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E Evolution Dynamic of Digital HR System
E Evolution Dynamic of Digital HR System
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Gentlemen, we have an appreciated business history of more than half a century, and the Shumaila Naz is PhD
business world around us is changing day by day. To survive in this cut-throat competition, Scholar at the
we must discard our traditional approach and update ourselves in line with the best Department of
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DOI 10.1108/EEMCS-10-2014-0251 VOL. 8 NO. 1 2018, pp. 1-23, © Emerald Publishing Limited, ISSN 2045-0621 EMERALD EMERGING MARKETS CASE STUDIES PAGE 1
1. Power division: Since 1956, the company had manufactured a great number of
transformers, energy meters, switchgears, kiosks, compact stations and shunt
capacitor banks. PEL continually contributed towards the advancement and
development of the engineering sector in Pakistan. The PEL Power division was one of
the major electrical equipment suppliers for utility and industry.
2. Appliances division: The company ventured into the home appliances market in 1981
as one of the leading manufacturers of refrigerators, air conditioners, deep freezers
and similar products. Their products received a great response from the local market,
which encouraged the company to multiply its production in the subsequent years.
Today, PEL had become a preferred choice for household items. Its products were not
only in great demand in the local market but the company had also started exporting
its appliances overseas.
In 2010, the manufacturing units of PEL were situated at two facilities in Lahore, Pakistan
with an area of 1,033200 sq ft at 14-km Ferozepur road Lahore and 614,252 sq ft at 34-km
Ferozepur road Lahore. PEL also had the privilege of getting its equipment approved and
certified from well-reputed international accreditation bodies including, ISO 9,001:2008
(Quality Management System Certification), ISO 14,001: 2004 (Environmental Management
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System Certification), OHSAS 18,001: 2007 (Health & Safety Management System
Certification), CE Mark (Product Certification) (http://pel.com.pk/index.php/about-us/). The
CE Mark for power products enabled PEL to export their products to the European Union
and other developed countries. PEL had made various agreements/collaborations with
recognized brands to achieve tremendous growth and manufacture high-quality products
(Exhibit 1) (http://pel.com.pk). Despite the economic recession at both micro and macro
levels and the rapid shortfall in electrical energy resources in the country, the annual
turnover of the company had been growing consistently at a cumulative average growth
rate of more than 18 per cent annually for the past 12 years. The company’s business had
grown substantially from PKR 3.16 billion in 2001-2002 to PKR 20.29 billion in 2012
(Exhibit 2). PEL was successful in attaining a high market share in both the Appliances and
Power division (Exhibit 3). PEL had a large dealer network throughout Pakistan with more
than 1,600 dealers spread across the country.
PEL received the 4th Health and Environmental National Excellence Award 2008 for
effective Health, Safety & Environmental performance. The award was offered by “Help
International Welfare Trust, Pakistan” in collaboration with the Corporate Social
Responsibility Association of Pakistan (ACCA-WWF PERA, 2008). In 2009, PEL received
the 4th CSR National Excellence Award and the 6th Annual Environmental Excellence
Award. In 2010, it was awarded the 5th CSR National Excellence Award (Annual report of
PEL, 2013). Engineer day, consisting of 500 members, was celebrated by the institution of
engineers as a way of recognizing the importance of engineers’ contribution to society. At
this occasion, the company was awarded for its excellent contribution to the power industry
(Hamara Pel, 2016).
The company began with 250 employees in 1956, and this increased to more than 5,500
employees in 2012. Since 1956, PEL had adopted a functional organizational structure.
When it ventured into the home appliances market in 1981, PEL redesigned its
organizational structure into a divisional structure (Exhibit 4). The present PEL workforce
could be classified into three broad categories:
Non-executive grades ⫽ 4,000 approx
Executive grades ⫽ 1,200 approx
Managerial grades ⫽ 250 approx
Total strength ⫽ 5,500 approx
about that employee. In such a scenario, any anomaly could easily be overlooked due to
the paper and file system malfunctioning. He further shared a critical example of one of the
employees, named as Mr Muhammad Aslam (DTR After Sales Support Executive), who
should have retired from his job at 60 years of age on 19 January 2005. However, this date
went unnoticed, and the gentleman continued serving the company and drawing his salary
till the next set of appraisals at the end of 2005. When he was asked about this issue, he
argued that “this was not my job to go and inform my company as to when I have to be
retired”. This and similar incidents which occurred over time emphasized the need for an
intelligent formal system to be established.
