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Challenges and Benefits of HRIS Implementation

Human Resource Information Systems: Challenges and Benefits of HRIS of Implementation

Introduction

In today’s fast-paced business environments, especially in larger-sized organizations maintaining many divisions and high volumes of employees, it becomes even more crucial for the human resources manager (and traditional line managers as well) to have access to real-time, employee data so as to develop a streamlined and efficient human resources system. Many organizations, because the need for data is so vital to business success, turn toward HRIS systems, which are information system technologies designed to improve areas of payroll, manager/staff relationships, improve data storage and retrieval, and can even be used to connect the external environment to the internal environment through the use of electronic data systems. There are many challenges and considerations when launching these systems as well as organizational improvements which human resource information systems can provide. This paper describes these challenges and drawbacks to the contemporary human resources practitioner.

What is HRIS System

A human resource information system (HRIS) is “the composite of databases, computer applications, and hardware and software necessary to collect, record, store, manager, deliver, and present data for human resources” (Ngai and Wat, 2006, p.298).

The Benefits of HRIS

The HRIS system is a conglomerate of different electronic systems, the sophistication and price-tag of which is dependent on the specific business or industry, which provides the HR manager and even line manager with real-time data which can be housed until practical HR decisions need to be made. For instance, specific employee demographics such as their skill-set, training, and even compensation can be stored in electronic systems until this data is needed, such as in the event of requiring information about performance when constructing an annual review. This access to real-time data gives HR managers the flexibility required to adopt new models of human resources or simply to improve communications with a high volume employee population in a manner that is both accurate and effective.

Challenges and Benefits of HRIS

The most positive aspect of HRIS involves dramatic technological improvements and are now providing HR managers with more high-tech tools for data storage and data manipulation. For example, companies which have historically-struggled with their payroll systems would likely find the HRIS system a vital tool for improving the delivery of compensation, accuracy of payouts, and the ability to upgrade payroll information at short notice in a real-time environment. “If you’re not able to access your payroll data in a way that allows you to analyze it, it’s difficult to make a meaningful decision” (Grensing-Pophal, 2008, p.36). The HRIS system devoted to payroll allows employee information including insurance information, government-mandated payroll withdrawals, and the ability to automate what had traditionally been a complicated and labor intensive HR function. Some companies simply prefer to outsource payroll function to a third party using their HRIS systems to alleviate time constraints on the HR professional. “Payroll is something that doesn’t make much sense to do in house. Just keeping up with the regulations can be overwhelming” (Grensing-Pophal, 2005, p.33). Outsourcing and linking these external efforts with the extranet can give HR professionals more flexibility and the ability to monitor and regulate the efforts of the outsourced payroll partner.

Further, improvements in relational databases which link separate HR functions gives businesses more data storage and the ability to cross-link employee data with business-related data. The relational database provides “unlimited opportunities to store a virtually limitless amount of data on employees” (Wang, 2006, p.17). The data and memory capacity of these data systems also gives new flexibility for data storage and retrieval in a way that is relevant to the business’ technological needs or HR focus. These improvements in technology have also provided HR professionals with a marketplace with high volumes of competing products to choose from when selecting a vendor to launch and maintain new HRIS systems (Harrison, 2009), which is vital to the cost perspective of the business in reducing the human resources expenditures on an annual basis.

Automation of many HR roles is another superior benefit of implementation of these HRIS systems as it “reduces time and costs for routine HR tasks such as benefit enrollment, vacation requests, and approvals and forms distribution” (Grensing-Pophal, 2008, p.37). From a labor perspective, automating the HR function in these areas will free up a great deal of time for the busy HR professional and allow them to focus on the more human-oriented aspects of job role including better interpersonal relationship development or even the provision of training. The role of HR professional continues to become more complex each and every day, demanding a dynamic, multi-tasking individual with the skills necessary to create a more rewarding organizational culture and business environment. Automation as a benefit of implementation creates positive outcomes for the HR manager by allowing them more time to devote to more important, strategic-minded business issues including coaching and staff development.

