Edward Wong Sek Khin 1, Mehdi Poorangi 2, Ahmad Zahiruddin 3 E-HRM AND E-RECRUITMENT FOR SMES: MALAYSIAN PERSPECTIVE

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1 376 НОВИНИ ЗАРУБІЖНОЇ НАУКИ Edward Wong Sek Khin 1, Mehdi Poorangi 2, Ahmad Zahiruddin 3 E-HRM AND E-RECRUITMENT FOR SMES: MALAYSIAN PERSPECTIVE The purpose of this study is the analysis of possibilities and difficulties of e-information practices for SMEs in Malaysia, its effectiveness, practical managerial implications concerning these actions. Statistical analyses of the empirical findings show that in the opinions of SME executives e-recruitment is considered as a subfunction of e-hrm and are seen as a valued technological improvement to the main activities of HRM. This technology is seen as a pathway to improving external and internal interactions and communication between jobseekers, employees, and other stakeholders, as well as a method of building databases. Keywords: E-business; SME; HRM. Едвард Вонг Сек Хін, Мехді Пурангі, Ахмад Захіррудін ЕЛЕКТРОННИЙ КАДРОВИЙ МЕНЕДЖМЕНТ ТА ЕЛЕКТРОННИЙ РЕКРУТИНГ У МАЛОМУ ТА СЕРЕДНЬОМУ БІЗНЕСІ (НА ПРИКЛАДІ МАЛАЙЗІЇ) У статті проаналізовано можливості та труднощі використання електронної інформації малим та середнім бізнесом Малайзії, її ефективність у використанні на практиці. Статистичний аналіз емпіричних результатів показав, що на думку керівників у секторі малого та середнього бізнесу, е-рекрутинг це підфункція електронного кадрового менеджменту, яка сприймається як суттєве технологічне нововведення в галузі кадрового менеджменту. Ця технологія сприймається як спосіб покращити зовнішні та внутрішні комунікації між потенційними робітниками, роботодавцями та іншими стейкхолдерами, а також як метод побудови баз даних. Ключові слова: електронний бізнес; малий та середній бізнес; кадровий менеджмент. Рис. 2. Табл. 1. Літ. 10. Эдвард Вонг Сек Хин, Мехди Пуранги, Ахмад Захиррудин ЭЛЕКТРОННЫЙ КАДРОВЫЙ МЕНЕДЖМЕНТ И ЭЛЕКТРОННЫЙ РЕКРУТИНГ В МАЛОМ И СРЕДНЕМ БИЗНЕСЕ (НА ПРИМЕРЕ МАЛАЙЗИИ) В статье проанализировано возможности и трудности использования электронной информации малым и средним бизнесом Малайзии, ее эффективность в применении на практике. Статистический анализ эмпирических результатов показал, что по мнению руководителей в секторе малого и среднего бизнеса, э-рекрутинг это подфункция электронного кадрового менеджмента, которая видится как существенное технологическое нововведение в области кадрового менеджмента. Данная технология воспринимается как способ улучшить внешние и внутренние коммуникации между потенциальными работниками, работодателями и другими стейкхолдерами, а также как метод построения баз данных. Ключевые слова: электронный бизнес; малый и средний бизнес; кадровый менеджмент. 1 Faculty of Business and Accountancy, University of Malaya, Malaysia. 2 Faculty of Business and Accountancy, University of Malaya, Malaysia. 3 Faculty of Business and Accountancy, University of Malaya, Malaysia. Edward Wong Sek Khin, Mehdi Poorangi, Ahmad Zahiruddin, 2011

