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HRIS: An Evaluation of its Cost and
Benefits
13-16 minutes
1. Home
2. Library
3. Operations
4. Human Resource Information System
5. HRIS: An Evaluation of its Cost and Benefits
Human Resource Information System (HRIS) often described as
Human Resource Management System, in the present scenario
can serve as a crucial tool in providing a competitive advantage to
the organizations. It involves measurability, better management of
data and information, equally provide scope for measurement of
key HR practices and its outcomes on employee productivity as
well as organizational performance. HRIS is usually adopted as
well as implemented for attaining the following goals:
Improving Efficiencies: Automation in HR, reduces dependence
on hard copy form of data and information related with the
employee details, facilitates saving of time and resources by way of
using online applications/forms created in a user friendly interface.
This improves the overall efficiency of the HR department and the
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HR professionals may focus more on strategic decision making and
developmental functions of HR.
Mutually Beneficial for both the Management and the
Employees: Automation of HR or HRIS, facilitate transparency in
the system, thereby result in improved employee satisfaction from
his job and convenience for the management in proactively
responding to people related affairs.
HR as a Strategic Partner: With the implementation of HRIS in the
organization, the role of HR expands from merely being a support
system or an administrator to a strategic partner. HR functions in
alignment with the corporate strategy and today plays a strategic
role in driving business objectives through effective management of
human resources and implementation of HR best
practices/interventions for improved employee performance.
An evaluation of HR costs involves calculation of ROI (Return on
Investment) on Human Capital, which generally encompasses an
assessment of the benefits or the positive outcomes and also the
costs or the negative outcomes of HR led initiatives/practices. The
evaluation of costs and benefits of HRIS can be performed with the
help of various techniques:
Identification of sources of value for costs and benefits of HR
led initiatives: This would be involving an assessment of the
business environment, changing trends and an evaluation of the
strategic course of alternatives.
Estimating the Timing of Benefits and costs: This essentially
involves comparing the HR costs and benefits in various periods or
measuring the costs-benefits of various programs led in different
timings. This plays a crucial role during the policy making process.
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Calculating the value of Indirect Benefits: Indirect benefits are
the secondary benefits. This step helps in understanding the
influence of various factors on the probability of success of HRIS
projects. By estimating the magnitude, one can perform better
evaluation of the planning process. For estimation, at first the
proper metric is chosen and then direct estimation, benchmarking
and internal assessment are done. Benchmarking is widely
available, as it has several advantages to offer. It results in better
risk management for large scale projects which are in progress.
Internal assessment involves an assessment of the firm’s own
internal metrics. Here data transfers are much easier and relatively
cost effective as well.
Methods for estimating the value of indirect benefits: These are
typically estimated in dollars. It involves a calculation of the
Average Employee Contributions (AEC). AEC is derived by
calculating the difference between the net revenue of an
organization and the cost of goods sold divided by the total number
of employees. In short, AEC = (Net Revenues – Cost of Goods
Sold)/number of employees.
AEC is the average employee contribution to the organization. This
is a profitable technique for the organization. It helps the HR
professionals to estimate their contribution towards the
organization. It also contributes towards the assessment of
employees’ individual differences and production rate.
Avoiding Common Problems
The HRIS Cost Benefit Analysis process lot of times ignore an
assessment of the HR policies and its influence on organizational
effectiveness. Calculation of direct and indirect costs sometimes is
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confused, as a result of which direct costs are calculated as direct
costs. Since more emphasis is given on time saving, decision
makers fail to analyze the outcomes or the end results of the HR
led initiatives.
Packaging the analysis for decision makers
The Cost Benefit Analysis is done by analyzing the overall
organizational goals and the objectives which have been planned to
be achieved over a period of time in measurable terms. Until and
unless, a proper Cost Benefit Analysis is done, decision-makers will
not be able to estimate the expenditures on investment. The
process enhances the strategies for a firms’ effectiveness.
Extensive analysis should be done by the decision-maker through
proper identification of direct and indirect cost and benefits.
Variance Analysis: Variance Analysis is one of the methods for
assessing the indirect benefits and can equally be used as a
measure in the evaluation process. This involves an assessment of
the financial and operational data for identifying and ascertaining
the cause of the variance which is identified. In project
management, this technique can be very useful for evaluating and
review the progress in a project, maintaining budgetary control by
assessing the planned as well as the actual costs incurred in a
project.
HRIS Benefits
According to the opinion of Kovach (2002), HRIS implementation
has the following advantages:
Improving the organizational competitiveness by way of improved
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human resource functioning.
Provides the opportunity for shifting the focus from day to day
operational issues of HR to much more strategic objectives.
Employees play an active part in the HRIS implementation and its
usage in day to day functioning.
Results in reengineering or restructuring of the entire HRD.
Broadly HRIS Benefits can be classified into the following:
Advantages for the management in terms of improving the decision
making capability of management, effective cost control, clarity of
vision and transparency in its operations and more concentration
on the strategic objectives of HR.
Advantages for the Human Resource Department in terms of
improving the efficiency of the HR department, reduced
dependence on paper work and manual management of employee
data/information, brings standardization in the key processes and
reduces redundancy and transforms the HR department into a
proactive department.
Provides added advantages for the employees as it saves time,
facilitates convenience in usage and administration, improves
decision making, etc.
