CH-9-12 Talent Management – Human Resource Information Systems: Basics, Applications, and Future Directions : Chapter Notes

This Document Contains Chapters 9 to 12 Lecture Outline Chapter 9: Talent Management CHAPTER OBJECTIVES After completing this chapter, you should be able to do the following: ❖ Understand the origin of talent management and how it fits within human resources planning (HRP), human capital management, strategic HRM, and corporate strategy ❖ Discuss the evidence for the importance of TM in general and, specifically, in terms of the talent management lifecycle ❖ Discuss the common attributes of talented individuals ❖ Discuss the steps in the development and use of an HRP program ❖ Explain the use of HRP in forecasting supply and demand of new employees ❖ Explain the importance of job analysis and job descriptions to talent management programs ❖ Identify and discuss the important HR metrics for the HRP program of a company. ❖ Explain the difference between a long and short strategy for TM and why it is important ❖ Explain the contribution of a TM program to corporate strategy, as well as the importance of an adaptable workforce ❖ Discuss the effects of corporate culture on the talent management program ❖ Discuss how the use of computer applications in an HRIS support the components of talent management, as well as their use in setting performance goals and evaluating job performance ❖ Discuss how companies are using social networks to recruit talented individuals ❖ Explain the relationship between talent management and performance management and the need to show measurable results on a balanced scorecard ❖ Explain how workforce analytics are used in a TM program ❖ Explain how to measure the success of a TM program INTRODUCTION ➢ Talent management (TM) is not just a title for the HR professional who is the manager of new hiring at a company. The field of TM brings with it a new perspective that unifies recruiting, hiring, training, promoting, and retaining talented individuals who can contribute to the overall growth and competitive advantage of a company. Historically, the management of a company’s talent was primarily focused on hiring individuals who had good experience along with appropriate educational credentials—and then hoping they would fit. Just matching individual skills to specific job requirements is insufficient. ➢ TM requires an HRM plan that is a comprehensive program of using and developing the person’s knowledge, skills, and abilities. The outcome of a TM program nested within the HRM function is that individuals can become high-performing employees who can contribute to the effectiveness and profitability of the company. Defining Talent Management ➢ Talent management has been defined in a number of ways. TM generally refers to the process of hiring, socializing, developing, and retaining employees while, at the same time, attracting highly skilled individuals from the labor market. ➢ A specific definition is provided by Lockwood (2006): “Talent management is the implementation of integrated strategies or systems designed to increase workplace productivity by developing improved processes for attracting, developing, retaining and utilizing people with the required skills and aptitude to meet current and future business needs. ” ➢ More recently, Larry Dunivan (2010) notes that “talent management has become the call to action for a more consultative, knowledge-based role for Human Resources in overall business management. ” In other words, talent management from a technological perspective provides companies the opportunity to collect and leverage rich data about people to respond to business needs. From an Information Systems perspective, the door has been opened to utilize technology to manage the employee lifecycle from recruitment to retirement. Importance of Talent Management ➢ Poll conducted by the Society for Human Resource Management (SHRM) and titled “Challenges Facing Organizations and HR in the Next Ten Years” ➢ Findings: Nearly half the respondents (47%) said that obtaining human capital and optimizing on human capital investments was the top investment challenge for businesses over the next 10 years. ➢ In another survey conducted by CedarCrestone (2010), respondents were asked what HR computer-based application categories would have increased adoption and usage in the near future. ➢ Findings: “Three application categories will grow 90% or more: talent management, social media, and workforce optimization, the latter of which includes workforce planning and workforce analytics. ” The Talent Management Lifecycle ➢ The lifecycle can be created by (1) expanding too quickly into new markets or geographies, (2) the changing needs of the employees, and (3) the ongoing retirement of the baby boomers. ➢ Acquiring and growing a talented human capital workforce that adapts to the new challenges occasioned by changes in the marketplace is key to the talent management lifecycle and, subsequently, to finding the leadership capabilities necessary to compete in the global economy. ➢ But lack of leadership in companies today is not just tied to lack of experience or training. It also comes from (1) expanding too quickly into new markets or geographies, (2) the changing needs of the employees, and (3) the ongoing retirement of the baby boomers. ➢ The first step in the talent management life cycle is to estimate the leadership demand for labor—that is, the number of new leaders needed to replace the retiring baby boomers. The second step is to estimate the supply of leaders available in both the labor market and internal to the company. Then, the difference between the estimated supply and demand for new and potential leaders can be calculated. The final step is to use HR programs to change the difference so that supply and demand are equalized (e. g. , hiring new leaders when needed). When the estimated supply and demand become different, the life cycle begins again. ➢ It is interesting to note that the McKinsey report could not predict what would happen if there were a severe economic downturn. The economic downturn of 2008–2009 kept many baby boomers in the workforce. However, it is still inevitable: baby boomers will eventually leave. ➢ Talent management technologies are globalizing at the fastest rate (of all HR technologies), 46% over the last four years, whereas core HR and payroll technologies are going global more slowly, at the rate of 23%. ➢ The fact that talent management software is more readily adopted globally can be attributed to the “lower impact” legislative requirements with talent management functionality than are typically found with core and payroll processes. ➢ In relation to the TM life cycle, each HR application represents an important part of the progression through TM process. For example, workforce planning, succession planning, and recruiting management compose the early stages of selecting individuals. The remaining four applications would occur while the individuals are going through the phases of the TM program. Attributes for Talent ➢ Although a complete list of the characteristics that make for success is impossible, the following appear to be the common attributes of talented individuals: ▪ Ability to communicate with others using multiple media ▪ Drive; motivation ▪ Ability and willingness to listen to the ideas of others ▪ Problem-solving skills ▪ Imagination ▪ Job Analysis and Human Resources Planning: Part of TM The Role of Job Analysis ➢ Talent management comprises more than recruiting and so will be built on a program of human resource planning (HRP). ➢ The HRP program is closely related to strategic HRM. The aim of an effective HRP program is to have the best available people working in the proper jobs at the appropriate time so that the organization maximizes its productive capacity, which is dependent on forecasts of needed human capital (i. e. , employees). ➢ In order to make these forecasts accurate, however, it is crucial that the knowledge, skills, and abilities (KSA) required in the forecasted jobs be known. Job analysis provides this information by producing job descriptions (as described in Chapter 10). Human Resource Planning (HRP) ➢ HRP begins with the identification of the strategic goals of the company and of how an HRP program can assist in achieving the effective use of the human capital of the company. ➢ Changes in organizational strategy and business objectives will focus attention on the use of the HRP program to estimate three factors related to an organization’s employees: ▪ Number of employees needed for growth or decline ▪ Required competencies and behaviors of these employees ▪ Required levels of productivity expected from these employees ➢ In this model, the HRP program involves three major phases: (1) setting HRP objectives, (2) planning personnel programs, and (3) evaluation and control. ➢ Phase 1: Setting HRP Objectives ▪ Requires estimating demand and supply of human capital ▪ Comparing estimated supply with estimated demand ▪ The inequality (gap between supply and demand) leads to setting HRP objectives ➢ Phase 2: Planning HR Programs ▪ Where demand exceeds supply, a new recruiting program could be initiated ▪ Where supply exceeds demand, a downsizing program could be initiated ➢ Phase 3: Evaluation and Control ▪ Can lead to setting new HRP objectives ▪ How useful were the HR programs in closing the gap Workforce Management/Human Resources Planning With an HRIS ● Workforce planning systems (WPS) are available from a number of vendors. Their capabilities can be found in a variety of enterprise applications and stand-alone tools. ● The primary purpose of a WPS is to get the right people with the right skill sets in the right place at the right time to meet customer demand. A good example of a WPS is offered by Towers Watson (http://www. Towers watson. com/en/Insights/IC-Types/Survey-Research-Results/2012/11/workforce-planning-translating-the-business-plan-into-the-people-plan). ● Other vendors who have WPS include SuccessFactors (www. Success factors. com), Workforce Planning Associates, Inc. (www. Workforce planning. com), and Workforce Software (http://www. Work force software. com). Each of these websites provides information on WPS/HRP, as well as discussing its uses and benefits. Long- and Short-Term Strategic Importance of Talent Management ➢ In the long term, organizations need to invest now in employee talent to sustain a competitive advantage over time. ➢ When the economy goes sour, investment in human capital may be suspended. Short-term tactics must be put in place to get past the economic downturn until conditions improve and the long-term strategy can be reinstated. ➢ Long-term talent management strategies also need to be linked to corporate strategy. One very important strategy that must be maintained despite the state of the marketplace is corporate brand management. It has been confirmed repeatedly that the best labor talent is linked to highly regarded corporations that have excellent brand images. Google, for example, is considered the number-one brand in the world—over $100 billion worth in value. As a result of this brand image, the company receives over 1,000 résumés each day. ➢ Talent Management and Corporate Strategy ➢ The fundamental requirement to connect business and corporate strategy to HRP and talent management is based on the capability to be able to adapt to changes in the global economy. ➢ The central question is, “How can HR make a substantial contribution to executing a firm’s business strategy when many executives at corporations still treat HR as a line of business focused on transactions and compliance?” ➢ HR departments need to take on a value creation role to support corporate and business unit strategy. Becker et al. (2001) argue that the HR function has to become a high-performance system, “where every element of the HR system (selection, rewards, performance management, development etc. ) is designed to maximize the quality of human capital in the organization. ” Anticipating Change and Creating an Adaptable Workforce ➢ Since change is given as a constant within any business, then companies need a workforce that can adapt to changes. ➢ A study done by IBM (2008) found that three key capabilities were found to influence a workforce’s ability to adapt to change: ▪ First, organizations must be capable of predicting their future skill requirements. ▪ Second, they need to effectively identify and locate experts. ▪ Third, they must be able to collaborate across their organizations, connecting individuals and groups that are separated by organizations’ boundaries, time zones, and cultures. ➢ The HR department needs to establish programs to assess the existing skills of employees, to develop new skills through training, and to create job conditions that help retain valued employees. Talent can be nurtured from within an organization by training. When the necessary skills are still not available from a workforce adaptable to change, then an organization must look to hire from the outside. ➢ Just as the marketplace for doing business is in constant change, so too are the HRM programs to develop talent within an organization and create an adaptable workforce. ➢ Mentoring, formal education, and job rotation have been available for years and have been used effectively by many companies. When the business climate changes, some long-term HR programs specific to talent management may get shelved or substituted for something else. ➢ It may be cheaper to acquire existing talented professionals from outside the company rather than to hire university graduates and spend time and money on extensive training programs. However, it may also be more difficult for newly hired and talented individuals to assimilate to the organization’s culture, which might clash with the values and culture they experienced at their previous jobs. Talent Management and Corporate Culture ➢ Choosing the right knowledge, skills, and abilities (KSA) to require of job applicants is important for an organization looking to hiring talented individuals. But what are the organizational factors that a prospective applicant seeks when choosing an employer? There seems to be one attribute of an organization that is considered important and valued by almost all applicants: the culture of the organization. ➢ Corporate culture is based on the values that are seen as important to all members of a company. Corporate culture is developed as part of social networking and the creation of social and work norms when individuals work together as a group. Schein (1985), in an early definition of corporate culture, describes it as involving an understanding of what constitutes correct attitudes and perceptions, one that is shared by coworkers. ➢ A study done by the Aberdeen Group indicated that organizational fit, also known as cultural fit, surpassed other organizational