HR Administrative Approaches and Transactional Performance Analysis

This report provides an in-depth analysis of four key HR administrative approaches: self-service portals, shared service centers, HR outsourcing, and offshoring. It delves into the theoretical underpinnings of each approach, focusing on resource-based and transaction cost theories to explain ho...Read More

ADMINISTRATIVE APPROACHES
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Introduction
Human resource related administration is one of the most important areas for the development of
an organization. For that reason, employers and managers adopt various strategies and theories
that help them improving their human resource administration in a systematic and hassle free
way. Human resource administration refers to the overall management system in an organization
that involves a holistic experience experienced by the human resource of the organization. This
human resource includes all those who work in the organization. Generally, the human resource
administration system is directed by some HR professionals hired by the employers in an
organization so that the HR can work systematically and efficiently and serve the organization
with its maximum potential. There can be various approaches for creating and implementing an
efficient human resource team in a firm. This study has focused on four specific human resource
administration approaches that can be helpful for an organization to enhance its transactional
performance. These approaches include self service portal, shared service centre, human resource
outsourcing and off shoring. Usefulness and challenges of all these approaches have been
discussed from the point of view of both resources based and transaction cost theories in this
study.
Administrative approaches
Human resource approaches are very important in order to enhance the performances of the
employees, to maintain the employee relationships, to provide job satisfaction to the employees
and so on. There can be two kinds of approaches such as the traditional approach and the modern
approach. However, the purpose of both these Approaches is to come up with strategies for
professionally facilitating functional activities in an organization. In this age, most of the top
companies prefer using those strategic approaches that include any kind of technological support.
Small and medium sized organizations also prefer technological approaches as they are generally
less time consuming and affordable.
In this regard, an understanding of HRIS or the Human Resource Information System is relevant.
HRIS refers to a kind of juxtaposition and blend of information technology and human resource
which helps the human resource processes and functions to run using the electronic media
(Nagendra and Deshpande, 2014). There are various kinds of software used by many firms that
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solely work as human resource software. One of the most important uses of HRIS is that single
software can handle many aspects of human resource without taking much time and effort. The
use of these software or applications Are generally easy to use both for the employees and the
employers or managers (Dery et al. 2013). In this study, both traditional and technological
human resources Approaches have been discussed as both have their own Advantages and
disadvantages. The usefulness and potentials of the approaches depend mainly on the type and
scope of the organizations.
Self service portal
Self service portal or HR portal is a medium which connects every significant human resource
activities together for obtaining useful elucidations. This is mainly an employee friendly secure
portal that works in order to empower the workers by giving them the control of what they do
both as an individual employee and also as a human resource team (Weisberger and Binder,
2019). These portals help reducing the hectic paper work related to human resource
administrative management using internet and other technological media. The use of these self
service portals have been increased since the time from when the companies started giving heed
not only to employee performances but also to their well being as well.
These self service portals have many advantages especially regarding resources and economy.
As mentioned earlier, this is an one stop solution And replacement for the traditional Approach
where a number of resources needed to be sued such as paper work, transfer of data from one
data storage to Another, different employees hired solely for dealing with the different levels of
functional Activities of the workforce of an organization and so on (Scherer, Wünderlich and
Von Wangenheim, 2015). It has been seen earlier that employees used to spend a lot of time
gathering important data which ultimately affect their productivity. On the other hand, the
traditional approach also imposed the utmost responsibility to the managers of the human
resource team for handling employee data, giving them pay checks, storing multiple records of
their performances and so on.
Self service portals allow the employees to be aware of their work individually and through an
internal management (Catoe et al. 2019). In other words, the decentralizing of the human
resource activities can be done through the implementation of this HR approach. According to
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the transaction cost theories, the overall transaction cost arises when an organization hires a
different person or agency to manage a particular work without doing it using internal
employees. From this theoretical point of view, self service portal is one of the most useful HR
approaches that have the ability to lessen the transaction cost as it works through internal
management run by the employees. Resource based theories explain how an organization, which
utilizes minimum resources effectively, profits consistently (Meijerink, Bondarouk and Lepak,
2016). Using self service portal allows the HR tasks to be divided among each and every
employee thereby decreasing the load of centralized HR activities.
