2020

HUMAN RESOURCE
INFORMATION
SYSTEMS

FOR INTERNAL USE ONLY

PHR3083 (AB107)

KPTM |
 CHAPTER 1: EVOLUTION OF HUMAN RESOURCE

MANAGEMENT AND HUMAN RESOURCE INFORMATION

SYSTEM

LEARNING OUTCOME:

AFTER STUDYING THIS CHAPTER, YOU WILL BE ABLE TO:

1.1 Introduction to HRIS

1.2 Historical evolution between HRM and HRIS

1.3 Interface between HR and technology

1.4 Who uses HRIS and how is it used?

1.5 Benefits of HRIS

PHR3083 (AB107) 1
1.0 INTRODUCTION TO HRIS

WHAT IS HRIS

HRIS Defined

• “HRIS can be briefly defined as integrated systems used to gather, store and

analyze information regarding an organization’s human resources.”

(Hedrickson, 2003).

• HRIS “One which is used to acquire, store, manipulate, analyze, retrieve and

distribute information about an organization’s human resources.”

(Tannenbaum 1990).

Not just technology:

“HRIS is not limited to the computer hardware and software applications that

comprise the technical part of the system: it also includes the people, policies,

procedures and data required to manage the HR function.” (Hedrickson, 2003, p.381).

Figure 1.1: HRIS Purposes

PHR3083 (AB107) 2
1.2 Historical Evolution between HRM and HRIS

Examining the evolution of HRM intertwined with developments in IT and describing

how IT has played an increasing role in the HRM function. This historical analysis will

show how the role of HRM in the firm has changed over time from primarily being

concerned with routine transactional and traditional HR activities to dealing with

complex transformational ones and transformational HR activities are those actions

of an organization that “add value” to the consumption of the firm’s product or

service.

Transactional and Traditional HR Transformational HR

Activities Activities

Transactional activities are the Are those actions of an

routine bookkeeping tasks—for organization that “add value” to

example, changing an employee’s the consumption of the firm’s

home address or health care product or service.

provider. An example of a transformational

Traditional HR activities are HR activity would be a training

focused on HR programs like program for retail clerks to

selection, compensation, and improve customer service

performance appraisal. behavior, which has been

identified as a strategic goal for

the organization.

Table 1.1: Differentiate between Traditional HR and Transformational HR

PHR3083 (AB107) 3
Historical Evolution of HRM and HRIS

Technology
advancement
Cost- Era and
Effectiveness emergence of
Social issues Era (1980- strategic HRM
Era (1963- 1990s) (1990-
Post-world 1980) present)
War II (1945-
Pre world War 1960) - -Focus on
-Increase
II (early 20th cost
Legislative globalization
Century) - Classify
compliance reduction
and
workers by through
- Clerical that technological
categories automation
record required breakthrough
- Job -Employee
keeping collection, (internet
description dev and
- Use analysis and enable Web
and labor involvement
human reporting services)
unions were -value
capabilities of -Treats
established added
voluminous human capital
data to service as strategic
authority asset and
competitive
advantage

Figure 1.2: Summary Historical Evolution of HRM and HRIS

PHR3083 (AB107) 4
Pre–World War II

In the early 20th century and prior to World War II, the personnel function (the

precursor of human resources management) was primarily involved in clerical record

keeping of employee information; in other words, it fulfilled a “caretaker” function.

During this period, the prevailing management philosophy was called “scientific

management.” The central thrust of scientific management was to maximize

employee productivity. It was thought that there was one best way to do any work,

and this best way was determined through time and motion studies that investigated

the most efficient use of human capabilities in the production process. Then, the

work could be divided into pieces, and the number of tasks to be completed by a

worker during an average workday could be computed. These findings formed the

basis of piece-rate pay systems, which were seen as the most efficient way to

motivate employees at that time. At this point in history, there were very few

government influences in employment relations; consequently, employment terms,

practices, and conditions were left to the owners of the firm. As a result, abuses

such as child labor and unsafe working conditions were common. Some employers set

up labor welfare and administration departments to look after the interests of

workers by maintaining records on health and safety as well as recording hours

worked and payroll. It is interesting to note that record keeping is one of the major

functions built into the design of an HRIS today; however, there simply was no

computer technology to automate the records at this time in history. Of course,

paper records were kept, and we can still see paper record HR systems in many

smaller firms today.

PHR3083 (AB107) 5
Post–World War II (1945–1960)

The mobilization and utilization of labor during the war had a great impact on the

development of the personnel function. Managers realized that employee

productivity and motivation had a significant impact on the profitability of the firm.

The human relations movement after the war emphasized that employees were

motivated not just by money but also by social and psychological factors, such as

receiving recognition for work accomplished or for the achievement of work norms.

Due to the need for the classification of large numbers of individuals in military

service during the war, systematic efforts began to classify workers around

occupational categories in order to improve recruitment and selection procedures.

The central aspect of these classification systems was the job description, which

listed the tasks, duties, and responsibilities of any individual who held the job in

question. Because of the abusive worker practices prior to the war, employees

started forming trade unions, which played an important role in bargaining for better

employment terms and conditions. Computers were being used for billing and

inventory control, but there was very little use for them in the personnel function

except for payroll. The payroll function was the first to be automated. Large firms

began harvesting the benefits of new computer technology to keep track of

employee compensation, but this function was usually outsourced to vendors since it

was still extremely expensive for a firm to acquire or develop the necessary

software for the payroll function. It was simpler to outsource this function. It is

important to realize that computer technology was just beginning to be used at this

time, and it was complex and costly.

PHR3083 (AB107) 6
Social Issues Era (1963–1980)

This period witnessed an unprecedented increase in the amount of labor legislation

in the United States, legislation that governed various parts of the employment

relationship, such as the prohibition of discriminatory practices, the promotion of

occupational health and safety, the provision of retirement benefits, and tax

regulation. As a result, the personnel department was burdened with the additional

responsibility of legislative compliance that required collection, analysis, and

reporting of voluminous data to statutory authorities. For example, to demonstrate

that there was no unfair discrimination in employment practices, a personnel

department had to diligently collect, analyze, and store data pertaining to all

employment functions, such as recruitment, training, compensation, and benefits. To

avoid the threat of punitive damages for noncompliance, it had to ensure that the

data were comprehensive, accurate, and up-to-date, which made it essential to

automate the data collection, analysis, and report generation process.

Simultaneously, computer technology was evolving and delivering better productivity

at lower costs. These technology developments and increased vendor activity led to

the development of a comprehensive management information system (MIS) for

HRM. The decreasing costs of computer technology versus the increasing costs of

employee compensation and benefits made the acquisition of computer-based HR

systems (HRIS) a necessary business decision. So, the major issue at this time in

the historical development of HRIS was not the need for or capabilities of

technology but how to best implement it. Another factor was the booming economy

in most industrialized countries.

PHR3083 (AB107) 7
Cost-Effectiveness Era (1980 to the Early 1990s)

With increasing competition from emerging European and Asian economies, U.S. and

other multinational firms increased their focus on cost reduction through

automation and other productivity improvement measures. As regards HRM, the

increased administrative burden intensified the need to fulfill a growing number of

legislative requirements, while the overall functional focus shifted from employee

administration to employee development and involvement. To improve effectiveness

and efficiency in service delivery through cost reduction and value-added services,

the HR departments came under pressure to harness technology that was becoming

cheaper and more powerful. In addition, there was a growing realization within

management that people costs were a very significant part of a company’s budget.

Some companies estimated that personnel costs were as high as 80% of their

operating costs. As a result, there was a growing demand on the HRM function to

cost justify their employee programs and services. The prevailing management

thinking regarding the use of computers in HR was not that their use would result in

a reduction in the number of employees needed in HR departments but that employee

activities and time could be shifted from transactional record keeping to more

transformational activities that would add value to the organization. This change in

the function of HRM could then be clearly measured in terms of cost-benefit ratios

to the “bottom line” of the company.

PHR3083 (AB107) 8
Technological Advancement Era and the Emergence of Strategic HRM (1990 to

Present)

The economic landscape underwent radical changes throughout the 1990s with

increasing globalization, technological breakthroughs (particularly Internet enabled

Web services), and hyper competition. Business process reengineering exercises

became more common and frequent, resulting in several initiatives, such as the

rightsizing of employee numbers, reducing the layers of management, reducing the

bureaucracy of organizational structures, creating autonomous work teams, and

outsourcing. Firms today realize that innovative and creative employees who hold the

key to organizational knowledge provide a sustainable competitive advantage

because, unlike other resources, intellectual capital is difficult for competitors to

imitate. Accordingly, the people management function has become strategic in its

importance and outlook and is geared to attract, retain, and engage talent. These

developments have led to the creation of the HR balanced scorecard (Becker,

Huselid, & Ulrich, 2001; Huselid, Becker, & Beatty, 2005), as well as to added

emphasis on the return on investment (ROI) of the HR function and its programs

(Cascio, 2000; Fitz-enz, 2000, 2002). The increased use of technology and the

changed focus of the HRM function, which shifted to adding value to the

organization’s product or service, led to the emergence of the HR department as a

strategic partner. With the growing importance and recognition of people and people

management in contemporary organizations, strategic human resource management

(Strategic HRM) has become critically important in management thinking and

practice. Strategic HRM derives its theoretical significance from the resources-

based view of the firm that treats human capital as a strategic asset and a

competitive advantage in improving organizational performance (Becker & Huselid,

PHR3083 (AB107) 9
2006). Reflecting the resource-based view, Becker and Huselid (2006) stress the

importance of HR systems and structure—that is, the “systems, practices,

competencies, and employee performance behaviors that reflect the development

and management of the firm’s strategic human capital”—for organizational

performance (p. 899). Context is a crucial element in Strategic HRM, and, therefore,

researchers increasingly emphasize the “best-fit” approach to Strategic HRM as

opposed to the “best-practice” approach to Strategic HRM. The success of

Strategic HRM is contingent on several factors, such as national and organizational

culture, size, industry type, occupational category, and business strategy.

Accordingly, Becker and Huselid (2006) argue that “it is the fit between the HR

architecture and the strategic capabilities and business processes that implement

strategy that is the basis of HR’s contribution to competitive advantage” (p. 899). A

good example of the importance of HR and the information provided by an HRIS can

be found in the human resources planning (HRP) function, which will be covered in

greater detail in Chapter 11. HRP is primarily concerned with forecasting the need

for additional employees in the future and the availability of those employees either

inside or external to the company. Imagine, for example, that a company is

considering a strategic decision to expand by establishing a production facility in a

new location. Using the information recorded and analyzed in the HRIS, HRP can

provide estimates of whether or not there are enough people available with the

necessary skills in the external labor market of the new location to staff the new

facility. Determining the availability of potential employees in the labor market may

be critical to the strategic decision to build the new facility, and this, of course,

could involve millions or billions of dollars.

PHR3083 (AB107) 10
1.3 Interfaces between HR and Technology

Technology-driven automation (IT) and the redesign of work processes certainly help

reduce costs and cycle times as well as improve quality. Information systems (IS)

can further help decision makers to make and implement strategic decisions.

However, IT is only a tool and can only complement, not substitute for, the people

who use it. Often, organizations mistake IT as a message and not the messenger, so

they divert time, effort, and money away from a long-term investment in people to

developing and deploying information technologies (Thite, 2004). With HR data and

reports now readily available on their desktops, will managers interact less with the

HR department and see it as being less important? If that is so, how will it affect

the attitude of HR professionals toward their jobs and profession? Will they resist

the adoption of technology if they perceive that this technology lessens their

status? In traditional organizations with silo mentalities, turf wars between

operational departments and functions acting as independent entities are common.

Therefore, top management needs to be mindful of organizational politics in

managing change. This awareness can be particularly important when developing and

implementing an HRIS. Through most of its evolution, HRM has had an administrative

and caretaker focus in its delivery, and, even today, this administrative and

caretaker focus is important. But, with technology significantly decreasing the time

required for administrative tasks, HR departments will begin to allocate resources

to more complex, strategic, and transformative activities. Through these changes,

the role of HRM is redefined and transformed through value-added, strategic

initiatives and interventions. This also means that HR professionals will need to learn

new skills and rethink the way the HR department is organized and delivers its

services. With the improved job skills of HR professionals, technology will be seen

PHR3083 (AB107) 11
as HR’s “partner in progress.” While having an advanced, full-fledged system will not

automatically make HR a strategic business partner, this system acts as a building

block and an effective aid in the process (Lawler & Mohrman, 2003).

1.4 Who uses HRIS and how is it used?

• HR Professionals

➢ Reporting and compliance

➢ Payroll and compensation analysis

➢ Benefits administration

➢ Applicant tracking, skills inventory

• Functional Managers

➢ Performance management and appraisal

➢ Recruitment and resume processing

➢ Team and project management

➢ Training and skills testing

➢ Management development

1.6 Benefits of HRIS

• Increased Efficiency –

➢ more transactions with fewer resources

• Increased Effectiveness –

➢ more accurate information and simplification of processes

PHR3083 (AB107) 12
 CHAPTER 2: COSTS JUSTIFYING HRIS INVESTMENT

LEARNING OUTCOME:

AFTER STUDYING THIS CHAPTER, YOU WILL BE ABLE TO:

2.1 Justification strategies for HRIS investment

2.2 HRIS cost benefits analysis

2.3 Avoiding common problem

2.4 Packaging the analysis for common problem

PHR3083 (AB107) 13
2.0 Introduction

The central focus in this chapter has been estimating and understanding the cost

effectiveness dynamics of new investments in HRIS, which are assessed by the

completion of a cost benefits analysis (CBA). The calculation of a CBA has become

critical for any new investment by an organization, as CBAs are closely linked with

strategic goals such as profitability and the survival of the organization. Without a

well-done CBA, managerial decision makers will be much less likely to approve

expenditures for new HRIS investments, especially today. In the past, investments

in an HRIS were primarily driven by a risk avoidance strategy or by cost reductions

made possible by replacing paper-and-pencil or out-of-date systems.

2.1 Justification Strategies for HRIS Investment

In most organizations today, an HRIS provides the primary infrastructure used to

deliver HR programs to ensure HR regulatory compliance and produce the metrics

that are used to evaluate not only the HR function but also the contribution of the

organization’s human resources to the accomplishment of firm-level strategic

objectives. HRIS functionalities continue to evolve and to expand that no longer see

the simple shifting of paper-and-pencil processes but rather new capabilities that

leverage the advantages of integrated information systems that are faster and more

capable computing technologies. As a result, organizations are faced with new

opportunities to extend their investments in HRIS functionality.

PHR3083 (AB107) 14
Strategies for justifying HRIS investments fall into two categories which are risk

avoidance and organization enhancement.

i. A risk avoidance strategy is used when investment is believed to eliminate or

mitigate significant future risks faced by the organization, for example,

generating reports of the gender and racial diversity of employees. The

potential obsolescence of legacy computing systems was a prototypical risk

avoidance scenario. The old systems simply needed to be changed to avoid Y2K

problems and also because it was out of date. The need to comply with laws

and regulations and changes to these laws provide other circumstances in

which justification based on risk avoidance is popular. Risk avoidance

justifications focus on the magnitude and probability of risks and often are

not supported by the extensive investment analysis required by CBA.

ii. Organizational enhancement strategies on the other hand, highlight how the

effectiveness of the firm will be improved by the addition of the new

improved HRIS- as measured by increases in revenues or reductions in costs

such as voluntary employee turnover. Organizational enhancement

justification is often more challenging to “sell” to decision makers than risk

avoidance once because enhancement do not carry the threat of loss if no

action is taken. Hence there is often the reduced sense of urgency.

Investment justified by organizational enhancements typically require more

rigorous support and are subjected to more intense scrutiny by decision

makers. For example, when faced with potential losses, decision makers are

willing to accept much greater risk.

PHR3083 (AB107) 15
2.2 HRIS Cost-Benefit Analysis

Definition CBA – comparison of the projected costs and benefits associated with

an HRIS investments, which can be presented as a comparison of cost and benefit

dollars or presented as a cost benefit ration.

Definition Cost Benefit Ratio (CBR) – can be expressed mathematically, with the

benefits of the projects as the numerator and the costs as the denominator.

Definition Costs – any new outlay of cash required for the initial purchase,

implementation or ongoing maintenance of the investment.

Definition Benefits – any financial gain resulting from the investment that occurs at

any time during the investments useful life. Benefits include both revenue

enhancements and cost reductions.

CBA was using for investment in a new HRIS. To conduct CBA, the organization

usually selected team members from HR or HRIS professional or IT department as

well as representatives from other departments who will be affected by the HRIS

project to form the HRIS project team/CBA Team.