attributes for first-time applicants. If the company culture does not match the values, interests, work habits, and personality of the applicant, then that applicant either will not take the job or will only stay for a short while. TALENT MANAGEMENT AND INFORMATION SYSTEMS The Link Between Talent Management and Human Resource Information Systems ➢ Measuring the return on investment (ROI) for human capital, as described in Chapter 7, has to be reflected in the HR balanced score card program to justify its acquisition and use. Talent management (TM) is just one of many components involving the investment in human capital. ➢ The importance of using an HRIS is to ensure that the HR programs of attracting, hiring, educating, and nurturing employees are executed well and consistently over time because this is the heart of the talent management program. ➢ The numeric results of the components of the HRM program that compose the criteria for the TM program are (1) the number of talented individuals hired, (2) the job performance of these talented individuals, and (3) the retention of these individuals. The HRIS can capture these results based on performance criteria, so it is possible to measure how well HR programs perform, as part of the overall talent management program. ➢ Information systems can be found in every aspect of talent management, from conducting job analysis to focusing on the human capital demand and supply for current and future jobs, attracting the right talent in a specific location, hiring based upon desired attributes, and retaining high-performing employees. ➢ No matter how an HRIS is used to support talent management or other functional business areas, accurate and timely data are the key to successful program operations. An organization needs not only to collect data about potential job applicants but also to know the skills of the current employee resource pool. ➢ If the organization does not have the capability to develop the necessary HR business programs and processes, this is probably the time to use outside HRIS consulting companies. The key starting point for any consulting group is performing a business strategy assessment for an organization, and the organization should not proceed with a vendor until this project is finished. No information system will fix, enhance, or salvage a poorly defined business strategy plan. ➢ The talent management functional areas offered by application software products include many of the topics that we have already covered in this chapter, such as skills assessment, succession planning, recruiting management, career development, and employee lifecycle. There are also a number of consulting firms that can help tailor an application package for a company and help to implement it. ➢ Since talent management is only one component of human capital management (HCM), there are many questions that need to be answered when one initiates a general HRP program that includes TM and considers how to best use the HRIS to support this program. Is there an existing HRIS system in use today that has software that can support talent management? If not, should you build the new system inhouse, buy an out-of-the-box application, or outsource all of the processes to a vendor who specializes in TM? How will critical, secure data be protected for prospective applicants across multiple systems and, for MNEs, across multiple geographic regions? ➢ Information systems can be found in every aspect of talent management, from conducting job analysis to focusing on the human capital demand and supply for current and future jobs, attracting the right talent in a specific location, hiring based on desired attributes, and retaining high-performing employees. Ultimately, the HR department of an organization would use an HRIS to monitor and measure the overall contributions of talented employees with other results on a balanced scorecard, and these results could affect the design of other HRM programs. ➢ Today’s talent management software applications are increasingly deployed using a SaaS approach. SaaS/hosted applications have grown in most of the HRM programs that support a talent management strategy ➢ Before planning new HR programs to resolve the gap between forecasted demand and supply of human capital, a company needs to know what skills exist in the current workforce and what skills are needed based on the future strategy, and it needs a systematic approach to acquiring this information. An HRIS can be of great assistance in providing information on current employee skills, succession relationships, and leadership readiness. Recruiting Top Talent Using Social Networks ➢ Social networking using the Web has become popular with recruiters and potential applicants. Print ads in newspapers are still being used but at a considerably lower rate than 10 years ago. These social networks (e. g. , Facebook, LinkedIn, and Plaxo) are just media to increase the flow of information for making social connections. It is accurate to remember that many employees hired by a given company were referred to the HR department by a friend already working in the company. ➢ Recruiters searching for top talent also must be aware of their own company’s website and ask themselves if it has enough information for applicants to be interested in envisioning working for the company. A company website needs to target not only potential customers but also high-potential applicants. 1. Does the website make it difficult to find the link to career paths? 2. Does the link use the word careers or the phrase job opportunities? 3. Are there employee testimonial videos or videos from senior-level executives discussing the company’s culture and mission? 4. Is it easy to use the search engine to find specific jobs? 5. Are there too many steps for an applicant trying to submit a résumé and apply for a job? 6. What is the process to contact the applicant after he or she has applied for a job? 7. Is there any follow-up contact over a period of time? ➢ See Chapter 12 for more information related to these questions and for a broader discussion of e-recruiting. Using Information Systems to Set Goals and Evaluate Performance ➢ Tying measurable goals to company strategy is important. Studies have found that overall employee productivity increases along with company morale when employee goals are aligned with company strategy. ➢ There are many packaged goal alignment software tools available in the market to help show the value of an employee’s contribution to an organization. SuccessFactors (2010) is a company that specializes in business alignment and performance management software that assists in managing the employees’ lifecycle in an organization. ➢ Subjectivity will never be removed from any manager–employee relationship or from any performance review, but HRIS package tools provide a basis from which to monitor performance results that are recorded throughout the course of the performance measurement cycle. ➢ Many performance tools utilize the SMART acronym for goal setting. SMART has gone through various interpretations over the years since it was first introduced by Doran (1981). In the article, Doran established the acronym SMART to describe how to write performance goals. The acronym SMART stands for (1) specific, (2) measurable, (3) attainable or acceptable, (4) reasonable or results oriented, and (5) timely. Using Analytics for Talent Management ➢ Analytics, by themselves, cannot solve everything, but it is a very powerful tool to analyze data and to provide the fuel for intelligent decision making—good information. In short, analytics can be used to gain a competitive advantage in the marketplace. ➢ Deploying an analytic software package, however, does not tell you what specific kind of data you should be analyzing or what questions need to be asked. The skill of knowing the right questions still has to come from the business professional. When questions become complicated and linked to other areas of the business or the amount of data that needs to be analyzed is huge, then a skilled business intelligence (BI) person is a necessary resource; you need someone able to get the most out of the software package. Using Analytics for Talent Management ➢ Using workforce analytics to manage talent can involve asking many questions about an individual person or a group of employees. A simple question about an individual employee’s history is answered by using a query program against the employee data warehouse. However, the real purpose of analytics for talent management is to use the analytics to model, in terms of skills and abilities of employees who were successful in the company, against a pool of existing employees or new potential hires to determine their possibility of success in the organization. ➢ For new hires, an employer may like to know the demographics of existing, successful employees to see if the company image and recruiting programs are attracting the right individuals to the company. ➢ For existing employees, analytics can be used to understand the personal characteristics of successful employees. Data such as previous work experiences and education and training both within and outside the company can be collected and analyzed to determine what helps prepare these employees for success. Measuring the Success of Talent Management ➢ As baby boomers retire and leave the workforce, both the competition to attract and the costs of acquiring new, highly talented individuals are only going to increase. Many boomers may delay retirement due to the 2008 economic crisis and the lack of stability associated with pensions, but, at some point, there will be a labor shortage that needs to be addressed by HR executives. ➢ The HR organization will also be under heavy pressure to provide a succession plan for key executive roles, as well as a succession plan for the company’s board of directors. All of the costs associated with acquiring the best applicants will have to be justified and approved by financial management using an ROI calculation, no matter if the job is for a senior executive or a new sales representative. ➢ Given that the costs of developing succession plans and acquiring talented workers will increase in the future, it is important to measure the success of these programs over a period of time. Performance management and its use within the balanced scorecard will be critical in justifying the extra expenditures needed to acquire the most talented individuals in the market. ➢ The key to performance management is to ensure there are measurable performance criteria that an employee can realistically achieve over a period of time. ➢ Measuring performance results is critical in today’s workplace. This results-oriented perspective is not just limited to the sales department, where results can be measured against quota objectives. It now exists in all departments, from marketing, which measures campaign results by tracking new customers, to procurement, which accepts a new purchase order application that saves double the cost. This results-oriented perspective is also expected in the HR department. The HR organization needs to compare the costs of current or proposed programs to the financial benefits produced. Then, the overall result can be expressed as a cost–benefit ratio, and this information can be reflected on the balanced scorecard. Lecture Outline Chapter 10: Recruitment and Selection in an Internet Context CHAPTER OBJECTIVES After completing this chapter, you should be able to do the following: ❖ Understand the relationship between the Internet and organizational recruiting objectives ❖ Discuss the potential advantages and disadvantages of online recruitment in the framework of recruiting objectives ❖ Discuss recruitment strategies and social networking ❖ Understand the relationship between e-recruitment and HRIS ❖ Understand the relationship between selection and assessment with HRIS ❖ Discuss the technological issues that influence selection and the solutions that have been reached ❖ Understand the value of HRIS selection applications through the use of utility analysis INTRODUCTION The focus of this chapter is to consider the impact of technology on the recruitment and selection processes in organizations. ● In the recruitment section, we address the objectives of the recruitment process and whether or not online recruitment is helping to achieve these objectives. The recruitment objectives, which are based on the model of Breagh and Starke (2000), include cost of filling a job opening, speed of filling a job opening, psychological contract fulfillment, employee satisfaction, retention rates, quality of applicants, quantity of applicants, and diversity of applicants. ● We also discuss the impact of the attributes of the organizational website on applications and the use of social networking. ● In the selection section, we address the importance of assessment and its role in HRIS. Technology issues surrounding selection, such as validity, computerized assessment, security, and proctoring, are also discussed. We then present the ways that HRIS has been integrated with the function of selection and assessment to address the issues mentioned previously. Finally, we demonstrate HR’s value with HRIS selection applications through the use of utility analysis. ● RECRUITMENT AND TECHNOLOGY ● The goal of the recruitment function is to identify, attract, and hire the most qualified people (Cascio, 2013). However, this task has become quite challenging because there is a growing competition for talent in the labor market. ● Companies are increasingly being required to expand their search for applicants beyond local and domestic borders in order to find qualified talent. As a result, they have begun using the Internet as a means of attracting job applicants. In the United States, over 90% of large companies use the Internet to recruit applicants for job openings ● The Impact of Online Recruitment on Recruitment Objectives Research by Breaugh and Starke (2000) has identified a number of objectives for the recruitment process, including (a) cost, (b) speed of filling job vacancies, (c) psychological contract fulfillment, (d) satisfaction and retention rates, (e) quality and quantity of applicants, and (f) diversity of applicants. One important recruitment objective that organizations constantly strive for is to minimize the cost of filling job openings. Research has consistently shown that online recruitment does reduce costs. For example, one study shows that organizations saved 95% of recruitment costs when they used online recruitment as opposed to more traditional methods (e. g. , newspaper ads). Other estimates reveal that the cost of traditional systems of recruitment was $8,000 to $10,000 per position compared with $900 for online recruitment. Decision makers should examine the specifics of their recruitment situation and not just assume that online