Abstract
Orientation: The retail industry is the largest contributor to employment and the gross domestic product (GDP) in the Western Cape, South Africa. The management of human resources in this very competitive industry is a high priority for all retailers. The successful implementation, maintenance and use of human resource information systems (HRISs) are an integral part of many retailers.
Research purpose: Human resource information systems are difficult to implement and maintain, and as a result, organisations cannot effectively utilise these systems to their benefit. The purpose of this paper is to explore the factors affecting the implementation, maintenance and use of HRISs in two retail organisations in the Western Cape.
Motivation of study: Many retailers find it difficult to apply and utilise HRISs to their benefit and to the systems’ full potential. This study explores the challenges retailers are facing when implementing, maintaining and using HRISs.
Research design, approach and method: Multiple case studies were used to conduct the research. Data were collected through a semi-structured questionnaire using interviews. Twenty-one interviews were conducted in the two retail companies to gain an understanding of the use of HRISs within these organisations. The data were analysed using a thematic method of analysis. The units of analysis were the Human Resources and the Information Technology departments of both companies. The units of observation were (21) purposively selected employees in the two mentioned departments of both retail organisations.
Main findings: This research shows an under-utilisation of the HRIS in both companies as a result of poor data quality, lack of adequate training and the high cost of implementing and maintaining the system. There is a gap in terms of data analytics and report generation. This gap leads to the under-utilisation of the HRISs preventing the retailers to optimise the benefits of the HRIS.
Practical and managerial implications: For organisations to reap benefits from HRISs, a change management strategy and a rigorous training programme are needed that will focus on the implemented maintenance and improved usage of these systems.
Contribution: The contribution of the study includes proposed guidelines for the effective and efficient use of HRISs. The study further contributes to the body of knowledge in shedding light on the implementation, maintenance and use of HRISs in the retail industry in the Western Cape, South Africa.
Introduction
Retail is an important sector that contributes to the growth of the economy in many ways, such as the reduction in unemployment and an increase in the gross domestic product (GDP) (Nalla & Varalaxmi, 2014). As the retail sector is a major contributor to the creation of employment in the economy, the management of human resources becomes an important aspect in organisations (Powell & Dent-Micallef, 1997). Quality systems dedicated to human resource management are required to manage this complex environment. Human resource information systems (HRISs) are introduced to strengthen the strategic objectives of organisations by providing accurate information relating to human resources at the lowest time and cost (Das & Ara, 2015). For organisations to achieve this, they need to ensure that strategies such as recruitment, training, development and reward are aligned and well established (Chitere & Gachunga, 2013). An HRIS is defined by Kavanagh, Gueutal and Tannenbaum (1990, p. 13) as ‘a system that is used to acquire, store, manipulate, analyse, retrieve and distribute information resources’. The Human Resources (HR) and Information Technology (IT) departments are responsible for the extraction, transformation and loading of company employee information in a system (Mahmoud, 2014).
The purpose of the study
The purpose of the study is to explore the challenges retailers are facing when implementing, maintaining and using an HRIS in order to gain benefits from the system. The research questions are based on how organisations implement, maintain and use HRISs and if there are differences between organisations in how they use the system.
Literature review
For organisations to achieve success in the effective use of an HRIS, there is a need to fully utilise the HRIS as many organisations only use some system functionalities (Mohite, 2012). Some reasons for the ineffective use of the HRIS are the lack of management support, not able to upgrade the system, shortage of funds and poor training. In this complex environment, HRISs are difficult to implement and maintain and as a result, organisations cannot effectively utilise the system to their benefit. The aim of the study is to explore what factors affect the effective use of the system in the organisations and how HRISs are utilised by organisations to gain benefits from the system.
Arora (2013) mentions that the effective use of HRISs is difficult to measure, especially in terms of benefits for organisations. Most organisations that implemented HRISs indicate the system to be complex (Bhargava, 2014). The complexity of an HRIS is posed as a negative influence for the adoption of the system (Alalwan, 2014). Complexity affects innovation when using the system because employees find the system difficult to understand (Ahmer, 2013). Marufu (2014) mentions that under-utilisation of the system is a critical problem caused by the users who lack the understanding of how the system works. Furthermore, the implementation, use and level of maintenance of the system is determined by the size of the organisation (Slavić & Berber, 2013).
