MAKERERE UNIVERSITY BUSINESS SCHOOL IMPROVING HUMAN RESOURCE MANAGEMENT SERVICES DELIVERY THROUGH INFORMATION TECHNOLOGY: A CASE OF SELECTED

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1 MAKERERE UNIVERSITY BUSINESS SCHOOL IMPROVING HUMAN RESOURCE MANAGEMENT SERVICES DELIVERY THROUGH INFORMATION TECHNOLOGY: A CASE OF SELECTED ORGANISATIONS (PLAN B) BY TUMUHIRWE ORWIN 2009/HD10/17931U A RESEARCH REPORT SUBMITTED TO MAKERERE UNIVERSITY BUSINESS SCHOOL IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF DEGREE OF MASTERS IN HUMAN RESOURCE MANAGEMENT OF MAKERERE UNIVERSITY OCTOBER, 2011

2 DECLARATION I, Tumuhirwe Orwin declare that this research report is my own original work, and it has never been presented to any University or Institution for the award of any academic qualification. SIGN: Tumuhirwe Orwin 2009/HD10/17931U i

3 APPROVAL This is to certify that this research report has been submitted for examination with my approval as university supervisor. SUPERVISOR: MR. BBOSA RONALD ii

4 DEDICATION This piece of work is dedicated to: my Mum and Dad, Mr. and Mrs. Edward Kwatiraho for their bountiful and selfless support, constant encouragement and inspiration towards pursuing academic excellence; my beloved son Matthew who patiently endured endless evenings of my absence as I toiled on; my sisters and brothers Alex, Judith, Pamela, Edwin, Rita and Ivan for their belief in me and endless support; last but not least to my supervisor Mr. Bbosa Ronald, who greatly encouraged and supported me tirelessly during the production of this research report, not forgetting everyone who contributed in one way or another during my academic struggle. iii

5 ACKNOWLEDGEMENT The accomplishment of this thesis could only be achieved by the patience, council, guidance and collaboration of many people to whom I am indebted. I am specifically delighted to mention the following; My family who have been my rock through the times and who have patiently endured the challenging times and borne with all the times we have gone through together, with a constant cheer, I salute you; To the participating respondents, who always warmly welcomed me and made my interviews very fruitful, thank you for opening your doors to me every time I knocked and for providing information to this study in one way or another; To my supervisor, Mr. Bbosa Ronald, thank you for your encouragement, patience, good will and professional guidance. To my classmates especially my group members, I will forever hold special memories of the debates, group work and presentations which we had. These indeed helped to sharpen my interpersonal and presentation skills; to my lecturers at the University, I am grateful to all of you. Without you, Makerere University Business Graduate School would not have been the perfect place for my MA study. I am also indebted to all the other people who helped me in one way or another in my pursuit for academic excellence. I am very grateful indeed for without you this research wouldn t be complete. For all of you, your contributions will always be in my memory. iv

6 TABLE OF CONTENTS DECLARATION... i APPROVAL... ii DEDICATION... iii ACKNOWLEDGEMENT... iv LIST OF TABLES... vii ABSTRACT... viii CHAPTER ONE: INTRODUCTION Background to the Study Statement of the Problem Purpose of the Study Objectives of the Study Research Questions Scope of the Study Significance of the Study... 6 CHAPTER TWO: LITERATURE REVIEW Critical Human Resource Information Systems required for Effective Human Resource Management Service Delivery Human Resource Information Systems and Human Resource Management Service Delivery Challenges of Adopting Human Resource Information Systems Strategies for Introducing, Maintenance and Effective Utilization of Human Resource Information Systems Conclusion CHAPTER THREE: RESEARCH METHODOLOGY Introduction Research design Study Population Sample Size and Design Data sources Research Instruments Measurement of Variables Validity and Reliability of research instrument Data Analysis and Presentation Limitations of the Study v