HRIS systems also maintain the ability to enhance the organizational culture of a business as various social networking capabilities can be incorporated into the firm’s existing extranet or intranet. Such systems provide “a social tool to collaborate, communication and make real strategic decisions about the business’ people” (Frauenheim, 2009, p.11). Companies which maintain intranets can link multiple databases with the employee job role, such as allowing them to discuss events with managers or colleagues in real-time, avoiding the need for face-to-face interventions in the workplace. This provides a new type of flexibility to the contemporary organization where social networking becomes a commonplace means of communication with internal and external stakeholders. Employees, in more sophisticated networking systems, can even access their own personal files and update their skills profile after completion of mandated training programs to keep HR information up-to-date and fitting of actual employee competencies and skill levels. These types of systems can be accessed and the data manipulated for performance analyses or other skills-related assessment objectives which require accurate employee data.

The time saved on compensation programs is yet another major benefit of HRIS, as programs such as base pay reviews, incentive compensation, and equity-share programs consistently require a great deal of labor-intensive effort on behalf of the HR manager (Kreissl, 2007). Some less-sophisticated HRIS systems simply allow for the use of spreadsheets which can access multiple databases used to store employee data and simplify the process of reviewing employees for increased performance-related compensation. Line managers, as well, can contribute to the effectiveness of these electronic systems by having a data record to input their own assessments on individual employee productivity and ability to meet objectives which gives the HR real-time, 360 degree feedback mechanisms to give a more accurate and timely employee assessment. The HR generalist, in an organization without sophisticated HRIS, typically spends up to half of their job role-related time working and upgrading compensation programs for multiple level employees (Kreissl). A 50 percent reduction in manual effort related to compensation systems gives the HR professional new flexibility in being a more visible and dynamic contributor to employee relationship management.

Empowerment as an outcome of implementing HRIS is yet another benefit of choosing such a system to power the HR job function. A recent study conducted by the Cranfield School of Management identified that HRIS technology can give the line manager a more value-added role in the organization by allowing them access to employee data in a real-time environment (Smedley, 2007). Empowerment is a concept of motivation in which the manager or employee is given new opportunities to flex their creative and innovative selves and also organize their own work functions without senior-level management intervention. There is considerable focus today on aspects of diversity and job role empowerment in the organization as a means of boosting staff and managerial motivation to perform. Rather than using policies and processes to coerce managers to rely on the expertise of human resources experts in the organization, such systems give managers new opportunities to take on additional responsibilities regarding the management of employee-related data. A more motivated and objective-focused organization can lead to productivity improvements, thus the flexible and self-serving nature of some HRIS technologies can lead to a better organizational culture that is motivated to exceed expectations.

Online HRIS tools also provide new motivational outcomes from the employee perspective, as they allow employees to update their basic demographic information, review company policies, request time off, and even review internal job postings without having to rely on HR expertise (Copeland, 2004). Sometimes, even the least sophisticated software can act as an internal communications tool which empowers employees to take a more active role in updating their skills profile. HR managers, due to their complicated demands, may be unaware that a particular employee has developed extended skills through training intervention, thus this employee could be a more positive candidate for future job promotions. Self-service systems allow the employee to access and manipulate this data in a way that is meaningful to their growth expectations in relation to job promotion. The outcome is “improved employee morale and increased efficiency” (Copeland, 2004, p.46). The motivated employee will only be more dedicated to meeting organizational objectives, thus the largest benefit is a more contented workforce that is empowered. “Open, communicative cultures accept employee self-service systems” (Totty, 2003, p.30). Thus, from a cultural perspective, self-service employee database systems can enhance teamworking, job role performance, and build better human capital for the organization.

The Challenges of HRIS

Budget-conscious organizations without a great deal of financial capital might be concerned about the implementation of different human resource information systems. These systems, for multi-tiered organizations maintaining over 100 employees, the costs of implementing a system-wide software system which links the HR function to the broader business environment can be outside of budget capabilities. For instance, SAP is a common HR-oriented system which not only gives data access to the HR professional, but can also link areas of production, payroll and purchasing in a single, conglomerate software package. Airbus, a major manufacturer of commercial airliners, recently integrated SAP to improve the HRIS environment and give self-service capabilities to its existing 55,000 employees (Carrington, 2007). A business must conduct a strategic internal analysis of budget requirements before launching such a sophisticated program as the costs versus benefit of these programs might outweigh the additional flexibility it provides to the practicing HR strategist.

