Impact of Human Resources Information System (HRIS) on the Performance of Firms: A Study on Some Selected Bangladeshi Banks

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1 Impact of Human Resources Information System (HRIS) on the Performance of Firms: A Study on Some Selected Bangladeshi Banks Md Shahnur Azad Chowdhury*, Mohammad Yunus**, Faruk Bhuiyan*** and Mohammad Rokibul Kabir **** While working in organizations in today's highly competitive & changing world people come across situations where they are to take decision which forces them either to stick to an existing practice system or to transform the practice system by getting into a new practice. The same is in the case with technology adoption. Organizations do have a filing system. Everyone has a filing system no matter what whether it is organized or disorganized. With the development of technology the filing procedure is often maintained by using software in PCs (Personal Computers). Some people do it centrally whereas someone decentralizes to maintain this. The local organizations in the country(bangladesh) have been somehow quite reluctant to use technology to the fullest extent at the workplace. As a result of which the system of management becomes a bit disorganized with old school practices. Filing system & indexes are often used by many of the organizations but the problem often occurs with retrieving or finding the files when necessary. If not maintained systematically then there might be problems regarding its retention & effective use. So studies are carried out and must be carried out to show how important it is to have a filing system which is based on software that ensures its retention, timeliness, economy, classification etc. Besides taking the concept of filing one must take into consideration the HR practices of the country. The concept of HRM is quite new in the country and the concept of HRIS (Human Resources Information System) as well. HRIS is so new in our country that only students having courses of HRM becomes aware of the term. Many of the officials of an organization are still unaware with HRIS. The study on HRIS needs to be carried out to show how the systematic arrangement of HR practices help organizations to achieve their goals & aligns itself to the business strategy that it pursues. HRIS its knowledge, adoption, usefulness & process needs to be conveyed to people so that they utilize the benefits of HRIS to the optimum level. The aim of this study is the practice of filing & its updating in some Bangladeshi companies. Besides it will also suggest organizing its practices of HR into a sound and balanced HRIS practices that will benefit the organization to reduce its paperwork & the sensitive issue - privacy can be maintained to the department. Its accessibility can also be ensured with the help of adoption of such type of system. So basically such studies are needed to be carried out to inform the usefulness of adopting technology at workplace & suggests how quickly it can be adopted and transformed to a standard mode of practices. Keywords: HRIS,Performance,Filing system,technology. * Associate Professor, Department of Business Administration, International Islamic University Chittagong, Cell: yunusiiuc48@gmail.com ** Associate Professor, Department of Business Administration, International Islamic University Chittagong. ***Assistant Professor, Department of Business Administration, International Islamic University Chittagong. ****Assistant Professor, Department of Business Administration, International Islamic University Chittagong, Cell: , rakibais@yahoo.com 1

2 1. Introduction Organizations in the twenty first century are under the pressure of reducing cost of operations and the pressure of being responsive to the local customers demand. It is more intense for service oriented organizations, like; university, telecommunication, pharmaceutical, hotel, airline, bank, etc. The success of these organizations mostly depends on the productivity and behavior of their employees. Moreover, satisfied employees are a prerequisite to build satisfied customers (SinEiE, Poloπki, 2007). This is more special in banking industry where employees interact with clients on daily basis. So, to improve the efficiency of bank employees, human resource (HR) department needs to build an integrated information technology-enabled human resource management system. Human Resource Information System (HRIS) is used to gather and maintain the data that describe human resources, transforming data into information and then reporting the information to users (Ngai et al, 2008). HRIS accelerates the effective formulation and implementation of HRM activities. So, the areas that an integrated HRIS cover HRIS is in personnel administration, salary administration, leave/absence recording, skill inventory, medical history, performance appraisal, training and development, HR planning, recruitment, career planning, negotiations etc. (Singh et al., 2011). There are few research paper topics for HRIS in Croatia: HRIS practice in large Croatian companies (Markic et al., 2011), HRIS development at universities (Bambir et al., 2010) and HRIS in hotels at the Adriatic coast (ArneriE et al., 2007). Panayotopoulou et al. (2007) mentioned the several effects of technology on six key HR processes, namely: HR planning; acquiring HR (recruitment and selection); HR evaluation (performance appraisal); communication; rewarding HR (performance appraisal, compensation and benefits); and developing HR (training and development, career management). Further, Beckers and Bsat (2002) identified at least five reasons about the use HRIS by companies, these are: increase competitiveness by improving HR operations; produce a greater number and variety of HR-related reports; shift the focus of HR from the processing of transactions to strategic HRM; make the employees part of HRIS; and reengineer the entire HR function of companies. In spite of having several benefits of HRIS- enabled companies, they are failed to enjoy the full benefits of it. A survey conducted by the Institute of Management and Administration in the year 2002 indicated that the biggest problems in managing HRIS include: lack of staff, lack of budget, problems with time management, need to work with other departments and lack of information technology support (Ngai and Wat, 2006). Since these are rather general obstacles that can relate to any information system, a list of more specific obstacles, when implementing and managing HRIS, would include: unclear about the key persons responsible for basic HRIS design, several national laws and may create complexity in formulating HR policies, threat of losing personal data that HRIS encompasses, and difficult to measure the return on investment (ROI) of HRIS due to its intangibility of ROI of HRIS. In this research, we have tried to explore the areas of HRIS application in banking industry in section 4.1, and mention the benefits of IT-enabled HRM in section 4.2. We have also tried to identify the reasons of being failure to exploit the full benefits of computer based human resource management in section