7 CHAPTER FOUR: PRESENTATION AND INTERPRETATION OF FINDINGS Introduction Sample Characteristics Respondent Category by Gender Respondent Category by Tenure as Employee of the Organisation Respondent Category by Level of Management at the Organization Respondent Category by Highest Level of Education Respondent Category by Age of respondent Objective one: Critical Human Resource Information Systems required for Effective Human Resource Management Service Delivery Objective Two: Impact of Human Resource Information Systems on Human Resource Management Service Delivery Objective Three: Challenges of Adopting Human Resource Information Systems Objective Four: Institutional Level Strategies for Introducing, Maintenance and Effective Utilization of Human Resource Management Information Systems CHAPTER FIVE: DISCUSSION, CONCLUSION AND RECOMMENDATIONS Introduction Discussion of the Findings Objective one: Critical Human Resource Information Systems required for Effective Human Resource Management Service Delivery Objective Two: Impact of Human Resource Information Systems on Human Resource Management Service Delivery Objective Three: Challenges of Adopting Human Resource Information Systems Objective Four: Institutional Level Strategies for Introducing, Maintenance and Effective Utilization of Human Resource Management Information Systems Conclusion Recommendations REFERENCES APPENDIX I vi

8 LIST OF TABLES Table 3.1:Sample Size Table 3.2:Validity and Reliability Table 4.1 Respondent Category by Gender Table 4.2: Tenure as Employee of the Organisation Table 4.3: Level of Management at the Organization Table 4.4: Highest Level of Education Table 4.5: Age of respondent Table 4.6: Critical Human Resource Information Systems required for Effective Human Resource Management Service Delivery Table 4.7: Impact of Human Resource Information Systems on Human Resource Management Service Delivery Table 4.8: Challenges of Adopting Human Resource Information Systems Table 4.9: Institutional Level Strategies for Introducing, Maintenance and Effective Effective Utilization of Human Resource Management Information Systems vii

9 ABSTRACT The study sought to examine the impact of human resource information systems on human resource management service delivery in public and private organisations. The study adopted a cross sectional and quantitative survey design. A sample of 92 respondents was drawn from a study population of 110. The stratified random sampling technique was employed to categorize the respondents and purposive random sampling was used during the selection of the sample. The SPSS computer package was used to analyze the data collected by use of a research administered questionnaire. Findings indicate that 75% of the staff in the HR departments did not possess the required competencies to operate the HRIS and that as a result of the combined knowledge and skills on the HRIS. In regard to the assessment of the impact of Human Resource Information Systems on Human Resource Management Service Delivery, the findings revealed that due to the availability of the HRIS, the HRIS had improved the HR functions at the organizations, HRIS improved the data maintenance process and HRIS improved the data input process. This is confirmed by a global mean of From the findings, several challenges were pointed out among which included lack of funding to acquire, update, and maintain critical HRIS, lack of expertise(s) in IT to operate the HRIS because of the reluctance of the organizations to train, educate and develop the HMIS staff, insufficient financial support, problems with time management of the HRIS implementation process and the need to work with other departments. Some of the strategies put forward to counteract the challenges were ensuring that the sources of funds to cover the costs of setting up and maintaining a HRIS, mobilization of financial resources, support from top management, training of staff on how to operate HRIS, staff attitude change towards the HRIS, sourcing for the required expertise(s) and timeliness during the implementation stage. viii

10 CHAPTER ONE INTRODUCTION 1.1 Background to the Study Human Resource information is key to making effective strategic decisions. Therefore, the use of Human Resource Information Systems (HRIS) has been advocated as an opportunity for human resource (HR) professionals to contribute to organizational strategy. According to Lengnick-Hall, Mark & Moritz (2003) HRIS is a system used to acquire, store, manipulate, analyze, retrieve and distribute pertinent information about an organization s human resources. It is often regarded as a service provided to an organization in the form of information. Human resources and information technology are the two elements that many firms are learning to use as strategic weapons to compete (Ball, 2001). HRIS are expected to make the HR function more efficient but the question remains whether HRIS has lived to this. HRIS are designed to support the planning, administration, decision making and control activities of human resources management (Brown, 2002). Lengnick-Hall and Moritz (2003) posit that HRIS needs to be implemented at three different levels: the publishing of information, the automation of transactions and finally a change in the way human resource management is conducted in the organization by transforming HR into a business strategic partner. In their view, the evolution of HR as promoted by HRIS evolves from information to automation and from automation to transformation. While HRIS have been widely adopted, a transformation of human resource management service delivery has occurred in relatively few organisations hence appreciation of human resource services remains a key question. 1

