Making Sense of e-HRM: Technological Frames, Value Creation and Competitive Advantage Steve ...

214 Pages·2010·3.4 MB·English

Making Sense of e-HRM: Technological Frames, Value
Creation and Competitive Advantage

Steve Foster

Submitted to the University of Hertfordshire in partial fulfillment of the
requirements of the degree of Doctor of Business Administration

December 2009
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CONTENTS

ABSTRACT.............................................................................................................7
1. INTRODUCTION: AN UNCOMFORTABLE RELATIONSHIP?........................9
1.1 THE RISE OF E-HRM..............................................................................................9
1.2 THE RESEARCH AGENDA: WHY IS E-HRM USE TYPICALLY IMMATURE?.....................10
1.3 DISSERTATION STRUCTURE..................................................................................12
1.4 THE UNIQUE CONTRIBUTION OF THIS RESEARCH....................................................13
2. RESEARCH STRATEGY...............................................................................15
2.1 A PERSONAL PERSPECTIVE ON E-HRM RESEARCH................................................15
2.2 METHODOLOGICAL DEVELOPMENT: OVERVIEW......................................................16
2.3 METHODOLOGICAL DEVELOPMENT: PROPOSED APPROACH....................................20
2.4 APPROACH TO THE LITERATURE REVIEW...............................................................22
2.5 RESEARCH APPROACH........................................................................................25
2.6 INTERVIEW STRUCTURE.......................................................................................28
2.7 INTERVIEW CODING STRUCTURE...........................................................................29
2.8 ANALYSIS OF INTERVIEWS: CODING.......................................................................30
2.9 METHODOLOGICAL ISSUES...................................................................................32
3. CREATING VALUE THROUGH PEOPLE MANAGEMENT...........................33
3.1 HRM AND PERSONNEL MANAGEMENT...................................................................33
3.2 THE ROLE OF PEOPLE MANAGEMENT IN CREATING VALUE........................................34
3.3 THE ROLE OF HR IN SUPPORTING PEOPLE MANAGEMENT.........................................36
3.4 HR AND COMPETITIVE STRATEGY..........................................................................38
3.5 A FOCUS ON VALUE AND OUTCOMES......................................................................39
3.6 TRANSFORMATION OF THE HR FUNCTION..............................................................40
3.7 HR TRANSFORMATION AND THE PUBLIC SECTOR.....................................................41
3.8 SUMMARY...........................................................................................................42
4. E-ENABLING PEOPLE MANAGEMENT.......................................................43
4.1 OVERVIEW..........................................................................................................43
4.2 THE E-HRM LANDSCAPE.....................................................................................43
4.3 THE USE OF E-HRM.............................................................................................44
4.4 DEFINING E-HRM................................................................................................48
4.5 E-HRM DEVELOPMENT........................................................................................50
4.6 DEVELOPMENT STAGES OF E-HRM.......................................................................51
4.7 IMPLEMENTING E-HRM........................................................................................53
4.8 LITERATURE ANALYSIS OF E-HRM........................................................................56
4.9 GENERAL THEORIES OF IT VALUE CREATION..........................................................60
4.10 LINKING TECHNOLOGY TO OUTCOMES....................................................................63
5. THE E-HRM VALUE MODEL.........................................................................65
5.1 OVERVIEW..........................................................................................................65
5.2 THEORY DEVELOPMENT.......................................................................................65
5.3 A HUMAN CAPITAL MANAGEMENT PERSPECTIVE ON E-HRM....................................67
5.4 A NEW FRAMEWORK FOR UNDERSTANDING E-HRM VALUE.......................................68
5.5 TEMPLATE THEMES..............................................................................................68
5.6 DEVELOPMENT OF THE E-HRM VALUE MODEL.......................................................69
5.7 LEVEL 1: VALUE POTENTIAL.................................................................................70
5.8 VALUE POTENTIAL: THE FATAL FLAW...................................................................73
5.9 LEVEL 2: VALUE CREATION..................................................................................74
5.10 LEVEL 3: VALUE OUTCOMES................................................................................74

