Information Systems for HRM

Information Systems for HRM

  • Human Resource Management (HRM) aims for effectiveness and efficiency, similar to other management functions.
  • Good information systems are crucial for monitoring and evaluating HRM effectiveness and efficiency.
    • HRM effectiveness contributes to organizational effectiveness.
    • HRM efficiency contributes to organizational efficiency.

Configuration of HRM Information System

The configuration depends on the organization's needs and options, including:

  • Innovation/digitization: Evolving technology and improving service.
  • Integration: Converging different existing systems.
  • Simplification: Simplifying the current solution.
  • Automation: Automating certain HR processes.
  • New Uses: Scaling capacity to other areas.
  • Transition to the Cloud.

Modules in HRM Information Systems

In general, it may include modules for:

  • HR planning
  • Employee Database
  • Control issues (e.g., Absenteeism, Holidays)
  • Compensation and benefits
  • Payroll
  • Training and Development
  • Performance and Succession Management
  • Skills inventory
  • Climate and Commitment
  • Health, Hygiene and Safety at work

Evolution of Payroll Systems

  • The 90's
    • Payroll Systems
    • Focus on Administration
  • The 00's
    • ERP Solutions, Best in Breed
    • Self-Service
    • Focus on cost reduction
  • The 10's
    • Integrated Talent
    • Social Media, Mobile & SaaS
    • (Big) Data Analytics
    • Focus on business value and strategy

HRM Focus on Measurement

  • Measurement is increasingly important for HRM.
  • Traditional accounting measurements are insufficient.
  • Measures demonstrate that people generate value if managed well.

Hard and Soft Indicators

  • Hard (Quantity) Indicators
    • Number of days spent in training
    • Number of days lost because of strikes
    • Costs to replace an employee
  • Soft (Quality) Indicators
    • Employees’ satisfaction
    • Supervisors’ satisfaction
    • Turnover intention