However, regardless of the specific financial measures used in the organization,

investment analysis, that is, CBAs, are based on three basic pieces of information: -

a) Sources of costs and benefits

b) An estimated dollar value for each cost and benefit item

c) The time when the organization will incur each cost and receive each benefit

PHR3083 (AB107) 16
a) Identifying Sources of Value for Benefits and Costs

Investments in HRIS functionality differ from more traditional investments

because HR is commonly perceived as a source of costs rather than a direct source

of revenue. Failing to recognize important sources of costs or benefits is a common

problem in HRIS CBA. The HRIS CBA matrix used to help uncover all reasonable

benefit and cost components in HRIS investment analysis. The HRIS CBA matrix

consists of six cells.The four upper cell (1-4) represent sources of benefits (i.e.,

direct revenue enhancements, indirect revenue enhancements, direct cost

reductions and indirect cost reductions). The two cells of the bottom row capture

costs of implementation (i.e., direct and direct costs). A simple of each cell of the

HRIS CBA matrix can ensure that important sources of benefits or costs are not

overlooked.

Direct (Hard) Indirect (Soft)

Benefits Revenue 1 2
enhancement New revenue Improvement potential

(new sales) (better decision making)

Cost reduction 3 4
Direct costs Potential costs

(cancelled vendor (saved staff time)

contracts)

Costs New 5 6
implementation Out of pocket costs Indirect costs
costs
(software, service, (increased technical
agreement) support needs)

Table 2.1: HRIS CBA Matrix

PHR3083 (AB107) 17
Direct Benefits

The four ‘benefit’ cells of the HRIS CBA matrix represent the crossing of two

dimensions. The first dimension is the type of benefit revenue-enhancement versus

costs reduction. Organization can enhance revenue by changing employee’s job

performance. These changes could result in new revenue in terms of new sales due

to more efficient procedure, for example, those instituted because of a better

training program for new employees.

Organization can also reduce costs by changing the location of HR function to make

them more effective. For example, an organization with a new HRIS could decide to

outsource programs (such as employees recruiting) to vendors, this giving the HR

staff more time to handle other functions. HRIS investment can also permit the

offering of news products and service that can increase revenue and enhance profit

margin. Thinking about opportunities for cost reductions and revenue enhancements

separately allows each to be explored more fully.

The term direct and indirect are used here to refer to benefits and costs that might

be described elsewhere as “hard” and “soft,” respectively. Hard or direct outcomes

generally refer to benefit (and costs) (a) that are very likely to occur and (b) whose

values are easily estimated. Some examples of direct benefits can be seen in Table

1, which shows an example of a CBA for an e- learning investment.

As can be seen, the organization is considering having e- learning modules created

by an external vendor to replace in- house training programs. The direct revenue

enhancement includes additional revenue the organizational can be earn by selling

the e-learning modules, outsourcing the development of the e-learning, and training

sales employees on customer service and managerial leadership via e-learning

PHR3083 (AB107) 18
modules. The direct cost reductions include all the typical cost involved in training

programs, as seen in table 2, for example, reduced travel expenses and reduced

facilities costs.

Indirect benefits

Soft or indirect benefits, on the other hand, are often less easily quantified because

their value is more difficult to establish. After the HRIS functionality is introduced,

indirect revenue enhancements result from improvement in intermediate outcomes

that could position the organization to be able to increase revenues. For example, in

Table 2, e-learning training modules can be used to improve customer service by

improving the skills of sales employees.

Improving managerial leadership could impact the indirect benefits at the top of

Table 2 by encouraging employee engagement in the activities that most directly

influence organizational effectiveness. Thus, in this example, the intermediate

outcomes are the e- learning training modules, and the revenue increases, as listed

in as listed in Table 2, are “better customer service leading to increase in repeat

sales” and “A” more agile organization able to respond rapidly to market changes.”

The intermediate outcomes (the e-learning training modules) may also affect

revenue increase outcomes, by, for example, improving the organization’s capacity to

attract and retain high- quality employees, achieving a reduction in turnover and

absenteeism (see Table 2), improving employees ‘capacity to make decisions, or

freeing up time for employees to engage in activities that more directly support the

strategic objectives of the organization (see Table 1). Often, indirect revenue

enhancements represent intermediate outcomes that require that some additional

activity or condition exist before an increase in revenues is realized.

PHR3083 (AB107) 19
For example, before managers can work on leadership responsibilities an activity

that re directly related to strategic company goals, it may be necessary to

restructure several departments and provide some in- service training.

Direct (hard) Indirect/Contingent(Soft)

Revenue Outsourcing e-learning training module Better customer services leading to
Enhancement development increase in repeat sales

Sales of locally developed learning modules or
programs
Cost Reduction Reduced travel expenses
Reduced facilities costs (e.g., for room and
equipment rental and refreshments)
Reduced required for paper-based training
materials and teaching aids
Reduced expenses for instructor fees or
salary and benefits costs (if internal)
Reduced costs for replacement workers of
trainees are required to be away from their
work
A more agile organization able to respond
rapidly to market changes
Improved training effectiveness through
customization and just-in-time delivery =
faster learning curve, less lost productivity
while waiting for training, and right amount
and type of content
More agility, able to disseminate new cost-
reducing best practices more quickly
Reduction in turnover (41% of employees
will look for another job within 12 months
due to poor training and education, this
percentage drops to 12%) and in
absenteeism

Improve safety (fewer injuries, less lost

time, fewer insurance claims, lower
workers’ compensation costs)
Costs of Installation support Increased use for end-user help desk
Implementation
Software fee/license
Courseware redevelopment
Software support
Lost productivity during conversion to new
Analyst/administrator
system
Training administrator

Courseware development

Courseware purchase

Bandwidth fees

Table 2.2: example of an e-learning CBA Matrix

PHR3083 (AB107) 20
 b) Estimating Indirect Benefit Magnitude

Constructing dollar estimates of indirect benefits is challenging, but it can be done.

To simplify estimations of the dollar value of indirect benefit and provide a basis

for justification, one should break this task into the following three steps

1. Estimating benefit magnitude,

2. Mapping benefit to cost or revenue changes and

3. converting magnitude estimates to dollar value

By separating these steps, we can begin to understand better the factors that

influence the value of indirect benefits and perhaps more important when these

benefits are likely to occur during the HRIS project. Also, since magnitude and value

are often driven by different factors, separating these decisions provides a better

framework for post-implementations evaluations. Both benefits and value estimates

are then open to objectives review.

Approach Description When To Use It Advantages

Limitions
Direct Direct (“gut level”) Best when costs are not Quick and low cost to
Estimation estimate of the large perform
relationship of the
potential benefits to Appropriate when May not provide data
the estimated costs of attempting to gain that contain suffient
engaging in an compliance or matigating detail for use in
investment extreme risks monitoring
implementation
When subtantial direct effectiveness or to
cost reduction or remove perform follow-up
enhancements exist analyses

Highly depedent on
the expertise of the
decision maker

PHR3083 (AB107) 21
Benchmarking Using bencmark data Superior to direct Allows the
from other firm to estimation when costs are organization to
estimate the potential large develop more precise
benefits and costs that estimates than
are likely to result When the organization direct estimation
from the purchase of either has limited based on the
HRIS functionality experience or no data collective experience
concerning the area of of other organization
functionality
Average estimates of
outcomes may not
generalize to the
target organization

Internal Analysis based on When costs are high and Provides the most
Assessment specific internal benefits are not obviously preccise estimates of
assessments of actual dramatically larger than the baseline costs
costs and likely cost and current
benefits (e g.activity- performance of
based costing) When the organization existing processes
has the assessment against which to
capabilities in place to compare potential
gather the appropriate improvements
data May increase both
cost and time reqired
to make decisions
Mix and Using combination of When different amounts Permits the
Match these approaches or sources of organization to use
informantion are available the best methods
for different types of available
costs andbenefits (e
g.most likely scenario)
Table 2.3: Different Approaches to Estimating Banefit Magnitude

PHR3083 (AB107) 22
c) Estimating the Timing of Benefits and Costs

Organization uses this information to estimate the cash outflow and inflows

associated with investments. The timing of cash flows is particularly important when

costs and benefits occurs in different time periods and when the organizations cost

of capital is relatively high. The task of assigning the benefits and costs to time

periods can be accomplish by constructing a simple grid that lists benefits or cost

items along one axis and future time periods on the other axis. The numbers of time

periods required will depend on the expected useful life of the investment and the

relevant length of time periods (usually years, but months or quarters may be used

in some instances). The critical period for most HRIS investments is the first five

tears. Few organizations are likely to approve HRIS investments with longer payback

periods.

2.3 Avoiding Common Problems

It is uncommon for HRIS CBA to include an extensive analysis of costs matched with

a single source of benefits – typically, an estimate of direct cost reductions.

Recognizing only direct cost reductions is problematic for two reasons.

First, it ignores HR’s more strategic role in improving organizational

effectiveness. Online recruitment that results in hiring employees with higher

potential and in developing and administering training programs through online tools

for example is designed to enhance employee job performance and organizational

effectiveness- not necessarily to reduce employee headcount. Ignoring these

benefits can lead people to dramatically understate the actual value of HRIS

investments.

PHR3083 (AB107) 23
A second problem is that in many instances, items listed as direct cost reductions

are actually indirect cost reductions. Time saved is a prime example. An HRIS will

reduce the amount of time required to complete typical HR transactions, but these

time savings do not result in actual reductions in overtime or headcount. In these

instances, time saved is actually an indirect benefit. Its value depends on how

individuals spend the extra time made available to them. Incorrectly recognizing

time saved as a direct cost reduction creates the wrong expectation among decision

makers. This false expectation can lead to the incorrect perception that an

investment did not succeed- no reduction in payroll expenses occurred – when, in

fact the benefits to the organization actually occurred in other forms.

Third, be sure that value estimates assigned to time saved are reasonable. Many

HRIS investments purport to save employee time, making it a common component of

an HR technology CBA. When new HRIS functionality will save enough time to make

it feasible to reduce the number of employees or reduce overtime expenses, time

saved is a source of direct cost reduction.

However more often HR technology saves time in smaller increments that do not

permit direct savings. That is the amount of time saved does not permit whole

positions to be eliminated. In this circumstances, time saved is an indirect benefit.

The value of time saved depends on what value generating activities employees

engage in during the time made available to them.

For example, if the implementation of self-service functionality reduces workload

but does not lead to the headcount reductions, the new functionality might still have

tremendous organizational value if those saved hours are used to improve the

effectiveness of recruitment efforts or some other value-generating activity, such

as the development of a team-training program.

PHR3083 (AB107) 24
2.4 Packaging the Analysis for Decision Makers

When you have completed your analysis, you should have:

a. Data that identify each benefit and cost component examined

b. Estimates of the dollar magnitude of each including upper and lower bounds

c. Estimates of when the organization will incur each cost and receive each

benefit.

d. Documentation justifying each decision you made in developing these values

After steps 1 to 4 are completed, the next step is to package the analysis for

decision makers in your organization. Obviously, this process involves “selling” the

analysis to senior management so that it will not be overlooked or minimized.

Managerial decision makers prefer well-organized and clear CBAs to help them make

their investment decisions.

Packaging the analysis for consideration by decision makers includes deciding what

data to include and how the data should be organized. This process should be done

with the entire project management (PM) team since the report must cover the

entire HRIS project, not just the investment analysis. A table outlining the value

and timing of costs and revenue is likely to be the central focus of the analysis. Some

experts encourage limiting the number of sources of benefits presented to decision

makers to simplify the presentation and the required justifications. This approach

is satisfactory for small projects which is for stand-alone HRIS application such as

applicant tracking, but would be inappropriate for a complex HRIS project.

Accurately identifying and estimating the value of the benefits and costs of new

HRIS functionality will play a critical role in HRIS investment decisions in the

foreseeable future. A renewed interest in detailed investment analysis is healthy

PHR3083 (AB107) 25
and should be embraced by analyst and decision makers. In addition to supporting

improved investment decisions, detailed CBAs of HRIS investments are also likely to

identify implementation contingencies and opportunities that can increase the

chances for successful implementations. These analyses also provide the desired

organizational targets against which to judge the effectiveness of an investment

after implementation.

PHR3083 (AB107) 26
 CHAPTER 3: NEEDS ASSESSMENT AND HR METRICS

LEARNING OUTCOME:

AFTER STUDYING THIS CHAPTER, YOU WILL BE ABLE TO:

3.1 Planning needs analysis

3.2 System development life cycle

3.3 Gap analysis

3.4 HR metrics and workforce analytics

3.5 Using HR metrics and workforce

PHR3083 (AB107) 27
3.1 Planning Needs Analysis

Needs Analysis refers to the process of thoroughly gathering, prioritizing and

documenting an organizations HR information requirements and it serves as a

necessary input for the subsequent design and implementation of an HRIS. An HRIS

need analysis usually takes on a particularly prominent role in the analysis phase of

an HRIS development project, prior to significant design and implementation

activities.

3.1.1 Some potential costs of not planning and conducting a through needs

analysis

a) Users reject an HRIS that fail to provide the functionality they need.

b) Vendor software packages are selected are selected based on incomplete,

inaccurate or irrelevant criteria.

c) Costly custom systems are developed a build based on arbitrary data.

d) Custom additions to the HRIS are required to fill needs after

implementation as these were not properly identified during the needs

analysis.

e) Scope creep occurs because of growth in the goals, functionality and

requirements of the HRIS without adjustments to the time, cost or

resource allocated to the project.

PHR3083 (AB107) 28
3.1.2 The Purpose of Need Analysis

To collect and document information related to making changes connected to

Current system performance issues

The introduction of a new system, application, task or technology

Any opportunities perceived to benefit the organization

3.1.3 Five Main Stages in Needs Analysis

All stages should be completed, although more detail may be required when, for

example, a system is being built in-house rather than purchased from a vendor.

Figure 3.1: Summary of Need Analysis Process

PHR3083 (AB107) 29
1. Needs Analysis Planning

First stage of the needs analysis process, need analysis planning, the

team is assembled and prepares to investigate the current and

desired system applications and functions.

Once the team is in place, they can begin arranging to conduct a

thorough investigation.

There are four major activities that need to be completed during this

stage.

i. Organize the needs analysis team

- Conducted by a team led by HRIS analysts and involving

human resources and information technology staff.

- The team must work with current systems users and

associated constituents and stakeholders to identify

problems clearly, research possible ways of addressing the

problems and report their finding in order to support a

decision on the most appropriate solutions.

- A senior – level manager should have overall accountability

for need analysis. An information technology professional

should be included, along with at least one employee who

has knowledge of the present HRIS (if there is one) or

current HR processes.

- For large scale project, teams may wish to external

consultant. If an outside consultant will be involved in the

need analysis, it is important that he or she be integrated

early in the assignment.

PHR3083 (AB107) 30
ii. Determine management role

- Involvement of upper management is also important to

ensure successful needs analysis outcomes.

- If top management support has not already been obtained,

getting their active involvement and buy-in of other

stakeholders can be difficult.

iii. Define the goals

- Goals give focus they provide a standard against which

performance and achievement may be measured.

- It is essential at this point that the team knows what it

hopes to achieve how it plans to work and the anticipated

schedule as well as how the completed need analysis

document will look.

- These goals may also include timing, budget, staffing and

any other factors that could affect system selection,

development, implementation and operations.

- Like other goals, they should be specific, measureable,

attainable, relevant and timely (SMART).

iv. Determine tools and techniques to be used

- Specific information-gathering and techniques should be

used when conducting a need analysis.

- Each organization and project will require its own

combination of observation, exploration, analysis and

reporting approaches.

PHR3083 (AB107) 31
2. Observation

During the observation stage, analysts, impartially observe the

current systems and processes, forming the basis for later

recommendations.

At this point, the investigation is at a high level; more detailed data

will be gathered later, during the exploration stage.

It is important for the analysis to interact with employees at all levels

in the area that may be affected by the changes during observation.

Involving employee provides a great opportunity for them to voice their

concerns and for the analyst to determine what they consider

strengths and weaknesses of their current systems and operations.

Consists of multiple steps:

i. Analyze the current situation

- Analysts must develop a picture of present HR operations,

including any problems and issues involved in each area or

function.

- Analyst must consider the existing processes and current

organizational results and compare these to the

organization expectations for what they anticipate in the

future.

ii. Define the needs

- Define the needs that the new system must meet.

- Determines how those within HR believe operations should

occur, to evaluate industry best practices and to begin

PHR3083 (AB107) 32
 investigating what changes or updates to the system may

be adopted.

- Organizational policies, procedures and standard must be

considered along with ant regulation requirements.

iii. Identify performance gaps

- The team conducts a gap analysis.

- Comparing the current situation to the desired situation

allows the organization to identify and outline any

performance gaps.

iv. Classify the data

- Once the data has gathered, they need to be organized.

- Separate the data into categories (e.g., by function,

process and other grouping that makes sense for your

organization), and to separate technical and process

systems issues from other organizational issues.

v. Determine the priorities

- The team can set priorities for the needs that have been

identified.

- The needs may be ranked based on scope, cost benefit

analysis, time to implement, and/or potential impact if

ignored, as management will be interested in these

assessments when reviewing the results of the preliminary

analysis.

