm. In late December 2205, an Ameriprise Financial employee’s laptop
that contained unencrypted data on approximately 230,000 customers and
advisors was stolen from a car. Other financial services firm, including
Citigroup and Bank of America, also acknowledge large-scale customer
data losses in 2005. President of NCS, Rita Dew, a compliance consulting
firm in Delray Beach, Florida, says that the Securities and Exchange
Commission requires investment advisors to have policies and procedures
that address the administrative, technical, and physical safeguards related
to client records and information.

The Response:

Ameriprise Financial had to fight back and had to implement “layers of

protection.” It is important for employees who their primary business
computer, and employees regularly transport the computer between home,
office, and meeting sites. The vulnerability of this arrangement and the
need for a safety software program is much needed.

The Outcome:

Employees who are transporting lab tops should install the Steganos
Security Suite on their computer. This software allows employees to
create an encrypted virtual drive on the laptop that serves as data storage
safe. Employees stores all client related data and tax preparation software
database on the encrypted drive, which employees has set up with one
gigabyte of storage space. The best thing is that when an employee turns
off the computer the information is stored “safe”, the software
automatically encrypts the virtual drive’s data. The software also generates
encrypted backup files, which employees store on CDs in a fireproof safe.
This should keep the data secure if any employee’s laptop is stolen or if
the drive is removed from the laptop. Other financial advisors are relying
on encryption both in and out of the office. Other programs that are being
used to protect client’s information are RAID Level 1 system to store data
on the drives that are encrypted with WinMagic’s SecureDocs software.
Encryption ensures that anyone who steals the computer will be absolutely
unable to read the data, even by connecting it to another computer as a
“slave drive. This has given many financial advisors the greatest peace of
mind.

Terasen Pipelines

The Situation:

Terasen Pipelines is a subsidiary of Terasen Inc. located in Vancouver,

Canada and is located in several provinces and U.S. states. In 2001 the
company changed its headquarters to Calgary to be closer to the oil. With
the big move, the company went through a growth spurt. With the
company in many different locations and the growing numbers of
employees, the HR department saw a need to find a new system to keep
more accurate records.

The Response:

In the past Terasen had kept records on paper and with spreadsheets and
with the growth of the company, this system does not work as well as in
the past. In order to compensate for future growth, Terasen began to look
into HRIS companies to help with the HR operations. After researching
different companies, Hewitt’s application service provider model with
eCyborg was found to be the right fit.

The Outcome:

Although there was difficulty adapting to a new way of recordkeeping,

Terasen was able to find a system that will help support the current and
future growth of the company. Fortunately, some of the HR staff had
experience working with an HRIS and were able to help their colleagues
imagine new processes, as aided by a system. One theme often voiced
throughout this process was: "You guys don't know how hard we're
working when we can make it so much easier with a system that could do
a lot of this for us. You don't always have to run to the cabinet for the
employee file just to get basic information. It can all be at your fingertips."
(Vu, 2005). In order to help Terasen ease the HR burden of implementing
a new HR system, the management of Terasen was convinced to look for a
vendor to help implement and maintain a HRIS system. This system has
helped Terasen better prepare for current and future growth.

Shaw’s Supermarkets

The Situation:

Shaw’s Supermarkets is the second largest supermarket chain in New

England. With a workforce of 30,000 located at 180 stores throughout six
states, Shaw's HR staff is responsible for managing employees' personal
data. Their employee mix includes approximately 70 percent part-time
employees, consisting of students, senior citizens, second-job part-timers,
and career part-timers. One third of the workforce is made up of union
associates, and Shaw's staff oversees the company's involvement with
three unions and six separate contracts (Koven, 2002). In order to help
manage the workforce, the HR staff became interested in centralizing its
HR operations.

The Response:
In order to centralize HR operations Shaw’s decided to implement an ESS
(employee self-service) solution. The use of self-service applications
creates a positive situation for HR. ESS gives HR more time to focus on
strategic issues, such as workforce management, succession planning, and
compensation management, while at the same time improving service to
employees and managers, and ensuring that their data is accurate. With
this solution, employees have online access to forms, training material,
benefits information and other payroll related information.

