Encyclopedia of Human Resources Information Systems:

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1 Encyclopedia of Human Resources Information Systems: Challenges in e-hrm Teresa Torres-Coronas Universitat Rovira i Virgili, Spain Mario Arias-Oliva Universitat Rovira i Virgili, Spain Volume I A-H InformatIon ScIence reference Hershey New York

2 Director of Editorial Content: Development Editor: Senior Managing Editor: Managing Editor: Assistant Managing Editor: Copy Editor: Typesetter: Cover Design: Printed at: Kristin Klinger Kristin Roth Jennifer Neidig Jamie Snavely Carole Coulson Ashlee Kunkel, Joy Langel, Larissa Vinci Mike Brehm, Larissa Vinci Lisa Tosheff Yurchak Printing Inc. Published in the United States of America by Information Science Reference (an imprint of IGI Global) 71 E. Chocolate Avenue, Suite 2 Hershey PA 1733 Tel: Fax: cust@igi-global.com Web site: and in the United Kingdom by Information Science Reference (an imprint of IGI Global) 3 Henrietta Street Covent Garden London WC2E 8LU Tel: Fax: Web site: Copyright 2 by IGI Global. All rights reserved. No part of this publication may be reproduced, stored or distributed in any form or by any means, electronic or mechanical, including photocopying, without written permission from the publisher. Product or company names used in this set are for identification purposes only. Inclusion of the names of the products or companies does not indicate a claim of ownership by IGI Global of the trademark or registered trademark. Library of Congress Cataloging-in-Publication Data Encyclopedia of human resources information systems : challenges in e-hrm / Teresa Torres-Coronas and Mario Arias-Oliva, editors. p. cm. Includes bibliographical references and index. Summary: "This work rigorously analyzes key critical HR variables and defines previously undiscovered issues in the HR field"--provided by publisher. ISBN (hardcover) -- ISBN (ebook) 1. Personnel management--data processing--encyclopedias. 2. Information storage and retrieval systems--personnel management--encyclopedias. 3. Management information systems--encyclopedias.. 4. Knowledge workers--management--encyclopedias. I. Torres-Coronas, Teresa, 166- II. Arias- Oliva, Mario, 168- HF554.5.D37E dc British Cataloguing in Publication Data A Cataloguing in Publication record for this book is available from the British Library. All work contributed to this encyclopedia set is new, previously-unpublished material. The views expressed in this encyclopedia set are those of the authors, but not necessarily of the publisher. If a library purchased a print copy of this publication, please go to for information on activating the library's complimentary electronic access to this publication.

3 Topic: Setting New Directions to HRM Functions Human Resources in the Balanced Scorecard System Juha Kettunen Turku University of Applied Sciences, Finland INTRODUCTION Strategic planning is a matter of mapping the route between the perceived present circumstances and the desired future situation. Strategic management adapts higher education institutions (HEI) to their environment including educational policy, local demand for skilled labor, and other factors. The purpose of HEIs is to positively affect the development of society and the local community. The balanced scorecard approach developed by Kaplan and Norton (21, 24, 26) is a framework for the communication and implementation of the strategy. The approach creates a shared understanding of the strategic plan by describing the plan using strategy maps, strategic objectives, measures and target values for the planning period (Niven, 25). The balanced scorecard approach can be combined with other approaches and management tools. The purpose of this article is to report on a development project where the balanced scorecard approach was applied in the management information system (MIS) of an HEI. The MIS integrates the different approaches of management into human resources (HR) planning. It is important that the balanced scorecard approach is supported by the MIS. This is especially critical in large organizations. Many administrative units and organizational levels emphasize the importance of automation enabling management to consistently aggregate the scorecards of lower organizational levels to the overall scorecard. The MIS with a portal is a valuable communication channel, information processor, management tool and the joint memory of the organization. The empirical part of the article describes the MIS of the Turku University of Applied Sciences (TUAS), where the MIS is based on strategic management and the balanced scorecard approach. The system integrates budgeting, action plans, HR planning and quality management. The data warehouse approach is used to capture data from the diverse source systems and to store the data in an integrated database. An MIS portal was developed to support the management process and be open to the personnel of the institution. The portal supports the dialogue and commitment of the personnel to the strategic outlines. The portal is open to management and the personnel of the institution. BACKGROUND Balanced Scorecard Translates the Strategy into Action The autonomy of HEIs has increased. The autonomy emphasizes stronger management and the increasing accountability of institutions to society and other stakeholders. The management of HEIs is acquiring more integrated and strict but at the same time loose forms (Meyer, 22). Analyzes of autonomy and self-regulation in higher education do not, however, provide any specific tools for the management of HEI (Maassen & Stensaker, 23). Strategic management is widely used in the Finnish HEIs (Kettunen & Kantola, 26) and is also a strong candidate for the framework of the management system also in other countries (Bush & Coleman, 2; Middlewood & Lumby, 18). The balanced scorecard has been designed as a mechanism to make the strategic plan more understandable to management and personnel. The approach has been widely used in the private and public sectors. The experiences of many studies testify that the balanced scorecard approach is well suited to a higher education setting and allows the alignment of a wide variety of measures with the unique mission and strategy (Kettunen, 24, 26; Papenhause & Einstein, 26; Self, 23). The balanced scorecard is a useful tool, because it can be used to align the HR and many other management tools with strategic planning (Mouritsen, Thorsgaard Larsen, & Lumby, 25; Rampersad, 25). Copyright 2, IGI Global, distributing in print or electronic forms without written permission of IGI Global is prohibited.