11 Most public and private organizations have weaknesses in human resource service delivery because of the continued use of manual human resource systems. This explains the limitations faced during acquiring, storing, manipulating, analyzing, retrieval and distribution of critical human resource information. Although HRIS helps constitute activities involved in human resource management, not all organizations consider investing in it. For some managers and or employees the response and efficiency of the HRIS would be of greatest importance, for others the security and privacy issues might be more important, and still for others what matters most may be the system design and ease of use. A source of 5 international non governmental organizations (Malaria Consortium, PACE, World Vision, Oxfam, Save the Children) indicated that these organizations still use a manual HR system which lacks capacity to provide reliable information to sustain human resource management. For example in Malaria Consortium Africa, the inexistence of an HRIS has contributed to situations where there are staff separations from the entity and there are no immediate replacements, poor aggregation of staff bio data and poor scheduling of staff for leave and staff development (Malaria Consortium Annual Report, 2008). For example, a review of the exiting interview reports for the period 2006 to 2010 showed that 11 out of 23 employees that were employed at the organisation cited insufficient consideration had been made to the HR metrics. These included the length of service in making some of the HR service decisions and recruitment of staff towards the end of the lifetime of the project. In World Vision before the introduction of the HRIS too often, personnel files were not well kept. Storage rooms were often overcrowded and security was inadequate. Indexing 2

12 procedures were not always in place and file tracking systems were often lacking. Many times the HR personnel in World Vision had no means of finding who had a file at any particular time, and files could not be retrieved without a major search being launched. This resulted in large amounts of staff time being wasted. Basing on the audit and annual reports in the public service, it was discovered that a significant proportion of the salary bill relates to non-existent 'ghost' workers; yet, at the same time, retired public servants have found it impossible to claim pension payments to which they were entitled because records could not be retrieved. The result, in some ministries is that civil servants maintain two jobs in order to prepare for retirement. In the ministry of Labour, Gender and Social Development, the reports indicated that it took months of effort to go through individual files to analyse the demographic profile of staff. Even then errors occurred because files were moved from one office to another because of reasons of day to day administration. There were delays in identifying vacant posts for promotion as this process was dependant on different tiers of the ministry. There was also no master filing system that enabled names and numerical file codes to be matched and retrieved easily which usually meant that the whole shelves or cabinet of files had to be searched on each occasion. The same reports indicated that the ministry had challenges in leave administration. But this is rarely achieved, because of the manual systems being used to manage HR information. Before the introduction of the HRIS, the NWSC annual report of , indicated that due to the poor payroll management newly recruited staff were not paid to close to 3 or 4 months; in a few extreme cases staff were not paid for a year. Some retired staff died without 3

13 receiving their pension. Also the process of identifying ghost worker- workers who remained on the payroll but were no longer active in the workforce due to termination, retirement and death- and stopping their salaries almost took an average of 6 months with some cases taking nearly two years. For some of the organisations which have taken the step to implement HRIS, they have been met with a lot of resistance and fear by both the members of staff and the HR professionals. Therefore, the use of a HRIS would reduce HR costs by automating information and reducing the need for large numbers of HR employees; by helping employees to control their own personal information; and by allowing managers to access relevant information and data, conduct analysis, make decisions, and communicate with others without consulting an HR professional (Awazu & Desouza, 2003; Ball, 2001). Ideally, with an appropriate use of HRIS, less people should be needed to perform administrative tasks such as record keeping and more time would be made available for HR managers to assist by providing data on a strategic level to make strategic decisions. 1.2 Statement of the Problem In view of the challenges confronting public and private organisations, there is increasing realization of the importance of human resource information systems in improving human resource management. Issues relating to continuous poor record keeping, delayed personal data aggregation, poor talent management and poor staff file management continue to hinder human resource service delivery in the organisations. The undependable HR manual systems may explain why significant decisions are not based on accurate and timely information which compromises performance of those organizations. 4