Also, some organizations maintain environments which are so complicated and dependent on different divisional expertise that implementing a new HRIS system becomes a major time problem to ensure a quality implementation and launch of HRIS software packages. “Do not underestimate the amount of effort and investment required by this type of transformation” (Taylor-Arnold, 2007, p.126). When launching new HRIS systems, especially those as sophisticated as Oracle or the aforementioned SAP, data from different divisions is required in order to map out the information systems architecture of the new software being implemented. This requires, generally, multiple meetings with different area managers in order to screen out unneeded or redundant information and also ensure that all aspects of job role function, per division, is incorporated into the structure of the new software package in order to make it meaningful to the current operating environment. Sophisticated HRIS systems can sometimes take two years, with a project team of over 30 representatives in order to achieve implementation success (Taylor-Arnold). For the cost-conscious and deadline-oriented organizational environment, the senior-level decision-makers may wish to consider whether launch of a new HRIS technology would outweigh the long-term benefits offered to the HR manager.

There is also a problem with organizational culture which can arise when launching a new HRIS technology which deals with employees’ inherent desire to avoid change in the organization. Issues such as technology utility (user-friendliness), socialization with colleagues, and level of trust in the actual HRIS technology should be considered prior to launch, from a more psychological perspective. Employees in today’s job environments are motivated by appealing to their sense of security, which as proposed by Abraham Maslow, a famous psychologist (Morris and Maisto, 2005). When employees feel that they are being threatened by a new HRIS software launch, they will often resist the change and be less cooperative toward offering data to assist in its development. This would be especially true in today’s difficult economic environment where multiple domestic and international businesses have difficulty offering employees job security in the existing organizational culture. Prior to developing and launching a new HRIS system, human behavioral tendencies must be considered in order to familiarize employees with the benefits of these systems and indicate that job role security is still present. The challenges to launching a new system, in this case, would be employee interference or lack of cooperation with modeling efforts and would be a potential real-life business scenario in virtually any industry where implementing change is an ongoing problem. Therefore, long-term impact to the organizational culture and the professional relationships must be considered and addressed to appeal to the employees’ sense of security demanded for being less resistant to change such as the implementation of a new HRIS technology. Trust in the HRIS software is a major consideration as well in order to achieve HRIS implementation success (Lippert and Swiercz, 2005).

The need to upgrade existing HRIS technologies can also be a drawback which should be considered from the long-term, strategic approach. It seems that many of today’s HR professionals are taking more of a strategist role than that of support, therefore advancements in technology which quickly obsolete existing technologies could be a budgetary issue for the new HRIS developer. Perpetual upgrades driven by improvements in software and business technology often create the need for memory enhancements or the creation of new applications to support new technologies (Roberts, 2006). These upgrades can, in short time, require the development of new project teams to ensure successful incorporation and also be budget-restrictive. Therefore, a new HRIS launch could lead to long-term problems with sustaining the technology or having it remain relevant to future business or human resources objectives. The longevity of the new HRIS system should be considered as a paramount strategy prior to implementing. Consistent software upgrades are not only budget restrictive, but could create any number of negative outcomes on the organizational culture including resistance to the changes or the need for costly software training to make employees competent to operate these systems.

The open-access method for some online HRIS software packages can also create problems with successful launch of these technologies as employees can inaccurately manipulate the data to create an unrealistic profile of competencies. Self-service HRIS packages, as mentioned previously, can allow employees to access their demographic and benefits-oriented data in the online environment or through integrated intranet systems. Therefore, the business should be considerate of the need to support these technologies, such as having expertise on hand to provide employees with limited versus unrestricted access or the development of certain pass codes and identification for logging into these systems. From a support angle, it is likely that the most sophisticated the HRIS package, the more support into access and access support must be considered and maintained. The HR professional is going to be concerned with data privacy and access authorization for areas such as medical records and other privacy-sensitive employee information and will have to be a determining force in which sector of the business should have open access. This could be a time-restrictive demand on the HR professional, therefore if information technology support is too expensive or unrealistic for the business’ current operating model, consideration about whether implementing these systems will provide added value should be given.

