Human Resource Information Systems (HRIS) Impact Analysis in the Bangladeshi Industries. Is it fruitful in actualizing competitive strategies?

Master's Thesis, 2015

88 Pages, Grade: 3.92 out of 4.00


Table of Contents


Table of Contents

List of Table

List of Figure

List of Equation


Chapter 1. Introduction
1.1 Background
1.2 Rationale of the Study
1.3 Objectives of the Study & Research Questions
1.4 Data Source & Methodology of the Study
1.5 Organization of the Report

Chapter 2. Literature Review

Chapter 3. Competitive Strategy for HRM
3.1 Overall Cost Leadership Strategy
3.2 Differentiation Strategy
3.3 Focus Strategy
3.4 The five generic competitive strategies
3.4.1 Which Competitive Strategy Is the Best?
3.5 Competitive Advantages of Using HRIS
3.5.1 The position or environmental model
3.5.2 The resource-based view model

Chapter 4. Competitive Strategies vs. HRIS
4.1 Human Resource Information Management Infrastructure
Stage 1
Stage 2
4.2 A Model of Organizational Functioning
4.3 How HRIS Assists Organization in Developing HR?
4.3.1 Recruitment Process
4.3.2 HR development process

Chapter 5. Leveraging HRIS Payoff for Competitive Advantage
5.1 Keys to pairing powerful technology with solid HR processes
5.2 Five Trends to Watch

Chapter 6. Site Visit Survey Questions & Their Corresponding Results
6.1 Interviewee's Information
6.1.1 Name
6.1.2 Designation
6.1.3 Organization
6.1.4 Background (both academic and experience)
6.1.5 Academic background needed for HRIS
6.1.6 Reasons for becoming interested in HRIS
6.1.7 Duration of doing job
6.1.8 Most challenging/rewarding aspect of work/career
6.1.9 Interviewees' contact information
6.2 PART-A: Competitive Strategy Pattern
6.2.1 Competitive strategy(s) pursuit by organization for achieving competitive advantage
6.3 PART-B: Competitive Advantage
6.3.1 Customer satisfaction profile
6.3.2 Organization's ability to compete successfully
6.3.3 Business growth (in percentage)
6.3.4 Organization's financial condition
6.3.5 Organization's overall competitive advantages achieved
6.4 PART-C: Human Resource Information Systems
6.4.1 Statement of whether or not organizations rely on technology for conducting HR- related activities
6.4.2 Areas in which organizations pursue technology for HR Jobs
6.4.3 Organizational development attained for pursuing Technology in HR activities ..
6.4.4 Statement of whether HRIS has a positive impact on competitive strategies for any organization or not
6.4.5 Statement of whether HRIS positively contributes to the overall low-cost provider strategy or not
6.4.6 Statement of whether or not HRIS positively contributes to the broad differentiation strategy
6.4.7 Statement of whether HRIS positively contributes to the focused (or market niche) low-cost strategy or not
6.4.8 Statement of whether HRIS positively contributes to the focused (or market niche) differentiation strategy or not
6.4.9 Statement of whether HRIS has positive impact on overall organizational goal achievement or not
6.5 Open Ended Question
6.5.1 HRIS software used in the organization
6.5.2 Installation year
6.5.3 Vendors of HRIS software
6.5.4 List of the modules of HRIS in the organization
6.5.5 The core job duties/functions/responsibilities done by HR (Entry-Level, Mid-Level, and Top-Level) using HRIS
6.5.6 HRIS' contribution to organization's net profit (estimation in %)
6.5.7 Statement of whether or not the field is growing
6.5.8 The biggest challenges faced by this field
6.5.9 The characteristics and competencies of people who are successful in HRIS
6.5.10 Specific functional or technical knowledge critical to HRIS
6.5.11 The typical salary ranges in HRD
6.5.12 Aside from tangible compensation as money, fringe benefits, travel, etc., types of satisfaction and reward does this profession yield
6.5.13 Opportunities for growth and development
6.5.14 Opinion regarding HRIS in the organization (comments on HRIS vs. competitive strategies)
6.5.15 Gathering organization's HRIS vs. competitive strategies data
6.5.16 Rating of HRIS' contribution on competitive strategies (1-Lowest; 7- Highest) ..
6.5.17 Recommendation for other departments or organizations
6.5.18 Consent of using interviewees' name

Chapter 7. Findings & Evaluation of HRIS’ Impact on Organization’s Performance
7.1 Hypothesis-01
7.2 Hypothesis-02
7.3 Hypothesis-03
7.4 Hypothesis-04
7.5 Hypothesis-05

Chapter 8. Conclusion
8.1 Final Remarks
8.2 Recommendations
8.3 Limitations of the Study
8.4 Future Study


a. Questionnaire
b. Index Terms


In order to partially fulfill the requirements for my Master of Business Administration (MBA) degree from the Departement of Management Information Systems at the University of Dhaka, this report was completed from July to September 2015. My thesis was supervised by Associate Professor and former Uepsarlmenlal Chairman Md. Abul Kashem. My thesis' initial title was "Linking Competitive Strategies with Human Resource Information Systems: A Comparative Analysis," and I've already published a scholarly article on the title in the International Journal of Asian Business and Information Managemenl, published by IGI global. This study now has a different title and is published as a book because it contains so much additional information.