2 НОВИНИ ЗАРУБІЖНОЇ НАУКИ 377 Introduction. As organizations are meant to be competitive successful in any competition, this depends upon available resources, especially human resources. All global organizations have to hire the best skilled employees in their catchment or resource area. This employment attitude has shaped the strategic framework for human resource managers known as knowledge, skills, abilities, and other characteristics, that are important for an organization and its objectives (KSAOs ) (Heneman and Judge, 2009). Recruitment is considered a subprocess within the HRM field, while selection and staffing are the key processes of human capital development. Noe and Wright (2006) state that recruitment is the process of identifying and attracting potential employees, whereas selection is the process of making decisions to select these employees though recruitment is considered to be the critical part of organization's human resource development. E-recruitment is a means of using information technology (IT) to perform, speed up or improves this process (Tong and Sivanand, 2005). Development of human resources is an important role of any company aiming at achieving a competitive position over rivals (Noe et al, 2006). Among the main tasks of HRM, recruitment plays the most important role because it deals with acquiring new human resources and these resourses must be acquired effectively, competitively, and systematically (Bratton and Jeffrey, 2007). Information technologies and systems have changed the face of business and this information revolution changes the business world and the conditions of competition (Porter and Miller, 1985). Accordingly, companies are now using information systems and technologies for optimizing their HR activities, like e-hrm and e-recruitment that are widely deployed internationally. It is necessary to present an overview of these 2 topics. E-business has been defined as the transformation of key business processes by internet technologies (Huber et al, 2007). E-HR or e-hrm has been developed when e-commerce and e-business systems were speread at the business world (Olivas-Lujan et al, 2006). E-HRM is the merging of information technology and in HRM and the use of web-based technologies in HR practice and policies. This e-business system is maturing and growing within organizational life (Ruel et al., 2007). Therefore, E- HRM is a concept dealing with the way of "doing" HRM and performing its functions, like recruitment and staffing, electronically being Internet-based and conceptually and practically falling info HRM (Ruel et al., 2002, 2004). SMEs are an important element of Malaysia's economic development, and this direction requires some new policies and attitudes concerning e-recruitment. Malaysia's government has been involved in developing new grounds for SME growth by allocating capital to SMEs and developing specialized centres to promote the development of SMEs. The launch of and imposing of supporting regulations to cope with market and industry's workforce needs are the real aid to local SMEs. From all of this, we can say that implementation of e-recruitment practices and policies in Malaysia is a worthwhy field of study. This study seeks to: 1. to analyze the possibilities and difficulties of e-recruitment practices at SMEs in Malaysia; 2. to elaborate the effectivenes of e-recruitment practices at SMEs in Malaysia; 3. to explain the practical and managerial implications about e-recruitment policies in Malaysia.

3 378 НОВИНИ ЗАРУБІЖНОЇ НАУКИ Conceptual Model and Research Hypotheses. After reviewing the literature on e-business, HRM, and e-rhm, we develop a conceptual framework involving all important issues that should be taken into account when analyzing the significance and effectiveness of an e-recruitment system for small and medium enterprises. According to this framework, e-recruitment as an activity belonging to e-hrm falls under the e-business domain. Understanding the relationship of these elements and their challenges will assist executives and practitioners in developing and executing e- recruitment policies more effectively. According to the findings of the a literature review a conceptual model is shown in Figure 1. Cooperative Competitive Advantage Strategic Alliance Scope of Alliance 1) Small Enterprise with large 2) Large enterprise with small Type of Alliance 1) Financial 2) Competitive 3) Marketing Partner selection Developing & maintaining Ability cooperatively 1) Ability to select fitting partner 2) Ability to share resources 3) Ability to share risk 4) Ability to share control 5) Ability to maintain long term relationships 6) Ability to absorb knowledge 7) Ability to learn 8) Ability to invest International Markets 1) Simple alliance 2) Networking International Markets 1) Simple alliance 2) Networking Figure 1. Conceptual Framework Based on the above literature, this study seeks to determine the existence of the concept of e-recruitment from the e-business and HRM view point among the executives in Malaysia.