The Outcome:

Shaw’s has had positive feedback since implementing the ESS solution.
"The reaction from our employees has been extremely positive," Penney,
VP of Compensation and Benefits, says. "We even had a significant
increase in our medical coverage costs, and it was almost a non-issue
because the online enrollment featured the plan choices, the employee
cost, and the company subsidy. An employee self-service application
makes it very easy for them to understand their contributions and coverage
options. I received several e-mails from employees saying this was a great
change and how easy ESS was, which the case is not often when
employees are selecting their benefit options." (Koven, 2002). By giving
the employees more access to their information they are able to see the
benefit choices available to them. Employees are also able to update their
information online, which helps reduce the paperwork of the past. Shaw’s
has also seen improvement in productivity because employees are
updating information at home, not during work hours.

CS Stars, LLC

The Situation:
New York Attorney General Andrew Cuomo has announced that New
York State has reached its first settlement with a company charged with
failing to notify consumers and others that their personal data had gone
missing. Cuomo’s office, which enforces the state’s 2005 Information
Security Breach and Notification Law, charged CS STARS LLC, a
Chicago-based claims management company, with failing to give notice
that it had lost track of a computer containing data on 540,000 New
Yorkers’ workers’ comp claims.

The Response:

The owner of the lost data, which had been in the custody of CS STARS,
was the New York Special Funds Conservation Committee, an
organization that assists in providing workers’ comp benefits under the
state’s workers' comp law. On May 9, 2006, a CS STARS employee
noticed that a computer was missing that held personal information,
including the names, addresses, and Social Security numbers of recipients
of workers’ compensation benefits. But CS Stars waited until June 29,
2006, to notify Special Funds and the FBI of the security breach. Because
the FBI declared that notice to consumers might impede its investigation,
CS STARS waited until July 8, 2006, to send notices to the 540,000 New
Yorkers affected by the breach. On July 25, 2006, the FBI determined an
employee, of a cleaning contractor, had stolen the computer, and the
missing computer was located and recovered. In addition, the FBI found
that the data on the missing computer had not been improperly accessed.

The Outcome:

New York's Information Security Breach and Notification Law, effective

in December 2005, requires businesses that maintain computerized data
which includes private information to notify the owner of the information
of any breach of the security of the system immediately following
discovery, if the private information was, or is reasonably believed to have
been, acquired by a person without valid authorization. The law affects not
only businesses in their dealings with their customers, but employers in
their role as custodians of employees’ personal data. (Cadrain)

Without admitting to any violation of law, CS STARS agreed to comply

with the law and ensure that proper notifications will be made in the event
of any future breach. The company also agreed to implement more
extensive practices relating to the security of private information. CS
STARS will pay the Attorney General’s office $60,000 for costs related to
this investigation. (Cadrain)

IBM

The Situation:

IBM's paperless online enrollment system, introduced in 1999, has proved

to be a winner for both the company's 135,000 active U.S. employees and
the company, according to Cathleen Donnelly, senior communications
specialist at company headquarters in Armonk, N.Y. The company saves
$1.2 million per year on printing and mailing costs alone, Donnelly says,
and the employees’ can take advantage of a variety of technologies to
learn about issues, research program information and access decision
support tools from their desktop computers. (Heuring, 2002)

The Response:
One of those tools, a personal medical cost estimator, enables employees
to calculate potential out-of-pocket health care expenses under each of the
plan options available to them, Donnelly says. Employees log in
personally and are greeted by name and with important information
regarding their benefits enrollment, such as the deadlines and when
changes take effect. They automatically get access to health plans that are
available to them, and the calculator lets them compare estimated benefit
amounts for each plan.

"Employees can select the health care services they expect to use in a
particular year, estimate expected frequency of use, and calculate potential
costs under each plan option," Donnelly says. "The feedback that we've
received from employees tells us that this tool has really helped them to
make a comparison between plans based on how they consume medical
services." The calculator shows both IBM's costs and the employee's.
(Heuring, 2002)

The Outcome:

"Since we began offering online enrollment, we've learned that employees

want web access," Donnelly says, so they can log on at home rather than
through the company intranet. So the company has been working to put in
place a web-based enrollment system that employees and retirees can
access from anywhere.

