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3.0 from 42 votes

Effects of E-Business on Human Resource Functions

Date: July 1 2005

Master''s Thesis

Effects of E-Business on Human Resource Functions

Abstracts: new Human Resources consulting industry is on the rise.   Management decisions about Human Resource functions can affect the way business is done.   The inverse is also true -- the way business is done can affect Human Resource decisions.   This paper explores changes in the way Human Resource functions are performed in the advent of high technology advances in conducting business processes over high-speed communications channels, termed e-business in today´s market.   A survey of Jacksonville, Florida, Human Resource professionals identified the services they conduct internally, contract outside sources to complete, or perform by using web-based applications as a result of e-business advantages.   Findings of statistical significance indicated within 95% probability of success which areas of HR service will match the needs of the local business community.   This study found statistically significant results in four Human Resource functional areas:   1) Trend to do e-business in the overall company strategy; 2) Employment candidate screening; 3) Rarity in performing labor negotiations; and 4) Facilitating training.   From the data discovered in this study, management futurists can predict which areas to focus energies for highest probability of success in strategic Human Resource planning.

Situation Analysis

Management consultants and external organization development specialists offer the gamut of general training from specific technical skills instruction to executive development.   Recruiting specialists have all but replaced in-house employee screening and hiring functions in many market segments.   Mandated compliance monitoring for things such as diversity awareness, harassment complaint procedures, safety program and instruction oversight are migrating to large service providers external to the client organizations.

Internet Service Providers are now commonplace for global business-to-business clients as well as for individual consumers.   Sales of products and services previously relied on warehousing, marketing middlemen, and third-party channels of distribution to meet end-user needs.   E-business, conducting commerce over electronic communications modes, has led to changes in traditional product flow.   These fast paced operations have also dictated the way organizations manage their personnel needs.   Outsourcing services such as administering payroll, insurance, hiring, and corporate training is commonplace.

As e-business increases, Human Resources functions will evolve from on-site providers under a company umbrella to employing outsourced contracted consultants who offer specialized services to many organizations.   While such a trend may be developing, no singular clearing house provider of HR services has emerged.   Few HR services providers use scientific methods to identify the real HR needs in the wake of changes resulting from increased e-business practices.


This study was limited to only a small sample of organizations conducting business in Jacksonville, Florida.   There is no attempt to generalize findings to represent Human Resource (HR) practices of businesses elsewhere.   There is no best practice right for all organizations at all times.   The intent is to show a general trend and one possible avenue for determining the needs of a potential target market for contract HR service providers.


More than a decade ago, Kleingartner & Anderson (1987) predicted high technology advances would change the skill levels needed for future workers and the demand for part-time work in an unstable environment due to ever-changing training demands.   The authors´ prediction correctly identified modern issues of skill set obsolescence, international competition and creative benefits management efforts to retain qualified employees.   Their book correctly predicted increased needs for HR departments to provide training, with an estimated five-year half-life of a professional education.

Also in 1987, Manzini & Gridley envisioned an information system where managers would have terminals with remote access to several fundamental HR business function models that would empower HR managers to participate in strategic planning for the quantity and quality of staffs needed to meet the ever-changing technology advances. The only difference between this 1987 futuristic view and today´s reality is the connecting lines can be continents apart with each inputting application an independent e-business provider.

The Industrial Revolution, especially the railways, transformed society according to a June 2000 article in Financial Director (UK PLC´s Board).   Similarly, a current trend to conduct business over high-speed communications channels requires a completely new attitude toward employees.   A faster-paced decision-making process is needed to offer unique benefits, flexibility and attractive compensation to keep talent, develop technology, and transition skills to e-business.

The technology that allows mass changes also brings the need for continuous organizational changes.   We see a new business concept of performing HR functions for smaller organizations across international boundaries.   Employee screening, database management, reviews for job postings, payroll, assignments, absences, health & safety, business analysis, pension planning, employee relations and training applications serve remote clients who have grown beyond having their own internal staffs to do these jobs.