4 НОВИНИ ЗАРУБІЖНОЇ НАУКИ 379 The hypotheses are as follow: H1. E-recruitment as an e-business system helps enterprise to reduce costs of traditional recruiting. H2. E-recruitment is a more effective way to develop competitive human capital. H3. SME's executives in Malaysia are aware of the strategic importance of knowledge-workers for their performance. H4. E-recruitment system improves enterprise operational effectiveness. H5. E-recruitment system improves enterprise knowledge management. H6. E-recruitment system enables enterprises to develop intellectual capital more effectively. H7. E-recruitment system assists SME executives to deal with challenges in HRM regarding the skills of job-seekers. H8. Malaysian SMEs do not have enough capacity and ability to adapt e-business systems like e-hrm. H9. Malaysian SME executives prefer to outsource e-recruitment to e-recruiters because of financial and technical constraints. These 9 hypotheses are sketched in Figure 2 in order to show the process of formulating e-recruitment strategies at Malaysian SMEs by executives basing on this study. H1 Cost reduction H2 Competitive Human Capital H3 Knowledge workers Government policies & regulations H4 Operational effectives H5 Intellectual Capitals H6 Knowledge management H7 Dealings with skill dilemma H8 Incapability to adapt e-business H9 Outsourcing recruitments E-recruitment Malaysian context Labour market Formulating & implementing Strategies Figure 2. Hypothesized Field of Study: Malaysian SMEs and E-recruitment Research Method. To test these hypotheses, an empirical study was carried out, using a questionnaire. The questionnaire used for this study is of the close-ended type

5 380 НОВИНИ ЗАРУБІЖНОЇ НАУКИ and includes 17 questions. Some responses are based on the 5-point Likert scale to indicate the attitudes of the SME executives toward e-recruitment systems, and the remaining are simple multiple choice questions which are organized into a 7-page questionnaire. The responses of the sampled SME executives were evaluated using SPSS software and a set of variables was identified and evaluated to form a statistical picture of the questionnaire responses. Results. H1. This hypothesis aims to investigate whether e-recruitment reduces the costs of traditional recruiting. To test the hypothesis a count procedure was conducted and the overall attitudes of the executives were statistically interpreted using a simple frequency technique. This test shows that 74% of executives agree with the statement that e-recruitment reduces the overall costs of the hiring and staffing procedures. To add more statistical details, a chi-square test was also undertaken to test the goodness of fit among these 2 sets. This test reveals that p-value of the test is 0.00 and since that is less than 0.05, there is a significant difference between those who agree and those who disagree. So H1 one is accepted. H2. States that e-recruitment system as an e-business system is an effective way to develop superior and competitive human capital. Similarly to H1, a count procedure converted the attitudinal measures into analyzable numerical ones and then a frequency test revealed that 63% of the executives disagreed with this statement. A non-parametric test was also used and a p-value of was calculated. This value indicated the important difference between agreed and disagree statements and therefore H2 is rejected. H3. Claims that Malaysian SME executives are aware of the importance and criticality of knowledge workers. The results of the frequency analysis also accept this statement and the statistical findings show that up to 66% of the executives declared their support of this statement. Only 34% have not been aware of the importance of knowledge workers and the gap between these 2 groups was identified as an important gap that shows that H3 can be accepted. Moreover, a p-value of 0.00 (less than 0.05) also expresses that the fitness between observed and expected cases also supports this hypothesis. H4. Claims that an e-recruitment system improves operational effectiveness of the HRM system at a SME. The overall attitude of the executives towards this statement was analyzed and frequency analysis of the results show that 68% of SME executives expressed their objection to this hypothesis, they do not believe that e-recruitment system within the e-business system will improve the operational effectiveness. In addition, the results of a non-parametric test also signify this gap between opponents and proponents of this statement. H5. Claims that e-recruitment systems improve knowledge management at Malaysian SMEs. The results show that 67% of SME executives disagreed with this statement and only 33% agreed, showing a distance between the reality of the competitiveness for Malaysian SMEs and the same reality of their overseas competitors. Overall, a big portion of SME executives in Malaysia does not consider e-recruitment system as a tool to improve management of their knowledge resources, particularly human resources as discussed in the literature review. Moreover, a non-parametric test (chi-square) also reveals that there is a significant difference between observed and expected cases and this gap with a p-value of less than 0.05 rejects this hypothe-

