E-HRM
in India: Present Status, Challenges and Future Prospects
Mahima Nanda
Senior Research Fellow
(SRF),
University Business
School,
Guru Nanak Dev
University,
Amritsar, India,
Dr.
(Ms.) Gurpreet Randhawa
Associate Professor,
University Business
School,
Guru Nanak Dev
University,
Amritsar, India,
Abstract
Despite
the multiple benefits associated with the use of digital technologies in the
area of HRM, its adoption is not widespread. The limited resources with the
developing and the under-developed nations make e-HRM imperative to reduce the
organizations operational costs. But before its successful adoption, the
challenges to e-HRM need to be overcome and the way forward should be clear.
While India is on the path of embracing digital revolution in all spheres of
administration and management, its journey
is not smooth as societal, cultural, infrastructural and economical barriers
impede e-HRM
adoption. In this context the present paper highlights the present
status, challenges and future prospects of e-HRM in India with the purpose of
providing a pathway to the policy makers and the organizations regarding the successful
adoption and implementation of e-HRM practices in India.
Keywords:
e-HRM, Human resource management, ICTs, Digital technologies.
______________________________________________________________________________
Introduction
Today we are living in the era of
‘digital age’ in which information and communication technologies (ICTs) have
brought innumerable changes in the organizations. Almost all the areas of
administration and management have undergone tremendous
change due to digital technologies and human resource management (HRM) is not
an exception. In comparison to other business
functions like marketing, finance, manufacturing, supply chain etc., HRM has
been rather slow to adopt digitalization of its operative functions. Factors
like competitive business environment, globalization, rising costs, etc. made
it imperative for business houses to adopt relevant ICTs that would perform all
HRM services, and thus help firms to achieve competitive advantage
(Olivas-Lujan et al., 2007). These services mainly include e-recruitment,
e-selection, e-performance management, e-compensation management, e-learning,
etc.
Employment of digital technologies in
HR field has actually helped in the emergence of a new symbiotic relationship
which has changed the scenario from simple HRM to e-HRM or
digital HRM, while at the same time has also empowered the technology to evolve
at its full potential (Hempel, 2004). The digital HRM allowed greater
flexibility and stronger integration of workplace tasks. In fact, it has brought
radical changes and has redefined the key HR activities. Bondarouk and Ruël
(2009) defined e-HRM as “an umbrella term covering all possible integration
mechanisms and contents between HRM and Information Technologies aiming at
creating value within and across organizations for targeted employees and
management”.
Though
multiple benefits are claimed to be associated with digitalization of core HR
practices, yet the adoption of e-HRM practices has not been widespread. Especially
developing countries like ours usually face several challenges in terms of
cultural, societal, infrastructural and economical barriers. However with the
‘Digital India’ initiative of government, the future of e-HRM in India seems to
be bright. Keeping in view the scarcity of resources, there is an urgent need
to reduce operational costs of the organizations through increased investments
in IT in HR which would allow collaboration and/or replacement of a few, some,
or all of the traditional HR functions through broader coverage of IT in HRM
(Sharma and Shukla, 2013). With the rising growth figures, India has been at
the core of the world’s attention and with the digital revolution being
witnessed, the day is not far when India will become the HR Capital of the
world (PeopleStrong, 2016). Therefore challenges to this concept need to be
overcome at the earliest and digital revolution should be embraced, only then
e-HRM could accelerate the development of HR functions in Indian organizations.
Literature Review
(I)
From HRM to e-HRM
The semantics of people
management mainly consists of two terms, personnel
management and HRM, in which the former has a limited scope and views workforce as a “tool” whose
behavior can be manipulated for the interest of the organization and is
replaced when worn-out (Aswathappa,
2018). The latter term is wider in scope and varies widely because of social
constructions and frames of reference undertaken by an individual (Rahman et
al., 2018). As per Boxall (2007), “human resources include the knowledge,
skills, networks and energies of people and, underpinning them, their physical
and emotional health, intellectual capabilities, personalities and
motivations”. HRM, therefore, treats the workforce as assets and is defined as
“all those activities associated with the management of employment
relationships in the firm” (Boxall and Purcell, 2003) and is an umbrella term
encompassing personnel management and human resource development (Aswathappa,
2018).