HR Metrics Typology

  • Employment
    • Average Age
      • Average Age = {\text{Sum of ages} \over \text{Total number of Employees}}
      • A high average (>40 years) indicates an aging workforce, especially if seniority is low.
    • Average Seniority
      • Average Seniority = {\text{Sum of years of seniority} \over \text{Total n. of employees}}
      • Should be related to the company's age.
    • Young Employees Rate (%)
      • Young Employees Rate = {\text{N. Employees under/= 25} \over \text{Total number of employees}} X 100
      • Indicates HRM planning related to strategy.
    • Female Employees Rate (%)
      • Female Employees Rate = {\text{N. Female employees} \over \text{Total number of employees}} X 100
      • Rate equal to 50 indicates equality.
    • Handicapped Employee Rate (%)
      • Handicapped Employee Rate = {\text{N. Handicapped employees} \over \text{Total number of employees}} X 100
      • Higher percentage indicates greater social impact.
    • Rate of Top and Middle Managers (%)
      • Rate of Managers = {\text{N. Senior and Middle Managers} \over \text{Total number of employees}} X 100
      • Reflects importance of R&D.
    • Rate of Temporary Workers (%)
      • Rate of Temporary Workers = {\text{Annual average of temporary workers} \over \text{Annual average workforce}} X 100
      • Higher value indicates greater precariousness.
    • Turnover Rate
      • Turnover Rate = {(\text{Admissions} + \text{Leavers})/2 \over \text{Annual average workforce}} X 100
      • Expresses job turbulence; > turnover rate > unstability of work places.
    • Replacement Index
      • Replacement Index = {\text{Admissions} \over \text{Leavers}}
      • < 1 indicates reduction of work places.
    • Employment Index
      • Employment Index = {\text{End N. Workers} \over \text{initial N. Workers}}
      • Shows evolution of jobs; > 1 creation, < 1 suppression.
    • Promotions Rate (%)
      • Promotions Rate = {\text{Promotions} \over \text{Total number of employees}} X 100
      • Measures promotions per 100 employees.
  • Working Hours
    • Average Maximum Annual Potential (hours)
      • Measures potential hours based on normal working period.
  • Health and Safety
    • Rate of Absenteeism
      • Absenteeism Rate = {\text{N. Hours absenteeism} \over \text{Maximum annual potential}} X 100
      • Measures absence from work.
    • Overtime Rate (%)
      • Overtime Rate = {\text{Total hours overtime} \over \text{Maximum annual potential}} X 100
      • Conjugated with absenteeism rate.
    • Rate of Absenteeism due to Illness (%)
      • Rate of Absenteeism due to Illness = {\text{N. absenteeism hours due to illness} \over \text{Maximum annual potential}} X 100
      • Reduced % reflects health coverage effectiveness.
    • Rate of Absenteeism due to Work Accidents (%)
      • Rate of Absenteeism due to Work Accidents = {\text{N. absenteeism hours due to work accidents} \over \text{Maximum annual potential}} X 100
      • Measures absenteeism due to accidents.
    • Occupational Medical Care rate (%)
      • Occupational Medical Care rate = {\text{N. of medical examinations} \over \text{Annual average workforce}} X 100
      • Connects exams with employees.
    • Health and Safety Index
      • Health and Safety Index = {\text{Health and Safety costs} \over \text{Pay expenditure}}
  • Pays and Benefits
    • Average Annual Direct Salary (€)
      • Average DS = {\text{Annual direct salary} \over \text{Annual average workforce}}
    • Average Annual Retribution
      • Average Annual Retribution = {\text{Direct salary + occasional premia and subsidies + payments in kind} \over \text{Annual average workforce}}
    • Salary Range
      • Salary Range = {\text{Net Highest net base salary } \over \text{Lowest net base salary}}
    • Personnel Costs Weight on GAV
      • Personnel Costs Weight = {\text{Personnel Expenditure} \over \text{Gross Added Value (GAV)}}
      • Measures weight of costs in GAV; higher value = more labor intensive.
  • Education and Training
    • Rate of Workers with University Degree (%)
      • Rate of Workers with University Degree = {\text{N. employees w/univ. degree or equivalent} \over \text{Total number of employees}} X 100
    • Training Rate (%)
      • Training Rate = {\text{Total training costs} \over \text{Pay expenditure}} X 100
      • Expresses weight of training costs.
    • Training Participation Rate (%)
      • Training Participation Rate = {\text{N. Participants in training courses} \over \text{Annual average workforce}} X 100
    • Apprentices’ Rate (%)
      • Apprentices’ Rate = {\text{N. apprentices} \over \text{Annual average workforce}} X 100
      • Significant value indicates social contribution.
  • Working Relations
    • Rate of Unionized Employees (%)
      • Rate of Unionized Employees = {\text{Nº employees registered in a Union} \over \text{Total number of employees}} X 100
      • Value close to 100 translates a high sense of “professional class”.
    • Strike Rate (‰)
      • Strike Rate = {\text{Hours lost because of strike} \over \text{Maximum annual potential}} X 1000
      • Higher value indicates greater conflict.
  • Productivity
    • Capital-Employment Coefficient (€)
      • Capital-employment coefficient = {\text{Fixed capital} \over \text{Total n. of employees}}
      • High value = capital-intensive; low value = labor-intensive.
    • Work Productivity
      • Work productivity = {\text{Gross Added Value} \over \text{Annual average workforce}}
      • Measures the gross added value attributed, on average, to each worker (€/person).

Basic Sources of Information for HRM

  1. Annual HR report (“Relatório Único”)
  2. Organizational structure (chart)
  3. Job Analysis
  4. Climate diagnosis

1. Annual HR Report (“Relatório Único”)

  • Concentrates information on HR in a single document.
  • Delivered via internet to the Ministry of Work (March 16/April 15).
  • Only for Private Sector Organizations.

Previous Obligatory Reports (Included in Annual HR Report)

  • List of workers
  • New contracts & contracts terminated for non-permanent workers
  • Overtime report
  • Report on training and development
  • Report on health and safety
  • Social Balance

Contents of the Annual HR Report:

  • First part with basic information and 6 annexes:
    • Annex A – List of workers
    • Annex B – Workers leaving and joining the organization
    • Annex C – Training and development
    • Annex D – Health and safety
    • Annex E - Strikes
    • Annex F – Non-permanent workers

2. Organizational Chart

  • Results from an Organizational Design.
  • Depicts CEO, CFO, CLO, CHRO, and their respective functions (e.g., Accounting, Controlling, Recruitment & Selection, Training & Development).

