HR professionals. The Use and Impact of e-hr: A Survey of HR Professionals

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1 The Use and Impact of e-hr: A Survey of HR Professionals Thomas W. Gainey Department of Management Richards College of Business university of West Georgia Brian S. Klaas Department of Management Darla Moore College of Business university of South Carolina HR professionals increasingly offer computer-based, self-service applications. We surveyed 141 HR directors and managers about tfie nature of e-hr in their organizations. Results indicated that firms varied greatly in their use of computers to provide HR services. Further, increased use of e-hr was found to be associated with lower costs, improved communication and delivery of HR, more employee participation in HR, and more strategic involvement by the HR staff. 50 PEOPLE & STRATEGY 31.3

2 HR and Technology In their 50-year anniversary issue. HR Magazine listed "technology" as one of the top 10 changes that had impacted the field of human resources over the past half century (Moss, 2005). Indeed, the profile of today's successful HR professional is very different from the "personnel managers" of the mid-late.. 20th century. HR professionals must be technologically savvy individuals who have the ability to successfully incorporate and manage computer-oriented applications throughout their organizations. Advances in technology over the past decade have created both concerns and opportunities for organizations and HR. In a national survey, 37% of employee respondents admitted that they regularly used their personal computers at work to surf the Internet and had engaged in such activities as stock trading, gambling, and online chatting (Young, 2004). Additionally, devices such as cell phones, palms, ipods, and BlackBerries, which can be brought into the workplace and easily concealed, greatly increase the potential for employees to engage in behaviors that may expose an organization to productivity losses, harassment lawsuits, and corporate espionage (Towns, 2003; Mirchandani &c Motwani, 2003). Yet, new technology also presents opportunities to involve a more computer-literate workforce as partners in performing activities traditionally reserved for staff members. One such opportunity is e-hr, which refers to using computer-based technologies to put HR activities in the hands of "customers." While e-hr initially was possible only for large organizations with in-house, IT professionals, software providers such as PeopleSoft and SAP now make it possible for small and medium enterprises to offer self service, computer-based HR systems as well (Bussler &C Davis, 2002; Friesen, 2003). And, there is evidence that firms are increasingly setting up e-hr applications. In a study by Towers Perrin, 94% of organizations reported providing at least some HR online access to their salaried employees, and 72% noted that some online access was available for tbeir hourly employees (Overman, 2002). However, there is evidence that the extent to whicb HR is providing selfservice opportunities varies widely among organizations (Elliott &C Tevavichulada, 1999). As individuals become more technology-litera te, various stakeholders expect more self-service applications from HR (McCormick, 1998). Using the Internet and Intranets, HR is called upon to move from traditional staff-based, 8-to-5 services to systems that are available 24-hours per day, seven days per week. Currently, there is little empirical research examining this important area of HR. Thus, we conducted this study to examine, in broad terms, the extent to which organizations use tbe Internet, Intranets, and/or local area networks to provide HR services that traditionally have required significant HR staff interaction. Additionally, we examined the relationship of computer-based HR applications to a number of favorable outcomes for organizations. Benefits and Concerns of e-hr In the popular business press, advocates of e-hr argue tbat this computer-based approach offers a number of benefits. First, many e-hr applications allow 24/7 access to tbe HR department (Overman, 2002]. Flexibility often is a key issue witb individuals balancing work and family demands. By offering alternatives tbat employees can fit into tbeir own scbedules, satisfaction levels should be higher and HR-related requirements will be completed in a timelier manner. Survey Methodology and Respondent Profile The sample for this study was obtained from the membership list of the American Society for Training and Development (ASTD). Surveys were mailed to 700 individuals whose job titles indicated that they were either HR managers or HR directors in tbeir firms. Of the 700 contacted, 141 returned the survey resulting in a 20.1% response rate. Respondents were a diverse group in terms of their size and industry. While the average number of employees at participating firms was 2,987, respondents reported having as many as 110,000 employees and one firm reported having only one employee. Additionally, respondents reporting having an average of 43 HR staff members, witb a range of 1 to 257 HR staff members. Further, a number of different industries were