Unveiling the Value Creation Process of Electronic Human Resource Management: An Indonesian Case

Article excerpt

Introduction

The advancement of information and communication technologies (ICT) is altering the way of life and work, including business and government practices. It is believed that ICT development drives business processes and strategies of change. In human resource management (HRM), for example, organizations have finally realized the growing importance of using ICT in leveraging their HRM functions. Moreover, there is an increasing demand for the HRM function to be more efficient, effective, and capable of supporting the strategic goals of every business function, thereby leading to the organizational adoption of electronic human resource management (e-HRM). e-HRM has been considered as a means for an organization to innovate itself, both in private and public, in response to the demands and changes in the business.

Ruel, Bondarouk, and Van der Velde (2007) defmed e-HRM as a way of implementing HRM strategies, policies, and practices in organizations through a conscious and directed support of, and/or the full use of, web technology-based channels. e-HRM has a wide range of uses; furthermore, it supports particular human resource (HR) activities, such as recruitment and selection, performance management, compensation and benefits, training and development, health and safety, employee relations, retention, policies on work-life balance (Enshur, Nielson, & Grant-Vallone, 2002), and managing employee information across the entire employment cycle (Parry & Tyson, 2011).

Today, the use of e-HRM is a common practice in many organizations, profit and nonprofit, and is expected to create value for them. Consequently, academic interest in e-HRM has increased in an attempt to investigate the value creation of e-HRM. Lepak and Snell (1998) suggested that e-HRM investment goals include the transformation of the HRM function to a strategic business partner. Strohmeier (2007) found that research on e-HRM has shown to alleviate the administrative burden as well as produce an increased accuracy of results and quality of HR activities. Similarly, Ruel et al. (2007) suggested the following four goals: cost reduction, improving HR services, improving strategic orientation, and global orientation. However, despite the great potential for HR functions to create value beyond administrative outcomes, in practice, many organizations utilize e-HRM more for an "automating" approach that focuses primarily on administrative efficiency rather than supporting strategic "human capital management" processes (Foster, 2010). According to Foster (2010), while process-based administrative tools are used by more than 90% of organizations, strategic HR technology tools have a much lower organizational penetration rate, typically at the 30% to 40% level (Foster, 2010).

It is expected that the adoption of information technology in the HR system will change the relationship between employees and the HR Department. Moreover, the dependency and interaction between employees and computers may increase. Therefore, the e-HRM implementation process must take into account the challenges of both management change and technology acceptance. Incorporation of the Technology Acceptance Model (TAM) into recent e-HRM studies has resulted in the notion, that the use of e-HRM by targeted employees is highly determined by the level of usefulness and the ease of use of the technology (Ruta, 2005). However, previous studies have mostly either focused only on the technology acceptance dimension or have partially probed the relationship between possible HRM outcomes and the usage of e-HRM in a separate model. The attempt to reveal the empirical evidence for the success enabler of e-HRM acceptance along with the possible HRM outcomes created by the usage of e-HRM, by combining them into single and a comprehensive framework, are relatively scarce. Furthermore, recent studies on e-HRM usually lie in the private sector as their object. …