4 The balanced scorecard of the TUAS includes five perspectives: Societal impact: The societal impact perspective includes an objective which describes the institution s outreach and engagement in society and the local community. Customer: The customer perspective includes the objectives of student and employer satisfaction. Customer satisfaction is what essentially all the organizations try to achieve. Finance: The financial perspective describes the objectives of public funding and external income. Internal processes: The internal processes perspective typically describes the sequential internal processes of an organization. Learning: The learning perspective describes the objectives of HR that are drivers for future performance. The achievement of these objectives is required to reach the objectives of the internal processes. In many other organizations the societal impact and customer perspectives have been combined into one perspective. The balanced scorecard helps management to communicate the important objectives to the personnel. The objectives are described by measures. Typically, the management of the organization sets the target values of the measures for the planning period. The HR must be aligned with all the strategic objectives. When the scorecards are planned for all the organizational units the personnel is able to understand the strategic plan and their own role in contributing to the plan. MAIN FOCUS OF THE CHAPTER Balanced Scorecard in Higher Education Figure 1 describes the strategy map of the TUAS. The concept of the strategy map was introduced by Kaplan and Norton (24). The societal impact perspective of the TUAS includes the objectives of regional development and the customer perspective includes the H Figure 1. Strategy map of the TUAS Societal impact Customer Regional development Customer satisfaction Finance Funding from central government External funding Internal processes Innovation process R&D Support processes Support services Learning process Education Human resources Learning Capabilities for R&D Teacher capabilities

5 objectives of customer satisfaction. These objectives can be achieved as a result of the internal processes including research and development, support services and education. The financial perspective includes funding from central government and external funding for research and development and continuing education. The financial objectives are aligned with the internal processes and structures in the budget of an organization. The learning perspective includes the objectives of capabilities for research and development and teacher capabilities. The linkages of the strategy map describe the relationships between the perspectives and strategic objectives. Table 1 describes the learning perspective of the balanced scorecard of the TUAS. The learning perspective includes two objectives describing the core capabilities of the personnel. The objective of the capabilities for R&D is described by the number of licentiate degrees and doctorates which are important for high quality research and education. The objective of teacher capabilities includes the measure describing the share of teachers having the required teacher education. The target values have been set for each year of the planning period. Even though there are many other important characteristics of HR, the balanced scorecard cannot include every important aspect, because the attention must be focused on achieving the most important targets. Table 2 describes the HR plan of the TUAS. It describes the actual and planned development of the labor force, vacancies and labor costs, which are aligned with the internal processes in the budgeting process. The HR plan has also been prepared for each administrative unit of the institution. The HR plan also includes information on the share of absence hours, measures to maintain working ability and the resources and days of in-house training. The HR plan also includes the timetable and plans for how permanent jobs will be created for temporary workers. Detailed plans including personnel development and qualitative indicators are made in the different administrative units. The HR plan includes diagnostic measures, which are vital for success, but are not drivers of strategic success. Diagnostic measures are necessary in the same way as the body temperature and blood pressure of individuals, but they are not the right ones to manage the transformations needed. Table 1. Leaning perspective of the balanced scorecard at the TUAS Actual figures Target values Objectives Measures R&D capabilities No. of licentiate s degrees No. of doctorates Education capabilities Share of teachers with teacher education, % Table 2. HR plan of the TUAS Measures Actual figures Target values Labor force: Labor force at work Labor force, person-years Permanent employees Temporary employees Substitute employees Vacancies: Number of vacancies Open vacancies Labor costs: Labor cost / total cost, % , , , ,