represented in this study. Industry classifications represented research are: Heahhcare (14%); Education (13%); Manufacturing (11%); Financial (10%); Services Non-Profit (9%); Hi-Tech (9%); Government (7%); Transportation (6%); Hospitality (5%); Wholesale/Retail (5%); Services Profit (4%); Utilities (3%); and. Other (4%). To examine tbe degree to which e-hr was utilized in our respondents' firms, we supplied a listing of various HR services typically provided to employees, managers, job applicants, and HR staff members. We then asked our HR professionals to place a check beside each of tbe services that were available in tbeir organization using computer-based technology. Next, we created measures of the amount of usage by summing up the number of responses. The HR services contained in the survey are provided in Tables I - 4. Additionally, a number of Likert-type items were included in the survey to assess the extent to which e-hr had resulted in reduced costs, improved delivery of HR services, improved communication across the organization, more employee involvement in HR-related areas, and the ability of HR to assume a more strategic role in the organization. Second, e-hr applications can free up HR staff members to work on more strategic initiatives (Stanley & Pope, 2000). Organizations increasingly are recognizing the important role of HR in creating a competitive advantage through progressive management practices (Pfeffer, 1995). In fact, CNN Money recently named the job of HR manager one of the top five jobs in America, projecting a growtb rate of 23.47% over the next 10 years (Kalwarski, et al., 2006). Many top managers understand that strategic HR initiatives can have a direct impact on tbe organization's ability to be competitive and profitable (Becker & Huselid, 1998). Third, e-hr may improve the delivery of HR services, resulting in more timely transactions at a lower cost (Jossie, 2001; Lengnick- Hall & Moritz, 2003). For applications that require users to input data, e-hr can eliminate the necessity of having a staff member re-enter information. This reduces tbe time it takes to complete transactions, as well as reduces the likelibood that subsequent input errors will be made. Alternatively, e-hr also raises some concerns. For companies that do not already have sufficient computer technology in place, the cost to make workstations available to employees can be significant. Setting up centralized workstations, kiosks, or computer labs PEOPLE.STRATEGY

3 TABLE 1 Using e-hrto Provide Employee-Related Services 84% job listings 40% 82% HR-rclated forms 36% 60% retirement plan balances 34% 56% computer-based training 31% 55% company handbook 31% 55% benefits inquiry 50% employee newsletters 31% 48% retirement portfolio 21% cbanges 19% 44% training program enrollment 15% time entry benefits enrollment performance appraisals personal data cbanges employee opinion surveys paid time off balances compensation statements work or vacation schedules new bire orientation rbat many different employees can use reduces this cost. However, rhe initial outlay of money may be considerable. Additionally, depending on an organization's needs, the cost of servers and software may require substantial investments (Lengnick-Hall & Moritz, 2003). A number of providers offer "canned" packages that are reasonably priced. However, when tbis software must be customized to meet an organization's specific needs, development costs can increase quickly. Finally, critics note that many employees may be reluctant to use these self-service systems (Overman, 2002). Employees who have limited exposure to computers and tbe Internet may find the transition to e-hr somewhat daunting. Recent media reports of data theft in the workplace may contribute furtber to skepticism about the utility of e-hr programs. Utilization of e-hr To get a broad sense of how HR professionals perceived their organizations' use of computer-based technology to provide HR services, we asked respondents to classify themselves regarding their overall development of computer-based applications. Just over 33% responded tbat they were at the interactive stage of development. These individuals said they actively used computer-based applications that allowed employees to submit data and make cbanges online. About 29% of the respondents reported that they were at tbe inquiry stage in their development, using computer technology to provide employee-specific data in response to inquiries. 