An autocratic culture had emerged in the departmental proceedings where all issues and
affairs were to be routed through the head of department. Administration at PEL adhered
to rigid rules, and the administration manager did not appreciate employees who directly
contacted him for HR-related issues. Consequently, the departmental hierarchy became
vertical and bureaucratic in structure. Good personal relations with the senior management
(Admin.) supported the process of problem resolution on a priority basis. Whereas, those
who were not in direct liaison with the senior manager (Admin.) could face many obstacles.
Overall, a dictatorship culture was prevalent in this particular department.
Appraisals and increments were performed on a yearly basis. This was done by sending
employee personal files (comprising employment records and company service history) to
concerned departmental heads and appraisal forms were filled in manually by the HOD
(head of department) for all direct and indirect subordinates. To reduce the workload,
managers often forwarded appraisal forms to their subordinates to write their appraisals
personal profile, tasks achievements and performance. It was more convenient for them to
review, add comments and sign each appraisal form for their juniors. The adjective trait
method was used for appraisals and performance was rated on a Likert scale using three
categories of excellent, good and need improvement parameters. No or little employee
involvement was present in the whole appraisal process, i.e. defining performance roles
and feedback meeting. Afterwards, the files were sent back to administration where payroll
records were updated and increment letters issued. This rigorous process usually took
three to four months to complete.
The flow of said administrative activities was highly disturbed and could not cope with the
growth of PEL when another unit was established. PEL set up Unit 2 at 34-km Ferozepur
Road Lahore for the distribution of transformer manufacturing. Since, the HR executives
faced great difficulty in communicating between the two units due to the large distance of
20 km, Clerks were sent from one unit to another to retrieve employee data (for maintaining
The panic among management personnel led to the decision to make a drastic change in
the HR system. Under the direction of Mr Saigol (Director Operations), the decision was
made, in 2006, to set up an innovative Human Resource (HR) department benchmarked
with international practices. This new formalized HR department was supposed to be
responsible for all white-collar employee affairs. Whereas, the IR&A department was liable
to manage all the blue-collar employees in the company. The PEL HR department now
consisted of a team of HR specialists supervised by a HR Manager (later being referred to
as Head HR). Four different sub teams were developed under the dedicated team leaders.
Young, talented and energetic professionals with excellent academic qualifications and a
background in human resources management, and business studies were hired in these
teams. They were assigned clearly defined job descriptions with a clear hierarchy
(Exhibit 5). These teams were responsible for performing the following key functions of HR
department:
manage future challenges. Buddy employees profited by enhancing their formal network
and knowledge domain, and their leadership potential consequently contributed positively
towards the organization (Hamara Pel, 2016).
The PM team dealt with the performance management system. This team facilitated in
objective settings, appraisals and performance management activities throughout the
factory. The appraisal period followed the calendar year from January to December.
Executives and management grade increments were performance based, under a forced
distribution curve, whereas non-executives grade increments were based on cost of living
adjustments (COLA) as per Government of Pakistan announcements. Employees’
performance was appraised under management by objectives (MBO) method of
evaluation. In MBO, objectives were determined by involving all concerned parties (line
and staff managers) from the planning phase to the implementation phase for achieving
coordination and integration. The MBO technique was not used only due to the
inappropriateness of the informal control mechanism but also due to the increased amount
of work operations and the constant changing environment (Murphy, 1983) faced by the
manufacturing industry. Murphy (1983) suggested MBO should be aligned with the
management system of organization, for example in planning and performance appraisal
systems. Thus, keeping in view, cascaded objectives were decided from a top-down level
at the start of each calendar year. In total, 60 per cent weightage was given to MBO which
consists of key performance indicators (KPIs/KRAs), and 40 per cent was allocated to
adjective traits which consisted of soft skills and competencies. Although this appraisal
provided realistic performance standards and a competency-based framework to measure
subordinates, superiors felt agitated to appraise/score employees manually (Exhibit 6). The
progress against these objectives was recorded and reviewed bi-annually, and increments
were awarded at the end of each calendar year. The company wide first appraisal period
ran from 1st July to 15th July and the second appraisal period from 15th November to 30th
November. The progress against these objectives was recorded by the direct supervising
officer after receiving agreement with the direct reporting employee. Thus, the initiation of
an innovative PM system made the whole process much more transparent. One company
executive, Mr Muhammad Ismail (Engineer Mktg. & Pvt. Sales) said that “The new system
enables me to set my yearly achievement goals at the start of each year hence I know
where I have to focus my efforts and what is expected of me at the end.”