PHR3083 (AB107) 33
 vi. Review with management

- It is important to work with them to define task, agree on

the process, state the desired outcome and establish

shared responsibility for the continuation of the project.

- The analysis team should ensure that management

understands that the full needs analysis takes time to

design develop and accomplish.

3. Exploration

Process builds on the analysis completed in the observation stage and

involves gathering additional and more detailed data regarding HR

processes.

The data collected during exploration provide the foundation for the

development of goals that the organization wishes to achieves with the

new system.

Multiples techniques should be used to collect data: -

i. Interviews

ii. Questionnaires

iii. Observation

iv. Focus groups

4. Evaluation

Once the data have been collected, they must be reviewed and assessed

to create a clear picture of the current and desired process, data

sources and issues.

Next, the data should be arranged in a format useful for the next

phases of the SDLC: design.

PHR3083 (AB107) 34
 Third, the data should be reviewed by the project team to gain

additional perspective and encourage suggestions, noting any

duplications or omissions.

5. Reporting

The final stage of the need analysis process, reporting, involves

preparing a report that summarizes the findings and presents

recommendations for the design phase.

3.2 System Development Life Cycle

▪ The systems development life cycle (SDLC) is a formal, multistage process

through which information systems are implemented.

▪ There are five-phase SDLC as the major system in development activities.

▪ This phased approach to system design has multiple advantages. First, it allows

the organization to focus on a limited set of issues. Second, it contains many

activities within one phase and allows organizations to make “go, no –go”

decisions at the end of each phase. At any time, the project is seen as not

meeting objectives, it can be terminated, with the work to-date providing a

baseline if conditions merit moving forward.

PHR3083 (AB107) 35
 Figure 3.2: A Typical Systems Development Life Cycle (SDLC)

i. Planning

▪ The planning phase of the SDLC includes both long-range or strategic

planning and short-range operational planning.

▪ During the planning phase, HR will determine the existing technological

and system capabilities and develop a general plan for adapting,

upgrading or changing these plans.

▪ HR is conducting an analysis of their future human capital strategies

and assessing what may need to be done technologically to ensure that

these strategies may occur.

▪ At this phase is at a strategic level, the planning is very high level and

not as detailed.

PHR3083 (AB107) 36
 ▪ At the end of this phase, an organization should have a general idea of

the issues they need to address and may have developed a plan to move

forward.

ii. Analysis

▪ An organization current capability is documented, new needs are

identified and the scope of an HRIS is determined.

▪ In many systems projects, this phase can be the most time-consuming

and important phase of the SDLC.

▪ Encompasses steps such as reviewing the current system processes,

looking for opportunities for improvement, exploring and justifying

change, developing requirements for the new system (needs analysis),

and prioritizing those needs.

▪ At the end of this phase, a formal requirements definition report

should be completed and available for use in systems design or vendor

evaluation.

iii. Design

▪ The “blueprint” for the system is finalized. Whereas the analysis phase

finalizes the needs or requirements for the HRIS, here, the detailed

specifications for the final system are laid out.

▪ It is often during the design phase that the final vendor evaluation and

selection occurs.

▪ Using the results of the needs analysis, the current organizational

needs and potentially industry best practices.

PHR3083 (AB107) 37
iv. Implementation

▪ The HRIS is built, tested and readied for actual rollout or the “go live”

stage – the point in the SDLC at which the old system is turned off and

the new system is put into operation.

▪ Two common approaches to switching from the old system to the new

system used by many organizations is to either pilot the new HRIS in

one location before fully going live, or to turn on limited functions and

then continue to add functionality.

▪ There is not one single optimal approach, but instead, the approach used

by your organization should reflect your needs and context.

▪ Key steps in implementation include coding or configuring modules,

system testing, finalizing procedures, converting old data for use in the

new systems, documentation and training end users.

v. Maintenance

▪ The SDLC does not end once the go-live date arrives.

▪ The maintenance phase, sometimes referred to as the “forgotten

phase”, is that phase in the life of an HRIS during which the primary

objective is to prolong the useful life of the HRIS, and it begins once

the new system is put into operation.

▪ Consequently, a crucial part of maintenance is the evaluation of the

HRIS.

▪ Maintenance serves four main purposes: -

1. Corrective Maintenance – there will be times that despite the

best efforts of designers and implementers, something in the

system does not work properly and must be fixed (e.g., computer

PHR3083 (AB107) 38
 bugs, misinterpreted designs, incorrectly specified designs or

identified need ignored).

2. Adaptive Maintenance – the human resources environment is

always changing and evolving. For example, new government

regulations affecting HR practices, such as legislation addressing

racial and gender discrimination, can prompt new requirement or

alter the old requirements of the system.

3. Perfective Maintenance – the goal of perfective maintenance is

to tweak or improve on the existing system. For example, a more

efficient routine that speeds up processing times could be

developed in the maintenance phase.

4. Preventative Maintenance - focuses on the ongoing requirements

of maintaining the hardware and software than runs the HRIS.

Such a maintenance action will prevent future system crashes

due to inadequate hardware.

PHR3083 (AB107) 39
3.3 HR Metrics and Workforce Analytics

❖ Human capital metrics has become an umbrella term that encompasses a wide

range of activities and processes.

❖ There is a fundamental distinction between HR metrics and workforce

analytics. Metrics are data (numbers) that reflect some descriptive detail

about given processes or outcomes, for example, success in recruiting new

employees. In the domain of human capital, these reflect characteristics of

the organization’s HR programs and activities.

❖ Analytics refer to strategies for combining data elements into metrics and

for examining relationships or changes in metrics. Understanding these

combinations is done to inform managers about the current or changing state

of human capital in an organization in a way that can impact managerial decision

making.

❖ The importance of this view is that the analytics an organization needs

depend on the problems and opportunities that currently face its managers.

This path leads to the metrics that the organization needs in order to compute

these analyses. A number of important HR activities fall within HR metrics

and workforce analytics. Several of the most common are described briefly

below.

PHR3083 (AB107) 40
3.3.1 HR Metrics Toolkit (2010)

Initially, HR metrics were primarily used to measure or audit aspects of HR programs

and activities as describes. Next, metrics began to use to measure HR effectiveness.

These HR metrics toolboxes are listed in table below:

Absence [(No. of days absent in Measures absenteeism. Determines if your company

Rate mo.)/ (Ave. no. of has an absenteeism problem.
employees during mo.)
x (No. of workdays)] x Analyzes why and how to address the issue. Analyzes
100 further for effectiveness of attendance policy and
effectiveness of management in applying policy.

Cost per hire (Advertising + Agency Costs involved with a new hire. Use EMA/Cost per
fees + Employee Hire Staffing Metrics Survey as a benchmark for
referrals + Travel cost your organization.
of applicants and staff
+ Relocation costs + Can be used as a measurement to show any
Recruiter pay and substantial improvements to savings in
benefits)/No. of hires recruitment/retention costs.

Determines what your recruiting function can do to

increase savings/reduce costs, etc.
Health care Total cost of health Per capita cost of employee benefits.
costs per care/Total employees Indicates cost of health care per employee. For
employee benefit data from the Bureau of Labor Statistics
(BLS). See BLS's publications titled

Employer Costs for Employee Compensation and

Measuring Trends in The Structure and Levels of
Employer Costs for Employee Compensation for
additional information on this topic.

HR expense HR expense/Total HR expenses in relation to the total operating —

factor operating expense expenses of the organization. In addition,

PHR3083 (AB107) 41
 determines if expenditures exceeded, met, or fell
below budget.

Analyzes HR practices that contributed to savings,

if any.

Human (Revenue—(Operating ROI ratio for employees. Did organization get a

capital ROI expense - return on their investment? Analyzes causes of
(Compensation cost + positive/negative ROI metric.
Benefit cost)))/
(Compensation cost + Uses analysis as an opportunity to optimize
Benefit cost) investment with HR practices such as recruitment,
motivation, training, and development.

Evaluates if HR practices have a causal relationship

in positive changes to improving metric.

Human (Revenue—(Operating Value of workforce's knowledge, skill, and

capital value Expense - performance. This measurement illustrates how
added (Compensation cost + employees add value to an organization
Benefit Cost)))/Total
no. of FTE

Prorating (No. of mos. actually The basic steps to calculate an employee's pay
merit worked/No. of mos. increase appropriate to the period of time worked
increases under the current
increase Policy) x
Increase in percentage
the person would
otherwise be entitled
to

Revenue Revenue/Total no. of Benchmark to indicate effectiveness of company

factor FTE show employees as capital rather than as an expense.
Human capital can be viewed

PHR3083 (AB107) 42
Time to fill Total days elapsed Number of days from which job requisition was
to fill requisitions/No. approved to new hire start date. How efficient/
hired productive is recruiting function? This is also a
process measurement. See EMA/Cost per Hire
Staffing Metrics Survey for more information.
Training Total training cost/ Training cost per employee. Analyzes training
investment Training cost/ function further for effectiveness of training (e.g.,
factor Headcount Has productivity increased as a result of acquiring
new skills and knowledge? Have accidents
decreased?). If not, evaluate the causes.

Training (Total benefit —Total The total financial gain/benefit an organization

(ROI) costs) x 100 realizes from a particular training program less the
total direct and indirect costs incurred to develop,
produce, and deliver the training program (see white
paper Four Steps to Computing Training ROI [Lilly,
2001) for more information on this topic).

Turnover Total of the costs of The separation, vacancy, replacement, and training
costs separation costs resulting from employee turnover.
+ vacancy +
replacement + training This formula can be used to calculate the turnover
cost for one position, a class code, a division, or the
entire organization.

Exit interviews (Drake & Robb, 2002) are a useful

tool in determining why employees are leaving your
organization (see white paper Employee Turnover
Hurts Small and Large Company Profitability
[Galbreath. 2000) for more information on this
topic).

Turnover (No. of separations Calculates and compares metric with national

rate during mo./Avg. no of average, using business and legal reports at
(monthly) employees during mo.) www.b1s.gov/j1t/home.htm. This measures the rate
x 100 at which employees leave a company. Is there a

PHR3083 (AB107) 43
 trend? Has metric increased/decreased? Analyzes
what has caused increase/decrease to metric.

Determines what an organization can do to improve

retention efforts. Evaluates if HR practices have a
causal relationship in positive changes to improving
metric. (See white paper titled Employee Turnover:
Analyzing Employee Movement Out of the
Organization.)

Turnover ((No. of employees Calculates and compares metric with national

rate (annual) exiting the job/ average, using business and legal reports at
Avg. actual no. of www.b1s.gov/j1t/home.htm. This measures the rate
employees during the at which employees leave a company. Is there a
period) x 12)/ No. of trend? Has metric increased/decreased? Analyze
mos. in period what has caused increase/decrease to metric.
Determines what organization can do to improve
retention efforts. Evaluates if HR practices have a
causal relationship in positive changes to improving
metric. (See white paper titled Employee Turnover:
Analyzing Employee Movement Out of the
Organization.)

Vacancy cost total of the costs of The cost of having work completed that would have
temporary workers + been performed by the former employee or
independent employees less the wages and benefits that would
contractors + other have been paid to the vacant position(s).

Vacancy rate Total no. of vacant Measures the organization's vacancy rates resulting
positions as of from employee turnover. This formula can be used to
today/Total no. of calculate the vacancy rate for one position, a class
positions as of today) x code, a division, or the entire organization.
100
Workers Total WC cost for Analyzes and compares (e.g., Year 1 to Year 2, etc.)
compensation year/Average no. of on a regular basis. You can also analyze workers'
employees compensation further to determine trends in types

PHR3083 (AB107) 44
cost per of injuries, injuries by department, jobs, and so
employee forth. HR practices such as safety training,
disability management, and incentives can reduce
costs. Use metric as benchmark to show causal
relationship between HR practices and reduced
workers' compensation costs.

Workers (No. of injuries and/or The "incident rate" is the number of injuries and/or
compensation illnesses per 100 illnesses per 100 full-time workers. 200,000 is the
incident rate FTE/Total hours base for 100 FTE workers (working 40 hours/week,
worked by all 50 weeks/year.) The calculated rate can be modified
employees during the depending on the nature of the injuries and/or
calendar year) x illnesses. For example, if you wished to determine
200,000 the lost workday case rate, you would include only
the cases that involved days away from work

Workers (No. of days away from "Severity rate" is the number of days away from
compensation work per 100 work per 100 FTE. To calculate the severity rate,
severity rate FTE/Total hours replace the number of injuries and/or illnesses per
worked by all 100 FTE from

Yield ratio percentage of A comparison of the number of applicants at one

applicants from a stage of the recruiting process with the number at
recruitment source the next stage. (Note: Success ratio is the
that make it to the proportion of selected applicants who are later
next stage of the judged as being successful on the job.)
selection process (e.g.,
100 resumes received,
50 found acceptable =
50% yield)

PHR3083 (AB107) 45
3.3.2 Limitations of traditional HR Metrics

Unfortunately, while the computing, communications and software infrastructure

supporting HR metrics and analytic has undergone dramatic change since the late

1990s, the metrics themselves have not. Current computing operations are capable

for capturing data on a wide range of electronically supported HR processes,

extracting, analyzing and then distributing that information in real time to managers

throughout the organization. However, currently popular HR metrics were developing

before current computing infrastructures existed. Consequently

1. Emphasize costs or easily calculated counts (e.g., headcount, turnover) that

often serve as proxies for costs. Every managerial decision has cost and

benefits consequences, whether we recognize them or not. As a result, when

metrics and analytics systems only provide information about costs, with little

or no information about benefits, costs are likely to become the primary

driver of managerial decisions.

2. Tended to aggregate data to the level of the organization. As such, they offer

limited information that could be used to identify and diagnose within-

organization differences. Organizational turnover rates, for example, are

heavily influenced by the turnover rate in the organization dominant job

category, masking any differences in turnover rates for jobs with fewer

incumbents.

3. Early efforts only provided data after events has occurred. This result in slow

responses to problems or opportunities. Because they provide data “after the

fact,” these are described as “feedback” metrics.

PHR3083 (AB107) 46
3.4 Using HR Metrics and Workforce Analytics

i. Benchmarking

The Saratoga Institute’s benchmarking efforts were the first to develop

information on standard HR metrics regarding the use and management of human

capital. Benchmarking data is useful in that it provides insights into what is possible.

However, a challenge in using HR metrics as benchmark data is that an organization’s

human resource practices and the use of its HR staff reflect current challenges

facing that organization. As a result, most organizations have an HR department, but

the specific functions performed by these departments vary widely across

organizations. Consequently, direct comparisons of HR benchmarking data from one’s

own organization to data from other organizations may not provide realistic

guidelines for either goal setting or forecasting the potential effectiveness of

remedial actions an organization might undertake.

ii. Data Mining

Interest in data mining human capital information has been on the rise since the

implementation of integrated HRIS and digitized HRM processes. Data mining refers

to efforts to identify patterns that exist within data and that may identify

unrecognized causal mechanisms that can be used to enhance decision making.To

identify these causal mechanisms, data mining uses correlation and multiple

regression methods to identify patterns of relationships in extremely large

datasets. An example would be the identification of a correlation between employee

job satisfaction and employee turnover. Data mining has a number of important

applications, but the caveat with its use is that it can also uncover spurious and

nonsensical relationships (e.g., taller employees make better leaders; older

employees have longer tenures).

PHR3083 (AB107) 47
iii. Predictive Analyses

Predictive analysis is the goal of many metrics and analytics efforts. Predictive

analysis involves attempts to develop models of organizational systems that can be

used to predict future outcomes and understand the consequences of hypothetical

changes in organizations, for example, a change in existing organizational systems.

To continue the simple example above, if the organization discovered a correlation

between employee job satisfaction and turnover, HR could use this data to suggest

modifications to the employees’ work situation or their benefits. Efforts to develop

balanced scorecards are examples of elementary predictive systems. They involve

identifying leading indicators of important organizational outcomes and the nature

of the relationships expected to lead to them. Engaging in efforts to test the

assumptions in these models over time can lead to enhancements in the quality of

the models’ underlying predictive analyses, either by identifying additional leading

indicators or better specifying the nature of the relationships between predictors

and outcomes.

iv. Operational Experiments

The evidence-based management movement argues that managers should base their

decisions on data drawn from the organization and evidence about the actual

functioning of its systems rather than using personal philosophies or untested

personal models or assumptions about “how things work.” One of the most effective

methods for developing the evidence on which to base decisions is through

operational experiments conducted within the organization. Ayres (2007) describes

how Google uses operational experiments to test the effectiveness of the ad words

used on its Web site. Rather than simply relying on intuition or “expert judgment”

about which ad wording is more effective, it creates an experiment. It configures

PHR3083 (AB107) 48
its site to alternate the presentation of competing ad text to visitors to its site and

then tracks the number of click-through on the ad for a period of time. Given the

large number of daily hits, Google can get objective data on the effectiveness of the

various ads in a relatively short time and then adopt the ad wording demonstrated

to be most effective.

v. Workforce Modeling

Workforce modeling attempts to understand how an organization’s human capital

needs would change as a function of some expected change in the organization’s

environment. This change may be a shift in the demand for the organization’s

product, entry into a new market, divestiture of one of the organization’s businesses,

or a pending acquisition of or merger with another organization.