The size of an organisation also contributes to the effective use of the system (Ball, 2001) and could be part of the reasons why organisations are not maximising the use of the system, which is a great concern. Sarker (2014) states that there should be a relationship between the size of an organisation and HR practice in the use of the HRIS, so that the growth of the organisation is assisted by the system to select the right skills needed to optimise organisational performance. Many organisations with HRISs neglect positioning the required resources to manage it, depriving the users and the organisations of achieving the benefits it offers (Arora, 2013).
Training is a compulsory requirement that most organisations set as a criterion before employees can access the system (Naris, 2009). In the retail banking sector, training of employees on how to use the system is identified as a critical success factor (Chitere & Gachunga, 2013; Hossain, 2014). Chitere and Gachunga (2013) and Kinanaga (2013) state that training and development are important criteria for the adoption of HRISs to improve HR functions. Nalla and Varalaxmi (2014) identify a significant difference in the use of HRISs with the introduction of training of newly employed HRIS users in the retail sector. Nalla and Varalaxmi (2014) support Sorescu, Frambach, Singh, Rangaswamy and Bridges (2011), stating that retailers create value for their businesses through innovations and training of their employees in order to build a sustainable advantage in the marketplace.
Akpaloo (2010) identifies the lack of management support and inadequate funding as some of the problems affecting the effective use of the system. Ahmer (2013) supports Akpaloo (2010) by stating that a lack of management support impacts negatively on the adoption of the system. Ngai and Wat (2006) mention that many organisations are not realising the benefit of HRIS implementation because of the lack of funds and support from management. Inadequate funding could deprive an organisation from utilising the system effectively. The cost of the implementation and maintenance of the system is a major concern that impacts its effective use (Iwu & Benedict, 2013). Ahmer (2013) argues that an HRIS with less functionalities could be more expensive in terms of the cost of acquisition and maintenance. The maintenance of the system relates to the upgrades, backups and improvements of the software and hardware part of the system (Lippert & Swiercz, 2005).
System application and products (SAP) is one of, and the most famous, HRIS software programmes that was introduced in 1972 by three German programmers to assist companies in their daily business and human resource activities irrespective of the size of the organisation (Khoualdi & Basahel, 2014, p. 29). Most retailers are identified to be making use of the SAP system, which requires the use of functionalities known as modules. Companies can buy the modules they can afford, but this cost saving can have a negative impact on the use of the system (Udekwe, 2016). Thakur (2016, p. 2) indicates that the proper implementation of SAP assists in improving the efficiency of organisations if effectively utilised. Khan, Hasan and Rubel (2015, p. 48) also comment that the high cost of instituting and maintaining the SAP system is the major barrier in HRIS implementation.
According to Chumo (2014), the HR department is under pressure to reduce costs and at the same time improve the services they render to their employees. Improved services benefit the organisation as the needs of employees include being more satisfied, employee information is secure, employees trust the HRIS, and as a result, their efficiency and effectiveness in the organisation improve.
Organisations that have an HRIS and do not consider information security as important are prone to malpractices which could disrupt the information in the system (Mohite, 2012). Information security in HRISs is a critical factor that should be considered when implementing the system in an organisation (Stone & Dulebohn, 2013). The lack of effective information security of an HRIS could have a negative impact on the effective use of the system, including employees being afraid that their information could be accessed by unauthorised individuals; as a result, employees could be biased in terms of the level of trust they have in the system.