Authorship/Referencing - About the Author(s)
5 of 11 5/12/2020, 2:08 PM
HRIS: An Evaluation of its Cost and Benefits about:reader?url=https://www.managementstudyguide.com/cost-and-bene...
The article is Written By “Prachi Juneja” and
Reviewed By Management Study Guide Content Team. MSG
Content Team comprises experienced Faculty Member,
Professionals and Subject Matter Experts. We are a ISO
2001:2015 Certified Education Provider. To Know more, click on
About Us. The use of this material is free for learning and education
purpose. Please reference authorship of content used, including
link(s) to ManagementStudyGuide.com and the content page url.
Human Resource Information System (HRIS)
1. Home
2. Library
3. Operations
4. Human Resource Information System
5. Job Analysis and Human Resource Planning
A Job can be described as a group of tasks which is assigned to
the individual employees for ensuring achievement of the
organizational goals. When this job is analyzed in terms of
determination of the skills, duties and knowledge required for
completion of tasks, it is regarded as Job analysis. In the words of
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Geisler (2006), the entire process of Human Resource Planning
essentially involve four crucial aspects in it:
Forecasting of Manpower requirements
Formulating Policies
Implementing Policies Effectively, and
Controlling or Monitoring the Policies for ensuring that the right kind
of people in right numbers, are selected for the right position and in
right time.
A sound HRP process in an organization must be strategically
aligned with the overall corporate strategy and essentially depends
on the availability of a robust HRIS for making accurate projections
regarding the manpower requirements and availability of
information readily regarding crucial HR parameters.
Job analysis
Job Analysis involves gathering information and analysis of
information of crucial information about a job. In this analysis
judgements are made on the data collected of a job. Job Analysis
involves both Job Description and Job Specification, which includes
an assessment of the nature of the job as well as the knowledge,
skills and attitude of the jobholder. In other words, Job Description
provides details regarding the content of the job in a written format
and Job specification is a written record of the qualities and
qualifications which a Jobholder should be having for handling a
job.
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Source: http://hsimed.gtri.gatech.edu/hsi_info/hsi_methods_job.php
The job analysis is useful in developing selection, training, and
performance evaluation. Job analysis is the process of studying
and collecting information about the responsibilities and operations
of a given job. Specifically, job analysis involves the steps:
Analyzing the Job interrelationship with the organizational
strategies and vision.
Determining the Uses of Job Analysis like Recruitment & Selection,
Compensation, Training & Development, etc.
Identification of Job which would be analyzed
Collection of Data for Job Analysis through observation, Interviews
and Questionnaire Administration.
Preparing the Job Description which is essentially a written account
of the job.
Preparing the Job Specifications which should essentially provide
details regarding the specific skills, qualities and qualifications
which a job holder should possess.
Reviewing and updating the information ideally in every three years
and the interrelationship collecting job information.
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Human Resources Planning
Human resources planning can be described as a process of
ascertaining the manpower requirements of an organization
which should be aligned with the strategic goals of the
organization. According to E.W. Vetter, human resource planning
is “the process by which a management determines how an
organization should make from its current manpower position to its
desired manpower position”. Some of the features are:
Well defined objectives of human resource planning.
Human resource plan needs of the organization.
Manpower planning in advance.
Creating Proper Work Environment.
Planning is the first step for determining the success of any
strategic initiative and ensuring achievement of pre-defined goals
as it establishes a road map for realization of several action plans.
Effective planning begins with information gathering, defining or
establishing objectives and implementing sound decisions for
ensuring achievement of organizational goals. HR Planning
answers the following questions of number of employees in the
organization, skills and knowledge of the employees a company
possesses, proper utilization of the resources and motivational
tools required for the employees.
Human Resources Practitioners who plan HR program assist the
organization to manage its employees strategically by facilitating
the career planning of the employees and achieving the objectives
as well. In the present scenario of fast changing business
environment which is characterized by more volatility, cut throat
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competition and global approach, organizations have started to give
increasing importance to effective Human Resource Planning for
gaining a competitive edge through appointment of the right talent
in the right position. Not only in Staffing, but HRP plays a crucial
role in the areas of Training & Development, Compensation
Determination as well as planning and implementing various
motivational initiatives for the employees. In the era of Strategic
Alliances, Globalization of economies, Mergers and Acquisitions,
HRP can play a very critical role in determining organization’s
competitiveness.
Short Term and Long Term Human Resource Planning
Short Term Human Resource Planning is essentially derived from
the long term human resource planning, which is usually done for a
period of 1 year. It contributes towards fulfillment of long term
objectives and one of the key issues involved in short term Hunan
Resource Planning is matching of available human resources with
the existing jobs. Long Term Human Resource Planning is
essentially done for a period of five years or sometimes beyond it.
Human Resource Planning and HRIS
Availability of a robust HRIS in an organization can play a crucial
role in determining the effectiveness of Human Resource Planning
in an organization. A well-developed HRIS, can enable availability
of crucial information or data regarding the human resources and
accordingly result in accurate projections for the future
requirements.
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Authorship/Referencing - About the Author(s)
The article is Written By “Prachi Juneja” and
Reviewed By Management Study Guide Content Team. MSG
Content Team comprises experienced Faculty Member,
Professionals and Subject Matter Experts. We are a ISO
2001:2015 Certified Education Provider. To Know more, click on
About Us. The use of this material is free for learning and education
purpose. Please reference authorship of content used, including
link(s) to ManagementStudyGuide.com and the content page url.
Human Resource Information System (HRIS)
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