6 Development of the Management Information System The balanced scorecard approach was introduced at the TUAS in 22. The maintenance of the balanced scorecards in the different administrative units turned out to be troublesome. The consistent aggregation of the balanced scorecards to the upper organizational levels and data collection needed automation. In large organizations automation of data processing is necessary. The planning of the MIS started in 24 with the modeling of the entire management process. About 7 concepts were defined at the different organizational levels and a lot of process documents were written. It was obvious that the planned system would provide clear benefits as required generally for development projects of this kind (Galliers, Swatman, & Swatman, 15). It is important that there is a rigorous planning methodology such as the balanced scorecard to communicate and implement the strategic plans as a basis of the management process, because an outstanding strategy is not a random collection of unit strategies but a carefully constructed system of interdependent plans (Collis & Montgomery, 18). It is also important that the management process is developed and described in detail before the planning of the information system (Kettunen & Kantola, 25). The management process includes a sequence of management activities, which includes the objectives, operations, resources and results. The strategic planning produces the objectives, which are placed in the different perspectives of the balanced scorecard. The operations of the internal processes are planned to achieve the desired objectives. The financial resources are allocated in the budgeting process for the operations of the internal processes. The achievement of results is monitored and ensured so that the desired objectives can be achieved within an agreed time and budget. The data warehouse approach proved to be useful to capture data from existing data sources and direct them to an integrated database (Inmon, 16, Guan, Nunez & Welsh, 22). The essential data that supports the management process are no longer acquired arduously from separate data sources or personal files. Before the introduction of the data warehouse, data collection was scattered, unreliable and to a large extent manual. A lot of overlapping data were collected on an ad hoc basis without the documentation of the data collection processes. A new MIS portal was developed to support the management process and for the use of different people in the organization. The portal takes advantage of data warehousing that makes efficient use of the data obtained from the various data systems. The members of the institution have diverse user rights and roles in the interactive tool, which allows different organizational units to draft their strategic plans, action plans, budgets, and HR plans. The action plan also integrates strategic and quality management. The portal is also a communication tool that is used to make the strategic plan understandable to the personnel of the institution. The MIS Integrates Different Approaches of Management The MIS is an electronic platform, which includes strategic plans, action plans, budgeting tools, and HR plans. The MIS also includes information on feedback from students and employers. The TUAS regularly collects course feedback from students and employers represented in the 26 advisory boards of the institution. The MIS also includes information on the internal evaluations of the institutions and the suggestions of external evaluation by the Finnish Higher Education Evaluation Council. The open MIS enables the administrators and the members of the personnel to see how the institution is implementing its strategy and continuously improving its operations. Budgeting is the primary management process in most organizations. The budget has traditionally helped managers with short-term tactical planning and operational details. Managers typically review the operating performance against the budget and take corrective action if necessary during the budget year. The budget should allocate resources to the strategic initiatives to achieve long-term strategic objectives. Operational management is not, however, divorced from strategic management, because the budget is aligned with the strategic objectives of the balanced scorecard. The action plan must identify the strategic initiatives, the units and individuals responsible for the implementation and timetable. The individuals responsible must drill the unit action plan down into more detailed plans and include the actions in their personal workload plans. Typically the workload plans are finalized with the line manager in Finnish educational institutions. The action plans of the operational units and the individual workload plans must be aligned with the internal processes perspective of the balanced scorecard. H

7 The HR plan should direct an increasing amount of investments in human capital, because the HR is critical to organizational success in a knowledge economy. If resources are not directed towards the drivers in the learning perspective of the balanced scorecard, the other objectives will remain distant goals to which the organization is not committed. The advantage of the balanced scorecard approach is that the personnel can see how investments in human capital can help the organization to achieve its strategic objectives. FUTURE TRENDS The monitoring of the action plans and the budget is part of the periodic review process of management. The administrative units of the TUAS report on the achievements of the measures and targets three times a year. The TUAS has six educational departments, a continuing education centre and ten shared support units. All the administrative units have their own balanced scorecards, which directly contribute to the overall balanced scorecard of the institution. The achievement of the target values can be monitored using the MIS. The objectives include 37 measures with target values for the planning period. The measures and targets are updated annually and agreed on in the internal target discussions. Obvious future trends are that the number of data sources will increase in the data warehouse and more data will be collected from outside the organization. The information environments of the knowledge society will be open and dynamic. Networking with other organizations requires dynamic information environments which provide two-way access to shared information. Weak and strong signals are derived from the changes of the environment. The organization must match the resources of the organization to the changing environment in the strategic planning. CONCLUSION This article shows that a MIS with a portal can be used to integrate the different approaches and tools of management. An advantage of the electronic platform is that it supports the management process at all organizational levels and provides a framework for consistent future planning. HR planning can be aligned with strategic management, budgeting, action plans and quality management. It also turned out that the balanced scorecard approach is a useful tool when the different approaches of management are integrated into an information system. Management in a knowledge intensive organization requires software and controlled IT architecture. The data warehouse approach collects data from various data systems such as student administration, personnel management and financial management systems. The data warehouse provides a centralized database that integrates data from the diverse data sources. It integrates large amounts of data needed in the management process and statistical purposes. The integrated approaches of management and the open MIS create strategic awareness among the members of the organization and align the strategic objectives of the different administrative units. The integration and alignment of plans help management to create a shared understanding among the personnel about the efforts and steps needed for change. The MIS provides a system for the exchange of knowledge within the organization. It also stimulates dialogue encouraging innovations and reciprocal open discussion about strategic objectives. REFERENCES Bush, T., & Coleman, M. (2). Leadership and strategic management in education. London: Paul Chapman Publishing. Collis, D., & Montgomery, C. (18, May/June). Creating corporate advantage. Harvard Business Review, Galliers, R. D., Swatman, P. M. C., & Swatman, P. A. (15). Strategic information systems planning: Deriving comparative advantage from EDI. Journal of Information Technology, 1(3), Guan, J., Nunez, W., & Welsh, J. F. (22). Institutional strategy and information support: The role of data warehousing in higher education. Campus-Wide Information Systems, (5), Inmon, W. H. (16). Building the data warehouse. New York: John Wiley & Sons.