PHR3083 (AB107) 49
 CHAPTER 4: DATABASE CONCEPT

LEARNING OUTCOME:

AFTER STUDYING THIS CHAPTER, YOU WILL BE ABLE TO:

4.1 Data, Information and Knowledge

4.2 Database Management Systems

4.3 Data Warehouse, Business Intelligent and Data Mining

PHR3083 (AB107) 50
4.1 Introduction

Information Technology (IT) is the application of computers and techniques to

restore retrieve and manipulate data often within an organization. To facilitate the

functioning of Human Resource (HR) and make it more proactive, IT and HR have

been merged to form Human Resource Information System (HRIS). In short, one

can describe HRIS as an online solution for the entry, tracking of data, information

that a human resource management group requires for realizing its strategic

objectives and aligning its functions with the organizational vision. To get a clear

idea of HRIS and its applications in management systems, one should get a clear idea

of data, information and knowledge.

4.2: Data, Information and Knowledge

For any organization, effective data management is their primary concern and it’s

the lifeblood. The production and maintenance of data are critical to the smooth

operation of every part of the organization.

i. Data

▪ Represent the “facts” of transactions that occur on a daily basis.

▪ A transaction can be thought of as an event of consequence, such as hiring

a new employee for a particular position for a specified salary.

▪ The organizations attempt to capture the data (facts) associated with

each of these transactions, such as the data hired, the name of the person

hired, the title of the position, the location where the new hire will work,

and so on, and then store these data for future use.

PHR3083 (AB107) 51
 ii. Information

▪ An interpretation of data always has some goal and context such as making

a hiring decision for a particular department or understanding the

performance of an employee to make a promotion decision.

▪ Note that sometimes the data themselves can be informative without any

additional transformation (e.g., the salary ranges of the job).

iii. Knowledge

▪ Knowledge is information that has been given meaning (Whitehill, 1997).

▪ Knowledge is different from data and information.

▪ Knowledge consists of the procedures one follows to use data and

information to make decisions and conduct business.

4.3: Database Management Systems

Database Management Systems (DBMS) was introduced in and around 1960-1970 by

IBM. It is useful for creating and managing databases. The programmers and users

can create, retrieve, update and manage data systematically, promotes data sharing

from top to bottom level of the management, improves data security, better data

integration and improves productivity of the organization.

Several popular databases which are currently being used are based on the relational

database model. A relational database management system (RDBMS) is based on the

relational model as invented by E. F. Codd, of IBM's San Jose Research Laboratory.

Oracle, IBM’s DB2 and SQL Server of Microsoft are some of the leading RDBMS

products (Refer Figure 2). RDBMS has proven to be one of the most popular

relational databases which is being used by the organization’s in the present scenario

PHR3083 (AB107) 52
because of its benefits which it offers and it addressed the limitations of old DBMS

structures.

A DBMS is a set of software applications (i.e., computer programs) combined with a

database. A DBMS electronically allows organizations to effectively manage data.

Managing data means: -

1. Identifying the data needed to create information that is necessary to

make HR decisions.

2. Defining the characteristics of that data (e.g., number data vs. character

data)

3. Organizing those data in a manner that promotes integration, data quality

and accessibility

4. Restricting access to the data to the right personnel

The main functions of a DBMS are to create the database; insert, read, update and

delete database data, maintain data integrity (i.e., making sure that the data are

correct) and security (i.e., making sure that only the right people have access to the

data) and prevent data from being lost by providing backup and recovery capabilities.

Database management systems are also designed to have high performance, allowing

data to be retrieved quickly by the many users in the organization.

PHR3083 (AB107) 53
Figure 4.1: Database, Database Management System and Business Applications

Figure 4.2: Example of DBMS

PHR3083 (AB107) 54
Figure 4.3: Example of common fields in an HR Database

PHR3083 (AB107) 55
4.4: Data Warehouses, Business Intelligence and Data Mining

Much of the measurement data to create HR metrics will come from an organization’s

data warehouse. Data warehouse is a special type of database (Refer Figure 4) that

is optimized for reporting and analysis and is the raw material for management’s

decision support system.

The data in the data warehouse can then be accessed via queries and used to uncover

pattern and diagnose problems.

Figure 4.4: Data Warehouse

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Business Intelligent (BI) is a broad category of business application and technologies

for creating data warehouses to analyze and provide easy access to these data in

order to help organizational users make better business decisions (Refer Figure 5).

BI applications include the activities of decision support systems, query and

reporting, statistical analysis, forecasting and data mining.

BI system allow organization to

• Improve business performance by leveraging information about customers,

suppliers and internal business operations from databases across function and

organizational boundaries.

• Retrieve specified data from multiple database including old legacy file

database system and store these data into a new database which become that

data warehouse.

BI systems also provide reporting tools and interfaces (e.g., forms) that distribute

the information to Excel spreadsheets, Internet based portals, PDF files or hard

copies. These results can also be distributed to key executives in specialized formats

known as executive dashboards, which are becoming popular executive decision

support tool.

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Figure 4.5: Business Intelligence

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Data mining involves statistically analyzing large data sets to identify recurring

relationship. It is new to business analytics and has not yet been widely used for

Human Resource Management decisions. For example, data mining an employee

database might reveal that most employee reside within a group of particular ZIP

codes. This may help if the organization wants to supply transportation or encourage

carpooling.

Figure 4.6: Data Mining Process

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Summary

In this chapter, we have described the key aspect of current DBMS Technologies

and how they work to create, store and manage critical data about an organization.

Data are transformed into information by relational DBMSs and business

applications that work together. The underlying data in the database are collected

from business transactions and store in a tables that are related to each other

through shared fields called primary and foreign keys. Queries represent questions

asked of the data and are used to access specified data stored in the tables. The

result of queries can be view in forms of reports that are customized so that the

end user can better interrupt the data that are retrieved from the database. More

sophisticated data analyses and reports such as executive dashboards are produced

from specialized databases called data warehouses and business application

software called BI software.

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 CHAPTER 5: HR ADMINISTRATION AND HRIS, JOB ANALYSIS

LEARNING OUTCOME:

AFTER STUDYING THIS CHAPTER, YOU WILL BE ABLE TO:

5.1 Job Analysis

5.2 HRIS environment and other aspects of HR Administration

5.3 HRM Administration and organizing approaches

- Self-service portal and HRIS

- Shared service Centre and HRIS

- Outsourcing and HRIS

- Offshoring and HRIS

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5.1 Job Analysis

▪ A primary goal of an effective HR department is to ensure that the

organization has the best available people working in the proper jobs at the

appropriate time to maximize the organizations productive capacity.

▪ The organization must know not only what each job entails but also what

knowledge, skills and abilities (KSA) are necessary to perform the job

successfully.

▪ Job analysis provides both types of information.

▪ Specifically, job analysis is the process of systematically obtaining

information about jobs by determining the duties, tasks or activities of jobs,

from which KSA can be estimated.

▪ From this analysis, job descriptions can be developed.

▪ Job description defines the working contract between the employee and the

organization.

▪ Job description uses include: -

1. Evidence for any litigation involving unfair discrimination in hiring,

promoting or terminating employees

2. Development of all the HRM programs, especially talent management in

organization and other important HRM programs including

recruitments, selection, training and performance appraisal

3. Development of compensation structures

4. Employee disciplinary programs and union grievances

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In fact, job descriptions are often termed the “heart ‘of the HRM system. Given the

importance of job descriptions, it is critically important that they be accurate and

timely. Effectively managed HR departments capture and store the results of all job

analysis and job descriptions within the HRIS to facilitate future changes in jobs

required by reorganizations, mergers/ acquisitions, technology and market-driven

customer expectations.

Approaches and Techniques

Job analysis involves the following phases: -

1. Identify sources of information about the job. The best sources are usually
job incumbents and their supervisor however professional job analyst can be
used for newly created or complex jobs. Company records and the internet,
specifically the U.S Department of Labor O*Net database
(http://onetonline.org), are also good sources of information about jobs.
2. Identify the type of job information needed. This information can include
tasks, duties, responsibilities, the knowledge required, performance
standards, job context and the equipment used. A determination of what
specific information will be used for the analysis of all jobs must be made to
maintain consistency across the final job descriptions.
3. Determine the appropriate methods of collecting the job data. Techniques
include interview, questionnaire, observation and focus groups. The choice of
techniques depends on the number of jobs to be analyzed and the funding
available.
4. Consider using one or more of the standardized techniques for conducting job
analysis to enhance the final job description, for example, functional job
analysis, the position analysis questionnaire system, the task inventory
analysis, and the critical incident method.

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5.2 HRIS environment and other aspects of HR Administration

HRIS can assist managers charged with improving the efficiency of HR

administration by reducing costs, enhancing the reliability of reporting and improving

service to internal customers. Information technology facilities administration in

multiple ways. An HRIS can help improve data accuracy by: -

1. reducing the need for multiple inputs

2. Eliminating redundancies in data

3. Reducing the opportunity for human input errors and associated

corrections

The HRM administrative issue in this era: -

1. Organizational approaches for providing HR in a global economy (i.e.,

self-service portals, SSCs, outsourcing and offshoring)

2. Compliance mandates for record maintenance and report requirements

(e.g., employer information report EEO-1), which are associated both

with government laws in the United States (e.g., Occupational Safety

and Health Act (OSHA)) and the labor laws of other countries

3. The measurement of HRM contributions to an organizations strategic

goals via a balanced scorecard

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5.3 HRM Administration and organizing approaches

There are four typical HRM administration service delivery alternatives in

encouraging HR Managers to consider multiple approaches to meeting the HR

administration goals of cost reduction and service improvement. This approaches

facilitated by technology. Each has opened paths to increased efficiency and

effectiveness, improved service and cost controls, possibilities unimagined by HR

professional a decade ago. Figure 5.1 shown the four HR administrative approaches.

SHARED
SELF SERVICE
SERVICE
PORTAL
CENTER

OUTSOURCING OFFSHORING

Figure 5.1: Typical HRM Administration Service Delivery Alternatives

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 1. Self-service portal and HRIS

The first structural approach to HR administration is employee self-service (ESS)

HR portals, provides an electronic means for company employees to access its HR

services and information. Such portals provide a single sign-on capability for

employees, who can individually complete transactions for their personal data. Self-

service portals can range from simple intranet websites that allow employees to

access static HR policies such as safety requirements, to sophisticated internet

websites that allow employees to access and change their individual records. For

example, adding a new child to an employee’s medical benefits, from any computer

location on a 24-hour, 7-days-a-week basis, would be possible with ESS portals.

Figure 5.1: Example of Employee Self-Service Screen

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Figure 5.2: Sample Employee Self-Service Screen

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Advantage of self – service portals

o Improved speed and quality of service to employees and managers.

o Simplified routine inquiries and changes.

o Reducing the number of inquiry transactions requiring direct HR staff

involvement helps keep information current. For example, with self-service,

changes in the doctors and hospitals allowed for each medical plan or status

reports on the hiring of a new employee are more likely to be entered into the

system as required.

o Enhance employee satisfaction by permitting employees to control when and

where such access activities occur, empowering employee, increasing their

productivity, especially for those who travel frequently and offering privacy

for those who prefer to handle such matters without the presence of

coworkers.

o Self-service portals facilitate easy, increased access to HR information,

helping employees ensure that important personal data (such as individual job

performance appraisals used by managers in making decisions about salary

increases, promotions or other employment rewards) are accurate and

current.

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Table 5.1: Sample Employee Self-Service Functionality

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Disadvantage of self – service portals

o Permitting employees to access company data through self-service portals may

increase the possibility of security breaches and the associated negative

outcomes, like identity theft, for affected employees.

o Can lead to misuse of such information by others in the organization and may

feel their privacy is invaded when organizations fail to limit access to personal

data housed in HRIS (Phillips, Isenhour, & Stone, 2008). For example,

managers may learn negative information (e.g., that employees have medical

disabilities) through MSS portal access that would have been unavailable in a

paper record system. Even the inadvertent use or sharing of such information

may preclude training or promotional opportunities for employees.

o The inadvertent use or sharing of such information may preclude training or

promotional opportunities for employees. Misuse of this personal information

in this manner can constitute a violation of labor laws such as the Americans

with Disabilities Act (ADA) in the United States.

o To security issues, HR administrations my find that unions and managers

resist using self-service portals because unions may argue that employees are

“doing HR work” when they enter data and make changes online via an ESS

portal.

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 2. Shared service Centre and HRIS

The second structural approach to HR administration, SSCs, generally appeared in

response to the increasing globalization of competitive markets occasioned by the

proliferation of multinational enterprises (MNEs). To complete successfully,

organizations were pressured to reduce costs through the consolidation of

administrative transactions while still providing excellent service. Such a challenge

involved balancing the desire for control inherent in centralized administrative

structures and the desire for flexibility inherent in decentralized administrative

structures – a constant organizational conflict within large and expanding

corporations.

Figure 5.3: Functions in Shared Services

Sources: Powell (2004)

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Figure 5.4: Example of shared-service center

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Advantage Shared Service Center

o Permitting HR administration managers to focus on delivering the

timely, high-quality transactions necessary to fulfill corporate

requirements, such as mandated governmental reporting

o Removing the artificial barriers inherent in the generalist-specialist

continuum common in HR organizations, smoothing work and

communication processes. This is particularly important for

multinationals, which have to respond to the labor laws of multiple

countries.

o Combining such transactional responsibilities into a single business

unit encourages the unit to focus on customer satisfaction with

specific user interactions, such as responses to employee questions or

requests for assistance. This frees specialists to focus on more

strategic activities.

o SSCs also encourage the efficiency and standardization necessary to

support strategic cost-control goals by consolidating individuals

responsible for transactions, providing organizations with greater

motivation to redesign procedures and create more effective ones.

o Finally, such centers facilitate development of the measures of

efficiency, quality, and customer responsiveness that are necessary to

demonstrate appropriate contributions to strategic goals.

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Disadvantage Shared Service Center

o Frequently, organizations combine multiple, unrelated shared services into a

combined business unit. Depending on the nature of such functions, the

synergies needed to consolidate and improve processes may be less prevalent.

For example, combining vehicle fleet management and HR transactions may

offer few synergies. Leaders of such units may be stretched as they seek to

unify and manage diverse functions. However, careful development of the

mission and appropriate selection of the leaders of such units can overcome

this problem by establishing a shared mindset among those involved (Walker,

2001).

o Creating SSCs may lead to unanticipated power shifts in organizations. For

example, combining financial and HR transactions in a single center may lead to

reduced emphasis on HR transactions since business managers are especially

concerned with the budget reporting associated with financial transactions.

Again, establishing an effective mission and overarching goals for the center

can forestall such power shifts (Ulrich, 1997).

o SSCs can lead to depersonalization. For example, line managers, accustomed

to personal contact with HR professionals, may feel isolated when handling

transactions through self-service portals. Similarly, they may feel abandoned

when traditional communication patterns are disrupted because specialists

have been consolidated in SSCs. Because such units are concerned with

efficiency and cost controls, individuals working in them can become more

involved with the technology with which they work and less involved with

others who are engaged in the day-to-day aspects of the business (Ulrich,

1997).

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 3. Outsourcing and HRIS

The third approach to HR administration, outsourcing, is the practice of contracting

with vendors to perform HR services and activities. Outsourcing is not new in HR

administration. For example, Automatic Data Processing, Inc.(ADP) moved quickly in

1945 to offer its expertise in payroll and tax calculations to businesses facing

increasingly complex employee income tax and withholding calculations. Outsourcing

contracts should include specific pricing agreements (e.g. flat or fixed fee per

process or per employee served, unit prices per transaction levels, hourly and

overtime rates, revenue sharing, risk-reward sharing, failure penalties), expected

performance and associated measures (e.g. transaction quality standards, error

rates, system availability and downtime, customer satisfaction levels, hours of

operation) , and terms and conditions (e.g. start and end dates, extensions permitted,

termination agreements, dispute resolution procedures, audit procedures). HR

administration managers would require significant assistance from multiple groups

such as the legal, operations and information systems departments within the

organization to establish and monitor the contact, ensuring that the organization is

adequately protected from incompetent or unethical outsourcing.