Trustworthiness of the HRIS is one of the management motivators towards the investment of resources in the system (Iwu & Benedict, 2013). Davarpanah and Mohamed (2013) argue that the trust in the system is determined by the number of components used to operate the system for effectiveness. By identifying potential employees, maintaining complete records of employees and developing the talents and skills of employees, trust in the HRIS can be increased (Bal, Bozkurt & Ertemsir, 2012). Trust in the HRIS system also relates to the involvement of both the HR and IT departments in the form of teamwork and coordination on how to work together to achieve success in the usefulness of the HRIS (Lippert & Swiercz, 2005). The lack of proper teamwork and staff coordination among the users do have a negative impact on the benefits expected to be derived from the use of the HRIS (Mahmoud, 2014). Without proper coordination between the two departments, most organisations would find it difficult to build trust in their HRIS. Bal et al. (2012) mention that effective teamwork will assist in the performance of the system and will go a long way in having an effective work environment.
The performance of organisations in terms of HRIS usage is also based on the level of data quality (Tetteh, 2014). Poor data quality has a negative effect on the organisation’s productivity. Incorrect data captured into the system, for example, could have a negative impact on the employees’ salaries and other benefits paid to them. The volume of data and the data capturers not understanding the HRIS system could lead to poor data quality in the system (Chen, 2014). According to Bhargava (2014), user requirements are also misunderstood and as a result, the quality of the data decreases. Marufu (2014) identifies poor data quality as part of the challenges that organisations are facing. It negatively affects the level of confidence in the system and that leads to a low level of usage of the system. Furthermore, HRISs are regarded as a strategic tool, especially when the data capturing is accurate (Slavić & Berber, 2013). It also assists organisations in predicting the perfect time to employ or to down size their employment portfolio. Kumar and Parumasur (2013) regard a competitive advantage as one of the major reasons why organisations should invest in HRISs. Das and Ara (2015) also comment on the effective use of an HRIS by the retail organisations and state that HRISs can create a competitive advantage in terms of recruitment, training and development processes as well as other benefits offered by the system.
HRISs can benefit organisations when used effectively and efficiently. However, many factors need to be considered and managed, as the HRIS is a complex tool to use. The involvement of the management and the training of the users are needed to optimise the application of the HRIS. Without good teamwork and adequate funds, the innovation possibilities and the creation of a competitive advantage for the organisation will remain a dream.
Research design and methodology
Research approach
This research was conducted using a qualitative research method. An interpretive paradigm with an inductive approach was followed (Saunders, Lewis & Thornhill, 2009).
Research strategy
A multiple case study was used as a strategy. Two retailers, an oil company and a supermarket company, were used as case studies (Yin, 2003). Both the retailers are leaders in their respective fields. The one retailer has many convenience retail outlets throughout South Africa and Africa. They have been using different HRIS systems for years, but moved to a SAP platform 8 years ago. The other retailer has many different kinds of retail stores and distribution depots. These stores range from super macro stores to small family franchised stores. In this case, the retailer only implemented an HRIS (SAP) 2 years ago.
Many retailers were afraid to participate in the study; only the two mentioned companies made their organisations available for the research. A case study strategy was used because of the need to understand in depth the challenges faced by the management (HR), IT employees and users, from planning through to implementation and thereafter.
Research design
The interviewees were non-randomly and purposively selected. Twenty-one interviews were conducted across the two companies. This research focused on the IT and HR departments of both companies as the units of analysis. The units of observation were 10 employees in the oil retail company and 11 employees in the supermarket retail company. Data were collected by using an interview guide. The interview guide consisted of 40 semi-structured questions directly related to the research questions. The interviews were transcribed and given back to the interviewees for confirmation of the validity and reliability of the transcriptions. The transcriptions were then coded. From the coding, findings were generated and supported by direct quotes from the interviewees. The findings were categorised and themes developed from the findings (Saunders et al., 2009).
Findings
In both organisations, the implementation of an HRIS (SAP platforms) was met with great expectations. The implementations went more or less as planned. The normal project delays did occur, but at large both organisations are satisfied and are using their HRISs. An aspect that stood out was teamwork. In both organisations, teamwork is mentioned as the outstanding factor contributing to the success of the HRIS implementations. The result of the teamwork is that knowledge transfer took place, as an interviewee said:
All the HR and IT people participated in the implementation process and became part of the project team, which led to knowledge transfer. (I4)
A second important factor contributing to the success of the implementation was the commitment and involvement of top management. Top management in both organisations took ownership of the implementation and oversaw the projects. Their commitment and enthusiasm for the projects contributed to the successful implementation of the HRIS. Management is in support of new changes, and upgrades had to be made. The involvement of management in the implementation of the HRISs has led to the advantage that management trusts the system.