14 1.3 Purpose of the Study The study sought to examine how human resource information systems can improve human resource management service delivery in public and private organisations. 1.4 Objectives of the Study i) To examine the critical human resource information systems required for effective human resource management service delivery. ii) To determine impact of human resource information systems on human resource management service delivery iii) iv) To examine the challenges of adopting human resource information systems To propose institutional level strategies for introducing, maintenance and effective utilization of human resource management information systems. 1.5 Research Questions i) What critical human resource information systems are required for effective human resource management service delivery? ii) What is the impact of human resource information systems on human resource management service delivery? iii) iv) What are the challenges of adopting human resource information systems? What are the institutional level strategies for introducing, maintenance and effective utilization of human resource management information systems? 5

15 1.6 Scope of the Study Subject Scope: The study focused on examining the impact of human resource information systems on human resource management service delivery in public and private organisations. Area Scope: The study focused on selected public and private organizations which included; National Water and Sewerage Corporation, Uganda Revenue Authority, Ministry of Labour, Gender and Social Development, Civil Aviation Authority, Centaury Bottling Company Uganda Limited, World Vision, PACE Uganda, Oxfam and Malaria Consortium Africa. These were chosen on a basis of those organisations that were planning to implement the human resource management information system, those that were in the process of implementing the system and those organisations that had already implemented and were using the system in the central division of Kampala district. 1.7 Significance of the Study The findings of this study will be significant in different ways. i) The study aims at strengthening the body of knowledge on the theory about human resource management for nongovernmental organizations. ii) The findings of the study will help future researchers, as a basis for further research in the fields of human resource information systems on human resource management service delivery related issues. iii) The findings of study will help HR managers realize the importance of HR systems during records management and decision making processes given that they provide accurate and timely information. 6

16 iv) The findings of the study will help developers of the HR information systems to develop customized and dependable HR systems which address the records management and decision making concerns of public and private organisations. v) The findings of the study will help HR consultants to gain an insight about the effect of human resource information systems on human resource management service delivery which will be used in making recommendations to implementers of human resource information systems. 7

17 CHAPTER TWO LITERATURE REVIEW 2.1 Introduction This chapter focused on a review of the relationship between human resource service delivery through information technology. The review was guided by the objectives that guided this study. 2.2 Critical Human Resource Information Systems required for Effective Human Resource Management Service Delivery The use of Human Resource Information Systems (HRIS) has been advocated as an opportunity for human resource (HR) professionals to become strategic partners with top management. The idea has been that HRIS would allow for the HR function to become more efficient and to provide better information for decision-making. The question remains whether HRIS has fulfilled its promise. In its most basic form HRIS is a system used to acquire, store, manipulate, analyze, retrieve and distribute pertinent information about an organization s human resources. It is often regarded as a service provided to an organization in the form of information (Awazu & Kevin, 2003). Lengnick-Hall and Moritz (2003) have postulated that HRIS will be implemented at three different levels: the publishing of information; the automation of transactions; and, finally, a change in the way human resource management is conducted in the organization by transforming HR into a strategic partner with the line business. In their view, the evolution of HR as promoted by HRIS evolves from information to automation and from automation to transformation. They note that while HRIS has been 8