30% described tbemselves as using computer-based technology primarily to communicate HR-related information to employees. Only 9% of the respondents reported tbat tbey were relatively inactive in using computer-based tecbnology. Clearly, tbese participants varied widely in how they perceived their organizations' use of computer-based tecbnology in HR. Wben asked to estimate the extent of service utilization, about 10% noted thïit they used computers for over 90% of their HR-related work. About 87% reported that, on average, 54% of their HR-related services were available using computer-based technology. Less than 3% reported that they did not use computers for any of their HR-related activities. For the 97% of respondents who reported using computers for at least some of their HR-related activities, ahout 64% of tbese computer-applications were "in-house" and were supported by tbe firm's own IT department, about 16% were "in-bouse" and were supported by external providers, and about 17% were hosted and supported hy external providers. Next, we examined tbe degree to wbich computer technology was being used to provide particular HR applications. Specifically, we asked about the extent to which a number of potential computer-hased HR services were available to employees, managers, applicants, and HR staff members. Employee-related : Tahle 1 shows tbe percentage of respondents indicating tbat tbey used computers to provide a variety of employee-related HR services. Over 80% of our respondents noted that they used computers to provide listings of job openings and various HR-related forms to tbeir employees. Conversely, only 15% reported tbat computers were utilized to provide orientation training to new hires. About 40% of those surveyed reported tbat they used computers for 10 or more of tbe services listed, while only 21 percent utilized computer technology for fewer than five of the listed HR-related activities. On average, respondents noted that tbey used computers for ahout eight of tbe 18 employee-related HR services listed. Management-Related : Table 2 reports HR activities, traditionally involving managerial inputs, which are being performed with the use of computers. More than 50% of the survey participants reported tbat managers used computers to request new employees and to complete performance appraisals. Conversely, only 13% are using computer-related technology to maintain personnel files. About 18% of tbose surveyed did not use computers for any of the activities listed in Table 2 and fewer tban 10% selected five or more of tbe activities. Respondents, on average, reported that they used computers for almost tbree of tbe nine management-related services in the survey. TABLE 2 Using e-hr to Provide Management-Related Services 54"i> pcrformanci.' appraisals 51% new hire requisitions 37% attendance records 28% employment status cbanges 26% work schedules 23% pay 18% employee reward programs 17% disciplinary actions 13% electronic personnel files Applicant-related : The extent to wbicb computers are used to provide HR services to job applicants is sbown in Table 3. About 69% of our respondents indicated that tbey used computers to permit candidates to submit their applications online. However, only 11% used computers for selection testing. 20% of tbose surveyed used computers for four or more of tbe six activities listed. And, about 8% reported tbat they did not use computers for any of the job applicant-related services. 52 PEOPLE & STRATEGY 31.3

4 TABLE 3 Using e-hr to Provide Applicant-Related Services 84% job listings 69% resume submission 55% online applications 27% benefits summary 11% selection testing 2% job status tracking On average, respondents selected 2.5 of the six activities listed in Table 3. HR Staff-related : Finally, we asked our respondents whether activities traditionally performed by HR staff members were completed using computer technology. Table 4 contains the results. Payroll preparation and benefits administration were identified as the primary activities that were completed using computers. Only 10% of those individuals completing our survey noted that they used computer-technology to maintain personnel files. About 40% indicated that they used computers for four or more of the activities list in Table 4 and only 8% reported that computers were not used for any of the services. On average, HR professional reported using computer-related technology for 2.9 of the six HR staff-related services listed in Table 4. communication across the organization as another positive outcome. 75% of the respondents said e-hr that allowed their organizations to share information more quickly with their employees. Employee Involvement: Only 32% of the HR professionals participating in this survey felt that e-hr had lead to greater employee involvement in the HR area. Similarly., only 42% indicated that e-hr had made their employees less reliant on the HR staff. Clearly, the impact of e-hr was not as great in this area. Strategic Involvement: About half of those surveyed indicated that e-hr had freed them up so that they could make more strategic contributions to their organizations. Specifically, 49% reported that e-hr had made a direct impact on the "bottom line," while 48% noted that e-hr actually had made the firm more competitive. Finally, we examined the extent to which the amount of e-hr utilized resulted in more positive outcomes for the organization. Specifically, we looked at the relationship between the amount of computer-ha sed HR services provided to employees, managers, applicants, and HR staff members and the various outcomes associated with e-hr. The results of this analysis are provided in Table 6. TABLE 5 TABLE 4 Using e-hr to Provide HR Staff-Related Services 74% payroll preparation 70% benefits administration 54% applicant tracking 48% attendance tracking 38% FMLA tracking 10% paperless personnel files Outcomes