8 Kaplan, R., & Norton, D. (21). The strategy-focused organization. Boston: Harvard Business School Press. Kaplan, R., & Norton, D. (26). Alignment: using the balanced scorecard to create corporate synergies. Boston: Harvard Business School Press. Kaplan, R., & Norton, D. (24). Strategy maps. Boston: Harvard Business School Press. Kettunen, J. (25). Implementation of strategies in continuing education. The International Journal of Educational Management, 1(3), Kettunen, J. (24). Bridge building to the future of Finnish polytechnics. Journal of Higher Education Outreach and Engagement, (2), Kettunen, J., & Kantola, M. (26). Strategies for virtual learning and e-entrepreneurship. In F. Zhao (Ed.), Entrepreneurship and innovations in e-business: An integrative perspective (pp ) Hershey, PA: Idea Group Publishing. Kettunen, J., & Kantola, I. (25). Management information system based on the balanced scorecard. Campus-Wide Information Systems, 22(5), Maassen, P., & Stensaker, B. (23). Interpretations of self-regulation: The changing state-higher education relationship in Europe. In R. Begg (Ed.), The dialogue between higher education research and practice (pp. 86-5). Dordrecht: Kluwer Academic Publishers. Meyer, H. D. (22). The new managerialism on education management: Corporatization or organizational learning? Journal of Educational Administration, 4(6), Meyer, M. W. (22). Rethinking performance measurement: Beyond the balanced scorecard. Cambridge, UK: Cambridge University Press. Middlewood, D., & Lumby, J. (18). Strategic management in schools and colleges. London: Paul Chapman Publishing. Mouritsen, J., Thorsgaard Larsen, H., & Bukh, P. N. (25). Dealing with the knowledge economy: Intellectual capital versus balanced scorecard. Journal of Intellectual Capital, 6(1), Niven, P. R. (25). Balanced Scorecard diagnostics: Maintaining maximum performance. Hoboken, NJ: Wiley. Papenhause, C., & Einstein, W. (26). Implementing the balanced scorecard at a college of business. Measuring Business Excellence, 1(3), Rampersad, H. K. (25). Total performance scorecard: The way to personal integrity and organizational effectiveness. Measuring Business Excellence, (3), Self, J. (23). From values to metrics: Implementation of the balanced scorecard at a university library. Performance Measurement and Metrics, 4(2), KEY TERMS Balanced Scorecard: A framework for the communication and implementation of the strategy. The balanced scorecard approach translates the strategy of an organization into tangible objectives and measures and balances them typically into four different perspectives: customers, financial outcomes, internal processes, and learning. Data Warehousing: The process of capturing data contained in the various operational systems of an organization. The data from external sources can optionally be added to the data warehouse and utilized for analysis and decision-making purposes. Diagnostic Measure: Signals about organizational health and represent the important dimensions of performance in the same way as body temperature and blood pressure of individuals. They are not strategic measures used to manage the transformations to achieve strategic objectives. Management Information System: A proper management information system presupposes modeling the entire management process and tailoring all the necessary components of the information technology support system to meet the needs of the organization. The management information system should include a description and measures as to how the strategic objectives will be achieved. H

9 Management Portal: The management portal is a management tool to be used by managers and other members of the organization. Other stakeholders can have reports produced in the portal. Strategic Management: Strategic management is a matter of bridge building between the perceived present situation and the desired future situation. Strategy implies the movement of an organization from its present position, described by the mission, to a desirable but uncertain future position, described by the vision. Strategy Map: The concept of the strategy map is used to describe the strategy. The strategy map is a visual representation of the cause-and-effect relationships among the objectives of an organization s strategy and a great insight for executives and stakeholders in understanding the strategy.