recruitment saves money for all organizations. First, HR professionals need to consider whether or not online recruitment is appropriate for their company. More specifically, organizations need to plan how to process résumés and screen out those applicants who do not possess the qualifications needed. Failure to think through the entire process may generate greater administrative burdens for the HR department or departmental managers. When dealing with a website for recruiting, you may find it useful to monitor the numbers of hits your company’s websites are receiving on career pages. However, the number of hits on a website is only one small component in measuring effectiveness. For example, a recent study examined the sources job seekers were currently using for new opportunities and how they actually found their present positions. The results showed that over 90% would use or were actively using online sources to find work. The study further reported that only 30% found their present positions through online means. Organizations need to track the outcomes (e. g. , successful placements) of using online recruitment and compare these outcomes with those achieved by other recruiting methods. Another recruitment objective for assessing the effectiveness of recruitment is the speed of filling the job vacancy. Research has shown that online recruitment can decrease cycle time and increase the efficiency of the process by allowing organizations to spend less time gathering and sorting data. One estimate indicated that online recruitment can decrease hiring cycle time by 25% (Cober et al. , 2000). Another study using data from 50 Fortune 500 companies showed that the use of online recruitment reduced their average hiring cycle time of 43 days by 6 days and allowed them to cut 4 days off the application process. Psychological contract fulfillment, employee satisfaction, and retention rates are three other important goals of the recruitment process. The psychological contract refers to the employees’ beliefs about the reciprocal obligations and promises between them and their organizations. Not surprisingly, when employees believe that their psychological contracts with the organization have been breached, they are more dissatisfied and more likely to leave the organization. There are numerous types of expectations that shape the psychological contract. These expectations include the work role (skills use and job performance), social relations (coworker and customer interactions), economic rewards (raises and monetary incentives), and company culture. Therefore, it is critical during the recruitment phase that both the potential employee and the employer communicate what these expectations are and recognize whether this employment relationship will be able to meet the expectations of both parties (Baker, 1985). Information that is provided by the applicant and by the recruiting company is a crucial part of the recruitment process. Oftentimes, the recruitment process is rushed by the recruiters, who want to complete the task of filling job openings. When a process is rushed, job seekers may find incomplete or vague information regarding job openings and company expectations. Furthermore, when job seekers receive sugarcoated information from recruiters that exaggerates the opportunities and provides unrealistic expectations about the company, then the expectations of employees are incongruent with those of the organization. Inaccurate, overly optimistic, or vague information is something organizations need to minimize or avoid. Given that numerous companies now have their own websites, which contain a job page and endless space to provide information, more realistic information can be offered to job seekers. A realistic recruitment message is one that describes the organization and the job as they truly are without sugarcoating. One important tool many organizations use is the realistic job preview. A realistic job preview shows applicants the positive and negative attributes of a job they are applying for to see if this job is truly what they desire or thought it was. In addition to realistic job previews, organizations are also using the unlimited space on their company websites to provide a realistic culture preview. A realistic culture preview allows an organization to expand beyond the traditional job information and provide information about the company philosophy, value systems, history, diversity, salary structure, and benefits. A company’s employment brand can be a powerful tool to attract applicants to its website. A company’s employment brand is often based on the organization’s well-known values or distinctive image and culture (think Southwest Airlines or Apple). Quantity of Applicants Online recruitment is extremely convenient for applicants and is available to them 24 hours per day and 7 days a week. It also allows them to fill out an online application or upload a résumé for various positions in a matter of seconds. Although this convenience can be very beneficial, it may encourage applicants to apply for jobs without assessing their own qualifications for each job, which can result in a large number of applicants for every job opening. Two other important goals of the recruitment process are to generate highly qualified applicants with diverse backgrounds. The quality and diversity of the applicant pool are determined by the users of online recruitment. Some research indicates that online recruitment systems place artificial limits on the applicant pool. Most applicants who typically use online recruitment are computer-literate, well-educated, driven individuals with a high need for achievement, seeking relatively high-level jobs. However, research also shows that these applicants are more likely to be job hoppers than those who do not use online recruitment. In addition, online recruitment users often have low levels of computer anxiety or high levels of computer self-efficacy. Research has also found that college students preferred online recruitment methods as compared with other recruitment methods such as newspapers or television. Overall, it is apparent that online recruitment may help organizations meet the objective of increasing the number of job applicants. However, it is not clear whether the use of online recruitment will help organizations attract high-quality applicants. If an organization is looking for job applicants with particular skills (e. g. , computer skills), then it may be able to find and attract such applicants with online recruitment. However, the use of online recruitment may also result in some dysfunctional consequences. Attributes of Recruiting Website ● In general, the best website design is user-friendly, in that users can easily navigate and browse through multiple webpages to find information. ● The extent to which the website is usable or not has been referred to as website usability in the empirical literature. The construct of website usability has been conceptualized as encompassing a number of dimensions including navigability, content information, and aesthetic features. ● Navigability can be defined as the overall ease with which a user can browse through multiple webpages to locate topics of interest. Hosting a website that displays current information and includes active hyperlinks to retrieve information is essential in maintaining user interest within the site. To achieve this goal, organizations should follow the “three-click” rule for users to locate information of interest. ● Content information refers to the degree to which the website hosts relevant information that the user deems valuable and informative in nature. Providing information that the user desires is another mechanism by which organizations can sustain user interest and satisfaction with the website. ● The media richness theory has been frequently applied to explain why hosting relevant content information is beneficial to applicants. Specifically, this theory contends that communication effectiveness is a function of the degree to which media sources reduce user uncertainty and equivocality. ● When organizations posted employee testimonials on their employment webpages, their sites generated greater organizational attraction than other websites that did not have such testimonials. Consequently, hosting information that applicants value will most likely facilitate person–job (P-J) and person–organization (P-O) “fit”-related decisions. ● The more customizable information an organization provides on its webpage, the more likely an applicant will engage in appropriate self-selection behavior (to apply or not apply for a job within the organization). In other words, if the website provides direct feedback to applicants regarding their P-O or P-J fit, the online recruiting effort will likely attract a more qualified applicant pool. ● Companies should consider how the aesthetic features of their websites engage user interest and attention. These features encompass the overall stylistic or innovative aspects of a website, such as contrasting colors, pictures, animation, and playfulness, which keep the user engaged while he or she navigates through multiple webpages. ● Integrating these attributes together, a website’s usability has been found to affect applicant perceptions and attitudes toward the organization. A recent meta-analytic study found a corrected correlation coefficient of . 41 between website usability and organizational attraction—in other words, the more usable the website was perceived, the more likely the applicant was attracted to the organization. ● Recruitment Strategies and Social Networking ● The increasing popularity and use of social networking sites, such as Facebook, MySpace and LinkedIn now provide a unique method of allowing recruitment professionals to source, contact, and screen both active and passive job candidates. ● The Society of HRM (SHRM) conducted a survey about the use of social networking websites (SNWs)and recruitment (SHRM, 2008). The salient findings of this research are as below: ● Social networking sites and online search engines are being used more frequently now as an HR tool than they were 2 years ago. However, most organizations do not have a formal policy on this. ● They are primarily used to search for passive applicants, particularly at the middle-management levels, who might not otherwise apply or be contacted by an organization. ● They are, however, not used to screen applicants because of the legal issues associated with using social networking sites and not being able to verify with confidence the information. ● Negative information provided in the social networking sites, such as revealing confidential information about former or current employers; slanderous discussion of the applicant’s friends, peers, or coworkers; and information on the applicant’s profile page that contradict that provided on the applicant’s resume, has a greater influence on hiring decisions than positive information. ● Considering the legal implications, many question whether SNWs are a worthwhile recruitment source and screening device. For instance, do SNWs yield higher-quality applicants, and are they more economical in terms of cost per hire than traditional sources such as employee referrals? Unfortunately, very few organizations calculate the return on investment (ROI) of their SNW usage in recruitment. The Relationship of E-Recruitment and HRIS The applicant’s information acquired through the company’s online recruitment can be funneled into the company’s HRIS. The use of the HRIS in the recruitment process can make the process more efficient and effective by having information readily available and usable at a moment’s notice. One important function the HRIS provides is applicant tracking. Applicant tracking allows for the generation of applicants’ profiles, which are compiled through application blanks and/or resumes. These profiles can aid the hiring manager in his or her employment decisions. Recruiters or the hiring managers can perform keyword searches to find qualified applicants for available jobs. Applicant tracking also allows recruiters, hiring managers, and sometimes the applicant themselves to see where they are in the recruitment process. The HRIS can provide information about the yield ratios for each recruiting source, cost effectiveness of the recruitment process as a whole or by recruitment source, and to support EEO/AA analyses. Applicant data can be also stored and searched for future vacancies. Lastly, when applicants become new hires, the HRIS provides the data to populate the core HR system and other HR purposes, such as payroll and benefits. Online Recruitment Guidelines Stone, Lukaszewski, and Isenhour (2005) offer the following research-based guidelines on the effective design and use of online recruitment strategies: ● Online recruiting is more suitable for well-known firms with excellent employer branding. ● It should be used as one of the many sources of recruitment. ● It is more suitable when many candidates are needed for high-level jobs requiring high levels of education. ● Organizations should be aware of the limitations of this method, such as its limited ability to attract highly qualified candidates and minority candidates. It may in fact attract job hoppers. ● The websites should be easy to use and navigate and designed to attract, not screen, candidates. ● Online screening systems should be based on job analyses. ● E-recruiting systems should provide realistic previews of jobs and of the firms. ● The effectiveness should be regularly reviewed and continuously improved based on feedback from job applicants. ● Online recruiting should be culturally sensitive and suit people from diverse backgrounds including those with low education levels and low computer self-efficacy. ● Online recruiting must incorporate privacy protection policies, including those limiting the collection of information to only employment-specific data and those restricting access to and distribution of such data. SELECTION AND TECHNOLOGY ● This section focuses on tests and assessments of individual employees and candidates, which are at the heart of the evaluation processes that enable organizations to manage their talent. ● These tools are used for selecting employees, placing them in positions in the organization, training and developing them, promoting them, and evaluating them. ● Tests and assessments are important for HRIS because they provide data that are used for making organizational decisions. What Are Selection Tests and Assessments, and Why Are They Used? Tests and assessments are job-related decision-making tools that provide information about candidates, information that organizations can use in selection. Selection procedures refer to any procedure used singly or in combination to make a personnel decision, including but not limited to paper-and-pencil tests, computer-administered