3 2. Objectives of the Study 1. To discover the scope of HRIS in banking Industry of Bangladesh 2. To investigate the bankers perception about the benefits of HRIs in banks. 3. To pinpoint the inconvenient issues are being faced by the sample banks during the applications of HRIS. 3. Methodology Demographic Characteristics in Methodology Test of data validity: C. Value Standard Status Acceptable Frequency Table regarding HR people having specialized knowledge in the field of HRM: Title No. of HR specialist Percentage Have HR knowledge Don t have sound HR knowledge Total Literature Review: Over the last few decades there has been a considerable expansion in the number of organizations collecting, storing, monitoring, and analyzing information regarding their human talents with the use of Human Resource Information Systems (HRIS) software or other types of software which include HRIS functionality (Ball, 2001; Barron, Chhabra, Hanscome, & Henson, 2004; Hussain, Wallace, & Cornelius, 2007). HRIS refers to a systematic procedure for gathering, storing, maintaining, and recovering data required by an organization about their human resources, personnel activities and organizational characteristics (Kovach, Hughes, Fagan and Maggitti, 2002). An integrated HRIS may have a wide range of usages from simple spread sheets to complex calculations performed easily (Parry 2010). The significance for the execution of HRIS varies among organizations. Some use it to reduce costs, others to accelerate better communication, and some use it to re-orient HR activities to increase the department s strategic contribution (Parry, Tyson, Selbie, & Leighton 2007). Ngai and Wat (2006) conducted a survey of the implementation of HRIS in Hong Kong organizations. They found that the greatest benefits of the implementation of HRIS were the quick response and access to information that it brought. Moreover, the application 3

4 of an HRIS would minimize HR related costs by automating information and reducing the number of HR employees; by facilitating employees to monitor & control their own personal information; and by permitting managers to access relevant information and data, conducts analyses, make decisions, and communicate with others without consulting an HR professional (Awazu & Desouza, 2003). With the undoubted benefits of HRIS, organizations than any time before are more aggressive to use HRIS. But they are not in the position to enjoy it due to some barriers. The study of Krishnan and Singh (2006) explored the issues and barriers faced by nine Indian organizations in implementing and managing HRIS and the findings of the study were lack of knowledge of HR department about HRIS and lack of importance given to HR department in these organizations. 4. Discussions: 4.1 Scope of HRIS Applications in Banks: The scope of HRIS in Banks can be discussed under different sub systems as follows: i. HR planning Subsystem: This subsystem has the role of conducting special studies to provide data on the firm s human resources. Such system consists of two steps: assessing current human resources and meeting future human resource needs. It helps HR managers to ensure that they have the right number and kinds of capable people in the right places and at the right. ii. Recruiting and Selection SS: This subsystem records details of recruitment and selection activities, like; cost and method of recruitment and selection and time to fill the position, and provide necessary information timely to the users. iii. Leave and Absence Management SS: It keeps and provides information relating to HR leave and absence issues. It enables to provide comprehensive method of controlling leave and absences. iv. Skill Inventory SS: It is used to store and disseminate information relating to acquire skills and monitor the skill database both employee and organizational level to the HRIS users. v. Learning Management SS: This system provides a system for organizations to administer and track employee training and development efforts. Sophisticated Learning management systems allow managers to approve training, budgets, and cale4nders alongside performance management and appraisal metrics. vi. Performance Appraisal SS: It provides data on individual employee performance appraisal data, like; due date of appraisal, scores etc. vii: Payroll SS: This subsystem automates the pay process by gathering data on employee time and attendance, calculating various deductions and taxes, and generating periodic pay cheques and employee tax reports. It can encompass all employee related transactions as well as integrate with existing financial management system. viii. Benefits Administration SS: It provides a system for organizations to administer and track employee participation in benefits programs. These typically encompass insurance, profit sharing, retirement benefits, stock purchase option and flexible benefits etc. 4