Both organisations are of the opinion that security is at a high level and that there are processes in place to maintain and improve the security of the system. One interviewee stated that:
All the users do have a username and password to log into the system, and all the HR and IT personnel do have their personal computer that could be used to trace them. (I1)
Training is an on-going concern in both organisations. Users in both organisations are not allowed to use the system before they have completed the training. Interviewees feel that not enough is done to train employees and to maintain the training as new functionalities are added or changes made to the system. Many interviewees are of the opinion that training needs to be increased. One interviewee in company A said:
They need to push up the performance of individuals through rigorous training in order for them to feel the benefit of the system.
Data quality remains a challenge. This may be the result of the training gaps. An interviewee said:
It is not really applicable to all employees, but the SAP users are fully trained and also they sign a competency agreement. Access to the system also depends on the employee role. But the accuracy of data is still an issue. (12)
Too many human errors occur, resulting in poor data quality and leading to employees not trusting the system. This is contrary to the trust that top management has in the system. The perceived lack of data quality also affects the analytics and reports generated from the system. In both companies, reports generated are found to be difficult to extract and are not adequately customised to suit the requirements at that particular time. This indicates a gap in terms of data analytics and report generation to the under-utilisation of the systems and preventing the companies from reaping the benefits offered by the HRIS.
As far as upgrades are concerned, one company has a strategy to upgrade on a regular basis and to keep ahead of the tide. In the case of the second retailer, they choose to upgrade only if the upgrade is of direct benefit to the company. The result is that they do not always reap the full benefit of the system upgrades.
There was no clear answer when the interviewees were asked about customer satisfaction. In the case of the one retailer, customer satisfaction with the HRIS is high. Contrary to this, the other retailer has a low HRIS customer satisfaction report. The dissatisfaction is at different levels. In some cases, it is because not all the system functionalities are used; the under-utilisation and a feeling of waste were specifically mentioned. Other interviewees replied that the system is not user friendly or simply cumbersome to use. An interviewee stated:
I am satisfied with the system and would not recommend any other system, but I think the system could be made to be more users friendly. (I14)
This is supported by a statement from another interviewee:
I am not totally satisfied; I think the system is cumbersome and my main concern is that reports cannot be easily prepared and printed. Things have to be done on the system in a complicated way. (I5)
Although there is some dissatisfaction at one retailer, most interviewees are of the opinion that the HRISs do add value to their companies, and they will recommend the systems to other companies.
The retailers are of the opinion that the system adds value to their organisation and that the implementation has been successful. The commitment of management, teamwork and training contributed to successful implementation. Top management has trust in the systems and supports the needed upgrades of the systems. System security in both organisations is rated to be good. The main challenge facing the retailers is to use the HRIS optimally. The lack of continuous training may be a reason for the non-usage of all the required functionalities and poor data quality. Both retailers are experiencing challenges in terms of reporting and analytics. This is important as the real value of the HRIS lies with analytics, reporting and data quality.
There is a difference in the two retail organisations based on the usage of the functionalities of the system (Table 1). The oil company makes use of 90% of the HRIS functionalities compared to the supermarket, which uses only 40% of the functionalities. The recruiting system, which is part of the HRIS, is the only system that both retailers do not use. This poses a general problem and needs to be researched in future.
| TABLE 1: Summary of the functionalities in the human resource information systems of both retailers. |
Discussion
HR management in retail is important as the sector is one of the largest employers in the economy of the Western Cape Province. The HRIS is an important tool used to assist organisations in managing their complex HR environment. The implementation and maintenance of HRISs are difficult and complex, and as a result, many companies do not reap the benefits and value the system offers. Contrary to the general perception and research reports on the implementation of HRISs, this study shows that under certain conditions, the implementation of HRISs can be done successfully. In both of the cases investigated, the retailers reported successful implementation of the HRIS.