Employees can get summary information on the plans, drill down into
very specific details and follow links to the health care providers for
research. Donnelly says the system has received high marks for
convenience because employees can "get in and out quickly."

WORKSource Inc.

The Situation:

To meet the challenge of handling 100 new employees, WORKSource Inc.

acquired Web-based technology programs from GHG Corp. like electronic
paystub, electronic timesheet software, time-off system, and human
resource information system (“Tips,” 2006). These tools enabled CEO
Judith Hahn to handling payroll procedures efficiently and effectively.

The Response:

WORKSource has eight workforce centers, with approximately 108

employees, located throughout a six-county region. Previously, payroll,
benefits, and human resources for those employees were processed and
managed by a Professional Employer Organization. The company also has
52 administrative staff in its headquarters office. When the contract with
the PEO terminated on June 30, 2006, those 108 employees were
immediately moved to the payroll of WORKSource, which meant Hahn’s
workload more than doubled effective July 2006 (“Tips,” 2006).

Hahn, in an interview with PMR, said she relied on LEAN to help get a
handle on what needed to change for her to manage the increased
workload. Two years earlier, Hahn’s CEO had introduced her to LEAN, a
Japanese management concept of eliminating wasteful steps and motion
when completing processes. “I began to read as much as possible about
LEAN and joined an HR LEAN focus group” (“Tips,” 2006).

The Outcome:

Mastering the concepts of LEAN led Hahn to develop and apply her own
acronym of “REASON” to her department’s payroll and HR processes.
Review the process: map payroll tasks from start to finish. Eliminate
waste: determine how to complete a payroll task most efficiently without
unnecessary steps. Analyze alternatives: research and evaluate the
applicability of new technology. Sell innovations to management:
document the return on investment of each innovation. Open the lines of
communication: communicate openly—and often—with all stakeholders,
including employees and top management. Never allow negativity: make
change simple and fun. Give employees plenty of encouragement and time
to learn (“Tips,” 2006). Judith Hahn was able to implement the right
human resource functions using information systems.

Toshiba America Medical Systems Inc.

The Situation:

Lynda Morvik, director of benefits and human resources information

systems at Tustin, California-based Toshiba America Medical Systems
Inc. (TAMS), thought it would make sense to add a benefits
communication component to it. By having all the benefit information
online, the TAMS employee handbook would also be a living document,
enabling Morvik to make changes when necessary. Such was the case
halfway through the project, when TAMS changed health care plans from
Aetna Inc. to United Health Group Inc (Wojcik, 2004).

The Response:
TAMS, an independent group company of Toshiba Corporation and a
global leading provider of diagnostic medical imaging systems and
comprehensive medical solutions, such as CT, X-ray, ultrasound, nuclear
medicine, MRI, and information systems, had been using a payroll service
bureau and an in-house solution for HR that didn't include easy-to-use
consolidated reporting or an employee portal. After evaluating UltiPro
alongside several enterprise resource vendors, TAMS selected Ultimate
Software's offering and went live in September 2002 after an on-time and
on-budget implementation. Almost immediately upon rolling out the
UltiPro portal to employees, TAMS began seeing improvements, with an
estimated 70% increase in open enrollment efficiency (Wojcik, 2004).

The Outcome:

In an effort to expand the usage of the Web beyond the benefits

enrollment process, TAMS has posted a library of documents and forms
on its HR portal, including the benefits handbook, which garnered a 2004
Apex Award for publication excellence. That same year, Business
Insurance magazine also gave TAMS the Electronic Benefit
Communication (EBC) award for outstanding achievement in
communicating employee benefits programs over the Web. To continue
elevating its use of Ultimate Software's HRMS/payroll solution, TAMS
modified the UltiPro portal to meet the imaging company's unique needs
(Wojcik, 2004). It was completely integrated with several proprietary
applications created to address compensation and performance
management issues so that TAMS employees have a central location for
comprehensive workforce and payroll information from a Web browser
that they can access with a single sign-on (Wojcik, 2004).

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Steven Brown, MBA is a loving husband and father of two boys. He

enjoys his time with his family by providing a strong family foundation of
Christian Faith. After completing his Bachelors degree, Steven wanted to
further his ability to teach and share to others his mindset that they can do
anything if they would believe in themselves.