tests, performance tests, work samples, inventories (e. g. , personality or interest), projective techniques (ambiguous stimuli such as inkblots or pictures, often used for personality assessment), polygraph (lie detector) examinations, individual assessments, assessment center evaluations (summaries of multiple assessments, as evaluated by multiple raters), biographical data forms or scored application blanks, interviews, educational requirements, experience requirements, reference checks, background investigations, physical requirements (e. g. , height or weight), physical-ability tests, appraisals of job performance, computer-based test interpretations, and estimates of advancement potential. Why Is Assessment Important for HRIS? When used for employee selection, assessments have value because they assist organizations in identifying those individuals who are more likely to succeed on the job and prevent the hire of those who are less likely to succeed. The following list describes several reasons it is important for HR managers to understand the purpose and use of assessments. ● All organizations use assessments ● Organization leaders know employees’ abilities, skills, and personal attributes are critical for success. ● Some selection systems work better than others. ● Employee selection is regulated by antidiscrimination laws. ● The value of selection is quantifiable. ● Technology Issues in Selection The most common use of technology for selection systems is the use of computers to administer and score tests. HRIS experts need to be aware of several general concerns about the computer administration of selection procedures. ● First, if traditional paper-and-pencil assessments are computerized, does the computer version have different measurement properties? ● Second, as the capabilities of microprocessors increase, it is possible to make assessments that more closely simulate the job with high fidelity—that is, one that closely approximates the work that would be done once the candidate is hired. What are the benefits and risks of high-fidelity work simulations? ● Third, how does online testing affect the validity of selection systems? Does the technological ability to take a test anywhere, and organizations’ increasing interests in using that ability, compromise the test security that is present in traditional settings with proctored examinations? Equivalence Between Conventional and Computerized Assessments ● Organizations tend to assume that paper-and-pencil and computerized forms (versions) of a test are interchangeable, assuming that the test items and instructions are the same. ● However, the assumption of equivalence may not be justified, and the HRIS expert must know when the assumption is warranted. The primary concern is that the mode of administration (paper or computer) will affect the measurement properties of the test. Bandwidth Versus Fidelity: How Closely Should We Simulate the Job? ● Technology has enabled organizations to create work sample simulations that represent the job with high fidelity. Company leaders may want this because they believe that no assessment could be nearly as good as a simulation that closely matches the work that will be performed on the job. Correlation Between Assessment Scores and Job Performance ● However, an analysis of decades of assessment research has found that general cognitive ability tests can, on average, predict success virtually as well as simulations, and when combined with other types of assessments, they can exceed the predictive ability of simulations. ● Creating an assessment that looks just like the job might have a narrow range of uses. Also, simulations generally require that the job candidate already know how to do the job, at least at some basic level, or that the job is simple enough that so that the candidate can learn the job tasks quickly to perform the simulation. In general, HRIS managers should keep in mind that, depending on the effort and expense one is willing to expend on assessment development and installation, lower-fidelity simulations and/or combinations of other types of assessments might be preferable. Validity and Security Issues Created by Unproctored Online Testing ● Numerous consulting companies offer online tests. These tests may be administered in the same way as paper-and-pencil or stand-alone computer tests, conducted in an office by a proctor who gives instructions, checks identification, and monitors the test session. ● Online testing also allows for the possibility of unproctored (unsupervised) administration, with tests taken anywhere, at any time. ● Such testing can be attractive to organizations because of the convenience for both the candidate and the hiring organization. ● The issues included establishing candidate identity, test security and cheating, and fair access to testing for minorities. Applying HRIS to Selection and Assessment Selection systems are information management systems for organizational decision-making and administration. Therefore, HRIS plays an important part in their development and use. One uniquely HRIS-centered role is database design. Selection systems require the careful design of systems to store and keep track of individuals’ selection data, pre-hire and post-hire, and the ability to link information in interrelated systems, such as candidate test data and demographics, employment data for those who are hired, and job movement and position histories within the company. Another is the development of scoring and decision rules and administrative functions of the system. ● Test Access and Security: HR must decide how candidates will gain access to the test (By permission? Will there be prescreening? Is testing open to anyone?)and how the test content will be kept secure. ● Test Inventory and Administrative Privileges: The HRIS expert must consider how the computerized tests will be purchased and inventoried (if accessed from a vendor) and who should be assigned the right to work with particular types of test data. Will there be multiple levels of access? Will individuals be able to delegate record-viewing rights to others? ● Options for Scoring: Will there be multiple ways to score an assessment, with a variety of possible scoring rules? How might examinees’ scores be compared to these of reference groups in order to make these scores more meaningful? ● Accessing Results: In what data format and by what methods will test results be stored, transmitted, and interpreted? ● Applying Test Policies: What organizational requirements will affect the testing methods (e. g. , systems that allow accommodations for disabilities) and the data that are kept and used (e. g. , mandatory waiting periods before retests)? Demonstrating the HRM’s Value With HRIS Selection Applications The HRIS manager plays a key role in proving the value of a selection system through knowledge of how to obtain and use the right data on individual and organizational outcomes that will demonstrate a return on investment in the system. This expertise is also critical for defending the selection system, which is generally a high-stakes event: the use of the selection information determines individual careers and the company’s ultimate success. The quality of the candidate may be defined in the following ways: 1. The proportion who are successful on the job 2. The average numeric value of an outcome of interest (such as number of products sold or customers served) 3. The dollar amount of benefit resulting to the organization (such as the annual increase in revenue) If a selection system produces a higher proportion of successful candidates (for instance, a 10% increase in the number of new financial advisors who, once hired, can pass a government-mandated licensure exam), then that system has clear value to the company. The same can be said of a selection system that results in an increase in some performance criterion (e. g. , cable service technicians who are able to complete an average of 20% more installations per day as a result of testing). And the same can be said for a benefit that can be measured in dollars (for instance, the result that for every 10 points higher a salesperson scored on a sales skill assessment, annual sales increased by $1,000). There are many approaches to estimating utility, aside from an anecdotal approach (Does it seem like more people are successful on the job now?). ● One of the simplest approaches is to conduct pre/post comparisons of measurable performance to see if the selection system has coincided with a change in performance. ● As a more precise alternative, industrial/organizational psychologists frequently use a utility formula that takes several factors into account: the selection ratio; the validity coefficient, expressed as the correlation between assessment scores and criteria (outcomes); and information about the dollar value of performance. CHAPTER SUMMARY In summary, this chapter explained the intersection between the use of technology in the selection process and the use of HRIS in organizations. This highlighted the need for HRIS experts to understand how to use selection-related data in order to provide strategic information to the company and demonstrate the return on the company’s investment in assessments. In addition, technology issues surrounding the selection process were addressed. Measurement properties of paper-and-pencil assessments and their computer versions were discussed. The mode of assessments that does not include measurements of ability is of little concern for researchers since giving these tests on paper will not result in a different measure from that obtained with a computerized test. A second issue focused on in this chapter is the trade-off between fidelity and bandwidth. In general, HRIS managers should keep in mind that, depending on the effort and expense one is willing to expend on assessment development and installation, lower-fidelity simulations or combinations of other types of assessments might be preferable. One of the final issues dealt with was un-proctored testing, which can be convenient to both the applicant and the organization. Unfortunately, this means of delivering assessment gives way to a floodgate of concerns, such as how to verify candidate identity, provide test security and eliminate cheating, and ensure fair access to testing for minorities. The chapter further examined the role that HRIS experts have to play in solving these problems through the use of technology and the decision to develop and use an HRIS. Lecture Outline Chapter 11: Training and Development: Issues and Human Resource Information Systems Applications CHAPTER OBJECTIVES After completing this chapter, you should be able to do the following: ❖ Discuss how training can be used as a source of competitive advantage ❖ Differentiate between training and development (T&D) ❖ Understand how training and development affects both learning and motivation ❖ Explain the steps in a systems model of training ❖ Understand the essential features of the culture of a learning organization ❖ Explain the factors that influence transfer of training ❖ Understand both the costs and the benefits metrics associated with training ❖ Discuss the critical importance of the evaluation of training ❖ Understand MIS, HRMS, and DSS (see Chapter 1) training applications ❖ Explain the advantages and disadvantages of Web-based learning ❖ Develop a practical application, using EXCEL, in the evaluation of training INTRODUCTION The nature of work and the structure of organizations are rapidly changing. Internationalization, globalization, changing customer expectations of service and quality standards require firms to improve and transform themselves perpetually to remain competitive. In the new global economy, knowledge is now the new lever for success, since knowledge potentially adds more value than the traditional factors of production—capital, raw material, and labor (Harrison, 2005). This new knowledge-based economy is “directly based on production, distribution and use of knowledge and information. Knowledge is now recognised as the driver of productivity and economic growth, leading to a new focus on the role of information, technology, and learning in economic performance. ” The learning, training, and development (LT&D) of employees is now center stage in today’s organizations to ensure long-term competitiveness, excellence, quality, flexibility, and adaptability. Organizations also train and develop their workforce to enable employees to cope with their daily workload. Training and development also alleviates possible future skills shortages. High commitment organizations train and develop their employees to foster employee motivation and satisfaction (Pfeffer, 1996, 1998). In a time where job security is diminishing and where employability is of increasing value, employees place much greater emphasis on career prospects and career development in their choice of employer. Most large organizations utilize human resource information systems (HRIS) to collect, store, and analyze training and development information. This information is generally contained in specialist talent management modules, training and development modules, and/or learning management systems to reflect the strategic importance of LT&D in the organization. This chapter examines the strategic implications of implications of training and development before it covers the systems model of training and development (T&D). This section will look in detail at its four stages of the systems model—identifying T&D needs, designing T&D solutions, implementing T&D, and evaluating T&D. Then, training metrics and benefit analysis will be discussed. The next section investigates some HRIS applications in training and some implementation issues. The chapter concludes with a summary of the key issues. TRAINING AND DEVELOPMENT: STRATEGIC IMPLICATIONS AND LEARNINGORGANIZATIONS ● Education is aimed at developing, usually as part of a formal program of study, general knowledge, understanding, and moral values. ● Training refers to the planned acquisition of knowledge, skills, and abilities (KSA) to carry out a specific task or job in a vocational setting. The purpose of training interventions is to attain a positive change in performance. ● Development is a continuous process of systematic advancement, of “becoming increasingly more complex, more elaborate and differentiated, by virtue of learning and maturation” (Collin, 2007, p. 266). ● Learning is defined as the process of assimilating new knowledge and skills in consequence of experience or practice that will bring about relatively permanent changes in behavior. ● Skills are directly related to performance and the ability to carry out a task. ● Bloom’s taxonomy of learning, for example, identifies six increasingly higher levels of thinking: knowledge, comprehension, application, analysis, synthesis, and evaluation (Bloom et al. , 1956). ● Competences compose the KSA and underlying characteristics of a person that allow the jobholder to perform a task effectively. ● The knowledge of employees is a tacit commodity, an intangible asset. It is associated with an understanding of and a constructive application of information (Grant, 1996). ● Knowledge management essentially consists of five separate activities, which are the acquisition, documentation, transfer, creation, and application of knowledge (Yahya & Goh, 2002). ● A learning culture is one of the key levers for organizational learning, training, and development. Transfer of training is far more likely to occur in an environment where the basic assumptions, shared values, norms, and artifacts of an organization espouse successful LT&D, where employees are encouraged to create, process, and share information and knowledge (Cummings & Worley, 2001). A T&D intervention can only be considered successful if transfer of training has occurred and a permanent change in behavior has taken place. ● Andragogy, or the study of adult learning, purports that adults learn best when the following hold true: 1. They know the reason(s) for learning a new concept or skill. 