In the period of the “Management of skills” acquiring training played an important role in
human capital development and achieving organizational strategic objectives (Ezzahra
et al., 2013). PEL also realized the importance of training and the L&D team was
applied integrative approach of human resource development (Sablok et al., 2017). PEL
management continued its unceasing efforts to increase the skill level of its employees to
increase performance and designed customized learning interventions. The PEL resource
club comprised an in-house training club and open enrolment programme used as generic
training purpose built programs. For particular performance improvement, then customized
training was conducted. Such types of training created harmony between business
operations and learning programmes. They organized various workshops to nurture
leadership potential in managers. Physical activities were reinforced to enhance trainees’
intellect. The CFO of PEL suggested the objective of training was not to get work done
efficiently but to prepare employees for future challenges in their personal life and
professional career (Hamara Pel, 2016).
The HR Admin team was responsible for grievance handling, policy making, compensation,
health and safety and maintaining employee records. They ensured that systems defined
in HR procedures were effectively implemented. Most of the clerical and administrative
work was performed by this team.
Implementation of HRIS
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An extensive companywide training program was designed for all employees to get
them accustomed to the new software based modules so that they could learn to
perform their activities online. It took around eight months to incorporate all employees
in training incurring direct and indirect costs such as design & development costs,
resource person cost, material cost, infrastructure cost and employees opportunity
cost. All the records related to employee annual competency review, the training needs,
training undertaken, education, skills and experience were maintained by HR. The
records of training needs identified through online annual performance appraisals were
maintained online in PMDP system or in hard copy, (if conducted manually), as
appropriate. The records of trainings conducted by employees were also maintained in
Employee Training Management System (ETMS). An employee might place any
document, certificate pertaining to his work experience or training, in his personal file,
kept in HR department and acquired on his own. In this revolutionary period, all HR
activities were conducted through HRIS which produced following benefits at PEL. This
new system helped HR professionals in knowledge management, operationalize the
information and retrieved knowledge could be used by the employees for decision
making. Through this digitization, HR and IT worked together to leverage technology.
HRIS provided administrative and operational efficiency in compiling HR data (Satav,
2016). Due to the digital system, HR department worked in a paperless environment
with the help of information technology and all of their working data and records were
centrally hosted in digital form at company data servers. Hence all information and
associated reports were merely a click away. Every employee was issued a unique
password protected login to the central server and access to information was granted
based upon the user’s position, job role and responsibilities. Moreover, all attendance,
factory in / out and leave records were also maintained online, accessible through
employee and authorized by supervisor logins. HRIS was helpful in all HR activities,
saved time and overhead costs by applying task mechanization and process
automation and replace the human intervention of HR specialists (Tansley et al., 2001),
and it was user-friendly too. HRIS was used for automation of payroll and remuneration
activities, and to track equal employment opportunity data consequently, it was
supportive in gaining competitive and strategic edge and taking some initiatives. For
instance, an annual internships program was designed to generate potential pool of
eligible candidates for future hiring. University students, who were in their final year/
semester of professional degrees, were given four weeks period internship offers
during summer vacations or semester breaks on a stipend. During internship tenure,
candidates were evaluated for their competences and commitments. High performer
The employees had mixed and divergent views over this new system. The employees who
had been part of both the legacy and new systems viewed it differently. Mr Ejaz Ali (Dy.
Manager Switchgear) opinioned that:
The new system has made my life easier by making all required information pertaining to myself
and my subordinates available online at all times without requesting any other person or
department as we use to do in the past.