In order to further improve
this area of management, some form of restructuring was required which was made
possible with the inclusion of IT in the processes of HRM which added value to
the operational results of HR managers (Iqbal et al., 2019; Dede, 2020). This
has resulted in the HR departments being more focused on the strategic roles in
order to contribute to the operational results of the organization (Dede,
2020).
The
field of HRM started using computers in 1940s for employee information storage
and for payroll systems in order to transform the manual processes so as to
decrease the human errors leading to enhancement of the overall efficiency
(Walker, 1980). When the internet started to emerge in 1980s, it shed the
spotlight on the various HRM activities and the development in this area
accelerated (Al-Hmouze, 2016). Welbourne (2010) has aptly pointed out the three
major goals of e-HRM implementation: cost reduction, improving HR services, and
improving strategic orientation. However, the increasing demands of this aspect
of management can only be met if modifications are made among the existing
human resource systems so as to properly diffuse e-HRM in the organizations.
With the aim to study and analyze the
best practices, table 1 shows some of the related studies conducted with regard
to e-HRM in the present century.
Table
1: Studies related with e-HRM practices
|
Author (Year) |
Objective |
Design/Methodology |
Findings |
|
Hooi
(2006) |
To
understand HRM practices among small and medium sized enterprises (SMEs) in
Malaysia and to gauge the feasibility of implementing e-HRM in these
companies. |
Both
primary and secondary data was used but the main method was primary data
survey. |
(i) There is a relationship
between availability of financial resources, expertise, and technical
infrastructure and feasibility of implementing e-HRM. However, lack of these
resources is not considered a main constraint in the implementation of e-HRM. (ii) Readiness and feasibility of
implementing e-HRM in SMEs in Malaysia is dependent on the attitude of
employees and availability of resources. |
|
Stone
et al. (2006) |
To
find the factors affecting the acceptance and effectiveness of e-HR systems in
organizations. |
Secondary
research was carried out to propose a model that relates the antecedents to
the consequences. |
(i)
“Blended” HR systems i.e. combination of traditional HR systems and e-HR
systems should be deployed in organizations. (ii)
e-HR systems may even result in dysfunctional consequences, if they are not
properly implemented. |
|
Olivas-Lujan
et al. (2007) |
To
study how the Mexican firms are using e-HRM to their advantage and how other
firms can achieve competitive advantage from e-HRM. |
Case
studies from Mexican firms are depicted with the aim to add to the e-HRM
research in emerging countries. |
Local
idiosyncrasies play an important role in e-HRM adoption in the firms of
emerging countries. Social and cultural contracts, country’s infrastructure,
local institutions, etc. provide varying degree of challenges to e-HRM
adoption. |
|
Sharma
and Shukla (2013) |
To
explore the new trends in adoption of IT for HR practices in various Indian
organizations. |
Exploratory
study with case study method was employed. |
Major
challenges for e-HRM adoption includes: (i)
Software like that of payroll and performance appraisal are not
user-friendly. (ii)
Automation level is not dependent on nature of industry. (iii)
Organizations should strengthen the working knowledge of e-HR applications
among the HR practitioners. |
|
Narendra
and Bhor (2014) |
To
examine the present scenario of e-HRM in the sugar industry of India and how
it acts like a differentiating tool in today’s competitive market. |
Data
was collected from 13 sugar factories located in 7 western districts of
Maharashtra, India. |
e-HRM
and mobile applications have a tremendous scope in the sugar industry in