2. They are actively involved in creating and setting the learning activity. 3. They can connect new learning to the knowledge and experience they have developed over time. 4. Learning is problem centered. 5. They believe a learning activity is immediately relevant to their job. 6. They are internally rather than externally motivated to learn. In other words, they learn when they can see a benefit (Knowles, Holton & Swanson, 2005). ● A learning culture is one of the key levers for organizational learning, training, and development. Transfer of training is far more likely to occur in an environment where the basic assumptions, shared values, norms, and artifacts of an organization espouse successful LT&D, where employees are encouraged to create, process, and share information and knowledge (Cummings & Worley, 2001). A T&D intervention can only be considered successful if transfer of training has occurred and a permanent change in behavior has taken place. ● Learning at an individual or organizational level is ineluctably linked to the creation and management of knowledge. Learning is the basis for any T&D activity. The outcomes of learning include skills, competencies, know-how or tacit knowledge, and higher-level cognitive and other skills. Skills are directly related to performance and the ability to carry out a task. It has been argued that new organizational realities require higher levels of cognitive skills. Bloom’s taxonomy of learning, for example, identifies six increasingly higher levels of thinking: knowledge, comprehension, application, analysis, synthesis, and evaluation. ● Competencies consist of KSA and the underlying characteristics of a person that allow the jobholder to perform a task effectively. The knowledge of employees is a tacit commodity, an intangible asset. It is associated with an understanding of and a constructive application of information. ● In a knowledge-based economy, organizations must become knowledge productive, and employees must become knowledge workers and knowledge assets. Knowledge-intensive organizations are those that heavily depend on knowledge creation and knowledge sharing, such as firms with a significant research and development focus or consultancy firms. Knowledge management (KM) essentially consists of five separate activities, which are the acquisition, documentation, transfer, creation, and application of knowledge. ● Whereas knowledge is generated by individuals, organizational knowledge and learning are the result of the combined learning of everybody in the organization and the acquisition of knowledgeable individuals. ● The sharing, codifying, storing, and replicating of knowledge within the organization is greatly facilitated by information and communication technology (ICT). Consequently, KM focuses on the interaction of human beings and ICT and the subsequent creation of knowledge and, in addition, on the alignment of technology with people systems within a firm. ● The HR department plays a vital role in determining where, among employees, tacit knowledge exists; what type of knowledge is present; and whether and to what degree this knowledge is conducive to attaining present and future organizational goals. ● One of the most influential proponents of the learning organization is Peter Senge. In his book, The Fifth Discipline, he puts forward five interrelated disciplines that an organization should cultivate among its employees to engender learning and success (Senge, 1990): o Personal mastery: individual growth and learning o Mental models: deep-rooted assumptions that affect the way in which employees perceive people, situations, and organizations o Shared visions: a shared view of the organization’s future o Team learning: a shift from individual learning to collective learning o Systems thinking: or the “fifth discipline,” which connects the previous disciplines (Burnes, 2004) o HRIS training and development applications play a fundamental role in fostering organizational learning. These applications provide organizations with a mechanism to assess, measure, facilitate, manage, and record systematically the LT&D of each employee and thus the entire organization. In that way, HRIS LT&D applications also support HRIS talent management and performance management applications. For instance, LT&D applications may be utilized to manage the training and development of high-potential employees. In addition, employees’ training records could feed into their performance evaluations. Systems Model of Training and Development ● One of the most frequently cited models is the systems or systematic approach. This formal or planned approach to workforce T&D consists of four interrelated and connected steps. ● The steps are arranged as a cycle to highlight the cyclical and continuous nature of the process. The systems model, then, is conceptualized as an ongoing activity, in much the same way as is employee development. Thus, the model is applicable to both T&D. ● Its simplicity and clear structure make it ideally suited in the context of HRIS applications in this area. ● The model provides a rational foundation for the allocation of resources throughout the T&D process. However, the systematic model has also received some criticism because of its simplicity, the fact that it is a closed system, and because it does not take account of individual differences of the learners. 1. Identifying T&D needs. The first step of the systems model is concerned with the identification of the learning and development needs of organizational members. The training needs analysis (TNA) is the key activity of the systematic approach and essentially serves to identify any discrepancies, the T&D “gap,” between existing KSA and those required in the present and in the future. ● Training needs may arise at three distinct levels: organizational level, job level, and personal level. ● Because of the crucial importance and comprehensive nature of the TNA, many organizations employ a HRIS to collect, store, and analyze training needs data, thus ensuring that resulting information is both timely and accurate. Data sources range from business objectives and statistics, at the organizational level, to job descriptions and output levels, at the job level, to staff appraisals, biographical data, and individual training records, at the personal level. 2. Developing T&D initiatives. The second stage of the cycle focuses on the development of T&D initiatives, objectives, and methods, which should be capable of meeting the three levels of needs identified during the first phase, the TNA. ● A learning activity can be considered successful if it leads to transfer of learning, as well as a noticeable and permanent change in behavior in the trainees. ● The aim of the HRIS, in this context, is to compare employee training data with subsequent performance data. Successful learning events must achieve a best fit between the content of what is to be learned, the media through which content is delivered, and the method used to facilitate learning. e-learning. e-Learning (also e-learning, E-learning, or eLearning) is an umbrella term and broadly refers to any learning facilitated using electronic means. E-learning can capitalize on a variety of delivery media depending on the approach taken: Printed media (including textbooks but also online text and online magazines and journals) Audio (e. g. , traditional audio tapes, CDs, mp3s, wav, and other electronic file formats) Video (e. g. , traditional videotape, CD-ROM, interactive video, DVDs, video streaming, or satellite or cable transmissions) Other combined media including hypermedia, collaborative software or social networking technology (e. g. , websites, discussion forums, e-mail, blogs, wikis, MySpace, YouTube, Twitter, Facebook, or LinkedIn). Although it is important to make a distinction between different forms of collaboration, most e-learning combines various types of communication, collaboration, e-learning methods, and, in some cases, more traditional approaches to maximize learning transfer. Testing and assessment of e-learning may rely on traditional paper-based methods, electronic submission of files, and/or interactive assignments (including online discussions). The combination of e-learning methods with traditional face-to-face methods is referred to as blended learning. The key advantage of e-learning is flexibility—that is, it affords learners with the choice over what, when, where, and how much is learned. The key disadvantages center on the lack of human contact and technological issues. ● While standard e-learning solutions can take months to develop, rapid e-learning (REL) or just-in-time learning solutions may be developed in weeks, days, or even hours depending on the complexity of materials to be created. Essentially, REL allows companies to produce a large amount of content, using limited resources, in a short time interval, which can be delivered in real time to a large number of people. Therefore, it is not surprising that industry observers predict significant increases in the REL market in the years to come. REL has a number of key characteristics: o It has a short development time. o Subject matter experts (SMEs) act as the key source of content development. o It can be created using standard presentation software. o It allows for easy assessment and tracking of training. o Auxiliary multimedia tools (including flash applications) can be used to enhance training experience. o Training units can be undertaken in minutes rather than hours. o It can be synchronous as well as asynchronous (Bersin, 2005). REL should be ideally used to deal with o urgent and training needs, o short shelf life of training, o critical information needs and standard information broadcasts, o training that is purely informational in nature, o training that does not require mastery, o prerequisite and introductory training, and o training updates. Salas et al. (2005) offer several research-based guidelines for designing e-learning packages. Even though these guidelines pertain to distance-based learning, they are relevant and useful for other e-learning methods as well: ● Only provide e-learning when you are sure it meets the organization’s specific learning and development needs. ● Train learners on computer basics before offering computer-based training. ● Take into consideration human cognitive processes when designing e-learning programs. ● Enhance the learning experience by including graphics, texts, and learning games in the presentation of learning topics. ● Keep learners engaged by offering blended learning and allowing interaction among trainees and between trainees and facilitators. ● Offer trainees control over certain aspects of instruction, and guide them through the learning process by using tools, such as cognitive maps. Implementing T&D. The third stage of the systems model of T&D involves the implementation of training. To ensure that the implementation phase runs smoothly, organizations ought to formulate an implementation plan, which should specify ● the resources required, ● how training should be carried out, ● who should facilitate training, and ● the period within which training should occur. ● Training Transfer Positive and long-lasting changes in employee behavior and ultimately increased shareholder value can only be attained if training (or learning) transfer occurs. Training transfer is the continuous application of the KSA acquired during the training exercise. Various classifications of transfer of training exist depending on the context. ● Near versus far (How close is the training task to the actual job task?) ● Specific versus general (transfer of skills vs. transfer of principles) ● Positive versus negative (linked to the perception of the training experience) ● Lateral versus vertical o Lateral transfer is about the application of training to similar tasks at the same level of complexity while vertical transfer implies analysis and synthesis—that is, the ability to apply training to more complex tasks. Training transfer depends on a number of variables, which can be summarized under five headings: o Trainee characteristics (the trainee’s predisposition to training) o Training design (the organization of the learning environment) o Work environment (the immediate factors at work that affect transfer) o Learning and retention o Generalization and maintenance (ensuring that the trainee is given the opportunity to continuously use the acquired KSA) o Evaluating T&D. In order to assess whether a particular training initiative, method, or solution has met the training needs and objectives of the firm and whether transfer of learning has taken place, organizations must evaluate their T&D efforts. ● Training evaluation is not an isolated activity. It is part of the T&D cycle and must be considered alongside and aligned with needs analysis, design, and implementation to provide a holistic picture of the entire T&D process. ● Not all training can be assessed in the same manner, considering the diversity in training methods. ● Once an evaluation has been carried out, the results must be analyzed and fed back into the training process. ● The final step is omitted in many evaluation models, even though it is crucially important to use evaluation data to make decisions on future training initiatives. ● A HRIS can be invaluable in supporting this process as it contains a vast amount of data relating to training and performance, which can form the basis of any T&D decision making. ● Lateral transfer is about the application of training to similar tasks at the same level of complexity while vertical transfer implies analysis and synthesis—that is, the ability to