18 widely deployed, a transformation of human resource management has occurred in relatively few organizations. The evolution that Lengnick-Hall and Moritz propose, along with others (Walker, 2001), revolves around the perspective that HRIS will create informational efficiencies and cost savings such that HR departments can turn their attention to providing better analysis of current data and creative uses of the HRIS to provide better and more accurate data upon which to base strategic decisions. Ultimately the goal of both is to increase human resource service delivery. HRIS efficiency and administrative effectiveness can be described by studies of administrative HRIS, but the overall efficiency and effectiveness of an organization can only be reached through strategic deployment of the information provided by an HRIS. Administrative HRIS is used in day-to-day operations and it is usually in the form of records that hold employee information. Administrative HR is much more efficient when it is used with IT because HR professionals are better able to handle large amounts of information efficiently (Kirstie, 2001). For instance, Watson Wyatt s survey report (2002) concluded that it does not take a high progression of e-hr to reach high HRIS performance on the administrative side. The results showed that a properly integrated e-hr system is the key to the evolution of the system. The survey covered all organization sizes, and the measures used included productivity improvements within the HR organization, cost reductions, return on investment, and enhanced employee communications. They concluded that by properly implementing an e- HR system an organization should be able to reduce the amount of work for which the HR department is responsible which would then leave HR professionals free to concentrate on performing more strategic roles for the organization. 9

19 2.2 Human Resource Information Systems and Human Resource Management Service Delivery Human Resource Management (HRM) has shifted its function within organizations over the last few years. Its function has grown considerably and has shifted into a more strategic role rather than providing support for administrative paperwork. There has been a shift too, in terminology, with the term Strategic Human Resource Management (SHRM) becoming more common (Florkowski, & Olivas-Luja n, 2006). Dave Ulrich, a well-known HR Guru from the University of Michigan says that the purpose of the HR function is simply twofold: firstly, to improve the organisation s capability, and secondly, to improve individual capability within the organisation. To improve Organisation performance and create competitive advantage, the HR team must focus on a new set of priorities. These new priorities are more business, and strategic oriented and less geared towards traditional HR functions such as staffing, training, appraisal and compensation. Strategic priorities include team-based job designs, flexible workforces, quality improvement practices, employee empowerment and incentive compensation. SHRM was designed to diagnose organisation strategic needs and plan the development of talent which is required to implement a competitive strategy and achieve operational goals (Kovach, Allen, Fagan & Patick, 2002). This strategic role not only adds a valuable dimension to the HR function, but also changes the competencies that define HR professional and practitioner success. In response to its new role and responsibilities, HR professionals need a system that can manage as well as handle the traditional HR work. This is where Human Resource 10

20 Information System (HRIS) starts to come in. Human Resource Information Systems (HRIS) refers to the systems and processes at the intersection between human resource management (HRM) and information technology (Kovach & Cathcart, 1999). It merges HRM as a discipline and in particular its basic HR activities and processes with the information technology field and have been used in HR Departments for many years now. It is now expected to drive Human Resource (HR) s transition from an administrative and operational role to a strategic role. Many companies now strive to become world class. The goal is to work and perform in ways that are comparable to the most successful players on the world stage. If we explore the question: What does World Class HR mean in practice we will see two descriptions consistently cited. The first is that World Class HR functions manage their strategic work through the ability to measure what they do, and how they contribute. The second is that World Class HR functions consistently utilize technology to enable them to track, analyse, and report those measures (Mayfield, Mayfield & Lunce, 2003). They also use technology, HRIS, to enable them to continue to handle the traditional transactional HR work which still has to be done! So for companies aspiring to be World Class, Human Resources Information Systems (HRIS) play an important part in an organisations HR function. Any transformation of HR, or of People Management or of Performance Management without paying attention to their HRIS capability and needs will be unable to (a) handle their strategic role and measure their contribution to the organisation, and (b) run the risk of letting the traditional transactional functions of HR administration falls behind, and drag down the transformation efforts by failing to deliver the fundamentals (Ngai & Wat, 2004). After all, we live, work and play in the information technology era. Implementing an effective HRIS keeps the HR 11