India. The challenges that it presently faces includes untrained manpower, lack
of integration of various business modules, etc. which need to be overcome. |
|
Bondarouk
et al. (2017a) |
To
examine the relationship between e-HRM and HRM service quality. |
Empirical
study was conducted & standardized scales were used for collecting the
data. |
HRM
strength is an important antecedent of HRM service quality, which means that
e-HRM systems would fail if organizations do not have strong HRM systems to
start with. |
|
Ma
and Ye (2015) |
To
identify the determinants of attitude towards e-HRM and the usage of e-HRM in
China. |
Extensive
literature review in Chinese scenario was conducted. |
The
national and cultural characteristics of a nation (particularly China) pose a
great influence on the success of e-HRM adoption. |
|
Neema
(2015) |
To
study the e-HRM practices in public and private service sectors of India. |
Data
was collected using a structured questionnaire from
banking, telecom and insurance companies. |
(i) A significant difference on all factors
of e-HRM practices was found between public and private sector banks with
private sector banks being more transformational in this direction. (ii)
Private insurance and telecom sectors have adjusted more to e-HRM practices
as compared to their public sector counterparts. |
|
Marler
and Parry (2016) |
To
examine that whether e-HRM is a precursor of strategic HRM or IT is simply a
tool to execute strategic decisions in which HR strategy precedes the
deployment of e-HRM. |
Data
were collected from 5665 companies located in 32 different countries over a
period of 18 months in 2003-05. |
Strategic
HR involvement and greater e-HRM capability are both directly and
reciprocally related to each other and each is not mutually exclusive. |
|
Sinha
(2017) |
To
examine the impact of e-HRM on cost, employee empowerment, reduction in
administrative burden of HR managers, etc. and to examine extent of its
usefulness in Indian organizations. |
Descriptive
research using primary data was conducted. |
(i)
e-HRM greatly helps in strategic capability building of the organizations. (ii)
There is a significant difference in application of e-HRM tools, depicting
that penetration and depth of e-HRM tools are not uniform in Indian
organizations. (iii)
Digitally illiterate employees should be given relevant training to get
maximum gains out of e-HRM instruments. |
|
Roy
and Jegan (2019) |
To
examine the execution of e-HRM in banks and its impact on organizational
commitment of bank employees. |
A
descriptive research design was used and data was collected from 146 public
sector and 69 private sector bank employees of Kanyakumari district of India. |
(i)
e-HRM practices in banks have been adopted at moderate-level with more level
of adoption seen in private sector banks as compared to public sector banks. (ii)
Organizational commitment is more in employees of private sector banks than that
of public sector banks. The e-HRM practices influencing commitment include
e-training, e-recruitment, and e-information sharing. This influence also is
higher in private sector bank employees compared to public sector bank
employees. |
Source: Compiled from various studies.
(II) Theories supporting e-HRM
adoption
The adoption of IT have been
looked upon by many theoretical models like Technology Acceptance Model (TAM)
(Davis, 1986), Technology, Organization and Environment (TOE) (DePietro et al., 1990), Diffusion of
Innovation (DOI) (Rogers, 1995), etc. The TOE theory has the most widely
accepted effect on e-HRM practices as its prime focus is on firm level analysis
and not on individual level analysis (Oliveira and Martins, 2011; Rahman
et al., 2018).
Also, the environment factor in this theory aptly covers the role of government
in technology adoption which is the main theme of the study. Hence, this theory
is taken under consideration in the present study.