apply training to more complex tasks (Gagné, 1985). Training transfer depends on a number of variables, which can be summarized under five headings (Baldwin & Ford, 1988): 1. Trainee characteristics (the trainee’s predisposition to training) 2. Training design (the organization of the learning environment) 3. Work environment (the immediate factors at work that affect transfer) 4. Learning and retention 5. Generalization and maintenance (ensuring that the trainee is given the opportunity to continuously use the acquired KSA) Training Outcomes ● Training outcomes fall into a number of distinct categories. The number of training evaluation models in the literature seems almost infinite. ● Kirkpatrick (1960) suggests four levels of outcomes comprising reaction, learning, behavior, and results. ● Warr et al. ’s (1970) CIRO framework entails context, inputs, reactions, and outcomes (immediate, intermediate, and ultimate). ● Easterby-Smith (1986) suggests a CAPIO framework comprising context, administration, process, inputs, and outputs. ● A comparison of these and other frameworks reveals a significant overlap between these evaluation models and a number of key learning outcomes contained therein. TRAINING METRICS AND COST–BENEFIT ANALYSIS The costs involved in training can be established relatively easily. These overheads can be substantial and involve direct costs and indirect costs (see Chapter 6 for cost–benefit analysis) (Noe, 2002). A considerable direct cost is the loss of production sustained through the absence of trainees from work for the duration of the training. E-learning significantly reduces the element of direct costs, as trainees generally do not have to leave their place of work to participate in online training (provided they have access to a computer). Online courses may also be taken outside of work. In many cases, employees can avail of online training through an intranet, which can be accessed from work and from home, thus allowing for greater flexibility at a reduced cost. Benefits However, the actual benefits to the firm may be much more difficult to ascertain, as many of the benefits take a long time to materialize or can often be of an intangible nature. Russ-Eft and Pre-skill (2005) highlight three critical factors in human resource development evaluation, which complicate the assessment of training outcomes: 1. Evaluation occurs within a complex, dynamic, and variable environment. 2. Evaluation is essentially a political activity. 3. Evaluation ought to be purposeful, planned, and systematic. Phillips’s (1996c; 2005) ROI methodology (or ROI process) produces six types of data, which are based on Kirkpatrick’s (1960) evaluation taxonomy: 1. Reaction, satisfaction, and planned action 2. Learning and application 3. Implementation 4. Business ROI 5. Intangibles The ROI method advocates five useful steps for converting hard (tangible) data and soft (intangible) data into monetary values: 1. Focus on a single unit of improvement in output, quality, or time. 2. Determine a value for each data unit. 3. Calculate the change in output performance directly attributable to training. 4. Obtain an annual amount of the monetary value of the change in performance. 5. Determine the annual value (the annual performance change times the unit value). 6. HRIS APPLICATIONS IN TRAINING Today, firms place much greater demands on training applications in terms of compatibility with existing systems, analytical functionality, and accessibility to meet business needs. The primary demand on any system, however, must be that it furnishes usable information to key decision makers in order to achieve both administrative and strategic advantages. HRIS information should possess three key characteristics: 1. It must be presented in a user-friendly manner. 2. It must be meaningful and appropriate 3. It must be used effectively in the decision making process to support an organization’s overall business strategy HRIS / Learning Management Systems: LMS The vast majority of large organizations rely on fully integrated enterprise-wide systems, called enterprise resource planning (ERP) systems, to satisfy their information needs. An ERP amalgamates the management information systems (MIS) compatibility from all functional areas in a business—for example, finance, production, marketing, and HRM—into a single integrated system. The ERP that supports the HR function is commonly referred to as an HRIS or human resource management system (HRMS), although these are also available as stand-alone systems. The capabilities of today’s HRIS T&D applications, also called learning management systems (LMS), range from training administration to training management to talent management. The degree to which LMS can assist strategic decision making may be assessed using Beckers and Bsat’s (2002) decision support system (DSS) classification. Their model consists of five levels: management information systems (MIS) decision support systems (DSS) group decision support systems (GDSS) expert systems (ES) artificial intelligence (AI) Bonadio (2009) puts forward five key issues that could enhance a learning management system: 1. Employee development should be linked to learning delivery. 2. Learning activities ought to be aligned with business objectives. 3. Regulatory compliance must be maintained. 4. Learning effectiveness must be measured throughout the organization. 5. Establish an integrated approach to employee onboarding (employee orientation). HRIS Training and Development Applications – Implementation Issues ● Many HRIS T&D projects fail to meet the expectations of key decision-makers. ● Some firms introduce new TMS only because competitors have done likewise, without having the necessary expertise to operate the system. ● Frequently, decision-makers have false expectations of ROI or apply training metrics that merely focus on cost savings and fail to take note of intangible gains derived from T&D (see section on Training Metrics). ● In other cases, the HRIS T&D application strategy is not aligned with training needs and the overall T&D, HR, and business strategies. ● Few organizations involve employees during the implementation stage of the HRIS, which can lead to underutilization and dissatisfaction with the system (Burbach & Dundon, 2005). ● For a variety of reasons, many employees never actually complete e-learning programs that they are enrolled in. ● A number of authors have suggested success factors for the introduction of HRIS T&D applications and for increasing e-learning completion rates: Align e-learning strategy with T&D strategy, HR strategy, and overall business strategy. Create a corporate learning culture that fosters e-learning and the use of HRIS T&D applications. Assess HRIS T&D projects by their suitability to meet the T&D strategy of the organization rather than the technical sophistication and elegant features of the system. Carefully plan HRIS T&D projects to guarantee compatibility with legacy systems and sufficient budget allocation and expertise to use the system. Involve line managers and employees in HRIS T&D projects to ensure greater buy-in. Match HRIS T&D applications and e-learning initiatives with their ability to meet training needs to encourage learning transfer. Establish a suitable evaluation strategy to assess the extent to which training technology meets training needs, and evaluate regularly. Identify suitable T&D metrics that take account of all direct and indirect training outcomes. Promote the use of HRIS T&D applications and e-learning. Make managers accountable for uptake of e-learning and HRIS T&D utilization. Reward employees for use of e-learning. Ensure that e-learning and T&D systems are user-friendly and provide quality information. Develop a data security policy for the T&D system and applications. Do not focus only on financial gains from HRIS T&D projects. Train managers and employees in the use of T&D technologies. CHAPTER SUMMARY This chapter highlighted the strategic importance of learning, training, and development in an increasingly knowledge-intensive global economy. This chapter identified and explained a range of e-learning methods, their role in knowledge acquisition, and their advantages and disadvantages. A careful analysis of training needs, various LT&D methods and individual learning styles is necessary to ensure that transfer of learning occurs and that, ultimately, the strategic objectives of the organization can be attained. HRIS training and development applications are vitally important tools in pursuing a systematic approach to LT&D—that is, to identify training needs, to design LT&D solutions and methods, to implement these initiatives, and to evaluate the effectiveness of training, including the assessment of return of investment of training. As many LT&D outcomes are of an intangible nature and/or take a long time to materialize (note the definition of development in this context), it is inherently intricate to determine appropriate training metrics that may be employed to perform any meaningful cost–benefit analysis. A variety of HRIS T&D applications exist. Learning management systems may be embedded in a HRIS or ERP. The choice of system is contingent on the T&D needs of an organization, its budget, and its ICT capabilities. This chapter concluded with a discussion of surrounding the implementation of HRIS training and development applications. Lecture Outline Chapter 12: Management, Compensation, Benefits, Payroll, and the Human Resource Information Systems CHAPTER OBJECTIVES After completing this chapter, you should be able to do the following: ❖ Understand the performance management (PM) cycle and the role of the HRIS in PM design, decision making, and administration ❖ Understand typical compensation practices and the role of the HRIS in compensation design, decision making, and administration ❖ Understand typical benefits practices and the role of the HRIS in benefits design, decision making, and administration ❖ Understand payroll systems and the role of the HRIS in payroll administration ❖ Be able to discuss the meaning of work to employees in terms of their identities and self-esteem ❖ Discuss a motivation theory that helps to understand why work is so important to employees and how the HR programs in talent and performance management affect employee motivation INTRODUCTION ● Performance, rewards, and payroll systems focus the basic exchange between employees and employers: Employees provide performance, and in exchange, employers provide rewards, which are distributed via payroll systems. ● Performance management systems are usually entirely internal to the organization, but data must be linked to several other systems, including rewards, staffing, training and development, and career development. ● PM systems are used as working tools by managers and must, therefore, be inherently self-explanatory. Much of the data are specific to the individual, although various summary measures must be comparable across subsets of employees or all employees. ● Reward systems have both internal and external ties to multiple other information systems. ● Both pay and benefits must be linked (or linkable) to external survey data, legal requirement data, and internal systems, such as budgeting and planning systems. ● Usage of parts of reward systems must be restricted to HR professionals while other parts must be widely available to employees for self-queries. ● Most organizations consider rewards data to be highly confidential, so system security is critical. ● In payroll systems, flawless data integrity and even more flawless execution are critical. Payroll systems must be linked to external data (e. g. , federal and state requirements for minimum wage) and internal data (e. g. , general ledger and benefit choices) and must be capable of incorporating constant change. ● The HRIS must allow for all aspects of the employment relationship (including relationships with prospective and past employees) to be considered, analyzed, and acted on. Neither managers nor employees see the relationship between the organization and the employee through a single lens. ● Although the interrelationships between performance management, rewards, benefits, and payroll are clear, and it is obvious that the HRIS applications for these four functions need to interface seamlessly, it would be a mistake to assume that these four functions can be considered independently of other HR applications or, indeed, of any of the information systems operated by the organization. ● The HRIS must allow for all aspects of the employment relationship (including relationships with prospective and past employees that affect equity perceptions) to be considered, analyzed, and acted on. Neither managers nor employees see the relationship between the organization and the employee through a single lens. PERFORMANCE MANAGEMENT Overview The PM process consists of three parts: performance planning, performance observation and providing positive feedback and/or corrective feedback, and developing periodic performance summaries to serve as a basis for performance planning for the next period while providing data for a variety of HR decisions, including rewards, staffing, training, and other decisions affecting the employee’s relationship with the organization. PM is now considered within the framework of talent management, which encompasses all areas of HR that have to do with onboarding, developing, evaluating, and managing the workforce through all of the normal cycles. PM is just one of the areas connected to others, such as ● recruiting (external), ● staffing (internal), ● career management, ● 360assessment, ● development management, ● retention management, and ● workforce planning. Performance Planning ● Performance planning, like most management processes, must be constructed in such a way that any manager can do it, regardless of management style or skills. Better managers involve the employee collaboratively in all phases of the PM process, but the system is designed so that even directive managers can follow the process. ● The manager must first define what performance means in the case of a specific direct report (i. e. , the employee whose job performance is being evaluated). At the broadest level, this definition of performance would encompass any employee who fills the job position. ● Remember that the job position is described in terms of duties and tasks outlined in the job description. Another way to conceive the definition of performance is that it is the performance expected of a new employee in the position if the direct report were terminated. ● Ideally, this definition is developed by a cascade of goals, fitting the research findings on goal-setting theory, beginning with the organizational strategy and operating plan, with the immediate source being what the manager is expected to accomplish during the period and ending with the