When implementing an HRIS, according to the participants of the study, teamwork is stated as the most critical success factor in both organisations. This is supported by the findings of Shaikh (2012) who states that teamwork is a critical factor that contributes to the effectiveness of an HRIS. Kumar and Parumasur (2013) argue that teamwork creates the environment where knowledge transfer happens and as a result, assists with the implementation of an HRIS.
The involvement and commitment of top management is needed to contribute to the implementation and effective use of an HRIS (Alalwan, 2014). The findings of the study support those of Alalwan (2014). In both cases, the management of the retail organisations took ownership of the project and is committed and involved not only in the implementation phase but also with the maintenance, further development and enhancements to the system.
Security is an important factor that needs special attention when implementing an HRIS as well as during the operating and maintenance life cycle of the system. Irrespective of the organisation size, HRIS implementation needs to have security in place to safeguard the system (Mohite, 2012). Both organisations have security in place to safeguard the system. Usernames and passwords as an access code are created for all the users. A full audit trail is also kept when users are logged into the system.
In many organisations training is prioritised as being important. Training has become important as it contributes towards creating a competitive advantage for the organisation (Das & Ara, 2015; Powell & Dent-Micallef, 1997). The more employees know and understand the organisation, business processes and its systems, the better the organisation will benefit from the system, and values will be added to the bottom line. In both retail organisations, training is seen as an on-going concern and a prerequisite for the use of the HRIS. Ji, Guthrie and Messersmith (2014) identify rigorous training of employees as an influence to employment stability and job satisfaction. From the interviews conducted in this research, it has been found that there is a lack of rigorous training to equip the users, especially as far as new upgrades are concerned. This is a challenge for the organisations as the lack of skills and knowledge of the upgrades will affect the utilisation of the HRIS.
The upgrades of the HRIS are an important strategic decision. Upgrades are important as it keeps the organisation in touch with the latest technological advances. These technological advances can improve and safeguard the systems of the organisation, leading to a competitive advantage. It also ensures the organisation that the system is fully utilised. Mohite (2012) proposes that other required missing applications should be added to the HRIS system for full utilisation of the system. Laumer, Maier and Eckhardt (2014) agree with Mohite (2012) that procedures need to be put in place in the use of HRIS to support business strategic goals and objectives. There are various procedures to follow as far as upgrades are concerned. Organisations can follow best practices for upgrades as they are made available by the manufacturers but will be determined by the availability of funds and the required timing by the organisations. In this study, one of the retailers does regular upgrades but lacks in effective training support to the users. The other retailer only conducts upgrades based on cost and business requirements. This particular retailer also lacks an effective training programme on the use of the system, which is a concern.
Data quality is an important characteristic of HRISs. Effective data quality is regarded as a strategic tool used by organisations to make strategic decisions (Slavić & Berber, 2013). Inaccurate data or poor data integrity of an HRIS leads to mistrust and inadequate usage of the system (Ukandu, Iwu & Allen-Ile, 2014). Human error is one of the main factors affecting the quality of data. Therefore, training and employee understanding of the importance of quality data when using the system is of fundamental importance to the organisation. Poor quality of data leads to poor data analytics and reporting, which result in low trust in the system. In both organisations, data quality and analytics are challenged by poor usage of the system, which leads to poor system satisfaction within the organisations. Marufu (2014) argues that poor data quality and low user satisfaction do have a negative impact on the success of the system. There is a need for improvement in the quality of data in order to utilise the system effectively and efficiently. These findings support the findings of Akpaloo (2010) and Ukandu et al. (2014). Ukandu et al. (2014) argue that by enhancing data quality, the organisation could gain a competitive advantage using an HRIS. At the same time, trust and satisfaction levels of employees in and with the use of the HRIS will increase.