In a business environment which utilizes a flexible benefits plan, the HRIS system can have significant drawbacks on the HR professional role. These systems are ones which “allow employees to select the benefits they prefer from a group of benefits established by the employer” (Mathis and Jackson, 2005, p.465). Flexible benefits, also known as the cafeteria plan, gives employees options to select or deselect various benefits based on personal criteria, whether performance based or otherwise. In this type of system, an HRIS software package offers employees self-service benefits selections in a virtual environment which would be a considerable benefit to the HR manager. However, with multiple employee demographics consistently switching benefits from a master benefits offering could severely complicate the role of the HR manager when implementing an HRIS system to support flex benefits. If the system is not self-service, this will require the HR manager to input extensive manual data and can detract them from other value-added activities such as improving organizational culture or working to satisfy employees’ needs for security. These are realistic drawbacks to implementing such a system where offering employee flexibility provides additional workload to the HR manager in an environment where employee access to performance-related data could not be trusted and authorized.

Also Study: HRIS Implementation Case Study Summary

The implementation of an HRIS software package or technology could also disrupt the organizational effectiveness of the business from the social perspective. Abraham Maslow’s theory of motivation further identifies that employees in a business require a sense of belonging in the organization which appeals to needs for socialization and colleague-respect (Morris and Maisto). When incorporating the HR function into a singular software package, such as a linked system with the employee intranet, it is going to give more access to employees in order to receive important policy changes or benefits offerings (among countless other business scenarios). This automated system of human resources maintains the potential to remove some of the interpersonal aspects between the HR professional and the employee population, thus making the HR manager less aware of what is actually occurring in the real-life employee environment. In order to connect with employees at the interpersonal level, the HR manager may have to conduct employee interviews, perform observational research into the existing employee job environment, or any number of studies when employees are no longer reliant on face-to-face interventions with the HR manager. As identified previously, aspects of positive organizational culture and socialization must be considered as a potential drawback to launching a new HRIS technology. The ability for the ease and convenience provided by HRIS technologies essentially can create a social disconnect between the HR manager and their role in maintaining relationships with managers and subordinates.

Conclusion

There are a wide variety of benefits of HRIS technology which can provide, including the aforementioned ability to create a more accurate and streamlined system for employee review. Employee compensation is often on the forefront of different motivational theory from the HR lens and should therefore be considered due to the motivational outcomes provided by self-service systems and other efficient, internal HRIS systems. Being able to access real-time employee data and other assessments as part of a 360 degree feedback system is a major benefit to HRIS implementation.

The psychological benefits felt by staff members at the organization was also discussed, ranging from the improvement of organizational culture to areas of individual empowerment. Motivation and a sense of belonging serve the business well long-term toward meeting organizational objectives. When employees feel that they have job security and have a sense of belonging within the organization, they will likely be less resistant to change regarding the implementation of new HRIS technologies. Therefore, empowering employees to be an active part of the data updating and retrieval processes will appeal to their sense of belonging demanded on the job. Any organizational productivity or efficiency improvement is a major incentive for implementing these systems.

Even in the cost-conscious organization, there are still HRIS systems which are not as technologically super, such as Oracle and SAP, and can be purchased to satisfy budget restrictions and still meet the business’ needs. Therefore, for the small and even larger sized business, high volumes of competition competing for business can assist the HR manager or business leader in selecting an appropriate system which will bring the most financial and labor-related value possible. However, if the business’ HR consolidation needs are extensive, it should be identified that launch can be considerably expensive and labor-intensive. These are realistic drawbacks in today’s busy and hectic job environments which could outweigh the benefits of implementation in the long-term.

However, despite the drawbacks to implementation, research provided a larger amount of benefits which a business can experience as a result of implementing HRIS technologies. Any system which streamlines the HR function and provides flexibility to explore other important HR roles should be considered, at the very minimum, for launch in any business large or small. HRIS technologies appear to enhance the role of the line manager in executing and developing HR policy and process, which is yet another efficiency-related, positive benefit of HRIS implementation.

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