While this research was ongoing, I had the honor of being given the opportunity to pursue higher education at the University of Extremadura in Spain by receiving^ an Erasmus Mundus scholarships from the European Commission (EC). I was given the chance to attend at the thesis defense earlier than the official date at that time with the support of my supervisor and Professor Md. Hasibur Rashid who is the present Vice Chanchelor at the Begum Rokeya University. Rangpur. So, afterfinishing all of the requirements for my MBA degree, I travelled to Spain to pursue another Master's degree. The Degree Equivalence Committee of Begum Rokeya University, Rangpur, recently awarded this degree the Master of Philosophy (M.Phil) designation.

I owe a great deal of gratitude to numerous feopile. who helped me finish this report quickly. I would like to begin by expressing my sincere gratitude to the All-Powerful Allah for providing me with the fortitude to complete this task on time and the slrenglh to do this research. I want to express my gratitude to Md. Abul Kashem, a professor in the Department of Management Information Systems at the University of Dhaka, who gave me this thesis topic and has provided me with unwavering^ support, guidance, and encouragement as I work to complete my thesis. In psarlicular, I want to thank my parents for all of their support, care, and prayers. I also want to thank the rest ofdmy family. In psarlicular, I want to thank everyone who helped me share information and actively participated in my research interviews when I visited several orycanigations to gatherfirst-hand information that was very helpful to me in writing this report.

This thesis paper has several limitations. Uespsile my best efforts, there may still be a few minor faults, including typographical typos. I apologise for this.

List of Table

Table No.Page No.

Table 1: The role of HRIS in organizational performance

Table 2 Scenario of organization wise customer satisfaction level

Table 3 Organization 's score competitive strategies

Table 4 Organization's scenario of financial condition

Table 5 Organizational competitive advantages

Table 6 Rate of achieving competitive advantage

Table 7 Organization wise scenario for using HRIS

Table 8 Organization wise contribution by HRIS

Table 9 Rate at what extent HRIS contributes to overall competitive strategies of an org

Table 10 Sig value for competitive strategy vs. competitive advantage

Table 11 Correlations between organization's compatibility vs. business growth

Table 12 Correlations between organization's financial conditions vs. contribution of HRIS

Table 13 Paired Samples Correlations between business growth and HRIS contribution

Table 14 Model summary

Table 15 ANOVAa

Table 16 Coefficients“

List of Figure

Figure No.Page No.

Figure 1 Process of conducting the research

Figure 2 Model of organizational functioning in a HRIS platform

Figure 3 Data Flow Diagram for Human Resource Development Process

Figure 4 HRIS system workflow linked up with company's competitive strategies

Figure 5 Rate of customer satisfaction level

Figure 6 Rat of organization's compatibility

Figure 7 Time management process

Figure 8 Conceptual framework for HRIS

Figure 9 Organization wise Impact of HRIS on Competitive Strategy

Figure 10 Organization's compatibility profile

Figure 11 HRIS' contribution on business growth rate

List of Equation

Equation No.Page No.