A Social Issues Era (1963–1980)

rticle Source: http://EzineArticles.com/?expert=Steven_Phillip_Brown

discriminatory practices, occupational health and s afety, retirement

benefits, and tax regulation. As a result, the person nel department was
burdened with the a dditional responsibility of le gislative compliance that
required collection, analysis, and report - ing of voluminous data to statut
ory authori ties. For example, to demonstrate that there was no unfair
discrimination in employment practic es, data pe rtaining to all
employment functions, such as recruitment, training, compensation, and
benefits, had to be diligently collected, analyzed, and stored. To avoid the
threat of punitive damages for noncompliance, it was necessary to ensure
that the data were comprehensive, accu-rate, and up-to-date, which made
it essential to automate the data collection, analysis, and report generation
process. As you go through the chapters of this book, these vary-ing laws
and government guidelines will be covered within the specific HR topics.
It was about this time that personnel departments w ere beginning to
be ca lled Human Resources Departments and the field of human resource
management was born. The increasing need to be in compliance with
numerous employee protection legisla-tions or suffer significant monetary
penalties made senior managers aware of the impor-tance of the HRM
function. In other words, effective and correct practices in HRM were
starting to affect the “bottom line” of the firms, so there was a significant
growth of HR departments, and computer technology had advanced to the
point where it was begin-ning to be u sed. As a res ult, there was a n
increasing demand for HR de partments to adopt computer technology to
process employee information more effectively and effi-ciently. This trend
resulted in an explosion in the number of vendors who could assist HR
departments in automating their programs in terms of both hardware and
software.
Simultaneously, computer technology was evolving, and delivering
better produc-tivity at lower costs. These technology developments and
increased vendor activity led to the development of a comprehensive
management information system (MIS) for HRM. T he decre asing co sts
o f co mputer t echnology versus the increasi ng co sts of employee
compensation and ben efits made ac quisition of comput er-based HR sys -
tems (HRIS) a necessary business decision. However, the personnel
departments were still slow in adopting computer technology, even though
it was inexpensive relative to the power it could deliver for the storage and
retrieval of employee information in MIS reports. So, the major issue at
this time in the historical development of HRIS was not the need or
capabilities of technology but how to best implement it.
 Another factor was the booming economy in most ind ustrialized
countries. As a result, employee trade unio ns successfully ba rgained fo r
be tter employment terms, such as health care and retirement benefits. As
a result, labor costs increased, which put pressure on personnel managers
to justify cost increases against productivity improve-ments. With the
increased emphasis on employee participation and empowerment, the
personnel function transformed into a “protector” rather than a “caretaker”
func-tion, shifting the focus away fro m maintenance to development of
employees. Thus, the breadth and depth of HRM functions expanded,
necessitating the need for strate-gic thinking and better delivery of HR
servic es.
Cost-Effectiveness Era (1980 to the Early 1990s)
With increasing competition from emerging European and Asian economies, U.S.
and other multinational firms increased their focus on cost reduction through
automation and other prod uctivity improvement measures. As regards HRM, t he
increased
administrative burden intensified the need to fulfill a growing number of
legislative requirements, while the overall functional focus shifted from
employee administration to employee development and involvement. To
improve effectiveness and efficiency in service delivery, through cost
reduction and value-added services, the HR departments came u nder pr
essure to h arness tech nology t hat wa s becomi ng chea per and more
powerful.
In addition, there was a growing realization within management that
people costs were a very significant part of their budgets. Some companies
estimated that personnel costs were as high as 80% of their operating
costs. Asa result, there was a growing demand on the HRM function to
cost justify their employee programs and services. In one of the first books
to address this growing needto cost justify the HRM function, Cascio
(1984) indicated that the language of business is dollars and centsand HR
managers need ot real-ize this fact. In a later edition of his book, Cascio
(1991) quotes Jacques Fitz-Enz (1980), who more accurately states the
need for HRM to cost justify their function:

Few human resources ma nagers—even the mos t energetic—take the

time to a nalyse the return on the corporation’s personnel dollar.
Wefeel we aren’t valued in our own organiza-tions, that we can’t get
the resources we need. We complain that management won’t buy our
proposals and wonder why our advice is so often ignored until the
crisis stage. Bu t the human resources manager seldom stands back to
look at the total business and ask: Why am I at the bottom looking up?
The a nswer is painfully apparent. We don’t act like b usiness
managers—like entrepreneurs whose business happens to be people.
(p. 41)

Even small and medium firms could afford computer-based HR systems that were
run by increasingly user friendl y microcomputers, and could be shown to be cos t-
effective. The prevailing management thinking regarding the use of computers in
HR was not a reduction in the number of employees needed in HR departments but
that their acti vities and t ime coul d be shifted from the tra nsactional re cord
keeping to more transformational activities that would add value to theorganization.
This change in the function of HRM could then be clearly measured in terms of cost-
benefit ratios to the “bottom line” of the company.

Technological Advancement Era and

Emergence of Strategic HRM (1990 to Present)
The eco nomic landscape un derwent radical changes t hroughout the
1990s with increasing globalization, technological breakth roughs (part
icularly In ternet-enabled Web services), and hypercompetition. Business
process reengineering exercises became more common and frequent, with
several initiatives, such as right sizing of employee numbers, reducing the
layers of management, reducing the bureaucracy of organiza-tional
structures, autonomous work teams, and outsourcing.
Firms today realize that inno vative and creat ive employees who hold
the key to organizational knowledge provide a sustainable competitive
advantage because unlike other resources, intellectual capital is difficult to
imitate by competitors. Accordingly, the people management function has
become strategic in its importance and outlook and is geared to attract,
retain, and engage talent. These developments have led to the
 Chapter 1 Evolution of HRM
and HRIS 11

creation of the HR or workforce scorecard (Becker, Huselid, & Ulrich,

2001; Huselid, Becker, & Beatty, 2005) as well as added emphasis on the
return on investment (ROI) of the HR function and its programs (Cascio,
2000; Fitz-Enz, 2000, 2002).
The increased use of techno logy and th e changed focus of th e HRM
fun ction as adding value to the organization’s product or service led to the
emerg ence of the HR department as a stra tegic partner. With the growing
imp ortance and rec ognition of people and people management in
contemporary organizations, strategic HRM (SHRM) has become
critically important in management thinking and practice. SHRM derives
its theoretical significance from the resource-based view of the firm that
treats human capital as a strategic asset and a c ompetitive advantage in
improving organizational performance (Becker & Huselid, 2006).
Reflecting the systems view, Becker and Huselid (2006 , p. 899) stress
the impor-tance of HR structure—that is, the “systems, practices,
competencies, and employee performance b ehaviors that refl ect t he
development and manag ement of t he firm’s strategic human capital”—for
organizational p erformance. Context is a cruc ial ele - ment in SHR M, a
nd therefo re, research ers increasingly emphasize the “ best-fit” approach
to SHRM as opposed to the “best-practice” approach. The success of
SHRM is contingent on seve ral factor s, such as nati onal and organiz
ational cultu re, siz e, industry type, occupational category, and business
strateg y. Accordingly, Becker and Huselid (2006) argued that “it is the fit
between the HR a rchitecture and the strategic capabilities and business
processes th at implement strategy that is the ba sis of HR’ s contribution
to competitive advantage” (p. 899).
A good example of the importance of HR and the information provided
by an HRIS can be found in the human resources planning (HRP) function.
HRP is primarily con-cerned with forecasting het need for additional
employees in the future and the availabili-ty of those employees either
inside or external to the company.A good example is when a company is
considering a strategic decision to expand by establishing a production
facili-ty in a new location. Using the information recorded and analyzed in
the HRIS, HRP can provide estimates of whetheror not thereare enough
people available in the external labor market of the new lo cation to staff
the new facility. Thus, the availability of potential employees in the labor
market may be critical to the strategic decision to build the new facility,
and this, of course, could involve millions or billons of dollars.
Therefore, in de termining the strategic fit betwe en technology and
HR, it is not the strategy per se that leads to competitive advantage but
rather how well it is “imple-mented,” taking into account the
environmental realities that ca n be unique to each organization and,
indeed, between units and functions of the organization.