3. Job Analysis

  • Process of obtaining information about functions in an organization.
  • Includes a description of tasks, skills, experiences, and performance standards.
  • Essential for Recruitment and Selection, Performance Appraisal, Career Management, and Pay Systems.

Job Analysis Components

  • Job description:
    • Tasks, working conditions, intrinsic and extrinsic issues.
  • Job specification:
    • Requirements to perform well (education, experience, skills).
  • Performance standards:
    • Expected performance level and criteria for measurement.

Job Analysis Updates

  • Should be frequently updated.
  • HR officers or line managers should review job descriptions for new tasks.
  • Increasing responsibility may require salary adjustments.

Practical Applications of Job Analysis

  • Clarifies expectations for job holder, superior, and colleagues
  • Identifies responsibility borders
  • Identifies objectives for the job
  • Identifies criteria for recruitment & selection and performance appraisal
  • Supplies a basis for career management and specific programs (organizational development, job enlargement, and job enrichment).

Job Enlargement and Job Enrichment

  • Job enlargement: adds more tasks at the same level of responsibility (horizontal job loading).
  • Job enrichment: adds more responsibility to the same number of tasks (vertical job loading).

4. Organizational Climate Diagnosis

  • Employees’ perceptions of the working environment.
  • Represents their view on the organization, influencing their behaviors.

Practical Applications of Organizational Climate Diagnosis

  • Impacts employees’ performance (productivity, absenteeism, commitment).
  • Undertaken when facing problems or planning substantial change.
  • Frequent analysis helps identify and correct emerging problems.

Gathering Information on Organizational Climate

  • Social balances and company reports include motivation and social climate indicators (e.g., absenteeism).
  • Measured through questionnaires and interviews on perceptions of jobs (e.g., Pay, leadership, recognition).

Human Resource Audit

  • Purpose: to improve the effectiveness and efficiency of the organization through its Human Resources.

Human Resource Audit - Uses measurements and techniques that will allow:

  • Diagnostic of problems, their causes, and alternative solutions.
  • Support for decision-making.
  • Demonstrate An analysis of the contribution of the HR department for organizational effectiveness and efficiency.

Applications of the Human Resource Audit

  • Certifying available data on HR activities.
  • More rational management by using quantitative measurements.
  • Improving control and self-control.
  • Diagnosing serious workforce problems.
  • Better support for decisions.
  • Preparing negotiations with employees and unions.
  • Preparing mergers, acquisitions and sales.

The process of Human Resource Audit

  1. Gathering information
  2. Analyzing information
  3. Verifying information
  4. Assessing problems
  5. Proposals

Human Resource Audit Instruments

  • Annual report
  • Score boards
  • Performance appraisal
  • Organizations chart
  • Age charts
  • Flowcharts
  • Social events indicators

Annual HR Report (“Relatório Único”)

  • Can be used for preliminary information gathering but is not sufficient.
  • The report itself can be audited to certify data validity and legal compliance.

Score Boards (Tableau de board)

  • Used to assess the planning and controlling of the HR function.
  • HR Audit can contribute to score board development by identifying relevant indicators.

Individual Performance Appraisal

  • Used to verify:
    • If rules and procedures are followed.
    • Whether objectives and tasks are fulfilled.

Organizational Charts

  • Comparing charts from different years shows management philosophy.
  • Reveals which departments are becoming more important and which tasks are disappearing (outsourcing).
  • Mobility rates can be measured and used for planning.

Age Charts

  • Graphic representation of the workforce by age or gender.
  • Allows visual representation of (un)balanced situations.

Flow Charts

  • Used for better knowledge of steps in a task or procedure.
  • Gives an idea of internal control systems.

Social Events Indicators

  • Identify problems or consequences.
  • Provide criteria to judge the seriousness of a situation.
    • Internal: Absenteeism rate, wounded employees, number of complaints, machine failures.
    • External: Loss of customers, loss of market share, public opinion.