According to UK PLC''s Board (June, 2000), the answer is through information flow -- the ability to capture and continuously update the intellectual capital of an organization.   Companies engaged in e-business are faster moving, take greater risks and offer different rewards than traditional companies.   In his May 1999 article, Dr. David Ripley suggests a systems perspective to look at the environment in which people work.   That is, to look beyond "fixing" the employee with training or discipline.   Instead, Ripley suggests using Tom Gilbert´s Behavior Engineering Model by looking at six factors:

·               Information - most affected by e-business through direct links to the CEO and ultimate client with virtually any level employee

·               Resources - The best welder can´t weld without a torch.   In today´s e-business environment where intellect is the main work product for most of the workforce, the capability to make the link is just as critical.

·               Incentives - Probably the most unchanged, yet still complex challenge in identifying rewards for good performance

·               Skills & Knowledge - in e-business can include learning assessments and interventions delivered directly to the individual

·               Capacity - This is the ability of the hired person to perform their expected duties.   In e-business, this can be facilitated by resume scan and search applications and other HR management information systems.

·               Motivation - As unchanged as incentives, the recommended solution is to focus on removal of barriers to performance.

Dr. Boyett (May, 1999) says work groups will be much smaller and job security will disappear, leaving less than 50% permanent employees.   The remainder of the workforce will be part-timers, temporary employees or contractors who will stay together for hours, days, weeks, months or maybe years.   Citing US statistics, Dr. Boyett says the "temp" workforce grew 240% from 1984 to 1994.   In 1997, the global outsourcing market was $146 billion, an estimated $235 billion in 1999, and expected to double in the next year.   Dr. Boyett concludes, "Many HR departments are moving from role of provider of services to contractor, coordinator, and helmsman to a network of external providers."

Charles Handy, author of Age of Paradox, calls this a "virtual department."   Resource planning and recruitment are the most affected by e-business.   The rapid changes required in high technology, which include any form of e-business, creates a constantly changing workforce.   Changes in recruiting efforts are second only to changes requiring cross training and corporate to educational long-term relationships.   The moniker   "Learning Organization" itself is an e-business term as companies strive to keep abreast of changes.   Smart software for resume searches, skills matching, and Internet-based training are becoming the norm.

Research Findings and Analysis

The 1987 references predicted a trend to use outside providers for HR functions.   It is noteworthy that the respondents indicated only Employee Assistance Programs are being provided by more outsourced providers than internal sources (61%).   Executive Development is provided equally by internal and outsourced providers (also 61%).

It is also noteworthy that the standard deviations (above 2.2) for the survey questions asking subjects how often their organizations performed resume management and payroll functions were the highest of all the questions.  High standard deviations indicate the least concurrence on the part of the respondents.   These functions are also among the functions most touted in the secondary research as having greatest potential for growth in web-based service applications.

Concerning the span in types of HR functions, the survey indicated every respondent organization is using web-based computer applications for at least one HR function.   The highest incidence of this was found in three areas: job posting, payroll and instructional design functions (each area over 30% of the respondent organizations use web applications).

The highest incidence of using outside providers was for administering benefits programs (44%), providing executive organization development and employee assistance programs (61% each).

There were only four questions that were found to have a statistically significant difference compared with the middle of the scale:  

ø           Trend to do e-business;  

ø           Frequently perform candidate screening;  

ø           Rarely perform labor negotiations; and

ø           Facilitating training.

Of the four grouped main categories (Recruiting, Employee Relations, Compensation, and Training), Recruiting results were consistently higher in reported use of web-based applications (average 29%).   Training category results also indicate high use of the web (22.3%).

Conclusions and Recommendations

Steve Alexander (June, 2000) sums up the untapped potential of remotely accessing application service providers´ software over "virtual private networks" as the Next Big Thing in business evolution "which will fundamentally change the way a lot of stuff gets done."

·               Recommendation: Mr. Alexander´s business evolution is upon us and the astute Human Resources futurist will take advantage of every opportunity to maximize efficiency using e-business channels to develop and execute their corporate strategic plan.