Associated With e-hr To better understand potential outcomes associated with e-hr, we asked our HR professionals to respond to a number of Likerttype items. Table 5 provides the percentage of respondents who either "agreed" or "strongly agreed" with the items. Cost Reduction: More than half of those completing the survey (58%) agreed that their use of e-hr had resulted in reducing overall costs. However, only 27% indicated that those savings resulted from reduced staffing levels. Instead, savings were primarily attributable to a reduction in the cost of completing transactions. Delivery of HR: Improvement in data accuracy and reductions in paperwork and turnaround time were reported to be major, positive outcomes of e-hr. About 75% of those responding indicated a significant improvement in the way services are provided. Communication Flow: Along with improvements in the delivery of HR, a majority of our respondents identified improved Impact of Computer-based Technology in HR Otir use ofcuntputei-hiisl'd technology for HR-related services has allowed HR to: Cost Reduction reduce its overall costs reduce the average cost of a transaction reduce its level of staffing Delivery of HR reduce processing time for paperwork reduce turnaround time for HR transaction improve overall data accuracy Communication Flow share information more quickly with our employees better facilitate the flow of information improve communication across our organization Employee Involvement make employees less reliant of the HR staff involve employees in more HR functions Strategic Involvement have a more direct impact on the "bottom line" make our firm more competitive Percentage who "agreed" or "strongly agreed" 58% 56% 27% 84% 81% 72% 75% 74% 67% 42% 32% 49% 48% PEOPLE & STRATEGY

5 Relationship Between e-hr and Outcomes Cost Reduction Delivery ofhr Communication Flow Employee Involvement Strategic Involvement Em ployee-related.29 **.18 ^.27 '"".36 '"'.23 "' Management-related.28 **.17 -^.24 *".19 *.23 ** Applicant-related.29 ** ' '..M **.31 *^ HR Staff-related.25 '^".25 '"'.30 "*.18".27-^* As shown, there are a number of positive, significant relationships in Table 6. In general, the more technology was used to provide HR, tbe more our respondents experienced cost reductions, improved communication, more employee involvement in HR, and more HR involvement in strategic initiatives. The one area where the relationship was not significant was tbe delivery of HR to potential job candidates. We speculate tbat tbe inability to provide formal training to tbis group may bave resulted in the incorrect use of self-service applications or substantial errors in data entry. Thus, tbe necessity of tbe HR department to fix these problems may have been perceived as more time consuming tban more traditional, manual metbods of interacting witb ob applicants. Conclusions The use of computer-related technology to perform HR services continues to increase. However, there has been relatively little empirical research in tbis area. Our purpose was to examine the amount of e-hr currently utilized by organizations and some possible outcomes resulting from its use. As individuals hecome more tecbnologically adept, tbey likely will continue to request more computerized, self-service functions. And, HR professionals increasingly will be called upon to meet tbis demand. While tbere is no one approacb that will guarantee success, tbere are several suggestions tbat HR departments can consider as tbey move toward increasing e-hr applications in their organizations. Have a Master Plan: Many firms initially get involved in e-hr simply by using technology to communicate HR-related information, sucb as employee newsletters and company handbooks to employees. In fact, about 30% of our respondents indicated that their involvement in e-hr was limited to these types of applications. However, as organizations move toward more advanced e-hr systems, a systematic plan should be formulated. In our sample, a little more than 40% or respondents indicated that they had a formal, written plan for human resource information systems in tbeir organizations. More tban baif did not. If not well planned, HR systems easily can become fragmented and frustrating for users. Make Computers Available: If employees are expected to utilize e-hr systems, tbey must he provided access to these systems on a regular basis. 59% of our respondents indicated that most of tbeir employees bad computers on tbeir desks, wbile just over 12% said tbat most of tbeir employees did not bave access to computers at work. Where computers are not already available to employees, some organizations have established kiosks at centralized locations and otbers bave set up computer labs. Stilt others offer computer purchase programs that allow employees to buy computers at a discount and/or pay for computers througb payroll deduction. About 44% of our respondents noted tbat tbeir organization offered some form of a computer purcbase program. Provide Sufficient Training: Wbile more than 97% of our respondents noted tbat tbey used computer-based tecbnology for some of their HR activities, about 40% reported that they did not conduct formal