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Reason to Pursue HR Outsourcing

HR administration managers elect to pursue HRO for multiple reasons (Keebler,

2001). Weatherly (2005) suggests that managers may pursue discrete,

multiprocess, or total-process HRO. Some organizations outsource only discrete

or selected functions, pursuing discrete HRO through niche third-party

providers. This outsourcing involves having specialized external firms deal only

with a particular HR functions. External HR recruiting firms, for example, fall

into this category. Such an approach is common in smaller organizations with

limited numbers of for professionals or in larger organizations with few,

sporadic recruiting requirements. Also included in this category is the

outsourcing of parts of various HR functions. For example, even organizations

with large, effective recruiting staffs may elect to outsource executive or

specialty recruitment functions (e.g., recruiting for multilingual positions) to

external search firms that have unique expertise. Similarly, organizations may

outsource only annual benefits enrollment, flexible spending accounts (FSA)

administration, or payroll administration. Generally, the outsourcing of discrete

HR functions is attractive for two reasons. First, discrete HRO can achieve

cost savings by eliminating the company's need to hire highly specialized HR

professionals (e.g., executive recruiters) or those with the HRIS expertise

necessary to perform infrequent functions (e.g., FSA administration). In

addition, discrete HRO can reduce the FIR administration costs associated

with frequent, high-volume transactions such as payroll.

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Advantages of HR outsourcing

o The advantages of HR administration outsourcing can be both financial and

strategic. For example, organizations seeking to increase financial

profitability and enhance shareowner value might employ Human Resource

Outsourcing (HRO) to reduce ongoing expenses for employees and software,

forestalling capital expenditures for new building and equipment.

o Might include the ability of the organization to better focus on its core

business by transforming the HR function. By outsourcing the simpler,

transaction-based function, the HR department can move from its historical

focus on administrative to a new position as strategic business partner.

o Many HR professionals are mired in day-to-day transactional administrative

task that preclude the value-added consulting, planning and visioning activities

required from them to achieve strategic goals.

o HRO could free HR professionals to focus on strategic issues such as talent

management, while providing the firm with skilled transactional and

professional areas such as compensation and in administrative areas such as

governmental compliance and regulations.

o These services would be powered by the up-to-date technology provided by

the external vendor.

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Disadvantages of HR outsourcing

o Firms that used HRO to achieve HR transformation and cost savings rated

their success at an average of 3 on a 5-point scale, (1 equaling benefits not

at all achieved and 5 equaling benefits fully achieved) (EquaTerra, 2007).

o HRO is the likelihood that the organization will not achieve its strategic

goals. Such a failure could have a significant, negative impact on the

organization's ability to survive.

o The loss of institutional expertise in the outsourced functions, making an HRO

decision reversal difficult or impossible. Frequently, when outsourcing is

undertaken, HR subject matter experts are reassigned or released. This

restructuring can be a serious strategic error if the vendor is unable to fulfill

its contractual obligations. an organization would be unwise to outsource core

or strategic HR planning functions because of the possibility that

competitors might learn its plans from vendors.

o Loss of internal strategic HR expertise may be devastating to an

organization over time. Unfortunately, these outsourcing organizations may

lack the contract management expertise to oversee the vendor and hold it

accountable for contract terms. Other potential problems include security

risks in multivendor outsourcing, internal employee and manager resistance,

compliance failures, and cultural clashes between the organization and its

vendors.

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Limitation of HR Outsourcing

1. Hidden costs

➢ Sign a contract with the outsourcing company that will cover the details of

the service that they will be providing

➢ Anything not covered in the contract will be the basis for you to pay additional

charges

2. Threat to security and confidentiality

➢ The life-blood of any business is the information that keeps it running

➢ Medical records or any other confidential information that will be transmitted

to the outsourcing company, there is a risk that the confidentiality may be

compromised

3. Quality problem

➢ The outsourcing company will be motivated by profit

➢ Since the contract will fix the price, the only way for them to increase profit

will be decrease expenses

➢ As long as they meet the conditions of the contract

➢ In addition, you will lose the ability to rapidly respond to changes in the

business environment

➢ The contract will be very specific and you will pay extra for changes

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 4. Offshoring and HRIS

The final approach to HR administration, offshoring, is an expansion of HR

outsourcing that includes sending work outside the United States to vendors located

in other countries. Technological capabilities and global competition have combined

to make HRO a global business and offshoring for MNEs is quite complex. For

example, if an Australian airline has call centers in India to obtain improved cost

performance, why not have its SSC for HR there as well.

Figure 5.5: Company Reasons for Considering Offshoring

Types of HR Offshoring

Offshore ownership may include opening a new subsidiary in the foreign country,

entering into a joint cesium with an existing firm in that country, or purchasing an

existing firm. By comparison, offshore outsourcing is a traditional contractual

relationship with an existing firm. Offshore ownership is riskier than simple

offshore outsourcing. In addition to appropriate strategic and financial due

diligence, organizations considering offshore ownership must pay particular

attention to

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 ➢ Ready availability of necessary employee knowledge, skills, and abilities such as

language;

➢ Information and communication systems compatibility with HRIS;

➢ Governmental regulations and legal employment requirements such as wage

laws;

➢ Political stability of the country for facility and employee security; and

➢ Cultural differences such as expectations about participative versus

directive supervision.

Although an offshore outsourcing strategy is less risky than offshore ownership,

organizations would still face more risk than they would had they outsourced

domestically. HR managers should always perform due diligence in assessing the

reputation and business capabilities of an outsourcing partner. However, such

processes are more complex when dealing with organizations located halfway across

the globe. For example, concerns about electrical power availability, which might

determine whether HRIS processing can occur as scheduled, are rarely discussed

with outsourcing firms in the United States but might be a significant issue in pans

of Indonesia. In addition, worker availability to meet a 24/7 service center

requirement is less of a problem in the United States than in countries where

overtime is limited to a few hours per month, as it is in the European Union (EU).

Finally, oversight and audit functions may be less onerous and expensive when U.S.

companies establish offshore outsourcing agreements in nearby countries such as

Canada or Mexico rather than in more distant nations such as India or China.

PHR3083 (AB107) 81
 CHAPTER6: PERFORMANCE MANAGEMENT AND REWARDS

LEARNING OUTCOME:

AFTER STUDYING THIS CHAPTER, YOU WILL BE ABLE TO:

• 6.1 Automate Payroll System

- Calculate EPF, SOCSO, PCB

- Manage Allowance

- Manage Other Deduction

- Payroll generation

- HR Administration Templates

- Staffs Claims (HRM)

- Staff Leave (HRM)

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6.0 Overview of Performance Management and Reward

Performance, rewards and payroll system focus on the basic exchange of inputs and

outcomes between employees and employers. Employees provide performance and in

exchange employer provide rewards, which are distributed via payroll systems.

Performance Management (PM) systems are usually entirely internal to the

organization but data must be linked to several other systems, including rewards,

staffing, training and development and career development. PM systems are used as

working tools by managers to motivate employees to perform well in their jobs and

must, therefore be inherently self-explanatory.

6.1 Automate Payroll System

6.1.1 Calculate EPF

Overview of The EPF

The EPF is a social security institution formed according to the Laws of Malaysia,

Employees Provident Fund Act 1991 (Act 452) which

provides retirement benefits for members through

management of their savings in an efficient and reliable

manner. The EPF also provides a convenient framework for

employers to meet their statutory and moral obligations

to their employees.

Who Are Our Members?

Private and Non-Pensionable Public Sector employees. The EPF, as at September

2018, has a total of 14.09 million members. The total number of active and

contributing members is 7.19 million. The total number of registered employers

is 504,090.

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Mandatory Contributions

A contribution constitutes the amount of money credited to members' individual

accounts in the EPF. The amount is calculated based on the monthly wages of an

employee. Current contribution rate is in accordance with wage/salary received. For

employees who receive wages/salary of RM5,000 and below, the portion of

employee's contribution is 11% of their monthly salary while the employer

contributes 13%. For employees who receive wages/salary exceeding RM5,000 the

employee's contribution of 11% remains, while the employer's contribution is 12%.

Figure 6.1: Rate of Contributions

One of the main objectives of Malaysia Budget 2016 revision is to spur growth, and

increasing the people’s disposable income will in turn increase consumer spending. So,

now EPF members have the options of choosing between 8% or 11% of their salary

to be contributed to EPF savings every month. But, effective January 2018, (EPF)

reverts to the original 11% for members, as the option to contribute 8% ceases after

this month.

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Members’ Accounts

Figure 6.2: Member Accounts

Exercise

Calculation 1:
Basic Salary: RM 3000
Bonus: RM 2456.89

EPF Wages: RM 3000 + RM 2456.89 = RM 5456.89

EPF Employer Contribution: RM 5456.89 x 12% = ____________________
EPF Employee Contribution: RM 5456.89 x 11% = ____________________

Calculation 2:
Basic Salary: RM 6000
Bonus: RM 2456.89

EPF Wages: RM 6000 + RM 2456.89 = RM 8456.89

EPF Employer Contribution: RM 8456.89 x 12% = ____________________
EPF Employee Contribution: RM 8456.89 x 11% = ____________________

Calculation 3:
Basic Salary: RM 2000
Bonus: RM 2456.89

EPF Wages: RM 2000 + RM 2456.89 = RM 4456.89

EPF Employer Contribution: RM 4456.89 x 13% = ____________________
EPF Employee Contribution: RM 4456.89 x 11% = ____________________

PHR3083 (AB107) 85
 6.1.2 Calculate SOCSO

Background

The Social Security Organization (SOCSO) was

established as one of the government departments

under the Ministry of Human Resources to

administer, implement and enforce the Employees’

Social Security Act 1969 and the Employees’ Social

Security (General) Regulations 1971. On 1 July 1985,

SOCSO’s status was changed to a Statutory Body and since 1 January 1992, SOCSO

has implemented its own remuneration system known as the Sistem Saraan Baru

PERKESO.

Functions

The concept of SOCSO Social Security Protection is based on the concept of joint

responsibility through the pooling of resources, sharing of risk and replacement of

income.

The functions of SOCSO (PERKESO) are as follows:

1. Registration of employers and employees

2. Collection of contribution from employers and employees

3. Payment of benefits to workers and/or their dependents when tragedy strikes

4. Provision of physical and vocational rehabilitation benefits
5. Promotion of awareness of occupational safety and health

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Benefits

a. The Employment Injury Scheme

The Employment Injury Scheme provides protection to employees from occupational

injuries including occupational diseases and accidents occurring during travel in

connection with work.

b. The Invalidity Scheme

The Invalidity Scheme provides 24-hour protection to employees against invalidity

or death due to causes occurring outside working hours. Both schemes provide cash

benefits to employees and their dependants in the event of unforeseen incidents, in

addition to providing medical treatment, physical rehabilitation or vocational

training. SOCSO also conducts accident prevention activities through occupational

safety and health awareness programmes among employees and employers.

c. Self-Employment Social Security Act 2017 (Act 789)

The Self-Employment Social Security Act 2017 (Act 789) was first introduced

and came into force on 1st June 2017. For a start, this act will provide protection

under the Employment Injury Scheme to self-employed taxi drivers and

individuals providing similar services including Uber and Grab Car drivers. The

contribution rate stipulated is 1.25% per month from the insured salary option

d. Employment Insurance System

SOCSO made history when the Employment Insurance System Act 2017 (Act 800)

was introduced with a view to protecting and aiding workers who have lost

employment through two (2) main components, namely, the Employment Insurance

PHR3083 (AB107) 87
and Active Labour Market Policies. The Employment Insurance System (EIS) or

Sistem Insurans Pekerjaan (SIP) is a new scheme implemented as a protection

scheme for workers who have lost their employment by replacing lost income,

providing reskilling and upskilling training to enable them to find new jobs as well

as providing job-search services, so that they can gain suitable employment more

expediently. The Employment Insurance System Act 2017 received the assent of

the Yang di-Pertuan Agong on 27th December 2017 and was gazetted on 28th

December 2017. The contribution rate is from 0.2% employer's share and 0.2% of

workers from the monthly salary of employees. All private sector employers need

to pay monthly contributions for each employee. Civil servants, domestic servants

and those who are self-employed are exempted. All employees from 18 years of

age until 60 years of age have to contribute. Employees aged between 57 and 60

who have never contributed to SOCSO are exempted from this protection

plan. The maximum eligible monthly salary is capped at RM 4,000. Refer to the

contribution table below for more information:

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 Employer Employee Total
Amount of Wages
Contribution Contribution Contribution
1 Wages up to RM30 5 sen 5 sen 10 sen
2 When wages exceed RM30 but 10 sen 10 sen 20 sen
not exceed RM50
3 When wages exceed RM50 but 15 sen 15 sen 30 sen
not exceed RM70
4 When wages exceed RM70 but 20 sen 20 sen 40 sen
not exceed RM100
5 When wages exceed RM100 25 sen 25 sen 50 sen
but not exceed RM140
6 When wages exceed RM140 35 sen 35 sen 70 sen
but not exceed RM200
7 When wages exceed RM200 50 sen 50 sen RM1.00
but not exceed RM300
8 When wages exceed RM300 70 sen 70 sen RM1.40
but not exceed RM400
9 When wages exceed RM400 90 sen 90 sen RM1.80
but not exceed RM500
10 When wages exceed RM500 RM1.10 RM1.10 RM2.20
but not exceed RM600
11 When wages exceed RM600 RM1.30 RM1.30 RM2.60
but not exceed RM700
12 When wages exceed RM700 RM1.50 RM1.50 RM3.00
but not exceed RM800
13 When wages exceed RM800 RM1.70 RM1.70 RM3.40
but not exceed RM900
14 When wages exceed RM900 RM1.90 RM1.90 RM3.80
but not exceed RM1,000
15 When wages exceed RM1,000 RM2.10 RM2.10 RM4.20
but not exceed RM1,100
16 When wages exceed RM1,100 RM2.30 RM2.30 RM4.60
but not exceed RM1,200
17 When wages exceed RM1,200 RM2.50 RM2.50 RM5.00
but not exceed RM1,300

PHR3083 (AB107) 89
18 When wages exceed RM1,300 RM2.70 RM2.70 RM5.40
but not exceed RM1,400
19 When wages exceed RM1,400 RM2.90 RM2.90 RM5.80
but not exceed RM1,500
20 When wages exceed RM1,500 RM3.10 RM3.10 RM6.20
but not exceed RM1,600
21 When wages exceed RM1,600 RM3.30 RM3.30 RM6.60
but not exceed RM1,700
22 When wages exceed RM1,700 RM3.50 RM3.50 RM7.00
but not exceed RM1,800
23 When wages exceed RM1,800 RM3.70 RM3.70 RM7.40
but not exceed RM1,900
24 When wages exceed RM1,900 RM3.90 RM3.90 RM7.80
but not exceed RM2,000
25 When wages exceed RM2,000 RM4.10 RM4.10 RM8.20
but not exceed RM2,100
26 When wages exceed RM2,100 RM4.30 RM4.30 RM8.60
but not exceed RM2,200
27 When wages exceed RM2,200 RM4.50 RM4.50 RM9.00
but not exceed RM2,300
28 When wages exceed RM2,300 RM4.70 RM4.70 RM9.40
but not exceed RM2,400
29 When wages exceed RM2,400 RM4.90 RM4.90 RM9.80
but not exceed RM2,500
30 When wages exceed RM2,500 RM5.10 RM5.10 RM10.20
but not exceed RM2,600
31 When wages exceed RM2,600 RM5.30 RM5.30 RM10.60
but not exceed RM2,700
32 When wages exceed RM2,700 RM5.50 RM5.50 RM11.00
but not exceed RM2,800
33 When wages exceed RM2,800 RM5.70 RM5.70 RM11.40
but not exceed RM2,900
34 When wages exceed RM2,900 RM5.90 RM5.90 RM11.80
but not exceed RM3,000

PHR3083 (AB107) 90
35 When wages exceed RM3,000 RM6.10 RM6.10 RM12.20
but not exceed RM3,100
36 When wages exceed RM3,100 RM6.30 RM6.30 RM12.60
but not exceed RM3,200
37 When wages exceed RM3,200 RM6.50 RM6.50 RM13.00
but not exceed RM3,300
38 When wages exceed RM3,300 RM6.70 RM6.70 RM13.40
but not exceed RM3,400
39 When wages exceed RM3,400 RM6.90 RM6.90 RM13.80
but not exceed RM3,500
40 When wages exceed RM3,500 RM7.10 RM7.10 RM14.20
but not exceed RM3,600
41 When wages exceed RM3,600 RM7.30 RM7.30 RM14.60
but not exceed RM3,700
42 When wages exceed RM3,700 RM7.50 RM7.50 RM15.00
but not exceed RM3,800
43 When wages exceed RM3,800 RM7.70 RM7.70 RM15.40
but not exceed RM3,900
44 When wages exceed RM3,900 RM7.90 RM7.90 RM15.80
but not exceed RM4,000
45 When wages exceed RM4,000 RM7.90 RM7.90 RM15.80
Table 6.1: Contribution Rates

PHR3083 (AB107) 91
e. Panel Clinic & Dialysis Centres

Panel clinic

The selected panel clinics to provide medical treatment for any Insured Person under

SOCSO due to 'Employment injury’ are known as Panel Clinics (Insured Person)

SOCSO. Employment Injury' defines as an employee whom meets with an accident

or occupational disease during the course of and arising out of his/her employment

at workplace. Insured Person / Employer: Employer or Insured Person may refer to

the list of clinics to receive emergency treatments. Ensure to make available of the

following documents: Form 21 (Accident Report), Form PKS 68 or PKS 69

(Occupational disease reports) or cover letter from the employer.