Technology-Organization-Environment
(TOE)
TOE theory, developed in 1990, throws
light on the adoption outcomes in organizations using three broad categories,
namely technology, organization and environment (DePietro et al., 1990). It
discusses the processes and procedures that assist firms in adopting and
assimilating a technological innovation. The first factor, technology refers to the characteristics and features of the new
technological innovation that influences its adoption through its relation with
realization of potential benefits and the organizations’ existing capabilities
of adoption (DePietro et al., 1990; Chong and Ooi, 2008; Tan et al., 2009). The
potential gains and barriers of
innovations are assessed by adopters, in which gains refers to the increased benefits that organizations expect to
achieve in terms of efficiency, service quality, etc. while the barriers include complexity of adopting
the innovation and the compatibility issues with the organizations’ legacy and
competency systems (Rogers, 1995; Chong and Ooi, 2008; Oliveira and Martins,
2010; Troshani et al., 2011). Second factor, organization depicts the organizational characteristics that make
or mar the adoption process and this includes structure of organization,
resources, processes, etc. (DePietro et al., 1990). Adoption is facilitated
when there is support from top management (Premkumar and Ramamurthy, 1995),
there is high degree of centralization (Yang et al., 2007), supporting organizational
setting, skilled workforce (Lin, 2006), etc. The last factor, environment encompasses the firm’s
business environment and includes industry characteristics, competitors,
government support and regulation, supporting infrastructure, etc. (DePietro et
al., 1990; Oliveira and Martins, 2010). Government has a major role in this
factor as it can encourage technology adoption by raising awareness, training,
and support, including funding and thus is very crucial in the success of
innovation adoption (Chong and Ooi, 2008). The TOE model is widely used but is
often criticized because it ignores the fact that the three factors can fluctuate
across different scenarios and situations (Rahman et al., 2018).
Need and Objectives of Study
Research
on adoption of e-HRM technology began roughly four decades ago when
organizations started adopting technologies with the desire of gaining
administrative as well as strategic benefits (Bondarouk et al., 2017b). However,
the firm-level studies that have been conducted to study the impact of ICTs,
have been largely limited to developed countries (UNCTAD, 2011). Research on
developing countries like India is largely missing. Presently, India is on the
journey to embrace the digital revolution in which various management
disciplines including e-HRM can play a vital role by transforming the
organizations and the business activities. But implementing the e-HRM practices
in Indian context is a huge challenge as there is a lack of research leading to
poor knowledge and understanding among various stakeholders of the organizations.
Thus, the present study aims to bridge this crucial gap in research which would
facilitate the decision-makers to overcome the challenges and would eventually
speed-up the adoption of ICTs in the Indian organizations for effective
employee management.
This
research endeavours to examine the present status of e-HRM adoption and aims to
identify the challenges faced by the Indian organizations to achieve service
and performance excellence through e-HRM.
Research Methodology
To
meet the objectives of the study, data were collected from secondary sources by
reviewing the literature related to technology usage and the inhibitions to e-HR
practices. This includes going through various research papers, case studies
and doctoral theses, etc. from national and international sources and journals.
The paper is divided into three sections, section - I discusses the present
status of e-HRM in India, section – II illustrates various challenges for e-HRM
in India and the last section discusses its future prospects.
Section
- I
Present Status of e-HRM in India
The
high employee base sectors like IT, banking, insurance and BPOs are considered
to be the pioneers of implementing and benefitting from e-HRM practices in
India and this route is now even followed by the traditional Indian
organizations like automobile (e.g. Tata Motors, Maruti Suzuki), energy (e.g.
NTPC), and FMCG (e.g. Dabur), etc. (Sinha, 2017). In comparison to public
sector, private sector has more successfully adopted these practices,
especially in the banking sector (Neema, 2015).
The
various HR functions, i.e. recruitment, selection, learning, compensation, and
performance management, etc. which can efficiently be performed with IT based
mechanisms, have presently been adopted at varying degrees by Indian firms and
the following section describes their adoption extent:
In
India, the private sector and in the recent years even the public sector is
attracted by the benefits of e-performance management. The Department of Personnel and Training (DoPT) of
Indian Government has launched 'Online Probity Management System' for assessing
the integrity and performance levels of certain Group A and Group B officers and
Sparrow (Smart Performance Appraisal Report Recording Online Window) system
that has made the complete appraisal system online and it also facilitates the
review process done by the concerned ministries (Sharma, 2017). The technology
today has made way for fast and quick performance management systems. Private
companies are thus moving to ‘real-time performance appraisals’ as they no more
want annual performance appraisal system and thus are going for regular and
casual feedbacks (ET Bureau, 2017).