6 НОВИНИ ЗАРУБІЖНОЇ НАУКИ 381 sis. Therefore, H5 is rejected since the executives do not take e-recruitment as a knowledge management tool. H6. In its close linkage with H5, this hypothetical statement also links an enterprise's e-recruitment system to creation of intellectual capital as a source of competitive advantage for Malaysian SMEs in today's knowledge economy. For this statement, the results of the survey and the findings of frequency tests show that only 49% of Malaysian executives agree and 51% disagree. This difference is not statistically strong and this gap cannot accept or reject the hypothesis. Therefore, basing on the results of chi-square test we can say that this hypothesis is only slightly rejected, and this issue needs further investigation. H7. The e-recruitment system helps HR managers to deal with the skills of jobseekers more effectively. 58% of SME executives do not think e-recruitment can help them to cope with the problems and difficulties in matching skills of job seekers to their requirements. However, 42% of the executives said they believe this is possible within an e-recruitment system. This difference cannot imply that H7 is rejected and more statistical details are needed. For this hypothesis, a count procedure and then a non-parametric test were used. Goodness of fit through chi-square shows that the p- value is which is less than 0.05 and therefore H7 is rejected: e-recruitment cannot be used as a more effective way to match skills of job-seekers. H8. Addresses the field of SME resources and capabilities in applying e-business systems like e-hrm and e-recruitment especially. To simplify and enhance data collection and to investigate this context, SME executives were asked to express the level of infrastructure development for e-business systems at their enterprises. 43% of the executives believe they do not have enough infrastructure to support adoption and utilization of an e-recruitment system, whereas 30% of the SME executives expressed that their enterprises possess infrastructure to use e-business system, including e-recruitment system, and only 27% of the SMEs are stated to be developing the necessary infrastructure. A p-value of being less than 0.05 also indicates that this hypothesis is accepted and as previously discussed, Malaysian SMEs do not have supporting infrastructure for their business systems for the adoption of an e-recruitment system. H9. Claims that since SMEs normally do not have enough financial and technological resources to develop their own e-recruitment systems, many SMEs in Malaysia outsource e-recruitment to other firms. To test this hypothesis, a frequency test was used to explore the overall rating of executives on this issue. Surprisingly, the results of the test show that 50% of the SME executives are eager to outsource, and other 50% prefer to develop their own e-recruitment systems. It can be argued that H9 cannot be rejected a accepted by these statistical findings. Discussion. The following table shows the results of the study on 9 research hypotheses. In this study 104 small and 94 medium enterprises participated; the statistical results show that at Malaysian SMEs recruitment policies are made mainly by top management (entrepreneur, CEO or owner). It is also shown that manufacturing systems, quality control and automation are the key domains of the SMEs operations to be equipped with an e-business system, but HRM and recruitment are in the near future planning only. In Malaysia E-HRM is mainly intended to speed up the HRM, and e-recruitment is considered as a system to enable SMEs to deal with multicul-