5 ix. Employee Self Service SS: It allows employees to query HR related data and perform some HR transactions over the system. Employees may query their attendance record from the system without asking the information from HR personnel. x. Collective Bargaining SS: A computer terminal can be positioned in the conference room linked to database. This will expedite negotiations by readily providing up to date data based on facts and figures and not feelings and fictions. xi. Environmental Reporting SS: It provides information about whether organization involves fair HR practices by addressing environmental issues, such; EEO records, EEO analysis, health records, toxic substance, grievances and union increases. 4.2 Respondents Perceptions Opinion about Opportunity Table-3: HRIS enabled organizations offer more opportunity to be informed regarding HR related issues by ensuring open accessibility for all Type of HR issues Strongly Disagree No Agree Strongly Stake Holders Disagree comment Agree Employees Fair treatment Employers Ensuring right appointment Customers Selection of better service provider Recruiting Agencies Govt. Bridging between HR demand and supply Ensuring fair HR practices To find whether the respondents believe that HRIS enabled organizations offer more opportunity to be informed regarding HR related issues by ensuring open accessibility for all the above question has been asked. Out of 35 respondents 21(60%) believe that the use of HRIS provides additional benefit in fair treatment by the employer while 10 respondents (28.5%) think it has no effective role to play in fair treatment. 5

6 About 92% (32) of the respondents agreed that HRIS enabled organizations have advantages of selecting right candidates for them over the traditional organizations. The respondents opinion about its applicability for customers to select the right service provider is not very convincing as only 15 respondents (42.85%) believe it has application while 12 respondents have opinion against it. 8 respondents made no comment on it. Almost all the respondents have given their opinion in favour of its wide scope in recruiting agencies to bridge between the HR demand of different organizations and supply of right candidates best fitted for each individual organization. 20 respondents (57%) feel that the government can ensure fair treatment of employees by different organizations through strict monitoring by using the information provided through HRIS Opinion about Scope To what extent HRIS is being practiced in HR activities Area Frequency Percentage Recruitment & Selection Training & Development Payroll HRIS is being practiced in banks in three different areas called i) Recruitment & Selection ii) Training & Development and iii) Payroll. 80% of the sample banks use HRIS in Recruitment & Selection process while 40% banks uses HRIS in Training & Development and 74% of the sample banks applies it in preparing payrolls of their employees Opinion about Benefits of HRIS Respondents perceptions about the benefit of HRIS applications in HRM process have been sought and the following results have been revealed. 6

7 Use of HRIS in HRM Process Area Recruitment & Selection Training & Development Not important at all Use of HRIS in HRM Process Not that important Neutral Important Very important Payroll Among different areas of applications of HRIS in HRM process respondents have given the highest importance on recruitment and selection process as it is found from the study that about 94.28% (33 out of 35 ) believe it provides more benefits than traditional systems. The second area of HRIS application that provide more benefit than traditional system as described by them is payroll with 82.86% respondents view while training and development is in the last position that derives benefit for the sample organizations among the above mentioned three areas Role of HRIS in saving time on HR functions Role of HRIS in saving time on HR functions: Title Frequency Percentage Yes No Yes No Role of HRIS in HR process Time saving in HR planning Time saving in Recruitment & Selection Time saving

8 in Training Time saving in Record keeping Time saving in Sharing information Time saving in Strategic HR The respondents have given the opinion on the role of HRIS in HR Process for saving time. The results show a mixed response as about its role in saving time having almost equal response for both of yes and no. Still among the respondents, highest 65.71% of the respondent think it saves time in HR planning while 63.3% believe it has role in saving time in Strategic HR. On the other hand about 50% of the respondents think HRIS has no role to play in saving time in training Role of HRIS in saving cost on HR functions Role of HRIS in saving cost: Particulars Frequency Mean Standard Yes No Deviation Cost saving in Recruitment & Selection Cost saving in Training Cost saving in Record keeping Cost saving in Information sharing Cost saving in Documentation

9 A shown in the graph the findings of the survey reveals that HRIS has very important role to play in saving cost for record keeping as about 86.7% of the respondents have their opinion in favour of its role in saving time. Similarly respondents believe that it plays role for saving cost for all the areas of training, information sharing and documentations. The least number of respondents 4.3. Barriers in HRIS Applications Type Barriers of Strongly Disagree Disagree No comment Agree Strongly Agree Freq Uenc y % Frequ ency % Freque ncy % Freq u ency % Freq u ency % Threat of unemploymen t Privacy problem Security risk (individual and org., ) Nepotism, lack institutional knowledge of As shown in table: 4.3 the main the barriers against the application of HRIS are ability of HRIS to check of Nepotism, Threat of unemployment and privacy problem. Among the above causes the highest priority has been given on check of Nepotism as 45% of the respondents think that if HRIS is implemented in the firms then the chance of Nepotism would be minimized. 40% thinks that it introduction of HRIS would create unemployment problem % respondents thinks about the Lack of privacy. Only 17.14% of the total respondents consider the security risk and lack of institutional knowledge as some of the reasons against the tendency of the firm to introduce HRIS. 9