In
India, organizations are mostly using ‘SAP’, ‘BAAN’ and ‘People Soft’ which are
customized e-HRM packages for the companies. These are mostly used and adopted
by large organizations. Small and medium businesses (SMBs) still have a long
way to go. As per the report of KPMG India and Google (2017), digitalization
has great impacts in small and medium businesses as the digital SMBs are able
to generate five times more employment than their offline counterparts. With the
‘Digital India’ programme being run in full swing, there lies a huge scope of launching
e-HRM functions in such SMBs in near future.
Section
- II
Challenges
Technology
driven HR functions can act like a catalyst in enhancing efficiency of HR
departments in Indian organizations. However, there are certain challenges that
need to be overcome first. Some of these challenges are discussed below:
(I) Organizational Challenges
i.
Cost
and Complexity: In any organization, costs
associated with IT are not just limited to purchasing technology but also
includes expenditure on training and system support. Lot of money and efforts
are required for the systematic switch over from traditional HRM functions to
e-HRM functions, which is really a daunting task for organizations.
ii.
Resistance
to Change: Bringing organizational wide
changes is a big challenge in itself. Resistance is often observed from HR
managers who sometimes consider that e-HRM initiatives would decrease their
control over various HRM functions and as a result, they may have to lose their
jobs (Bhatnagar, 2009). Also, management’s unrealistic or half-hearted attempt
to bring e-HR practices in organizations only makes things more complex. In
this regard, it will be better to involve all stakeholders right from the e-HR
planning stage till all goals and objectives are attained (Sareen, 2014).
iii.
HR
Professionals’ Skill Gap: As per Hempel (2004),
HR managers should essentially adopt technologies that enable the
“reengineering” of HR role, be ready to assist in technology driven work-design
and organizational changes, and should support the managerial environment for
knowledge-based and innovative organizations. However, studies have shown that
traditional HR education and HR professional degrees do not appropriately prepare
professionals for these challenges (Hempel, 2004). Thus, the HR education needs
to be revised so that the professionals grab the necessary skills.
iv.
Lack
of alignment of HR Processes with the Goals of Organizations: The
alignment of HR processes according to the future of e-business is a key
challenge in e-HRM (Sylvester et al., 2015). Lack of alignment results in an
attitude of neglect and lack of attention paid to e-HR ventures by the top
management and hence they do not pay attention to educate, train and develop
employees. This attitude is often exhibited by the organizations’ lack of
funding to purchase, update and maintain HRIS systems, lack of knowledge and
expertise in employees to operate HRIS, etc.
v.
Data
Management and Information Security:
According to Varma (2010), e-HRM systems usually generate huge amount of data,
tackling which is a great challenge for companies. Companies have to do data
mining in order to efficiently understand and utilize this data for measuring
workforce performance, tracking attrition, etc. Also, the information generated
from e-HRM systems is very important and should be essentially protected from
outsiders who could misuse the organization’s crucial data.
vi.
Losing
‘People Connect’: With more automation in
organizations, the personal connect declines. Managing relationships is the
most important function and the foundation on which the success of HR functions
rests but too much focus on technology based HR functions could actually
decline the efficiency of HRM (Sareen, 2014). Hence, organizations need to
carefully adopt those selective e-HRM practices which are very essential.
(II) Infrastructural Challenges
i.