direct report’s expected part of that accomplishment. ● The manager must then move from the general to the specific, usually expressed in terms of desired outcomes. This constitutes the performance dimensions for the direct report and is consistent with the findings from goal-setting theory. ● When outcomes are difficult to observe or measure, behaviors that are expected to lead to desired outcomes are added. For each performance dimension, the manager must develop specific outcomes and behaviors that will be used to measure the direct report’s performance. ● When performance dimensions, measures, and standards have been developed, the manager must communicate them to the direct report. The manager must make certain that the direct report understands measures and standards. Formats ● Most organizations define the performance instrument differently depending on the type or level of the employee. ● Management employees tend to use a format that combines both goals and objectives together with a competency evaluation. ● A well-designed performance application can automatically map the correct “format” based on the employee who has logged into the performance website. Performance Period ● During the performance period, the manager uses the performance contract as a benchmark for observing the direct report. When performance above standard is observed, the standard becomes the basis of positive feedback. ● When performance is below standard or below the goal set by the direct report, corrective feedback is used, again relying on the standard and on the goal set as the benchmarks for the performance observed. Periodic Performance Summary ● At some point, a summary of performance during the period is provided to the direct report. In most organizations, this is an annual event, but some organizations have quarterly or semiannual performance summaries. At this point, the manager provides a summary of how the direct report has done on each performance measure and whether standards and goals have been met. ● One of the more important outputs of the performance process is an individual development plan (IDP). Typical Data Inputs ● Data inputs for PM systems include organizational-, job-, and individual-level data. ● Performance management systems must interface with staffing and training applications. ● Organizational-level data consist of links to organizational and unit goals and strategies and business plans. ● Performance plans should be able to tie back to unit and organizational plans; ideally, it should be possible to consolidate individual performance plans to the unit level and consolidate unit plans to the organizational level. ● Job-level data is a significant part of the PM system. Key tasks, responsibilities, and outcomes should flow from job data sets to individual performance plans. ● Typical Reports ● The most important standardized reports produced by the HRIS are the performance contract and the annual summary appraisal for each employee. ● Other reports include aggregate performance data by unit and reports comparing aggregated unit performance with unit output (Cohen & Hall, 2006, p. 64). ● The HRIS needs to have the capability of archiving data, so long-term performance trends for individuals and groups can be tracked. Data Outflows ● Performance data are used in many HRM decisions and will flow automatically into some processes or be available for others as needed. One automatic flow will be into compensation. ● Organizations with merit pay need performance distributions to construct a merit matrix. ● Other applications that make use of performance data are training and development (so that training needs can be analyzed based on current weaknesses in employee performance) and staffing, where aggregated strengths and weaknesses of currently needed skills and competencies can trigger recruitment and staffing goals. ● In addition, performance processes utilizing competency assessment can be used by manpower planning applications to assist in forecasting future deficiencies based on required skill profiles. Decision Support ● The basic decision support system in the area of PM is the entire system. Having performance criteria, performance measures, performance standards, and recent performance documentation in a single place allows managers to keep track of how each direct report is doing and what interventions need to be made to improve performance. ● Similarly, the direct report can view the same data and use them as a basis for deciding on areas where improvement is needed. ● This self-service feature for managers makes the performance management module a management tool for daily use. All performance management documentation activities required of the manager can be dealt with through the system. Performance planning, documented observation of performance, feedback documentation, and the formal appraisal can all be developed on the system itself and stored there for future reference by managers. ● The PM system can provide self-service for employees by allowing them to view the same data and use those data as a basis for deciding on areas where improvement is needed. For example, were performance-specific goals set at a high enough level to motivate employees to perform at higher levels on their jobs? ● Appropriate interfaces between the performance management module and training and development modules can lead either the manager or the direct report to training programs or other developmental activities based on the specific performance problems noted. ● Group performance can also be tracked. Automated PM systems allow managers and HR managers to track the administrative aspect of PM. COMPENSATION Overview ● Compensation is one of the most complex topics in HRM, and attempting to present an overview is ambitious. Organizations faced with the complexities of creating and administering compensation systems are increasingly turning to technology for help. ● The basic compensation system includes base pay, merit pay, short-term and long-term incentives, perquisites, recognition awards, and attraction or retention awards. ● There are many processes associated with each of these, all of which must be coordinated. ● There are also special populations that have unique pay processes: executives, sales personnel, scientists and engineers, expatriates, unionized workers, and the whole panoply of temporary or contract, or part-time workers. ● While the types of compensation mentioned above are made up of multiple programs, it is critical that all compensation programs be integrated, so that employees receive a single message about what adds value in the organization and the type of behavior and culture that is desired. ● Compensation programs must meet federal and state statutory and regulatory requirements. The Fair Labor Standards Act differentiates exempt and nonexempt workers; the organization must pay nonexempt workers at least the minimum wage, must pay time worked in excess of 40 hours a week overtime at a rate of 1. 5 times the normal pay, and must provide records to the federal government on hours worked and regular and overtime pay for all nonexempt workers. The OFCCP (Office of Federal Contract Compliance Programs) requires annual evidence of nonbiased results with respect to race and gender for SSEGs (similarly situated employee groups) and requires multiple linear regression analyses as evidence. ● Base pay is built around two processes: job evaluation and market benchmarking. Job evaluation creates an internal hierarchy of value. In the most common form of job evaluation, a set of factors is developed that reflects characteristics that add value to work in the specific organization (e. g. , the education required). Each factor is weighted by importance, and scales are developed. Every job that will be in the base pay system is evaluated on the set of scales, and a point score is calculated. Jobs are arranged by total points, and this forms the basis for a salary structure. ● Market benchmarking is used to price the structure (or individual jobs). Market data are collected for as many jobs as possible. In most organizations, one or more surveys may be developed inhouse to collect market benchmarks, but the bulk of benchmark data come from commercial and association surveys. Entering data can be done through a website with a format that maximizes ease of data. However, websites with salary data are not without problems; employees frequently access websites that may have unrepresentative data and argue that they are underpaid based on bad data (Menefee, 2000). ● An employee is placed in the salary grade appropriate for her or his job. Each grade has a midpoint that serves as a proxy for all of the jobs in that grade, and a range is built around that midpoint. (This range defines the minimum and maximum salary for jobs in that grade, usually ±20% from the midpoint. ) Exact placement in the range is usually a function of performance and individual characteristics (quality of degree, job seniority, and experience). ● The structure is adjusted each year based on market movements. If the market were to increase by 3%, for example, the midpoints would increase by 3% as well. However, not all employees receive a 3% increase if the organization uses a merit pay system. In a merit pay system, the size of the increase is a function of performance level and of where an employee is in the range: the higher the performance, the larger the increase, and generally, the lower the place in the range, the higher the increase. A merit matrix, developed to provide guidelines based on performance and place in the range, ensures that the total amount spent by the organization is no more than the specified percentage of payroll. ● There are many forms of short-term incentive pay. Unlike merit pay, short-term incentive pay is rarely added to base pay and must be re-earned every year. Typical short-term incentive programs include bonuses, gain sharing, goal sharing, small-group incentives, and profit sharing. Short-term incentive programs usually have specific measures, set up prior to the beginning of the program that will drive payout. (Profit sharing as an incentive is not typically covered by these measures. ) Gain sharing, for example, bases payouts on reductions in production costs due to more efficient use of labor. Specific preplanned formulas based on past production costs drive payouts. Bonus systems can be driven by preplanned criteria related to manufacturing, customer service, safety, or anything else that the company wishes to motivate employees to achieve. Profit sharing is usually retrospective, however; the board decides after the books have closed for the fiscal year that some percentage of profits will be shared with employees. In all cases, the measures driving short-term incentive payouts must be collected, either through existing measurement systems or through special systems designed for the purpose. ● Long-term incentives are primarily based on organization stock, options to buy organization stock, or phantom (make-believe) stock. The goal of long-term incentives is twofold: to align the interests of employees with those of shareholders and to motivate aligned performance over periods of more than 1 year. ● Perquisites are rewards that are a function of organizational status. Executive dining rooms, first-class or corporate-jet air travel, and club memberships are examples. Perquisites frequently have tax consequences to the employee receiving them and, thus, must be included as part of the pay system. ● Recognition awards are low-cost or no-cost awards that are retrospective: When an employee does something of note, he or she receives an award that may have little financial value but is psychologically rewarding. The use of websites in recognition programs, so that every employee can go online and find where he or she stands in comparison with other eligible employees, can greatly enhance the motivational impact of such programs. ● Attraction or retention awards are one-time awards that are used to attract prospective employees to the organization or persuade them to remain with the organization. These awards may take the form of cash, stock options, benefits, or adjustments to benefits rules. The goal is to incur a one-time cost that does not drive up base pay. ● Although the types of compensation already described are made up of multiple programs, it is critical that all compensation programs be integrated, so employees receive a single message about what adds value in the organization. Typical Data Inputs ● Compensation data inputs include internal, external, and generated data. Internal data include information about jobs (descriptions and specifications), people (performance and salary history), and organizational units (salary budget and job evaluation system). External data would include market survey data and information on rewards practices. Internal and external data would be combined and used to generate job evaluation results, salary structures, merit matrices, and a variety of reward guidelines. Data from the staffing function can highlight problem areas where compensation may be too low. ● Compensation for special employee groups usually requires data specific to that group. ● There are very few data within the organization that might not be required by some part of the compensation system. Typical Reports ● There are a number of standard reports in the compensation arena; however, because of the sensitive nature of compensation information, they are not widely circulated. ● The most common reports include budget reports to managers showing how their actual compensation costs compare with the projected costs. ● Most organizations provide each employee with an annual compensation report showing the total amount of money spent by the organization on the employee, including money spent on wage or salary, incentive pay, and the cost of benefits paid for by the organization. ● Similar reports, such as incentive reports, that tell people how they are doing with respect to earning a specific incentive award become much more effective when a website is used for communication (Stiffler, 2001). Data Outflows ● The primary data outflow from compensation modules is to payroll. ● Compensation analysts draw on the data for additional analyses; however, managers preparing budgets draw on compensation as they project costs over the next budget period. ● Benefits analysts draw on compensation data as they analyze probable future costs of wage-based benefits. (Pensions are usually a function of salary level while health benefits are largely independent of salary level. ) ● Data are sent to federal, state, and local agencies, including taxing agencies, labor departments, and other units tracking wage data. ● Many organizations provide data to firms conducting reward surveys. Decision Support ● The major rewards decision that has to be