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6. HR OPERATIONAL COST REDUCTION......................................................77
6.1 OVERVIEW..........................................................................................................77
6.2 HEADCOUNT REDUCTION (O1)..............................................................................78
6.3 REDUCTION IN NON-HEADCOUNT HR COSTS (O2)..................................................80
7. PEOPLE MANAGEMENT AND PRODUCTIVITY..........................................82
7.1 OVERVIEW..........................................................................................................82
7.2 MANAGER PRODUCTIVITY TOOLKIT (P1)................................................................83
7.3 CHANGE OF HR FOCUS (P2).................................................................................86
7.4 INFORMATION FOR OPERATIONAL DECISIONS (P3)...................................................89
7.5 IMPACT ON MANAGEMENT ACCOUNTABILITY (P4)....................................................95
8. STRATEGIC CAPABILITY..........................................................................100
8.1 BEING ‘STRATEGIC’...........................................................................................100
8.2 INFORMATION FOR STRATEGIC PLANNING (S1).....................................................103
8.3 CULTURE CHANGE (S2).....................................................................................105
8.4 EMPLOYER BRANDING (S3)................................................................................108
8.5 SUMMARY.........................................................................................................109
9. MAKING SENSE OF E-HRM.......................................................................110
9.1 OVERVIEW........................................................................................................110
9.2 TECHNOLOGY ADOPTION...................................................................................110
9.3 E-HRM AS A SOCIAL PROCESS...........................................................................112
9.4 THE E-HRM VALUE MODEL AND TECHNOLOGICAL FRAMES...................................113
9.5 DEVELOPMENT OF THE TECHNOLOGICAL FRAMES APPROACH...............................114
9.6 ANALYSIS: HR COST REDUCTION BENEFITS........................................................116
9.7 ANALYSIS: PEOPLE MANAGEMENT AND PRODUCTIVITY BENEFITS..........................119
9.8 ANALYSIS: STRATEGIC CAPABILITY BENEFITS.....................................................129
9.9 SUMMARY.........................................................................................................130
9.10 DEVELOPING FURTHER DOMAINS.........................................................................136
9.11 IMPLICATIONS FOR E-HRM.................................................................................141
10. DISCUSSION AND IMPLICATIONS........................................................ 144
10.1 OVERVIEW AND KEY FINDINGS.............................................................................144
10.2 ASSESSMENT OF THE E-HRM VALUE MODEL.......................................................145
10.3 POTENTIAL EXPLANATIONS FOR LIMITED E-HRM USAGE........................................147
10.4 LIMITATIONS AND FUTURE DEVELOPMENT............................................................150
10.5 SUMMARY AND IMPLICATIONS.............................................................................152
REFERENCES....................................................................................................153
APPENDIX A: PERSONAL BIOGRAPHY........................................................... 166
APPENDIX B: EXAMPLE OF MIND MAP FOR LITERATURE REVIEW............ 167
APPENDIX C: PROFILES OF PARTICIPATING ORGANISATIONS.................. 168
APPENDIX D: EXTRACTS FROM PERSONAL REFLECTIVE DIARY............... 174
APPENDIX E: STRUCTURED INTERVIEW QUESTIONS..................................177
APPENDIX F: EXAMPLE INTERVIEW............................................................... 179
APPENDIX G: PROJECT OBJECTIVES/APPROVAL LETTER......................... 185
APPENDIX H: EXAMPLE SELF-SERVICE SCREENSHOTS............................. 186
APPENDIX I: E-HRM LITERATURE ANALYSIS................................................. 187
APPENDIX J: TESTING THE MODEL – RESEARCH OVERVIEW
PRESENTATION.................................................................................................188

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List of Figures

Figure 1: Matrix of Research Designs.....................................................................20
Figure 2: The HR / Payroll Process Framework......................................................36
Figure 3: HR Maturity Scale...................................................................................39
Figure 4: Conceptual Structure of e-HRM Systems................................................44
Figure 5: E-HRM Landscape..................................................................................45
Figure 6: Adoption of e-HRM by Application...........................................................47
Figure 7: e-HRM Strategies....................................................................................53
Figure 8: Alignment of HR maturity and e-HRM Strategy.......................................54
Figure 9: Benefits Dependency Network................................................................64
Figure 10: e-HRM Value Model..............................................................................76
Figure 11: e-HRM Value Model showing Technological Frame Congruence........135
Figure 12: Example Self Service Screen (ResourceLink).....................................186
Figure 13: SAP EuHReka Self Service screen.....................................................186