It is true that this approach simplifies the HR administrative management. However, it may
complicate the entire HR functionality if the organization does not train the employees to learn
the usability of these portals properly. On the other hand, a continuous internet streaming is
mandatory for a proper working of these portals as it runs paperless. Thus, an organization
without advanced trainers and technicians can fail in utilizing the facilities of this approach.
A shared service centre
Shared service centre refers to a kind of agency giving shared functions in a company that helps
in executing and managing particular official activities including human resources, security, IT
and so on. This kind of human resource administration approach generates as an advanced level
of the traditional corporate services where all the organizational human resource activities are
handled or directed by some separate entities working as corporate governance (Weeks, 2013).
In other words, a shared service centre works collaborating with a multiple unit company to
provide value based services on different levels. These centres are bound to the organizations by
a service level agreement or SLA.
The purpose of using these centres is generally to decrease the transaction money spent on
decentralization. On the other hand, many organizations use shared service centres for enhancing
the organizational quality and productivity of the employees as well. Shared service centres can
be seen as different from the self service portals as per their theoretical approaches (Ulrich and
Dulebohn, 2015). Self service portal supports the fact that distributing the HR activities to the
employees themselves will help them control and be updated about their productivity,
organizational functions, HR activities and performances.
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On the other hand, shared service centres support the fact that using a different centre will be
helpful for the employees to focus solely on their performances and not on the HR activities
(Albrecht et al. 2015). So, it can be said that this approach helps in centralizing the human
resource services while self service portal approach decentralizes the HR activities. This
approach has many functions such as reducing the budget allotted to the HR department of an
organization, enhancing the human resource productivity, working towards customer care and so
on (Mezihorak, 2018). For example, a big company, having different subsidiaries, can hire one
single human resource department for handling all the human resource activities in all the
subsidiaries.
The implementation of this approach seemed to be impractical and difficult until the
technological era took over. Now, this approach is implementable by using internet and other
technologies in connecting the HR functions of all the subsidiary firms of big organizations
(Crump and Peter, 2014). On the other hand, the complications of overlap can be solved in the
situations where two or more companies or organizations merge together. This approach is very
much recommended from the transaction cost theoretical stand point as it helps in maintaining a
minimum cost used in the human resource administration. This approach can also be helpful for
growing organizations that can save both resources and money by implementing this HR
approach where a centre works to advocate the HR team by taking some of the important HR
responsibilities.
However, this approach may bring negative impacts as well as shared service centre may help
one part of the organization but not all of them (Barjaktarović, Stefanović and Đukanović, 2017).
The one directional tendency can thus be negative in specific organizational situations as well. In
that case, the aim of reducing the cost would not be successful as different teams would then
need to take the responsibilities that the shared service centre fails to achieve.
Human resource outsourcing
Human resource outsourcing is a HR administrative approach that not only focus on the HR
transactional activities but also on coming up with different strategic plans to deal with the issues
of cost and resources of an organization. According to Butler and Callahan (2014), human
resource outsourcing refers to a human resource approach that tries to manage and reduce the
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costs and utilize the available resources so that the organization profits and grows sustainably.
However, this approach requires a third party for handling the HR activities of a company. This
third party is efficient in dealing with HR issues and tasks and also in coming up with sustainable
organizational plans (Sako, 2014). Although this sounds to be costly but it can actually reduce
the costs as the HR tasks are outsourced by human resource professionals who knows how to
utilize available resources and budget allocated for the human resource team in a company.