Poor
Internet and Power Connectivity: The e-HRM
adoption is expected to be associated with the extent of internet penetration
in the country (Panayotopoulou et al., 2010). As per the TRAI’s “Indian Telecom Services Performance Indicator
Report” of January 2020, India has only 687.62 million internet subscribers
till September, 2019 which means that around 50 percent of the Indian
population have access to internet. Thus, the prevailing ‘digital divide’ can
actually make the e-HRM implementation difficult especially for people who
don’t have internet connectivity like those living in rural and remote areas of
India. For example, if recruitment is to be carried out on an electronic
platform, many job-seekers may not be able to apply and compete with others.
Moreover, the telecommunication industries offer poor internet services in
developing countries like India which could be due to various reasons like bad
maintenance culture, prevalent digital divide (as rural areas have lesser
internet using population) and the lack of government support systems in these
areas. Along with internet facility, 24*7 power supply is equally essential for
the successful implementation of e-HRM services which seems to be a distant
dream as far as India is concerned.
ii.
Frequently
changing and weak Government Structures:
Usually, with the change of government at centre the policies also change. For
example, the National e-Governance Plan (NeGP) launched in 2006 by the UPA
government was later on changed to ‘Digital India’ when the new NDA government
was elected in 2014. The new schemes and policies may be better or less
effective than their previous counterparts, but it definitely results in lack
of continuity in the ‘priority’ plans and policies of the governments, due to
which some targets and goals are left midway. This may also adversely affect
the IT penetration which impedes effective HR management, thereby affecting the
growth of organizations. Such obstructions result in insufficient monetary
support, fear to change the working style of staff, reduced involvement and
commitment of employees, etc.
iii.
Low
Private Investment: Long term investors
tend to avoid investing in areas where the infrastructure security and safety concerns
are low. Investments are low for internet penetration in India which impedes
growth of e-HRM functions.
Section
- III
Future Prospects
India’s flagship ‘Digital India’ programme
provides a path for transforming all the businesses, including their tasks,
functions and services. The robust IT connectivity being provided under India’s
smart cities mission is also a stepping stone in the same direction (Nanda and
Randhawa, 2019). With this, e-HRM functions are also expected to witness accelerated
development. The future of e-HRM in India is a journey which aims to move
towards paperless offices, have retrieval and analysis of data done at a very
high speed, gather and comprehend information to assist in strategic HR
functions, generate highly reliable and correct reports, give fast responses to
queries, establish standardized, streamlined and systematic procedures, provide
transparency, enhance the efficiency of the organizations, improve processes by
reducing duplication of efforts which helps in financial gains, reduce
organizational burden, help to improve employee satisfaction and productivity,
etc. It would revolutionize each and every task of HRM starting right from
human resource planning, recruitment, selection, training and development,
compensation and reward management, performance management, etc. till the
separation management.
From
e-HRM perspective, we are presently in the centre of an interesting era as
innovative and thought-provoking digital HR practices are currently underway of
adoption by organizations all around the world. These HR practices could be
guiding light for Indian organizations, enabling them to adopt suitable e-HRM
practices in their businesses so that Indian organizations can take quick steps
towards brighter and more technology-driven future.
Conclusion
For
the companies and especially, the HR professionals in a developing country like
India, modern day digital technology is both an opportunity as well as a
challenge which should be adopted but with care. The relation between IT and
HRM can be termed as symbiotic. While the application of IT in HRM is believed
to change the role of the function, at the same time HRM also allows technology
to develop at its full potential (Hempel, 2004). The small and medium
businesses could benefit in a great way by adopting the various e-HRM functions
but government and organizational leaders’ support is very much required for
this colossal task.
The
present study is successful to the extent of providing a pathway to the policy makers
and organizations regarding the adoption and implementation of e-HRM practices in
India. Organizations can reap the manifold benefits associated with the
launching of e-HRM services. Cost cutting, time saving, swiftness in various HR
tasks, fast decision making etc. are just some of the spill over positive
effects of e-HRM. However, for leapfrogging development in HRM functions, the above
discussed challenges need to be overcome. Only then, the investment in e-HR
practices can result in qualitative and efficiency gains (Sylvester et al.,
2015).
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