List of Tables

Table 1: Participants by Organisation Type............................................................27
Table 2: E-HRM Development Stages....................................................................51
Table 3: Summary of e-HRM literature analysis.....................................................60
Table 4: Components of the e-HRM Value Model..................................................75
Table 5: HR Operational Cost Themes...................................................................78
Table 6: People Management and Productivity Themes.........................................83
Table 7: Strategic Capability Themes...................................................................102
Table 8: Initial Analysis of Technological Frames.................................................115
Table 9: Technological frames (HR Cost Reduction)............................................131
Table 10 (a): Technological Frames (People Management & Productivity)...........132
Table 10 (b): Technological Frames (People Management & Productivity………. 133
Table 11: Technological Frames (Strategic Capability).........................................134
Table 12: HR Function Capability v Line Manager Capability...............................141

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Abstract

A wide range of Human Resources (HR) processes and information can now be
managed and devolved to line managers and employees using e-HRM (‘electronic
Human Resource Management’). E-HRM has been defined as “An umbrella term
covering all possible integration mechanisms and contents between HRM and
information technologies, aiming at creating value within and across organisations
for targeted employees and management.” (Bondarouk & Ruel, 2009, p.507).
Contemporary e-HRM technologies contain powerful functionality that can support
organisations in reducing the cost and improving the quality of Human Resource
service delivery, as well as enabling higher productivity and providing strategic
capability. The aim of this dissertation is to explore why the development of e-HRM
has been relatively immature, given that organisations tend to take an ‘automating’
approach that focuses primarily on administrative efficiency. The central thesis is
that future development of e-HRM depends on two factors; firstly, that stronger links
between e-HRM and competitive advantage at the organisational level must be
defined and exploited; and secondly that shared frames of reference with regard to
technology are critical to gaining the support of investors in e-HRM.

The dissertation explores the wider context of e-HRM and its relationship to
contemporary themes such as HR transformation, service delivery models, the
growth of the internet and changing employee and managerial workplace
expectations. Various definitions of e-HRM are explored, together with a literature
review that categorises and summarises e-HRM literature over a twenty-one year
period, concluding that there has been inadequate focus on understanding how e-
HRM creates value. The dissertation makes a key contribution to practice through
the e-HRM Value Model, a framework for defining, understanding and articulating
how e-HRM creates organisational value. Its focus is on the outcomes of e-HRM
rather than its characteristics, proposing that only three forms of outcomes can be
derived from e-HRM: Operational HR cost reduction, improved people management
/ productivity and increased strategic capability. It represents a means of defining
not only the value outcomes of e-HRM, but also the linkages between value
potential, value conversion and value outcomes, providing a practical framework for
defining the linkages between e-HRM and competitive advantage, as well as the
basis for a diagnostic tool.

The dissertation makes a contribution to knowledge through the analysis and
subsequent synthesis of a wide-ranging literature review and interviews with forty-
six managers and line managers across fifteen organisations that were planning for
or had implemented e-HRM. It concludes with a series of proposed reasons for the
slow progress towards greater strategic use of e-HRM, based on a technological
frames approach with regard to the Nature of Technology, Technology in Use and
Technology Strategy. The dissertation argues that unless HR professionals are
themselves able to make sense of e-HRM and articulate the benefits in terms of
competitive advantage, e-HRM development is likely to remain immature. Further
research opportunities to develop and test the model are identified, together with an
assessment of the implications for e-HRM management.

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1.
Introduction: An Uncomfortable Relationship?

1.1 The rise of e-HRM

A wide range of Human Resources (HR) processes and information can now be
managed and devolved to line managers and employees using e-HRM (‘electronic
Human Resource Management’). Although a variety of definitions exists for e-HRM,
ranging from those based on system functionality to those that see it as an overall
approach to HR management, for the purposes of this thesis, e-HRM will be defined
as “An umbrella term covering all possible integration mechanisms and contents
between HRM and information technologies, aiming at creating value within and
across organisations for targeted employees and management.” (Bondarouk & Ruel,
2009, p.507). Major global software providers such as SAP, Oracle and Lawson
supply dedicated HR modules as components of their Enterprise Resource Planning
(ERP) systems, often including payroll processing capabilities. The market also
includes a large number of smaller non-ERP suppliers (often termed ‘best of breed’)
that specialise only in HR/Payroll software, or specific systems that handle a single
aspect of HR. The available technology consists of powerful relational databases
containing data about employees, managers and the organisation structure, in
support of processes such as recruitment, absence management, training
administration and personal data management. These systems are typically web-
enabled, allowing the distribution of data and processes to managers, employees,
applicants and other groups, whether based in the office, at home or any location
with a suitable internet connection. Over 90% of US organisations claim to be
using web-based HR technology to support administrative operations
(CedarCrestone, 2009). Implementing e-HRM represents a major commitment of
time and resource for organisations, with around $5.7bn pa being spent globally on
related software and implementation (IDC, 2007).