Dialysis Centres

In accordance with the Employees' Social Security Act (Internal Circular Volume 1

Year 1999), SOCSO has provided haemodialysis facilities and support for qualified

Insured Person, who suffers from chronic renal disease "End Stage Renal Failure"

(ESRF). The haemodialysis treatment is one of the facility provided by SOCSO for

Insured Person, as part of its rehabilitation benefits programme. This treatment is

provided free of charge at any SOCSO dialysis panel centres, government hospital

or centres run by either NGOs or private dialysis centres.

Figure 6.3: Hemodialysis Treatment

PHR3083 (AB107) 92
Employer and Employee Eligibility

Act and Regulations

Employees’ Social Security Act,1969 and Employees’ Social Security (General)

Regulations, 1971 are applicable to all industries having one or more employees.

A. Employer

Employers are categorized into two (2)

i. Principal Employer

An employer who employs an employee directly under a contract of service or

apprenticeship. The employer is responsible for all matters relating to services

and payment of wages.

ii. Immediate Employer

An employer who employs employees to perform work under the supervision of

the principal employer. This includes a person who has a contract of service

with an employee and temporarily lends or leases the service of that employee

to a principal employer.

Employer’s Responsibility

The principal and immediate employers who employ one or more employees are

responsible to register and contribute to Social Security Organisation (SOCSO)

based on the rates specified under the Employees’ Social Security Act, 1969,

administered by SOCSO. The principal employers are also responsible for ensuring

that all workers employed by immediate employers are registered with SOCSO and

the contributions are paid accordingly. Employers are responsible for reporting all

work-related accidents that befall their workers within 48 hours of notification.

PHR3083 (AB107) 93
B. Employees

It is compulsory for all eligible employees who are Malaysian citizens and permanent

residents to register.

Employee’s Eligibility

All employees who are employed under a contract of service or apprenticeship in the

private sector and contractual / temporary staff of Federal / State Government as

well as Federal / State Statutory Bodies need to be registered and covered by

SOCSO. The rate of contribution is capped at monthly wage ceiling of RM4,000.00.

Employees exempted from the coverage of the Employees’ Social Security Act,

1969 are as follows:

i. Federal and State Government permanent employees

ii. Domestic servants

iii. Self-employed

iv. Spouses of a sole proprietor or a partnership owner

v. Spouse/s of a sole proprietor or partners

vi. Foreign workers

Employee Contribution Rate

Employee contribution rate is based on the employee's wages, overtime, commissions,

service charge, annual leave emoluments, sick leave, maternity leave, public holidays,

incentives, meal allowance, cost of living and housing allowance and so forth. All

payments whether hourly, daily, weekly or monthly-rated are considered wages.

Monthly contribution rates for employers and employees is shown in the Contribution

Schedule below.

PHR3083 (AB107) 94
 RATE OF CONTRIBUTIONS
No. Actual monthly First Category Second
wage (Employment Injury Scheme Category
of the month and Invalidity Scheme) (Employment
Injury
Scheme)

Employer's Employee's Total Contribution

Contribution By Employer
Only
1. Wages up to 40 cents 10 cents 50 cents 30 cents
RM30

2. When wages 70 cents 20 cents 90 cents 50 cents

exceed RM30 but
not RM50
3. When wages RM1.10 30 cents RM1.40 80 cents
exceed RM50 but
not RM70
4. When wages RM1.50 40 cents RM1.90 RM1.10
exceed RM70 but
not RM100
5. When wages RM2.10 60 cents RM2.70 RM1.50
exceed RM100
but not RM140
6. When wages RM2.95 85 cents RM3.80 RM2.10
exceed RM140
but not RM200
7. When wages RM4.35 RM1.25 RM5.60 RM3.10
exceed RM200
but not RM300
8. When wages RM6.15 RM1.75 RM7.90 RM4.40
exceed RM300
but not RM400
9. When wages RM7.85 RM2.25 RM10.10 RM5.60
exceed RM400
but not RM500

PHR3083 (AB107) 95
10. When wages RM9.65 RM2.75 RM12.40 RM6.90
exceed RM500
but not RM600
11. When wages RM11.35 RM3.25 RM14.60 RM8.10
exceed RM600
but not RM700
12. When wages RM13.15 RM3.75 RM16.90 RM9.40
exceed RM700
but not RM800
13. When wages RM14.85 RM4.25 RM19.10 RM10.60
exceed RM800
but not RM900
14. When wages RM16.65 RM4.75 RM21.40 RM11.90
exceed RM900
but not RM1,000
15. When wages RM18.35 RM5.25 RM23.60 RM13.10
exceed RM1,000
but not RM1,100
16. When wages RM20.15 RM5.75 RM25.90 RM14.40
exceed RM1,100
but not RM1,200
17. When wages RM21.85 RM6.25 RM28.10 RM15.60
exceed RM1,200
but not RM1,300
18. When wages RM23.65 RM6.75 RM30.40 RM16.90
exceed RM1,300
but not RM1,400
19. When wages RM25.35 RM7.25 RM32.60 RM18.10
exceed RM1,400
but not RM1,500
20. When wages RM27.15 RM7.75 RM34.90 RM19.40
exceed RM1,500
but not RM1,600
21. When wages RM28.85 RM8.25 RM37.10 RM20.60
exceed RM1,600
but not RM1,700

PHR3083 (AB107) 96
22. When wages RM30.65 RM8.75 RM39.40 RM21.90
exceed RM1,700
but not RM1,800
23. When wages RM32.35 RM9.25 RM41.60 RM23.10
exceed RM1,800
but not RM1,900
24. When wages RM34.15 RM9.75 RM43.90 RM24.40
exceed RM1,900
but not RM2,000
25. When wages RM35.85 RM10.25 RM46.10 RM25.60
exceed RM2,000
but not RM2,100
26. When wages RM37.65 RM10.75 RM48.40 RM26.90
exceed RM2,100
but not RM2,200
27. When wages RM39.35 RM11.25 RM50.60 RM28.10
exceed RM2,200
but not RM2,300
28. When wages RM41.15 RM11.75 RM52.90 RM29.40
exceed RM2,300
but not RM2,400
29. When wages RM42.85 RM12.25 RM55.10 RM30.60
exceed RM2,400
but not RM2,500
30. When wages RM44.65 RM12.75 RM57.40 RM31.90
exceed RM2,500
but not RM2,600
31. When wages RM46.35 RM13.25 RM59.60 RM33.10
exceed RM2,600
but not RM2,700
32. When wages RM48.15 RM13.75 RM61.90 RM34.40
exceed RM2,700
but not RM2,800
33. When wages RM49.85 RM14.25 RM64.10 RM35.60
exceed RM2,800
but not RM2,900

PHR3083 (AB107) 97
34. When wages RM51.65 RM14.75 RM66.40 RM36.90
exceed RM2,900
but not RM3,000
35. When wages RM53.35 RM15.25 RM68.60 RM38.10
exceed RM3,000
but not RM3,100
36. When wages RM55.15 RM15.75 RM70.90 RM39.40
exceed RM3,100
but not RM3,200
37. When wages RM56.85 RM16.25 RM73.10 RM40.60
exceed RM3,200
but not RM3,300
38. When wages RM58.65 RM16.75 RM75.40 RM41.90
exceed RM3,300
but not RM3,400
39. When wages RM60.35 RM17.25 RM77.60 RM43.10
exceed RM3,400
but not RM3,500
40. When wages RM62.15 RM17.75 RM79.90 RM44.40
exceed RM3,500
but not RM3,600
41. When wages RM63.85 RM18.25 RM82.10 RM45.60
exceed RM3,600
but not RM3,700
42. When wages RM65.65 RM18.75 RM84.40 RM46.90
exceed RM3,700
but not RM3,800
43. When wages RM67.35 RM19.25 RM86.60 RM48.10
exceed RM3,800
but not RM3,900
44. When wages RM69.05 RM19.75 RM88.80 RM49.40
exceed RM3,900
but not RM4,000
45. When wages RM69.05 RM19.75 RM88.80 RM49.40
exceed RM4,000
Monthly contribution is subject to the ceiling of the insured wage of RM4,000.00 per month.
Table 6.2: Contribution Rates

PHR3083 (AB107) 98
 6.1.3 Calculate PCB

Background

The Inland Revenue Board of Malaysia (IRBM) is one of the

main revenue collecting agencies of the Ministry of

Finance.

IRBM was established in accordance with the Inland

Revenue Board of Malaysia Act 1995 to give it more

autonomy especially in financial and personnel management as well as to improve the

quality and effectiveness of tax administration.

Potongan Cukai Bulanan (PCB) or also known as Monthly Tax Deductions (MTD) is a

mechanism for income tax deductions from employees' monthly remuneration

according to the formulas approved by the Director General. The purpose of

PCB/MTD is to reduce the burden on workers’ pay taxes at a time when the actual

tax was determined.

The Department of Inland Revenue Malaysia became a board on March 1, 1996, and

is now formally known as IRBM.

The agency is responsible for the overall administration of direct taxes under the

following Acts:

o Income Tax Act 1967,

o Petroleum (Income Tax) Act 1967,
o Real Property Gains Tax Act 1976,
o Promotion of Investments Act 1986,
o Stamp Act 1949,
o Labuan Business Activity Tax Act 1990.

PHR3083 (AB107) 99
Am I taxable?

✓ An individual who earns an annual employment income of RM25,501 (after EPF

deduction) has to register a tax file.

✓ With effect year 2010 an individual who earns an annual employment income

of RM26,501 (after EPF deduction) has to register a tax file.

✓ With effect year 2013 an individual who earns an annual employment income

of RM30,667 (after EPF deduction) has to register a tax file.

✓ Nevertheless, with effect year 2015 an individual who earns an annual

employment income of RM34,000 (after EPF deduction) has to register a tax

file.

✓ Individuals with single income earning more than RM34,001 per year (after

deduction of EPF).

✓ Married individuals and unemployed couples who receive employment income

exceeding RM46,001 per year.

PHR3083 (AB107) 100

Table 6.3: Income Tax Rate

PHR3083 (AB107) 101

Tax Relief

1. Compulsory Deductions

Employers are required to deduct the following in determining the amount of the

employee's monthly PCB:

a. The individuals

b. The deduction of a spouse

c. Deductions children

d. Contribution to the Employees Provident Fund (EPF) or other approved

schemes

e. Persons with Disabilities

f. The husband or wife with Disabilities

g. Medical expenses for parents

h. Basic supporting equipment

i. Education Fees (Individual)

j. Medical expenses for serious diseases

k. Purchase of books, journals, magazines and publications

l. Purchase of personal computer (once in every 3 years)

m. Net saving in SSPN's scheme

n. Purchase of sport equipment for sport activities

o. Life insurance and EPF

p. Others

PHR3083 (AB107) 102

2. Zakat Rebate through Salary Deductions

If an employee has made zakat payments to the zakat authorities through salary

deductions, the employer may make deductions charged against the amount of tax

to be deducted for each month.

Example 1: PCB/MTD for January

Zakat is paid : RM55.00

PCB should be cut according to the Schedule of Monthly Tax Deductions : RM105.00

PCB to be deducted after rebate : RM50.00

(RM105.00-RM55.00)

Example 2: PCB/ MTD for May

Zakat is paid : RM140.00

PCB should be cut according to the Schedule of Monthly Tax Deductions : RM110.00

PCB to be deducted after rebate : Nil (over RM30.00)

The excess zakat of RM30.00 in Example 2 can be carried forward to be deducted from the PCB for the

following month, provided that it is within the same year.

PHR3083 (AB107) 103

Case Study 1

Calculate Taxable Salary = (Gross Salary – EPF)

I’m single and my monthly salary is RM7000

1) My EPF is RM7000 x 0.11 = RM770 (take maximum RM500 for deduction).

2) My taxable salary is RM7000-RM500 = RM6500

3) Income tax PCB 2009 Chart show RM6500 taxable salary need to pay RM589

Table 6.4: Example of Income Tax Table

PHR3083 (AB107) 104

6.2 Manage Allowance

Allowance are extra income pay on an employee and form part of monthly

remuneration. All allowances must be shown in pay slip.

Four Type of Allowances

Allowance Type Symbol Used Description

Fixed Allowance F A fixed amount is paid to employee every month

Variable V The amount is not fixed and may vary from

Allowance month to month. It could be very high in one

month and very low / none in another month.

Daily Allowance D Daily rate of an employee is fixed to calculate

total daily allowance each month.

Shift Allowance S Pay to employee who work on shift.

Example below and calculate the total allowance for Aira Raisha’s on Januari 2019

Allowance Description Type Rate / Amount

Hand phone F RM 100.00 per month

Incentives V Rm 200.00 this month

Meal D RM 5.00 per day worked

Shift Allowance S (refer shift Allowance Table)

PHR3083 (AB107) 105

Shift Allowance Table:

Table Description Shift 1 Shift 2 Shift 3

1 General RM 2.00 RM 3.50 RM 5.00

2 Supervisor RM 4.00 RM 6.00 RM 8.00

3 Executive RM 5.00 RM 7.50 RM 10.00

Aira is at supervisor level, she worked:

5 days in shift 1

8 days in shift 2

Other days in shift 3

Solution:

Hand phone RM 100.00

Incentive RM 200.00
Meal Daily Rate x Days worked
= RM 5.00 x 18
= RM 90.00
Shift Shift rate x no. of days worked on that shift
Shift 1
= 5 days’ x RM 4.00
= RM 20.00

Shift 2
= 8 days’ x RM 6.00
= RM 48.00

Shift 3
= 5 days’ x RM 8.00
= RM 40.00

Total: RM 108.00

Total Allowance Hand phone + Incentive + Meal + Shift

= RM 100.00 + RM 200.00 + RM 90.00 + RM 108.00
= RM 498.00
And also, the other types of allowance: -
PHR3083 (AB107) 106
 • Entertainment

• Laundry

• Meal

• Mileage

• Uniforms and special clothing

• Car and Phone

• Hotel

6.3 Manage Other Deduction

Advance repayment

Amanah Saham Bumiputera

Club contribution

Loan repayment

Lembaga Urusan Tabung Haji

Zakat

EPF

SOCSO

Tax

6.4 Payroll generation

PHR3083 (AB107) 107

 Name Product: ABSS (MYOB) Payroll Version 9.1

Software (PCB2018 Compliance)

Price: RM 1,499.00

Brand: Abytech Sdn Bhd

Benefits:

1. Easily calculate EPF, SOCSO, PCB and

overtime.

2. Supports any combination of fortnightly and

monthly pay periods with the flexibility of defining

formulas for various payroll components.

3. Track and manage employee records, earnings

and deductions.

4. Any combination of income, deductions and benefits, which can be set for one

time or customized for specific staff.

5. Handles multiple child relief option.

6.5 HR Administration Templates

PHR3083 (AB107) 108

 There are various HR administration templates. These templates vary by company
and are used accordingly.
Company Name
Company
Job Description Template
Logo
Here
Job title:
Work Location:
Division/Department:
Reports to: Title of Manager (not person’s name)
◼ Full-time  Exempt
 Part-time ◼ Nonexempt
Essential Duties and Responsibilities:
Write one sentence/short paragraph giving a brief description to state overall purpose, expectations and/or objectives of position.
Then add bullet points, listing the specific tasks and job duties of the position that are required on a daily basis. Items should begin
with action words such as perform, responsible for, deliver, develop, etc.
If this position is part of a group of levels (i.e. Customer Service Rep I - Customer Service Rep II) , be sure to show the increase in
responsibility or progress required to advance to different levels.
• Perform related duties as assigned by supervisor
• Maintain compliance with all company policies and procedures
Education and/or Work Experience Requirements:
This section is used to describe what knowledge, skills and abilities are required to perform the daily tasks and job duties bulleted
above. If this position is part of a group of levels, be sure to show the increase in the knowledge, skills and abilities necessary to
perform the daily tasks and job duties. Some examples are:
• Excellent verbal and written communication skills, including ability to effectively communicate with internal and external
customers
• Excellent computer proficiency (MS Office – Word, Excel and Outlook)
• Must have A+ certification
• Must be able to work under pressure and meet deadlines, while maintaining a positive attitude and providing exemplary
customer service
• Ability to work independently and to carry out assignments to completion within parameters of instructions given, prescribed
routines, and standard accepted practices
• Associate degree preferred
Physical Requirements:
What is physically required to perform the daily tasks and job duties? Be specific. Some examples are:
• Ability to safely and successfully perform the essential job functions consistent with the ADA, FMLA and other federal, state
and local standards, including meeting qualitative and/or quantitative productivity standards.
• Ability to maintain regular, punctual attendance consistent with the ADA, FMLA and other federal, state and local standards
• Must be able to lift and carry up to 50 lbs
• Must be able to talk, listen and speak clearly on telephone
Print Employee Name:

Employee signature: Date:

PHR3083 (AB107) 109

 Hour Calculating Timesheet
Hours Hours Hours Hours Hours Hours Hours Total Hours
Week Monday worked
Tuesday worked
Wednesday worked Thursday worked
Friday worked
Saturday worked
Sunday worked Worked
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

Drug/Alcohol Testing Consent Form

PHR3083 (AB107) 110

Company Name: __________________________________________________

Applicant/Employee Name: __________________________________________

I hereby agree to submit to a drug or alcohol test by furnishing a sample of my urine, breath, and/or blood for analysis.
I have been fully informed of the reason for this test and I understand what I am being tested for and the procedure
involved. I am fully aware that the results of this test will be forwarded on to my potential employer or current employer
and will become part of my record. I understand that if at any time I refuse to submit to a drug or alcohol test or if I
otherwise fail to cooperate with the testing procedures, my application for employment may be immediately withdrawn
from consideration or I may be subject to immediate termination.