On the other hand, Mr Imtiaz Atif (Manager Prod.) had his own views and considered it as
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bittersweet that:
The new HR system keeps the employees busy year round frivolously. Now we have to do the
whole performance monitoring and recording process repeatedly and it has added to the
workload of the supervisors.
Similarly, Mr Shahid Adnan (Manager DTR Design) believed that it was much easier
earlier to sign multiple paper forms in one go as we used to do in the old system. We
are now bound to have access to a company IT network linked computer for each and
every trivial activity.
Mr M. Saigol (Director Operations) Pak Elektron Ltd. (PEL) was apprehensive of this
disturbing situation. He thought that we had invested 85 million rupees to make new
management system efficient and resolve employee complaints on priority. But now even
after providing extensive training, the employees were not taking it seriously and little
transfer of training was observed. On 30 June 2010, he called an urgent and crucial
meeting with senior management and presented his serious concerns regarding the
current dilemma. He felt annoyed and bewildered with the present working environment
and the employee behaviours and attitudes. He hired a third party HR consultant to submit
a comprehensive report detailing why PEL were unable to attain positive endorsement from
employees and could not realize the optimal benefits of the new digital system. Within three
months, after conducting company-wide attitude surveys, an initial draft report was
prepared. The HR consultant assumed that PEL had been facing resistance to change from
employees. He observed that people still preferred the manual system over the digital
system. Not all employees were properly acquainted with HRIS, and there was little transfer
of training. He found that ambiguity prevailed over the realistic objectives of the new
system. Supervisors were more dissatisfied and complained about the digital system. In
fact, the new system challenged the operating structure and policies of all the HR linked
departments. During interviews, employees displayed grievances to the consultant about
the stressful working environment and insufficient management commitment and support.
Keywords: They were irritated because one’s performance was dependent on others’ performance as
Organizational behaviour, departments were interdependent after digitization. The HR consultant further required
Technology transfer,
some time to submit a final report and solution.
HRM,
Training and development, If you were the HR consultant what suggestion would you give to the Director of Operations
Digital HR system, on how to improve the implementation of the digital system and solve employee related
Employee resistance issues. Should he discard the digital HR system?
Annual report of Pak Elektron Limited (PEL) (2013), p. 7, available at: http://121.52.153.178:8080/xmlui/
bitstream/handle/123456789/13925/04-Annual-Report-2013PEL.pdf?sequence⫽1&isAllowed⫽y
Ezzahra, K.F., Mohamed, R., Omar, T. and Mohamed, T. (2014), “Training for effective skills in SMEs
in Morocco”, Procedia-Social and Behavioral Sciences, Vol. 116, pp. 2926-2930.
Hamara Pel (2016), “Official bi-Annual magazine, 5th ed.”, available at: http://pel.com.pk/wp-content/
uploads/2016/04/Humara-PEL-Magazine-PDF-31-March-2016.pdf
Murphy, J.J. (1983), “Reappraising MBO”, Leadership & Organization Development Journal, Vol. 4
No. 4, pp. 22-27.
Posthumus, J., Bozer, G. and Santora, J.C. (2016), “Implicit assumptions in high potentials
recruitment”, European Journal of Training and Development, Vol. 40 No. 6, pp. 430-445.
Sablok, G., Stanton, P., Bartram, T., Burgess, J. and Boyle, B. (2017), “Human resource development
practices, managers and multinational enterprises in Australia: thinking globally, acting locally”,
Education ⫹ Training, Vol. 59 No. 5, doi: 10.1108/ET-02-2016-0023
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Satav, M.R. (2016), “Human resources management and technology”, IOSR Journal of Computer
Engineering (IOSR-JCE), Vol. 1, pp. 55-57.
Tansley, C., Newell, S. and Williams, H. (2001), “Effecting HRM-style practices through an integrated
human resource information system”, Personnel Review, Vol. 30 No. 3 pp. 351-371
Further reading
Oxford Economics (2012), “The digital transformation of people management”, pp. 1-14.
Figure E1
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Figure E2
Figure E3
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Figure E4
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Exhibit 5. HR hierarchy
Figure E5
Corresponding author
Shumaila Naz can be contacted at: shumaila.acadamics@yahoo.com