The growth in e-HRM coincides with the rapid expansion of the internet, which has
brought low cost access and massive content to the general population. In the UK
and much of the western hemisphere, individuals have become increasingly
technologically sophisticated, with growing numbers of people relying on the internet
to run their personal and work lives, including on-line shopping, arranging insurance,
booking holidays and managing bank accounts. There is now an expectation of
immediacy in dealings with service providers, the ability to compare products,
quickly access information, obtain virtual around the clock access and resolve
problems quickly (Sobkowiak & LeBleu, 1996). Access to Human Resources
services through the intranet/internet has now become a standard feature of many
businesses and employees expect high levels of service, including access to policy
information, benefits data, pay details and on-line access to transactions such as
personal expenses claims. Technology typically underpins HR delivery solutions
such as shared services and outsourcing and is generally considered to be the
‘glue’ that holds these HR service delivery models together (Boroughs, Palmer &
Hunter, 2008). However, in some organisations, delays in the introduction of
technology means that employees have better access to technology at home than
they have in their work location.

Although the HR function was one of the first to take advantage of computers
(through early payroll systems in the 1950s), it has been relatively late to implement
and exploit the internet and other technology solutions. Although the administrative

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efficiency provided by technology has been successfully employed by many as a
means of driving down operational costs, evidence suggests that implementation is
often restricted to administrative applications and only a minority have extended the
use of technology beyond basic transactions. As Hendrickson (2003, p.392)
observes, the HR profession has “Spent the last decade playing catch-up to other
business functions in terms of successfully integrating advanced information
technology into their processes.”

1.2 The Research Agenda: Why is e-HRM use typically immature?

As a consultant working in this field, I often engage with clients in helping them plan
for, develop and implement e-HRM solutions. Practical experience suggests that
the potential of e-HRM remains under-exploited in many organisations, typically
being employed at the most basic administration level and often targeted at reducing
the operational cost of the HR function. Many HR professionals are, indeed, still
playing ‘catch-up’ with regard to technology, demonstrating typically low levels of
understanding of its potential for supporting people management, increasing
productivity and making a strategic contribution to organisations. Technology is
often perceived to be a transactional tool and as a result, it frequently struggles to
locate itself on the agenda of senior Human Resources management. As an
example, a 2005 book ‘The Future of Human Resource Management: 64 Thought
Leaders Explore the Critical HR Issues of Today and Tomorrow’ (Losey, Meiseinger
& Ulrich, 2005) contains just four indexed references to technology – three consist of
a single-sentence reference to e-HRM and the fourth is a short paragraph containing
a weak case example. It would seem that if there is a future for HR, the sixty-four
‘thought leaders’ do not see technology as being a significant part of it - even David
Ulrich, who captured the imagination of practitioners across the globe through his
prolific writing on transformation in the 1990s and is a co-editor of the book, did not
take the opportunity to put technology on the HR agenda. Likewise, a brief review of
the content of conferences organised by the UK’s professional HR body, the
Chartered Institute of Personnel and Development (CIPD) over the past ten years
reveals that there has been very little specific HR technology content, apart from a
few limited sessions on topics such as web-recruitment. In contrast, The US based
Society of Human Resource Management (SHRM) is far more proactive in this area
and there is an active community of interest in the topic; the SHRM has even
produced an HR competency toolkit (cited in Meisinger, 2005, p.81) setting out five
core competencies for the HR function, one of which directly addresses HR
technology. It is perhaps no surprise that uptake of e-HRM in the US is well ahead
of the UK and it is much better developed as a discipline.

This central research question of this dissertation concerns why, in many cases, the
HR function has failed to exploit e-HRM technology, limiting its use to basic
administrative functions. It is concerned with the (mostly) complex and
uncomfortable relationship that exists between the HR function, line managers and
technology, leading to an apparent reluctance to invest in, experiment with and
develop e-HRM. In many organisations, HR technology is firmly defined as
administrative in nature, raising a series of questions about the processes through
which organisations understand, assess, plan for and implement e-HRM and the
failure to develop its more strategic functions. Indeed, an alternative title for the
thesis might be “Getting the Ferrari out of the garage”, a phrase used by one
participant in the research who was frustrated to see much of the potential of e-HRM
technology laying dormant and unused. One might speculate reasons for this slow
adoption; for example, Dunivan (1991) argues that because e-HRM has tended to

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