Equation 1 Constructing regression equation


Acronyms Elaboration

ABL Airtel Bangladesh Limited

ACR Annual Confidential Report

ATS Application Tracking System

BA Business Analytics

BB Bangladesh Bank

BI Business Intelligence

CAS Central Authentication Service

CBM Cost Based Management

CD Compact Disk

DFD Data Flow Diagram

DMS Document Management System

DSS Decision Support Systems

EDP Electronic Data Processing

ERP Enterprise Resource Planning

ESS Employee Self-Service

EXIM Export Import Bank Limited

GP Grameenphone Limited

HCM Human Capital Management

HR Human Resource

HRD Human Resource Division

HRIS Human Resource Information Systems

HRM Human Resource Management

HRMS Human Resource Management System

HRP Human Resource Planning

IBBL Islami Bank Bangladesh Limited

IS Information Systems

IT Information Technology

LMS Learning Management System

MD Managing Director

MIS Management Information Systems

Samsul Alam HRIS Impact Analysis in the Bangladeshi Industries

xi Table of Contents

P&O People and Organization

PIM Personnel Information Management

PMS Personnel Management System


ROI Return on Investment

ROM Read Only Memory

SA System Administrator

SaaS Software as a Service

SBL Sonali Bank Limited

SHL Square Hospitals Limited

SHRM Strategic Human Resource Management

SKAs Skills, knowledge, and abilities

T&D Training and Development

UPS Uninterrupted Power Supply


In the modern, fast-paced economy, competition is a challenge for commercial organizations thatfocus on providing services andproducts since it is unavoidable in highly dynamic and uncertain contexts. There has been a significant amount of emphasis on how to provide the best service and the bestproduct possible and how to do so by utilizing Human Resources (HR). This research highlights the competitive strategy concepts and models, competitive advantages from Human Resource Information Systems (HRIS), and the relationship between these two strategies that have a major impact on the peformance of the business as a whole.

In the discipline of HR strategic management, comprehending how HRIS is connected to competitive strategies has emerged as a key research topic. This study's main objective is to establish a connection between competitive strategies and HRIS, as well as the applicability of such a relationship to organizational implementation. The study takes into consideration an extensive investigation of the HRIS employed in contemporary technological-based firms that implement competitive strategies for operating their business effectively and for accomplishing goal. These tactics significantly affect how HRIS is implemented and how smoothly it operates, and HRIS itself helps to maximize the advantages of these tactics. These systems are never useful for exploiting^ competitive advantage, except from knowledgeable individuals like analysts.

We are aware that good management of an organization's HR is crucial to achieving efficiency and effectiveness in day-to-day operations. People will perform better overall and will help achieve both short­term and long-term goals if they are effectively managed and structured. On the other side, badperformance will occur if they are not adequately controlled. This research provides a comprehensive review of the HRIS used by organizations in Bangladesh that fall under the HR or People and Organization (P&O) division.

This report provides the knowledge required to comprehend the HRIS, which is essential for gaining a competitive edge. In order to achieve a long-term competitive advantage, this research starts by identifying some of the data that will be essentialfor the final implementation of an HRIS. The results of this study point to a lower-to-medium degree positive correlation between HRIS payoff and organizational competitive strategies, but they also came to the conclusion that this correlation has little impact on business performance in Bangladesh.

Chapter 1. Introduction

1.1 Background

The company is viewed as a coherent organism that adapts to its surroundings by discovering new or better ways to accomplish things. What should the company actually do to maintain or improve its position in its environment is the subsequent question. Should it put more emphasis on its finances, technology, or human resources (HR)? We should first look at the findings of other researchers before trying to provide a solution. According to Coff (1994), the causal ambiguity and systematic information that characterize human resources make them unique makes them a crucial source of sustainable advantage. Guest (1990) asserted that employees will respond with strong motivation, high commitment, and high performance if management places their trust in them and gives them challenging tasks.

Gratton (1997) highlighted six success factors: the dedication of senior management; recruits' motivation and aspirations; the management team's core competencies; the team's aspiration; the team's capacity to form and maintain alliances; and the incorporation of the company into a worldwide network. How does that affect us? It indicates that the sources of competitive advantage that are derived from developing sustainable competitive strategies have changed from money resources to technology resources and, more recently, to human capital.

Therefore, the size of the budget or the technologies that support the product are not the main factors in determining success. Employee attitudes, competences, and skills—their capacity to inspire commitment and trust, convey aspirations, and function in intricate relationships—are actually what matter. Now that we are aware of one of the sources of competitive advantage, namely the employees, what must we do in order to use them as a source of competitive advantage? The solution is found in competitive strategy and HR procedures that have been changed to utilize Human Resource Information Systems (HRIS).

1.2 Rationale of the Study

Prior to creating a connection between competitive strategy and HRIS procedures, a justification for that connection must exist. This justification provides us with a foundation for forecasting, analyzing, focusing on, and altering tactics and strategy depending on the situation. In line with earlier research, the justification created is based on what is required of employees in addition to the particular technical Skills, Knowledge, and Abilities (SKAs) needed to complete a given activity. Therefore, it is more beneficial to consider the requirements of an employee who collaborates with other employees in a social setting as opposed to task-specific SKAs.

Actually, it would be more accurate to refer to these required employee behaviors as required job behaviors. Despite reading various studies directly related to HRMS and the appropriate use of HR in the context of Bangladeshi enterprises, it is extremely rare to come across research papers on the subject matter of this work. The majority of studies in Bangladesh on human resource management (HRM) techniques have attempted to demonstrate how HRM may enhance employee satisfaction and business performance (Buller & McEvoy, 2012). In Bangladesh, there has been a severe lack of attention paid to the impact of information systems (IS) on human resource management and development. Once more, adequate HRIS integration with competitive strategies is neglected.