training sessions with employees. Training is a key element in making self-service applications successful (Stanley & Pope, 2000). Training is especially crucial where technology is involved because some employees may be far less computer-literate than others. And, if individuals initially have an unpleasant experience witb e-hr, tbey are unlikely to support future initiatives to expand tbese programs. Retain the HR Staff: Progressive organizations recognize tbat self-service applications do not take tbe place of HR staff members, ratber they free up these professionals to work on more strategic initiatives. And, there is increasing evidence tbat organizations are recognizing the strategic role and importance of HR. About 50% of our respondents noted that the use of computer-based tecbnology for HR services bad a direct impact on tbe "bottom line" and made tbe firm more competitive. Top managers tbat approach e-hr with a mindset that it will allow them to significantly reduce tbe HR staff are not taking advantage of tbe opportunities tbat e-hr provides, to increase HR's added value. Partner with Information Technology (IT): Given recent advances in tecbnology, HR professionals must partner with their organization's IT professionals to ensure tbat employees are using tecbnology appropriately and tbat tbe company is taking sufficient 54 PEOPLE & STRATEGY 31.3

6 advantage of tbe opportunities available. Our respondents, on average., reported that about 64% of their computer-based, HR services were "in-house" and supported by their own IT department. This shows that many organizations already have a working relationship with IT. However, to truly manage technology, HR and IT should develop relationships based on higher levels of communication, openness, and trust. Promote and Encourage: Many individuals who are comfortable with technology likely will welcome a move toward more computer-based, self-service applications. Others wbo are used to personal attention from HR or who have little experience witb computers may resist a move toward e HR. More tban 24% of our respondents indicated tbat tbey had put very Httle effort into promoting computer-based HR applications in their organizations. For many stakeholders, it might be necessary to advertise new HR applications and to offer incentives for using these programs. While e-hr applications continue to increase in organizations, great variation exists in the extent to which it has been implemented. Generally, these results sbow that as e-hr increases, organizations experience a number of positive outcomes. However, e HR must be approached in a systematic manner to help ensure that additional applications can be successfully integrated. REFERENCES Becker. B.K.,ÖC M.A. Husclid (1^98). High Performance Work Systems and Firm Pcrformarite: A Synthesis (if Research and Managerial Implications. Research in Personnel and Human Resource Managetnenl, 16, BIOGRAPHICAL SKETCHES Thomas W. Gainey is Chair of the Management Department in the Richards College of Business at the University of West Georgia. He received his Ph.D. in Management from the University of South Carolina. His research interests include alternative work systems and HRIS. His research has appeared in such journals as Personnel Psychology, Journal of Management, and the Human Resource Management Journal. Brian Klaas is a Professor in the Moore School of Business at the University of South Carolina. He teaches and conducts research in the areas of HR outsourcing, dispute resolution, and compensation. Bussler, L., &C E. Davis, (2002). nformarion systems: The Quiet Revolution in Human Resource Management. The Journal of Computer information Systems, 42:2, Elliott, R., & S. Tfvavichulada 1999). Computer Literacy and Human Resource Manaficmcni: A PublicAVivatf Sector Comparison. Puhlic I'ersnnnel Management. 28:2, Friesen, G.B. (2003). Is Your Client Really Ready for e-hr. Consulting to Management, 14:3, lossi, F. (2001 ). Taking the e-hr PItinge. HR Magazine, 46: 9, Lengnick-Hall, M., & S. Moritz (2003). The Impact of e-hr on the Human Rraource Management funi:tjon. Journal of IMhor Research, 24:3, 365. Kalwarksi, T., D. Mosher, J. Paskin, & T. Rosaro (201)6). Best Jobs in America. Money Magazine and Sabry.cotn. Retrieved May 2006, from McCormick, S. (1998). The Virtual HR Organization. Manügement Accounting, H(l:4, Mirchandani. D., & J. Motwani (2003). Reducing Internet Abuse in the Workplace..SAM Advanced Management Journal, 68:1, 22-26, 55. Moss, D. (2005). Ten Changes that Rocked HR (New Tods of the Trade). HR Magazine, 5lhl^, 40. Overmiin, S. (2002). Well-Designed Self-Service Saves Time, Money. HR Neivs, 21: 12, Pfeffer, ]. (1995]. Producing Sustainable Competitive Advantage Through the Effective Management of People. Academy of Management Executive, 9:1, Stanley, B, & D. Pope (2000). Self Service Ixssons. HR Magazine, 45: Towns, D.M. (2003). E-Harassment in the Workplace. Retrieved April 2006 from I a w. co m/a rticies/2003-all/towns a!l.html. Young, K. (2004). Internet Addiction: A New Clinical Phenomenon and its Consequences. American Behavioral Scientist, 48:4, PEOPLE& STRATEGY

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