____________________ _______________

Signature of Applicant/Employee Date

___________________ _______________

Company Representative Date

EMPLOYEE WARNING NOTICE

PHR3083 (AB107) 111

 Employee Information
Employee Name Employee ID
Date Job Title
Department Manager

Type of Warning
❑ 1st Warning ❑ 2nd Warning ❑ Final Warning

Type of Offense
❑ Tardiness/Leaving Early ❑ Absences ❑ Company Policy Violation
❑ Poor Work Performance ❑ Violation of Safety Rules ❑ Poor Customer Service
❑ Other:

Description of Infraction:

Action/Improvement Plan:

Consequences of Future Infractions:

Warning Receipt Acknowledgement

By signing this form, you confirm that you understand the information in the warning. You also confirm that you
and your manager have discussed the warning and a plan for improvement. Signing this form does not
necessarily indicate that you agree with this warning.

Employee Signature Date

Manager/Supervisor Signature Date

Witness Signature Date

PHR3083 (AB107) 112

6.6 Staffs Claims (HRM)

PHR3083 (AB107) 113

Overtime, ORP and HRP

Overtime (OT)

Overtime (OT) is authorized time that a staff member in the General Service,

Security Service, Trades and Crafts, or Field Service category up to and including

level FS-5, is requested to work in excess of his/her scheduled workday or

workweek. Time worked on official holidays is also considered overtime.

Compensatory time off (CTO) is compensation in the form of authorized time off,

in an equal amount of time worked in excess, that does not impact a staff member's

annual leave. Compensation for OT may be provided as a payment in addition to salary,

and may be paid:

• At the straight time rate for each hour in excess of forty hours of CTO;

• At the rate of one and one half times the staff member's hourly rate; or

• At two times the staff member's hourly rate.

5 categories of overtime which are:

i. Work on Rest Day (Work-RD)

When an employee was asked to work on his rest day within normal hour

of work (usually 8 hours per day), he is to be paid accordingly by the

employer for work done on rest day. Refer to Employment Act, for

monthly-rated employee the rate is 1 time of Ordinary Rate of Pay (ORP).

ORP means per day wages. This type of overtime pay is called work on rest

day. Minimum unit of calculation is 0.5 day, means if an employee worked

less than or equal to ½ of normal hours of work (for example ≤ 4 hours),

PHR3083 (AB107) 114

 he is considered already worked ½ day; if he worked more than ½ of normal

hours of work (for example: > 4 hours and ≤ 8 hours), he is considered

worked 1 day.

So, when normal hours of work = 8 hours:

Work done on rest day (no. of hours) Considered worked (in days)

≤ 4 hours ½ day

> 4 hours and ≤ 8 hours 1 day

An example of calculation (Work on rest day):

Min Unit Calculation of OT per day. Days OT Amount

(Basic Rate = RM2000) Worked = (1) x (2)

(1) (2)

½ Day ORP x OT Rate 1.5 days OT per day x Days worked

= (BRate /26) x 1 = 76.92 x 1.5

= (2000 /26) x1 = 115.38

= 76.92

ii. Work on Public Holiday

When an employee was asked to work on Public Holiday within normal hours

of work, he shall be paid accordingly by the employer (refer to

Employment Act, for monthly – rated employee the rate is 2 times of

ORP), this type of overtime pay called work on public holiday. Minimum unit

calculation is 1 day. This means even Sofia worked only 2 hours (less than

PHR3083 (AB107) 115

 or equal to normal hours of work) on a public holiday, she is considered

work 1 day. However, if he worked more than normal hours of work, the

excess is called Overtime on Public Holiday

So, when normal hours of work = 8 hours:

Work done on Public Holiday (no. of hours) Considered worked (in days)

≤ 8 hours 1 day

An example of calculation (work on Public Holiday):

Min Calculation of OT per day. Days OT Amount

Unit (Basic Rate = RM2000) Worked = (1) x (2)

(1) (2)

1 Day ORP x OT Rate 4 days OT per day x Days worked

= (BRate /26) x 2 = 153.85 x 4

= (2000 /26) x2 = 615.40

= 153.85

iii. Overtime on Normal Working Day

When an employee was asked to work in excess of the normal hours of work on

any normal working day (not rest day and not holiday), he shall be paid accordingly

by the employer (refer to Employment Act, for monthly – rated employee is 1.5

times of HRP), this type of overtime pay called overtime on normal

working day. Minimum unit calculation is 0.5 hour.

Working Hours per Year

PHR3083 (AB107) 116

 ❑ GROUP A : EMPLOYEE HAS TO WORK 6 WORKING DAYS PER WEEK

Working Hours per year = 6 working days’ x 52 weeks’ x 8 working hours

= 2,496 hours

HRP = (Basic Rate x 12 months) / 2496 Hours

❑ GROUP B : EMPLOYEE HAS TO WORK 5 ½ WORKING DAYS PER WEEK

Working Hours per year = 5 ½ working days’ x 52 weeks’ x 8 working hours

= 2,288 hours

HRP = (Basic Rate x 12 months) / 2,288 Hours

❑ GROUP C : EMPLOYEE HAS TO WORK 5 WORKING DAYS PER WEEK

Working Hours per year = 5 working days’ x 52 weeks’ x 8 working hours

= 2,080 hours

HRP = (Basic Rate x 12 months) / 2,080 Hours Overtime on Normal Working

Day

An example of calculation (Overtime on normal working day):

PHR3083 (AB107) 117

Min Calculation of OT per day. Hours OT Amount

Unit (Basic Rate = RM2000) Worked = (1) x (2)

(1) (2)

½ HRP x OT Rate 14.5 OT per day x Hours worked

hour = (BRate x 12 /Hours per year) x OT rate hours = 14.42x 14.5

= [(2000 x 12 ) / 2496] x 1.5 = 209.09

= 14.42

iv. Overtime on Rest Day

When an employee was asked to work on his rest day and the work was

carried out in excess of the normal hours of work, for those excess hours,

he shall be paid accordingly by the employer (refer to Employment Act,

for monthly – rated employee is 2 times of HRP), this type of overtime

pay called overtime on Rest day. Minimum unit calculation is 0.5 hour.

For example, if Sofea worked 10.5 hours on a particular Sunday (his rest

day), and her normal hours of work is 8 hours a day, we say she has done

the following:

Work on rest day : 1.0 day (rate = 1 x ORP)

Hourly on rest day : 2.5 hours (rate = 2 x HRP)

****Ordinary Rate of Pay (ORP) means per day wages

**** Hourly on Rate of Pay (HRP) means per hour wages

An example of calculation (overtime on rest day):

PHR3083 (AB107) 118

Min Calculation of OT per day. Hours / OT Amount

Unit (Basic Rate = RM2000) Day = (1) x (2)

(1) Worked

(2)

½ (Worked on Rest Day) 1.0 day OT per day x Days

Day ORP x OT Rate worked

= (BRate /26) x OT Rate = 76.92 x 1

= (2000 /26) x1 = 76.92

= 76.92

½ Overtime on rest day 2.5 OT per hour x Hours

Hour HRP x OT Rate hours worked

= (BRate x 12 /Hours per year) x OT = 19.23 x 2.5

rate = 48.08

= [(2000 x 12 ) / 2496] x 2

= 19.23

Total OT Amount = RM125.00

v. Overtime on Public Holiday

When an employee was asked to work on Public Holiday and the work was

carried out in excess of the normal hours of work, for those excess hours,
PHR3083 (AB107) 119
 he shall be paid accordingly by the employer (refer to Employment Act,

for monthly – rated employee is 3 times of HRP), this type of overtime

pay called overtime on Public Holiday. Minimum unit calculation is 0.5 hour.

For example, if Sofea worked 9.5 hours on a particular Public Holiday, and

her normal hours of work is 8 hours a day, we say she has done the

following:

Work on Public Holiday : 1.0 day (rate = 2 x ORP)

Overtime on Public Holiday : 1.5 hours (rate = 3 x HRP)

An example of calculation (overtime on Public Holiday):

Min Calculation of OT per day. Hours / OT Amount

Unit (Basic Rate = RM2000) Day = (1) x (2)
(1) Worked
(2)
½ (Worked on Public Holiday) 1.0 day OT per day x Days
Day ORP x OT Rate worked
= (BRate /26) x OT Rate = 153.85x 1
= (2000 /26) x2 = 153.85
= 153.85
½ Overtime on rest day 1.5 OT per hour x Hours
Hour HRP x OT Rate hours worked
= (BRate x 12 /Hours per year) x OT = 28.85 x 1.5
rate = 43.28
= [(2000 x 12 ) / 2496] x 3
= 28.85
Total OT Amount = RM197.13

Remember that Public Holiday is a paid leave, even you don’t work on that day, you shall still

entitle to one day’s salary. For monthly-rated employee, as long as salary is not deducted on

Public Holiday, he/she is considered paid for that.

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A summary of OT Rate:

OT Type Minimum Unit OT Rate

Work on Rest Day ½ Day 1 times ORP

Work on Public Holiday 1 Day 2 times ORP

Overtime on Normal Working ½ hour 1.5 times HRP

Day

Overtime on Rest Day ½ Hour 2 times HRP

Overtime on Public Holiday ½ Hour 3 times HRP

Example 1

Calculate Total OT Pay

Raqib OT record for January 2019 was:

Work on RD = 1.5 days

OT on RD = 5 hours

Work on PH = 1 Day

OT on PH = 2.5 hours

OT on ND = 14.5 hours

Maximum amount allowed to calculate overtime = RM2, 000.00

Working Hours per Year = 2496 hours

Solution:

Type Min OT pay per day / hour Day / Total Amount

Unit (Max. wages = RM2000) Hours = (1) x (2)
(1) worked
(2)

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 Work on RD ½ Day ORP x OT Rate 1.5 day OT per day x Days
= (BRate /26) x OT Rate worked
= (2000 /26) x1 = 76.92 x1.5
= 76.92 = 115.38

Work on PH 1 Day = (2000 /26) x2 1 = 153.85 x 1

= 153.85 = 153.85

OT-ND ½ hour HRP x OT Rate 14.5 OT per hour x hours

=(BRate x 12 /Hours per worked
year) x OT rate = 14.42 x 14.5
= [(2000 x 12 ) / 2496] x 1.5 = 209.13
= 14.42
OT-RD ½ hour = [(2000 x 12 ) / 2496] x 2 5 = 19.23 x 5
= 19.23 = 96.15
OT-PH ½ hour = [(2000 x 12 ) / 2496] x 3 2.5 = 28.85 x 2.5
= 28.85 = 72.12
Total OT Pay RM 646.63

6.7 Staff Leave (HRM)

There are two types of staff leave which is Compulsory under Employment Act 1955
and optional leave entitlement in Malaysia:

PHR3083 (AB107) 122

Annual leave (Compulsory under Employee Act 1955)

• An employee shall be entitled to paid annual leave of:

a) 8 days for every 12 months of continuous service with the same employer if

he has been employed by that employer for a period of less than 2 years

b) 12 days for every twelve months of continuous service with the same employer

if he has been employed by that employer for a period of 2 years or more but

less than 5 years

c) 16 days for every twelve months of continuous service with the same employer

if he has been employed by that employer for a period of 5 years or more

Public Holidays (Compulsory under Employee Act 1955)

• Every employee shall be entitled to paid holiday at his ordinary rate of pay on the

following days in any one calendar year:

(a) On ten of the gazette public holidays, four of which shall be: -

1. The National Day

2. The Birthday of the Yang di-Pertuan Agong
3. The Birthday of the Ruler or the Yang di-Pertua Negeri of the State or
the Federal Territory Day
4. The Workers’ Day

(b) On any day declared as a public holiday under section 8 of the Holidays Act
1951

• If a public holiday falls on a rest day, the working day following immediately

the rest day shall be a paid holiday in substitution.

PHR3083 (AB107) 123

 • Any employee who absents himself from work on the working day

immediately preceding or immediately succeeding

• A public holiday shall not be entitled to any holiday pay for such holiday.

• For any overtime work carried out by an employee on a paid public holiday,

the employee shall be paid at a rate which is not less than 3 times his hourly

rate of pay.

Sick Leave (Compulsory under Employee Act 1955)

• An employee shall, after examination at the expense of the employer:

a) By a registered medical practitioner duly appointed by the employer

b) If no such medical practitioner is appointed or, if having regard to the nature

or circumstances of the illness, the services of the medical practitioner so

appointed are not obtainable within a reasonable time or distance, by any other

registered medical practitioner or by a medical officer

If there is no hospitalization, the number of days of sick leave shall be

i. 14 days in each calendar year if the employee has been employed for

less than 2 years

ii. 18 days in each calendar year if the employee has been employed for 2
years or more but less than 5 years
iii. 22 days in each calendar year if the employee has been employed for 5
years or more.
If there is hospitalization
(i) 60 days in each calendar year if hospitalization is necessary, as may be certified

by such registered medical practitioner or medical officer

PHR3083 (AB107) 124

Maternity Leave (Compulsory under Employee Act 1955)

• Every Female employee shall entitle for a period of not less than 60 consecutive

days’ maternity leave in respect of each confinement with full pay which may

commence before the date of confinement as is medically advised.

• At the end of the 60 calendar days, they are normally required to return to work.

• Benefit is applied in case of miscarriage or medical termination of pregnancy

(provided that this is beyond 28 weeks of pregnancy).

• Benefits are not applied if it is a voluntary termination.

• Any rest day or public holiday and sick leave that falls due during maternity leave

is counted as part of the maternity leave and will not give rise to any additional

leave or payment.

Marriage Leave (Optional)

• A properly authenticated certificate of such marriage shall be provided by the

employee.

• Normally 3 days.

Paternity Leave (Optional)

• A male employee is eligible paternity leave for the birth of his child.

• Normally 1 or 2 days.

Adoption Leave (Optional)

• An employee who wishes to adopt a child either from recognized adoption agency,

blood related child or step child following all the legal procedures and he / she is

the primary care taker of the child may apply for Adoption leave.

PHR3083 (AB107) 125

• Normally 1 or 2 days.

Study / Examination Leave (Optional)

• A study leave refers to a period for which an employer has released an employee

from the performance of the duties pertaining to the latter’s employment, to

enable him/her to pursue training, study or examination.

Compassionate Leave (Optional)

• All confirmed employees are entitled to three (3) consecutive days of

compassionate leave per occasion on the death of the employee’s immediate

family members, which include grandparents, grandparents-in-law, parents,

parents-in-law, spouse, children, brothers and sisters.

• Employees are required to produce the death certificate as supporting document

for the leave application upon returning to work.

Unpaid Leave / Leave without Pay

• Under exceptional circumstances like serious illness, the employee can avail of

such a leave after approval from the approval authority. This may be sanctioned

only when all other forms of leave are exhausted.

Emergency Leave
• Emergency leave is defined as leave taken without prior approval due to

unforeseen circumstances e.g. accident, death of a relative, serious illness of

family members.

PHR3083 (AB107) 126

• Emergency leave application must be submitted with valid supporting documents.

It will be deducted from the employee’s annual leave entitlement upon approval

as otherwise it will be treated as unpaid leave and will be deducted from the

employee’s salary accordingly.

• Employees are required to contact, notify and obtain verbal approval on the

emergency leave from their immediate Head of Department within thirty (30)

minutes upon commencement of the employee’s official working hours.

• Employees found responsible for abusing emergency leave may be subject to

disciplinary action which may lead to termination of employment.