In April 2000, Lin Grensing-Pophal wrote ten tips for e-business managers for employees working from home, or telecommuters.   It appears these rules would adapt well to any form of business process conducted over the Internet:

1.           Have Clear Guidelines - include working hours, availability, expected reports, equipment or supplies provided, safety issues, training expectations and performance expectations.

2.           Relationship ground rules - overtime issues, flexibility in hours, framework for communications with coworkers, clients and managers; confidentiality.

3.           Training - include opportunities for those working in the office, expectations for system upgrade and continuing education programs.

4.           Expectations - format, frequency and quotas for deliverable products.

5.           Feedback - frequent and constructive.

6.           Communicate - use all communication tools to reinforce positive behaviors; respond to unfavorable performance immediately

7.           Maintain company involvement - include off-site workers in project teams and promotions

8.           Listen - good advice for all managers.

9.           Provide opportunity for personal growth - encourage membership in professional organizations, give assignments that challenge previous skill levels, offer advancement and include telecommuters in committees.

10. Know when to "call it quits" - recognize not all workers, not all business relationships and not all tasks can be equally shared across distances

Findings of statistical significance indicate a general trend that may later lead to increased use of the Internet to conduct business.   This study found statistically significant results in four Human Resource functional areas:

1)   Trend for e-business in the company strategy  

2)   Employment candidate screening  

3)   Rarity in performing labor negotiations  

4)   Facilitating training.  

Organizations using web-based applications to post job openings comprised the highest use of e-business in the Jacksonville study.   Training functions overall posed the greatest range of using internal Human Resources staffs, outsourced providers and web-based services.

  • Recommendation: From this study methodology, management futurists can predict which areas to focus energies for highest probability of success in strategic Human Resource planning.   In rank order, maximize use of recruiting and web-based training functions, look for ways to employ web-based applications to administer Employee Assistance Programs and other employee benefits, employ outside consultants for Executive Organization Development planning and interventions, and equip internal HR professionals with web-based tools for conducting labor negotiations.

Research from 1987 (Kleingartner, Anderson, Manzini & Gridley) correctly predicted ever-changing skill levels due to technological advances in the workplace.   Over three-fourths of the subjects in the Jacksonville survey reported training is done frequently.

  • Recommendation: Use continuing education and recertification programs to keep the workforce current on business skills and technological advances.   Training incentives and tuition reimbursement are key ingredients of what Dr. Boyett (1999) called "cool" endeavors to get and keep the very best employees.

High standard deviations for the survey responses for resume management and payroll functions indicate the least concurrence on the part of the research subjects.   These functions have the greatest potential for growth in web-based service applications.

·               Recommendation: Continue current practices to have outside sources provide payroll and head hunting.   However, consider expansion into web-based providers for these routine administrative functions to free the human capital for profit generating activity.



Alexander, S.   (2000, June 5).   New outsourcing; Saving companies money by renting business software from application service providers rather than licensing it from software companies will be promoted at the Strictly eBusiness Solutions Expo.   Star Tribune (Minneapolis, MN).

Boyett, J. H., Ph.D. & Boyett, J. T.   (1999, May).   Human Resources most effective practices across best companies.   PeopleSoft white paper series.   Retrieved June 9, 2000 from the World Wide Web:

Grensing-Pophal, L.   (2000, April).   10 Tips for managing telecommuters.  SHRM white paper series.  

Kleingartner, A. & Anderson, C. S.   (1987).   Human Resource Management in High Technology Firms.   Lexington: Lexington Books.   pp. 6-62.

Manzini, A. O. & Gridley, J. D.   (1987).   Integrating Human Resources and Strategic Business Planning.   New York: American Management Association.   pp. 34-73.

Ripley, D., Ph.D., SPHR.   (1999, May).   Improving employee performance: Moving beyond traditional HRM responses.  SHRM white paper series.  

UK PLC´s board gets down to e-business.   (2000, June 1).   Financial Director.


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