10 5. Summary of Findings: It is found that HRIS is being used in Banks in three different areas as of a)recruitment and selection b) Training and Development c)payroll. Among different areas of applications of HRIS in HRM process respondents have given the highest importance on recruitment and selection which is 98.28% (33 out of 35) and the second area of HRIS which is benefiting the firm is payroll with 82.86%.The result of the roles of HRIS in saving time showed a mixed response. The survey reveals that HRIS has very important role to play in saving cost for record keeping as about 86.7%.3 the main the barriers against the application of HRIS are ability of HRIS to check of Nepotism, Threat of unemployment and privacy problem. 6. Conclusion This research has provided valuable knowledge and information to banking authorities about the importance of HRIS is saving time and cost in the HRM process like Recruitment and selection, training and development, payroll processing etc.it can be concluded that the banks which will install HRIS will be able to reduce the cost and time in HRM process in a considerable amount References: SinEiE, D., Poloπki VokiE, N. (2007), Integrating internal communications, human resource management and marketing concepts into the new internal marketing philosophy, Working paper series, Paper No , Faculty of economics and business, Zagreb. ArneriE, J., Garbin PraniEeviE, D., TadiE, I. (2007), The Use of human resource information systems (HRIS) in Croatian hotels on the Adriatic coast: A survey, Global Business and Economics Antology, Vol. 1, pp MarkiE, D., Horvat, J., Oreπki, D. (2011), Human Resource Information Systems in Croatian Companies, Proceedings of ITI 2011, Zagreb: SveuEiliπni raeunski centar, pp Bambir, D., Hutinski, A., Drozdova, M. (2010), A Review of Some Basic Prerequisites for Human Resource Management Information Systems Implementation at the Universities, Proceedings of the 21st Central European Conference on Information and Intelligent Systems, Varaadin: Fakultet organizacijei informatike, pp Ngai, E., Law, C., Chan, S., Wat, F. (2008), Importance of the Internet to human resource functions in Hong Kong, Personnel Review, Vol 37, No. 1, pp Singh, H. P., Jindal, S., Samim, S. A. (2011), Role of Human Resource Information Systems in Banking Industry of Developing Countrie s, The First International Conference on Interdisciplinary Research and Development, 31 May - 1 June 2011, Thailand. 10

11 Beckers, A. M. and Bsat, M. Z. (2002), A DSS classification model for research in human resource information systems, Information Systems Management, Vol. 19 No. 3, pp Panayotopoulou, L., Vakola, M., Galanaki, E. (2007), E-HR adoption and the role of HRM: evidence from Greece, Personnel Review, Vol. 36 No. 2, pp Ngai, E., Wat F. (2006), Human Resource Information Systems: a review and empirical analysis, Personnel Review, Vol 35, No. 3, pp Parry, E., Tyson, S., Selbie, D., & Leighton, R. (2007). HR and Technology: Impact and Advantages, London: Charted Institute of Personnel and Development. Perry. E. (2010), The benefits of using technology in human resource management, IGI global. Cranfield School of Management. Ngai, E.W. and Wat, F.K. (2006). Human resource information systems: a review and empirical analysis. Human Resource Information Systems, 35, Krishnan, S., & Singh, M. (2006). Issues and concerns in the implementation and maintenance of HRIS. Issues and concerns in the implementation and. Indian institute of management ahmedabad Research and Publication Department in its series IIMA working papers with number WP Ball, K. S. (2001). The Use of Human Resource Information Systems: a Survey. Personnel Review, 30(6), Barron, M., Chhabra, D., Hanscome, R. & Henson, R. (2004). Exclusive Panel Discussion: Tips and Trends in HRIS, HR Focus, 81, 6-7. Hussain, Z., Wallace, J. & Cornelius, N. E. (2007). The Use and Impact of Human Resource Information System on Human Resource Management Professionals, Information and Management, 44(1), Awazu, Y. & Desouza, K. C. (2003). Knowledge Management, HR Magazine, 48(11), 107. Kovach, K.A., Hughes, A.A., Fagan, P., & Maggitti, P.G. (2002). Administrative and strategic advantages of HRIS, Employment Relations Today, 29,

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