Pay Leave Non Pay Leave

• PH: Public Holiday • LS: Line Shut Down

• MC: Medical Leave • AB: Absent

• HL: Hospital Leave • NPL: NON Pay Leave

• CL: Compassionate Leave

• AL: Annual Leave

• MT: Maternity Leave

• MR: Marriage Leave

Day Worked = Working Days – (Pay Leave + Non Pay Leave)

Day Worked = 27 days – (5 days + 2 days)

= 20 days

PHR3083 (AB107) 127

 CHAPTER 7: SECURITY AND PRIVACY ISSUES: EMERGING TRENDS IN

HRIS

LEARNING OUTCOME:

AFTER STUDYING THIS CHAPTER, YOU WILL BE ABLE TO:

7.1 Components of information security

7.2 Legal requirement of information security

7.3 Future trends in HRM

7.4 Future trends in workforce technology

7.0 Introduction

PHR3083 (AB107) 128

Information privacy and security are particularly important issues for HRIS because

unlike many other organizational systems, an HRIS includes a great deal of

confidential data bout employees such as social security numbers, medical data, bank

account data, salaries, domestic partner benefits, employment test scores and

performance evaluations.

Therefore, it is critical for organizations to understand and pay close attention to

what employee data is collected, stored, manipulated, used and distributed, when,

why and by whom.

Organizations also need to carefully consider the internal and external threats to

this data and develop strong information security plans and procedures to protect

this data and comply with legislative mandates.

7.1 Components of Information Security

Brief Evolution of Security Models

• Information Security (IS) is particularly important for an HRIS because of

the high degree of automation in these systems and the wealth of private

employee data being stored.

• IS had traditionally been defined as the protection afforded to an automated

information system in order to attain the applicable objectives of preserving

the confidentiality, integrity and availability (CIA) of information system

resources.

• However, the complexity of the networked environment in which HR data is

captured, stored and utilized means that personnel transactions and

PHR3083 (AB107) 129

 information processing are increasingly more vulnerable to security threats

and risks than ever before.

• The National Security Telecommunications and Information’s System

Security Committee (NSTISSC) security model, also known as the McCumber

Cube (figure 1) provides a more detailed perspective on security.

• The model, created by John McCumber in 1991, provides a graphical

representation of the architectural approach widely used in computer and

information security.

• The McCumber Cube in Figure 1 shows three dimensions. If extrapolated, the

three dimensions of each axis become a 3 × 3 × 3 cube with 27 cells

representing areas that must be addressed to secure today’s information

systems. To ensure system security, each of the 27 areas must be properly

addressed during the security process.

PHR3083 (AB107) 130

 Figure 7.1: The McCumber Cube

• The three dimensions and their attributes are categorized as follows: -

❖ Desired information goals – ensure that data is kept confidential, has

not been manipulated and is available to those who are authorized to

access it.

✓ Confidentiality assures that private data is kept safe from

unauthorized individuals. It is critical for maintaining the privacy

of the employee’s personal data.

✓ Integrity assures that data and programs are created and

modified in a specified and authorized manner. It is important to

assure the integrity of both the data and the systems.

✓ Availability assures that systems work and service is provided

promptly to those who are authorized to use them

PHR3083 (AB107) 131

❖ State of information – Identify the state in which data is currently

residing.

✓ Storage is an inactivate state of data that is waiting to be

accessed.

✓ Processing is a state in which data is being actively examined or

modified.

✓ Transmission is a state in which data is moving.

❖ Countermeasures – Identify mechanisms that can be used to protect

data.

✓ Technology is the use of hardware and software to limit threats

to data.

✓ Policy and practices is the use of procedures that mitigate risk

or eliminate the possibility of threats.

✓ Human factors revolve around giving each consumer of data the

knowledge of how to identify and handle threats.

PHR3083 (AB107) 132

 Figure 7.2: Summary Dimensions McCumber Cube

7.1.1 Security Threats

PHR3083 (AB107) 133
What kind of threats are our organizational security practices protecting us from?

In security, it is important to “know our enemy”. We have to understand our

vulnerabilities. If we do not know what the threat vector (attack method) is, we

cannot plan to defend ourselves. The following are common security threats: -

7.1.1.1 Threat sources

i. Human Errors

• When an HRIS is not well designed, developed and maintained and

employees are not adequately trained, there is a high potential threat

of security breaches.

• Research suggest that human errors, such incorrectly entered data or

accidental destruction of existing data, constitute security threats to

the availability, accessibility and integrity of information.

• The Ameriprise Financial for example, an error on the part of an

employee can potentially expose private employee or customer data.

ii. Disgruntled employees and ex-employees

• One of the concerns overlooked by HR managers is that information

may be damaged by disgruntled employees.

• This is commonly referred to as insider threats.

• Employees and ex-employees are dangerous since they have extensive

knowledge of systems, have the credentials needed to access sensitive

parts of systems, often know how to avoid detection and can benefit

from the trust that usually is accorded to organization employees.

iii. Natural Disasters

PHR3083 (AB107) 134

 • Typical forms of natural disasters are floods, earthquakes, fire and

lightning strikes which destroy or disrupt computing facilities and

information flow.

• These threats were considered the main threats to computing

resources.

• Although they are now less visible do not pose the daily risks that these

other security threats pose, each must be nonetheless considered when

developing security practices.

iv. External Hackers

• Another significant threat is the penetration of organizational

computer systems by hackers.

• A hacker is defined as someone who accesses a computer or computer

network unlawfully.

• Such attack often termed “instruction” once the hacker had

successfully bypassed the network security, he or she is free to

damage, manipulate or simply steal data at will.

v. Other “Internal” Hackers

• Many business hire contract workers, who work for the organization for

a short period.

• Contract workers usually gain temporary access to various critical areas

of an organization.

• This creates risks almost identical to those created by employees.

7.1.1.2 Types of threats

PHR3083 (AB107) 135

 i. Misuse of computer systems

• One of the predominant internal security threats is employees unauthorized

access to or use of information, particularly when it is confidential and

sensitive.

ii. Extortion

• The perpetrator tries to obtain monetary benefits or other goods by

threatening to take actions that would be against the victim’s interest.

iii. Theft

• The value of information can be much higher than the price of hardware

and software. With contemporary advances in technological developments,

a relatively small computer chip (e.g., a USB device) can easily store over

100 GB of data.

• For example, the state of Hawaii’s HR department had medical records

stolen when offices of two doctors servicing workers’ compensation claims

were burglarized.

iv. Computer based fraud

• There is growing evidence that computer-based fraud is widespread.

• Over 90% of companies have been affected by computer-based fraud, such

as data processing or data entry routines that are modified.

v. Cyber-terrorism

• Cyber-terrorism is the leveraging of an information system that is intended

to intimidate or cause physical, real-world harm or severe disruption of a

system’s infrastructure (Austin & Darby, 2013).

PHR3083 (AB107) 136

 • In one such scenario, a person with high-level computer and network skills

(e.g., hacker) is hired to break into a specific computer or computer network

to steal or delete data and information.

• Cyber-terrorists often send a threatening e-Mel stating that they will

release some confidential information, exploit a security leak, or launch an

attack that could harm a company’ system or networks.

vi. Phishing

• Victims usually receive e-Mel messages that appear to come from an

authentic source with which the victim does business.

• The official appearance of the message and the website often fool victims

into giving out confidential information.

• According to Gartner the estimated annual cost of phishing is around $2

billion (Moore & Clayton, 2007).

v. Denial-of-Service

• DoS attempts to make a service unavailable for legitimate users by flooding

it with attach packets.

• The server that is hosting that service is then unable to handle the large

number of requests, whereby shutting it down.

• The financial services sector has been hit particularly hard by this type of

attack.

• For example, Bank of America and JP Morgan Chase have both experienced

outages on their public websites due to DoS attacks.

PHR3083 (AB107) 137

 7.1.1.3 Software threats

i. Viruses
• A computer virus is a type of malware that works by inserting a copy of

itself onto a computer or device (e.g., smartphone) and then becoming

part of another program.

• It can attach itself to files without the user’s knowledge and duplicate

itself by executing inflected files.

• When successful, a virus can alter data, erase or damage data, create

a nuisance or inflict other damage.

• For example, in a period of five hours in 2000, the “I love you” e-mail

virus infected millions of computers, causing damages estimated at $10

billion.

ii. Worms
• Worms are in some ways similar to viruses since they can replicate

themselves.

• However, unlike viruses that require the spreading of an infected file,

worm such as Code Red, Slammer and MyDoom can spread by themselves

without attaching to files.

iii. Spyware

• Spyware is software installed on an unknowing user’s computer that

gathers information about the user’s activities on the Web (keystrokes,

website visited, etc.) and transmits it to third parties such as

advertisers or attackers.

• Problems associated with spyware include potential privacy invasion,

appropriate of personal information and interference with the user’s

computer operation.

PHR3083 (AB107) 138

iv. Blended threats

• These threats propagate both as viruses and worms.

• They can also post themselves on websites for people to download

unwittingly.

v. Trojan
• A Trojan is another type of malware that usually hides inside e-mail

attachments or files and infects a user computer when attachments are

opened or programs are executed.

• Unlike viruses and worms, Trojans do not reproduce by infecting other

files nor do they self-replicate. Instead, they must be opened on a

computer by a user.

• Some Trojans can work as spyware, while others can display a login or

install screen and collect personal data such as usernames and

passwords or other forms of identification such as bank account or

credit card numbers.

• They also can copy files, delete files; uninstall applications using remote

access programs on the computers and format disks without alerting

the victim.

• One type of Trojan horse is a rootkit. A rootkit takes over a root

(administrator) account and uses its privileges to hide itself.

• Most rootkits find their way into a system though installation or

updating of application software such as word-processing program.

7.2 Legal Requirement of Information Security

Governments, at various levels, in most of the developed countries have enacted

several laws and regulations to safeguard information security and data protection.

PHR3083 (AB107) 139

Some of these legal requirements from Europe and North America are listed below

(Kizza, 2007; Townsend & Bennett, 2003; Wikipedia, 2007):

❖ Personal Information Protection and Electronics Document Act

(Canada): The act was enacted in Canada to support and promote

electronic business by protecting personal information that is collected,

used, or disclosed in certain circumstances.

❖ California Security Breach Information Act, SB 1386 (California,

USA): This law in the state of California requires organizations to notify

customers or employees when unencrypted personal information has been

compromised, stolen, or lost.

❖ Computer Misuse Act, 1990 (UK): The act was proposed to make

computer crime (e.g., hacking or cyber-terrorism) a type of criminal

offence in the United Kingdom.

❖ The European Union Data Protection Directive (EUDPD): This directive

requires that all EU members must adopt national regulations to

standardize the protection of data privacy for citizens throughout the

European Union.

❖ Health Insurance Portability and Accountability Act (USA): This act

requires health care providers, insurance companies, and employers to

safeguard the security of health information. It sets national standards

for electronic health care transactions.

Several best practices have been proposed to ensure that employee data is secured

and employee privacy is protected.

1. Adopt a comprehensive information security and privacy policy.

PHR3083 (AB107) 140

 2. Store sensitive personal data in a secure HRIS and provide appropriate

encryption.

3. Dispose of documents properly or restore persistent storage equipment.

4. Build document destruction capabilities into the office infrastructure.

5. Implement and continuously update technical (firewall, antivirus, anti-

spyware, etc.) and nontechnical (security education, training and awareness)

measures.

6. Conduct privacy “walk-throughs” and make spot checks on proper information

handling.

7.3 Future Trends in HRM

• It is important to remember that some of these trends will also be true for other

countries while others may differ somewhat in terms of specific future trends

PHR3083 (AB107) 141

 within another country or culture. Five trends that will impact HR in the coming

years: -

i. Health Care Questions

- For organizations, health care costs are a growing concern.

- Chief financial officer identified health care costs as the number one

issue facing their organization (Robert Half, 2012).

- Some organization offers multiple health plans, some of which are

available only to highly compensated employees.

ii. Business Intelligence

- HR is under increasing pressure to show that its policies and practices

add value to the firm (e.g. to show positive ROI)

- To address this pressure, HR is increasingly turning to the use of

business intelligence to support complex metrics.

iii. Demographic Workforce Changes

- First, it is becoming more diverse. More women and minorities are

entering the workforce than ever before. For example, nearly 60% of

working –age women are now in the workforce compared to only 40% in

1970 (Bureau of Labor Statistics, 2011).

- Second, there is major demographic shift occurring in the workforce.

Although as recent as a few years ago, there would be upcoming large

retirements of baby boomers from the workforce; more recent data

suggest that baby boomers are postponing retirement.

iv. Growing Complexity of Legal Compliance

- Human resource has always been affected by legal compliance

requirements, but many would say that the pace of regulations

PHR3083 (AB107) 142

 continues to grow. For example, the Equal Employment Opportunity

(EEOC) continues to develop additional guidelines and states continues

to pass additional regulations on issue as varied as hiring practices to

workplace safety.

v. Virtualization of Work

- No longer are employees confined by physical or temporal space.

- Employee can conduct work anywhere and anytime.

- “The virtual workspace “can be defined as an environment where

employees work away from company premises and communicate with

their respective workplaces via telephones or computer devices”

(Lockwood, 2010).

- For example, one of the authors has recently taught a class in which a

student was part of a virtual team. His team consisted of six members

on four continents, none of whom had physically met.

Tips for Effective Virtual Meeting and Management

PHR3083 (AB107) 143

 i. Prepare and distribute agendas; ensure agendas reflect input requested

from participants.

ii. Initiate meetings with “roll call” of all participant; review agenda, meeting

objectives and timeframe.

iii. Identify the key roles of facilitator and scribe.

iv. Position participants in locations “free” of distractions or background noise.

v. Promote climate of collaboration and inclusion; encourage every attendee to

participate and express his or her view.

vi. Encourage participants to effectively use available technology.

vii. Conduct meeting evaluation at the close of the session.

viii. Establish expectation for distribution of the meeting minutes.

ix. Establish “next steps” and make follow-up assignments.

7.3.1 The Future Trends in HRIS

PHR3083 (AB107) 144

i. Bring your own device

• The first trend in technology that will affect HR and HRIS is mobile

computing and “bring your own device” (BYOD).

• The change is a dramatic departure from how organizations have previously

managed their technological infrastructure and presents a challenge for

organizational IT support.

• But, today, employees are more likely to want to use their own personal mobile

devices (e.g., smartphones, tablets and laptop) to work.

ii. Software as a device (SaaS) and the could

• Traditionally, HRIS implementations were large, time consuming and expensive

undertakings. Whether implementing a large – scale system such as enterprise

resource planning (ERP) system focused on a single HR function, an

organization would often with vendors and consultants to purchase and install

hardware and software on its premises.

• This “on-premises “approach to acquiring software was the dominant and often

the only approach available to organizations.

• Traditional software development models are being replaced by on-demand”

software plans, which see the company or customer leasing access to as few

or as many HR functions as it wishes to access.

• This approach to accessing software has been called software as a service

(SaaS). With SaaS, small and medium sized companies are now able to access

HRIS capabilities that were previously only available to large organization.

• The new trend in delivering software to companies is cloud computing. With

cloud computing, HRIS functionality is delivered to companies via the web,

PHR3083 (AB107) 145

 without the requirement of purchasing and maintaining hardware and

software.

• Example of popular could –based tools include i-Cloud, Instagram, Facebook,

Drop box, Gmail and Amazon S3.

iii. Web 2.0

• Refers to a second generation of Web-related services focusing on

creativity, collaboration and sharing in contrast to traditional isolated

information silos.

• With 2.0, user not only access information but also generates, share and

distribute new content.

• Web 2.0 has also encouraged business to promote user collaboration to share

knowledge and to communicate with business partners such as suppliers and

outsourcing providers.

iv. Social networking

• Social networking (SNW) is one of the features of web 2.0.

• Social networking tools such as Facebook, LinkedIn and Twitter have become

important tools for organizations and human resources is not an exception.

• Although many of these networks were originally developed to enhance

personal social connections organization are increasingly harshening the power

of SNW in the workplace.

• For example, tools such a wikis are being used by organizations to harshness

and centralized employee knowledge.

v. Enterprise portals

PHR3083 (AB107) 146

 • Is the general term used to refer to the ways in which individuals can interact

with each other.

7.4 Future Trends in Workforce Technology

• The many future trends in the HRM, IT/IS and HRIS fields can easily lead to

confusion for organizations, management, vendors and employees.

• Carden (2009) proposed technology should serve strategic goals, the

increasing competition by organizations to improve their profitability has

often led to the conclusion that new technology will solve these issues, but

the reality is more complex than that.

• Organizations that are most successful are those who are able r=to leverage

the technology that most closely links to a strong business and HRM strategy.

Henson (2005) had made the following predictions about the future of workforce

technologies:

1. The technology of the future will be both collaborative and connected.

2. There will be increased and more widespread use of intelligent self-service

via employee portals.

3. There will be increased use of HR scorecards coupled with workforce analytics

ands decision trees.

4. There will be increases in process automation and the use of online analytical

processing (OLAP) for processing raw data.

5. Faster and cheaper access to accurate real-time HR information will be

possible due to advancements in communication tools.

PHR3083 (AB107) 147

 6. The worker of the future will be able to work anywhere, anytime and on any

device, which not only help work-life balance but also turn the workplace into

a 24/7 cycle.

References

Michael J.Kavanagh, Mohan thite, Richard D. Johnson (2012) Human Resource

Information System (second edition), Sage Publication.

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