21 Department in the right path to deliver more effective and streamlined service to the Organisation. Since the rapid development of technology, software developers are continuously creating new and sophisticated softwares that can help companies execute dayto-day HR administrative tasks as well as enabling them to perform fast and effective recruitment process, performance management, compensation & benefit, etc. They do this by streamlining workflow processes through controlled processes, system interfaces and database validation. Not only should things flow more smoothly, but the big plus for top management and function management is that HRIS helps to ensure a greater control over any HR management related processes, enabling users to follow through tasks more easily (Ordónez de Pablos, 2004). It lets us set measures for task process as well as completion. We can know how far a process has gone, before its too late to speed up or correct direction. Typically, the people in the firm who interact with the HRIS are segmented into three groups: (1) HR professionals, (2) managers in functional areas (production, marketing, engineering etc.) and (3) employees (Rue l, Bondarouk & Looise, 2004).The usages of HRIS have increased quite significantly among Organisations of different sizes due to their enhancing the strategic human resource management role in the company. Despite the fact that it has become quite common amongst HR practitioners it is still uncertain whether the Organisation is using their HRIS optimally in terms of supporting the strategic role of HR. Many organisations still use HRIS as a database pool as well as to complete basic HR transactional tasks only, and have not yet optimised the actual capability of HRIS. If your company is using HRIS, let s assess the benefit of utilizing HRIS by comparing it against the above five reasons (Ruel & Bondarouk, 2008). In brief HRIS is an 12

22 enabler and empower for the HR function, and HRIS can provide line managers with a functionality to meet each of their work unit goals and objectives as well as providing data and analysis, especially for performance appraisal and performance management of their subordinates. Additionally, individual employees can also benefit from HRIS. They can interact more flexibly by having an access to the system and conduct a self-service modification process of many benefit options and administration alternative as well as updating their performance and task achievements status in real-time. 2.3 Challenges of Adopting Human Resource Information Systems Resistance by Employers and Employees: Many employers resist HRIS as they think that it increases cost of manpower as trade unions demand for employee based plans, more facilities and benefits including training and development (Strohmeier, 2006). Trade unions and employees also resist HRIS as they view that it increases the work load of employees and prepares programme for securing the human resources mostly from outside. The other reason for their resistance is that HRIS aims at controlling the employees thorough productivity maximization. Past practices: Perhaps the single greatest barrier to the effective acquisition and deployment of HRIS resources is the condition of current practices being wedded to past practices. The primary mechanism for moving to computerization has been to automate existing manual processes. Although these organisations are more alike than different, a multitude of unique manual processes have grown up at individual organmisations over time. This approach to doing business in the past has represented a major barrier to acquiring standard software packages to support primary functions. 13

23 Training: Lack of training in existing hardware/software and related technologies and inadequate education regarding new developments in MIS are critical barriers to success. Training needs to occur at two levels in these organisations: firstly is the training and development of MIS staff where they exist, and secondly training and education of user department personnel in appropriate technologies. Funding: Funding is a problem in two areas in the orgainsations. The first is lack of funding to acquire, update, and maintain critical HRIS and new technologies; and the second is the specific funding opportunities that create uneven or inappropriate investment in particular technologies especially in donor funded organizations. Because most information technology is acquired through capital grant funding, which is often dictated by particular events and timing, projects in this area do not always conform to strategic need. It is not uncommon to see a significant investment in a particular exotic advanced technology in another wise impoverished organisation. Uncertainties: Uncertainties are quite prominent in human resource practices due to absenteeism, seasonal employment, labor turnover, changing technologies, market conditions making HRIS less reliable. Inadequacies of Information System: Information system regarding human resources has not yet fully been developed due to industries giving low status to personnel department and less importance given to HRIS. ICT Infrastructure: It is expensive to build an infrastructure and to maintain the equipment update. Likewise, there is low connectivity in the third world countries where the 14

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