7 382 НОВИНИ ЗАРУБІЖНОЇ НАУКИ tural and multilingual working contexts to improve communication and interaction with employees and job-seekers. Executives at Malaysian SMEs believe that e- recruitment can lead them to a new competitive position at the Malaysian labor market due to the importance of knowledge workers and resource-based competition. The empirical findings of the study also show that Malaysian labor market is facing difficulties in matching skills with job requirements, and e-recruitment systems alone seems to be not able to overcome these challenges and therefore more advanced systems and managerial approaches are required. Also, it is obvious that for Malaysian SMEs outsourcing can be a reliable option to take advantages of e-recruitment in the presence of financial and technological restrictions. Table 1. Synopsis of hypotheses testing Hypothesis Description Status H1 E-recruitment as an e-business system helps accepted enterprises to reduce costs of overall recruiting H2 E-recruitment is a more effective way to develop rejected competitive human capital H3 SME executives in Malaysia are aware of the accepted strategic importance of knowledge workers for the performance H4 E-recruitment system improves operational rejected effectiveness of HRM system at a SME H5 SME need knowledge workers and today s rejected competition is based on managing the knowledge resources H6 Links enterprise s e-recruitment system to creation of rejected not clearly intellectual capital as a source for competitive advantage for Malaysian SMEs H7 E-recruitment system helps HR managers to deal rejected with skills of job-seekers more effectively H8 Lack of supportive infrastructure for e-business accepted systems like e-recruitment H9 Outsourcing e-recruitment accepted not strongly The statistical analysis and the empirical findings of this study show that the overall attitudes and opinions of SME executives on e-recruitment as a subfunction of the integrated e-hrm can speed up the key activities of HRM. However, the findings show that the ability to communicate and manage a multilingual organizational and working environment is the most important operational benefit of a web-based computerized e-hrm and e-recruiting system. This leads to improving external and internal interactions and communications between jobseekers, employees and other stakeholders as well as the ability to use databases to store and retrieve data. These are the main strategic advantages of a recruitment system for SMEs in Malaysia. Conclusions. The findings of this study show that e-recruitment in Malaysia is still in progress and even large firms are not using such systems for their HRM procedures. More attention needs to be paid by the executives, academicians, and practitioners to e-recruitment as an effective e-business system for all firms. Since e-recruitment and integrated e-hrm system require financial and technological resources and SMEs generally lack these resources, outsourcing to some specialized firms such as jobstreet.com and jobsdb.com are valuable options. Therefore, using e-business sys-

8 НОВИНИ ЗАРУБІЖНОЇ НАУКИ 383 tem such as e-recruitment needs a full linkage at a SME's operation level, strategy level and also business level, which indicates on an integration of decision-making and strategy formulation between top management and human resource managers. E-recruitment alone cannot create competitive human capital as it must be strategically embedded in an integrated HRM system that must be developed in full consistency with firm's overall strategy and competitive position. However, this cannot remove the difficulties and complexities of the labor market in terms of skill-matching and these challenges need comprehensive strategies internally and externally for all firms, universities, and governmental agencies to provide a safe ground for both job-seekers and firms to find their appropriate match References: Bratton, J., and Jeffery G. (2007). Human Resource Management: Theory and Practice. 4th edition, Palgrave, Macmillan. Heneman III, H.G., Judge, T.A. (2009). Staffing Organization, 6th edition, Boston, Mcgraw Hill. Huber, M.C.P., Patrick, M. (2007). Information Systems: Creating Business Value, John Wiley and Sons, Noe, R.A., Hollenbeck, J. R., Gerhart, B., Wright, P.M. (2006). Human Resource Management: Gaining A Competitive Advantage, 5th edition, McGraw-Hill. Olivas-Lujan, M.R., Ramirez, J. and Zapata, L. (2006). Human resources and information technology in Mexico a tentative research agenda, Proceedings of the First European Academic Workshop on Electronic Human Resource Management, Enschede, The Netherlands, October Porter, M.E., Miller, V.E. (1985). How information gives you competitive advantage, Harvard Business Review, Vol. 63 No.4, pp Ruel, H., Bondarouk, T. V. & Van Der Velde, M. (2007). The Contribution Of E-HRM To HRM Effectiveness: Results From A Quantitative Study In A Dutch Ministry, Employee Relations, 29, 3, Ruel, H.J.M., Bondarouk, T.V., Looise, J.C. (2004). E-HRM: Innovation or Irritation? An Exploration of Web-Based Human Resource Management in Large Companies, Purdue University Press/Lemma Publishers, Utrecht. Ruel, H.J.M., Looise, J.C., Bondarouk, T. (2002). E-HRM: een verschijnsel nader in kaart gebracht. De ontwikkeling van een model voor praktijk en onderzoek (e-hrm: a phenomenon observed more closely: developing a model for practice and research), Tijdschrift voor HRM [Journal of HRM], Winter. Tong, T.Y.K., Sivanad, C.N. (2005). E-recruitment service provider review, Employee Relations, Volume: 27 Number 1, pp: Стаття надійшла до редакції

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