On the other hand, these HR firms simultaneously handle the human resource administrative
tasks of various companies that automatically decreases the cost spent on them. However, most
of the companies give some of the important HR tasks to these third parties while self manage
rest of the human resource tasks due to many issues such as privacy issues and so on (Caruth,
Haden and Caruth, 2013). One of the most important advantages of using this human resource
approach is to control and the fix the issue of employee turnover. This approach can be very
much fruitful for the employees as they can get an advanced and professional level guide from
these third party associates on the areas like training, communication, upgraded information and
so on.
However, this approach has its sets of disadvantages as well. One of them is the detachment of
these third parties from the organizations that hire them for human resource outsourcing. Thus,
most of the time, these HR firms fail to grasp the idea of how an organization works based on its
own culture and ethics (Ee, Halim and Ramayah, 2013). It ultimately affects the overall human
resource administration. Apart from this, there is a risk of private data leak through these third
parties both deliberately and accidentally. This can seriously impact the sustainability of a
company. In order to both utilize this approach and to deal with the disadvantages at the same
time, the organization needs to first understand own organizational culture, aims and outlooks so
that they can help the third parties understand organizational perceptive.
Off shoring
Human resource off shoring is very much related to the approach of human resource outsourcing.
However, off shoring is a more umbrella term which includes approaches like human resource
outsourcing. In this approach, companies shift some of their organizational tasks to another
country. These organizational tasks may include processes like manufacturing, accounting and
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human resources (Tate and Bals, 2017). In other words, this approach supports the fact that a
company can save a lot of resources and labour cost by relocating some of the costly
organizational tasks to other countries. This approach is also recommended for the companies
that lack a regulatory environment which they can get in another country of their choice where
they want to relocate their businesses.
This approach was non-implementable in the age when technology did not yet come to its
matured level. It was also used to be believed that organizational processes like human resource
administration can only be done by the team physically present in the organization (Manning,
2014). However, now these processes can be handled from overseas and the communication
between the off shored and the original company can be strengthened also through the digital
media. The most common off shored business process is human resource and the reason is very
obvious that is the hope to get labours at a lower cost.
This approach has more disadvantages than its advantages not for the businesses but for the
employees. This happens because in this approach the companies give both responsibilities and
jobs to people of other countries. For that reason, the people of the home country lack the
opportunities of working in their own countries. On the other hand, the economic growth of the
home country also suffers. Apart from that, the companies may also suffer a lot if they off shore
important processes like human resources. This is because it may happen that the countries with
cheaper and lower cost human resources can give lower level services that ultimately affect the
brand value of the original company.
VRIN and Transactional Cost analysis
Barney’s VRIN talks about a resource based approach suited for any kind of company that look
out for effectively utilize the available intangible and tangible resources. According to this
approach or framework, a company can highly benefit by being competitively advanced from the
other companies in the market (Dutta, 2013). This framework can be used by the companies to
analyze the worth of their internal resources. Thus, it can be said that this framework can also be
used to analyze whether the above mentioned HR approaches can be the most beneficial for their
firm.
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On the other hand, Coase’s Transaction Cost analysis is another tool for analyzing all kinds of
transactional activities where a company invests its capital. The purpose of using this tool is to
minimize the transactional cost as much as possible in order to sustainably run the company (Lai
and Lorne, 2014). This tool can be very helpful in analyzing which of the above mentioned
approaches are best suitable for lowering the transactional cost as per the needs and objectives of
a firm.
Conclusion
The study has focused on a detailed discussion on the theoretical basis for the four human
resource administration approaches such as self service portal, shared service centre, human
resource outsourcing and off shoring. Both positive and negative sides of all these approaches
have been mentioned here so that the companies give heed to all of them before planning to
adopt any one of them for their firms. On the other hand, two frameworks have been explained
here namely Braney’s VRIN and Coase’s Transaction cost analysis tool. These tools have been
recommended for the organizations in order to analyze the probable effectiveness of the four HR
approaches before adopting them.
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