Confidence and trust in the HRIS is an important factor when utilising the system. The lower the trust in the system, the less effective is the use of the system. According to Iwu and Benedict (2013), trust and confidence in the use of HRISs by management is important because the higher the trust, the higher will the investments be that is made by management to support the system. As far as the two retailers are concerned, management and employees have a high level of confidence and trust in the system. Unfortunately, there are some smaller issues within the system threatening the trust relationship between management, employees and the utilisation of the system. When evaluating these issues, it all goes back to data quality and training.
The HRIS usage is characterised by the resources and efficiency of the administrators (Mohite, 2012). The two retail organisations have identified that the system is not fully utilised because not all of the required functionalities are utilised, which negatively affects the effectiveness of the system. Although the two organisations are not operating within the same sector of the retail industry, the lack of optimal use of the system is a common threat to both retailers. This is caused by the lack of skilled employees to operate the system and human errors that create poor data quality in the system. The under-utilisation of the systems by both organisations is rather interesting as most of the findings are very positive. Many of the critical areas are adhered to, but when asked about the usage of the system, both companies responded negatively. The two main reasons for this phenomenon seem to be the poor data quality and lack of effective training. Both these issues are not system problems but rather human problems.
Based on the difference in the utilisation of the HRIS, it could be seen in Table 1 that one of the retailers is making use of 9 out of 10 HRIS functionalities as compared to the other retailer which makes use of only 4 out of the 10 functionalities. According to Iwu and Benedict (2013) as well as Mukherjee, Bhattacharyya and Bera (2014), the use of the required HRIS functionalities assists in having an accurate HRIS recruiting system. Further research needs to be conducted on the impact of the utilisation of the HRIS in the two organisations.
Despite the under-utilisation of the system, the employees and other stakeholders seem to be satisfied with the HRIS. They all recognise that the system adds value to the employees, management and organisation at large. Nawaz and Gomes (2014) as well as Vărzaru and Albu (2014) indicate that satisfaction of the system is an important indicator of the effectiveness of the system. Although the effectiveness level of the systems is rated as good by both organisations, some challenges were raised by employees. The complexity of the system, the lack of customisation and poor functionalities are causing frustration and some discomfort at certain levels within the organisations. The reasons for these challenges need further research in the sector.
It is proposed that for successful implementation of HRISs and gaining optimal benefits from the system, retail organisations could follow the proposed guidelines:
- create a steering committee to guide the implementation process
- determine the goals and objectives of the HRIS
- get management involved and committed to the implementation and maintenance of the HRIS
- prioritise the implementation of the HRIS to create its importance in the mind of the employees (change management)
- make use of all the required functionalities for benefit creation
- customise some of its functionalities to eliminate difficulties in operation
- conduct a rigorous training programme to equip the users of the system to fully use the system.
Conclusion
The HRIS is an important strategic tool for organisations’ growth and productivity. The two retailers that formed the basis of the study emphasise the advantage of using an HRIS. Although many factors such as management commitment and support, good teamwork and security contributed to the successful implementation of the system, there are also some concerns, especially as far as system usage is concerned. The lack of continuous training, lack of regular upgrades, not making use of all the required system functionalities and poor data quality are creating challenges to the retail organisations. These challenges could result in low employee and management satisfaction, preventing the organisation from reaping the benefits and value offered by the system to the retail organisations.
It is recommended that a training strategy supporting the changes, as well as maintenance of the system, be put in place. Furthermore, the training should develop a good user understanding of the system as a whole, including processes, data quality and the role that users play when operating the system. It is further recommended that organisations simplify and modify some of the HRIS applications in order to eliminate complexity and complications when using the system. Added to the training, procedures of regular upgrades need to be created. With the pace of changes in the retail industry, no organisation can afford to fall behind with the latest technology. This will result in the organisation losing its competitive advantage and market place.
Acknowledgements
Competing interests
The authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article.
Authors’ contributions
A.C.d.l.H. is the supervisor for E.U.’s Master’s thesis. E.U. is a Master’s student and successfully completed his Master’s degree.
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