made about every employee is how much to pay the individual. Decision support systems (DSS)in compensation are all aimed at that decision. While much of this activity is carried out by compensation and other HR managers, managers can do much of the work themselves if the system is set up correctly as a self-serve system. The most common areas that managers would handle themselves include salary budget planning, merit, promotional and other increases, and most incentive programs. DSS can also deal with sales compensation and executive pay. ● The most common areas that managers would handle themselves include salary budget planning, merit, promotional and other increases, and most incentive programs. Using Web-based compensation modules, managers can perform salary-planning functions much easier than was possible with paper-based processes. Data such as current salary, compa-ratio, and salary ranges can be viewed for all of their employees at once; for international organizations, such systems can handle multicurrency requirements; and these systems can ensure that the total of the projected salary increases recommended by each manager does not exceed budgeting guidelines. ● A whole set of applications relate to executive pay. Since the Enron scandal and the subsequent passage of the Sarbanes-Oxley Act (SOX), compliance reports, including those dealing with executive pay, are required. SOX compliance is greatly supported by data from the HRIS (“How HRIS Can Help with SOX Compliance,” 2005; Sherman, 2005). ● Additional regulations covering executive pay have come about as a result of the Troubled Asset Relief Program (TARP) of 2009 and the financial bailout of troubled financial services firms and automakers. ● BENEFITS Overview ● There are five broad types of benefits programs in most U. S. organizations. Because some company-provided benefits in this country are government provided in other countries, a different typology would be required for organizations abroad. ● The first set of benefits programs that is common in U. S. companies includes pension plans (both defined benefit and defined contribution), individual savings plans (such as Keoghs, SEPs, and IRAs), and Social Security. ● The second set of benefits programs includes workers’ compensation, unemployment insurance, long- and short-term disability insurance, and life insurance. ● The third set of benefits programs includes medical and other health benefits such as hospitalization and medical care insurance; surgical and major medical care insurance; long-term care; dental, vision, and hearing care insurance; and prescription drug coverage insurance. ● The fourth area of benefits is paid time off and includes vacation, holidays, personal days, special purpose days (because of jury duty, bereavement, or military service for example), and family leave. ● The fifth and final category of benefits includes miscellaneous benefits, including dependent care, flexible working benefits (telecommuting, job sharing, and compressed workweek), employee assistance programs, professional memberships, tuition reimbursement, holiday parties and gifts, subsidized cafeterias and gyms, legal advice benefits, and employee discounts. ● Benefits programs differ from compensation in two major ways. o First, in the majority of organizations, employees pay part (or all) of the costs for most benefits. o Second, most organizations have some flexibility in their benefits program. All employees receive a core benefits package but then choose additional coverage or additional benefits or both, up to the level of the total benefits package. o These two characteristics of benefits programs make them relatively complex to administer. ● Additionally, legal requirements for benefits programs are more stringent than those for compensation programs. ● Another major difference between benefits and compensation programs, one that strongly affects HRIS configuration, is the growing trend to outsource benefits programs and administration. ● In benefits, program design, benefit delivery, and program administration (including employee communications) are increasingly outsourced. As a result, the HRIS must interface not only with other internal systems, such as rewards and payroll, but also with the IT systems of other organizations. The necessity of establishing these interorganizational linkages introduces problems such as how to define fields, which fields can be included, what protocols for interaction to establish, and how to maintain security. ● Legal requirements for benefits programs are also more stringent than those for compensation programs. Most benefits programs are influenced by the Employee Retirement Income Security Act (ERISA), which grants benefits a tax-favored status. However, to qualify for favorable tax treatment, the benefit must meet stringent requirements. These include reporting to recipients of benefits and to the federal government, demonstrating that requirements for qualified status are met. In addition, many organizations offer nonqualified benefits to some employee groups, particularly to executives. ● Typical Data Inputs There are HRIS benefits modules with different purposes, and each requires a different type of data input. ● One set of functions focuses on the organization’s relationship with current and prospective benefits vendors. ● A second set of functions focuses on the internal management of benefits programs and will be used to track usage, employee choices (in the case of flex plans), and costs. ● A third (and the most common) set of programs focuses on employee input about enrollment and other coverage choices, changes in coverage desired, and changes in employee status that may affect coverage and employee costs. ● The fourth set of data placed into the system consists of the myriad federal, state, and local laws and regulations governing benefits practice. Typical Reports ● There are dozens of reports required by federal and state government units, including the IRS, units of the Department of Labor, and other federal agencies, and similar units at the state level. With Web-based access to benefits and other employee information, summary reports can be viewed at any time and can, in many cases, eliminate the need for a company to produce expensive paper versions. ● The most common report is the annual benefits statement, also known as the annual compensation statement to employees, required for tax-qualified plans under ERISA. This report requires organizations to report to employees annually about certain benefit facts, such as vested pension levels. Most organizations have gone beyond the ERISA requirements and provide a report to each employee showing the total value of all compensation and benefits received by the employee during the year. ● With a Web-based system, an employee can, at his or her convenience, view his or her current benefits, salary, and other information directly and decide to print a paper copy if one is needed. For an international company that distributes benefits or pay in multiple currencies, the system could normalize that data into a single currency. Data Outflows ● Data generated by benefits programs have to be transferred to payroll and accounting internally. Data are sent externally to benefits providers, outsourced benefits administrators, and a variety of federal, state, and local agencies. Aggregate data are provided to benefits survey firms. ● With Web-based access to benefits and other employee information, summary reports can be viewed at any time and can, in many cases, eliminate the need for a company to produce expensive paper versions. Decision Support ● Decision support tools overlap, to some extent, with reports in the benefits and pay roll are as because frequently these reports trigger the need to make changes to comply with federal, state, or local requirements. ● When organizations offer flexible benefit plans, it is common to track the choices made by employees to guide plan development. ● Web-based services also offer decision support to employees deciding what levels of coverage to sign up for. ● Self-service systems for employees are increasingly relied on by employers to lessen the burden of benefits transactional administration. Employees typically make and change elections in flexible benefits plans through the company intranet. They can change beneficiaries or dependents as births, deaths, and divorces occur. They can increase tax-deferred or pretax contributions to various benefits categories such as 401(k) plans, health spending accounts, and similar programs. They may buy or sell vacation days from the paid time off (PTO) bank. They may transfer PTO days into their 401(k). (There are timing, contribution limits, and other rules that must be observed, but these can be built into the application. ) Employees can also find out the status of various benefits through self-service approaches. At least one organization allows employees to do “what-if” scenarios with respect to retirement: “If I retire tomorrow what would my (defined benefit) pension be?” ● The outsourcing of benefits creates additional issues for the HRIS. Some major corporations have outsourced all benefits. An extensive interface must be built connecting the organization’s HRIS with the outsource firm. The benefits advisors at the outsource firm must have current, accurate data on the benefits status of every organizational employee to be able to answer questions and provide advice. Outside access raises security issues to a greater level of concern; benefits data (including hospital and other medical billing, psychiatric care, and employee assistance program billing are the most sensitive employee data held by the organization, and privacy standards must be met [including Health Insurance Portability and Accountability Act]). PAYROLL Overview ● Payroll is the transactional process through which compensation is transferred to employees, and federal, state, and local income and payroll taxes are withheld from employees’ checks. It is also through payroll that any benefits costs borne by employees are withheld. ● Companies that outsource need to make sure that the compensation and benefits modules of the HRIS interface flawlessly with the provider’s payroll input. ● Even when companies do payroll inhouse, the payroll module is usually part of the accounting system rather than the HRIS, so it is critical that the interface between the HRIS and the payroll software works flawlessly. ● Payroll is the most heavily outsourced HRM function. Great economies of scale can be achieved by a payroll processor with respect to keeping up with the intricate requirements of income and payroll tax deductibles or maintaining (and upgrading) software that ensures that payroll is accurate and completed in a timely manner. Typical Data Inputs ● Data entered into the payroll system from inside the organization include compensation data, benefits data, and other payroll addition data (e. g. , special awards) and deductions data (e. g. , union dues, wage garnishment for child support, and credit union repayment installments). ● Time and attendance data are usually handled in a special module, and data from this module are also fed into payroll (Robb, 2004). ● Data external to the organization include federal, state, and local income and payroll tax rules that allow the organization to withhold appropriate amounts from each employee’s paycheck. ● There may be payments made to individuals who are not active employees. Although it is usually taken care of in a separate COBRA module, there may even be payments from ex-employees for the continuation of benefits. ● In addition to internal and external data, the system generates data that it stores and uses over time. For example, in 2010, FICA (Federal Insurance Contributions Act, i. e. , Social Security) taxes were withheld on the first $106,800 of income, and the maximum tax withheld for any employee was $6,621. Payroll must keep a running total of FICA paid to date so that it does not deduct too much from the employee’s paycheck. Typical Reports ● There are a number of standard payroll reports. These show, for the organization as a whole (or for subunits), the actual amount paid to employees for a period (and cumulatively) and the amounts deducted for various purposes. ● Reports go to federal, state, and local agencies, including taxing authorities. ● Reports go to benefits providers. ● Employees receive reports with their paychecks or notices of deposit; the report shows gross pay and all deductions. Usually year-to-date accumulations are also provided. Data Outflows Payroll data go to accounting; federal, state, and local agencies; and to benefits outsourcing firms and individual benefit program providers. These payroll data are the input for a variety of processes in those units. Decision Support Payroll data are not usually used for decision-making purposes. They are used extensively for audit purposes. CHAPTER SUMMARY The combined PM, compensation, benefits, and payroll systems constitute the most important parts of the HRIS. Because pay and benefits constitute the largest variable cost to any organization and the largest cost to many organizations, it is critical that managers plan, track, and audit outlays on a real-time basis. A significant proportion of data and reports owed to federal, state, and local agencies comes from the compensation, benefits, and payroll modules. The consequences of inaccurate, misleading, or non-submitted data and reports include embarrassment, fines, and even jail time. And these are the risks associated with poor data from just the transactional part of these modules. A key part of strategic HR is aligning employee behaviors with the strategic intent of the organization. It is important to hire the best people and provide them with the training and development needed. Without PM, the success of hiring strategies is unknown, and similarly, the need for training and development interventions is unknown. PM systems support the translation of corporate strategy into individual performance plans. Compensation and benefits systems can be used to hire the right people, retain the high performers, and motivate all employees to perform at a higher level. Compensation can also be used to motivate poor performers out of the organization. As systems technology has progressed, managers have become better able to enhance the performance of their direct reports and to tailor compensation and benefits programs that will attract, retain, and motivate the best. Thus, the importance of understanding the central role of an HRIS in assisting managers in making key decisions regarding performance, compensation, benefits, and payroll cannot be underestimated. Instructor Manual for Human Resource Information Systems: Basics, Applications, and Future Directions Michael J. Kavanagh, Richard D Johnson 9781506351452, 9781483306933