1.3 Objectives of the Study & Research Questions

The study's goal is to determine and demonstrate how HRIS relates to an organization's competitive strategies. The study also highlights the strategic value of HRIS in the growth of HR, particularly for Bangladeshi businesses. Once more, this study will make an effort to determine the answers to the following questions:

Question-01: Whether Competitive strategy has an impact on organization’s performance or not?
Question-02: Whether the Organization’s compatibility has a significant impact on business growth or not?
Question-03: Whether HRIS has a contribution on organization’s financial performance or not?
Question-04: Whether HRIS is positively or negatively linked up with organization’s competitive strategy?
Question-05: Is there has any supported relationship with business growth and HRIS payoff?

1.4 Data Source & Methodology of the Study

The primary and secondary data are both used to conduct this investigation. The questionnaire survey was the major research design used to produce the primary data. The information needed to fill out a questionnaire was gathered from HR executives of particular Bangladeshi firms through face-to-face interviews. Data were gathered using both qualitative and quantitative techniques, and descriptive data analysis was used. Analysis of the feedback from 8 different organizations revealed a 61.54 percent total response rate. Secondary data was gathered from a variety of books, papers, and websites as well as some empirical judgments and assumptions.

The gathered data was analyzed using the SPSS computer software (version 20.0) and, to a lesser extent, Microsoft Excel 2010. The procedure of conducting this research can be shown as of the following figure 1.

Abbildung in dieser Leseprobe nicht enthalten

Figure 1 Process of conducting the research

1.5 Organization of the Report

The study is laid out in a progressive manner to demonstrate the connections and how HRIS affects an organization's competitive strategy. The context, justification, objective, data source, and methods for carrying out this study and literature review are all covered in the study's first chapter. The site visit survey and interview are covered in the second chapter, and the analysis of the resurvey results and study results are covered in the third. The finer points of competitive strategy and the competitive advantages of employing HRIS are covered in detail in the fourth chapter. In the fifth chapter, the relationship between competitive strategy and HRIS is discussed. The sixth chapter provides an illustration of how HRIS might be used to gain a competitive edge. The final chapter is all about the summary, conclusion, recommendations, limitations and plan for future study.

Chapter 2. Literature Review

The competitive movements and business strategies that managers use to expand their company, draw in and retain customers, compete successfully, run their operations, and reach the desired organizational performance levels are collectively referred to as their strategy (Thompson, Strickland & Gamble, 2008). A competitive strategy entails a sequence of methodical and connected choices that offer a corporation a competitive edge over rival companies (Dowling & Schuler, 1990; Schuler & Jackson, 1987).

A business has a sustainable competitive advantage when a substantial portion of customers choose its goods or services over those of rivals (Thompson, Strickland & Gamble, 2008). Porter's (1980, 1985) categorization of generic strategies are the main source of guidance for the idea of business competitive strategy. He claimed that adopting a generic strategy—which he describes as the creation of an all­encompassing cost leadership, differentiation, or focus approach to industry competition—could lead to greater performance in a cutthroat market. Similar to this, Smith and Kelly (1997) held that the businesses that can most successfully attract, develop, and retain a diversified group of the most talented and innovative HR in the market place will be at a strategic and economic advantage in the future.

Business strategies were divided into three categories by Miles and Snow (1984): defender, prospector, and analyzer. They also suggested comparable strategic human resource systems. Cost-cutting, innovation, and quality-improvement were the three categories of corporate competitive strategies that Schuler and Jackson (1987) classified using labels that were slightly different from those Porter defined. Additionally, Schuler and Jackson (1987) assigned certain employee behaviors and HRM techniques to each competitive strategy. Dyer and Holder (1988) reclassified these as inducement, investment, and involvement, respectively, using the three varieties of Schuler and Jackson's competitive strategy. Utilization, facilitation, and accumulation were three distinct HR techniques that Dowling and Schuler (1990) combined.

By strengthening their competencies in three key areas—organizational design, managing change, and performance measurement—HR professionals can add strategic value beyond just understanding the needs of the business (Boudreau & Ramstad, 2005; Cascio, 2005; Kates, 2006; Lawler et al., 2004; Ulrich & Beatty, 2001). The effective administration of HR can give organizations a competitive edge. Technology—in particular, HRIS—is being used more and more for the delivery, support, and management of HR (Johnson & Gueutal, 2010).

Without constant communication between individuals in charge of the development, implementation, and evaluation of the strategy, including HR specialists and HRIS analysts, accurate and efficient line of sight will not be possible. Analysts in HRIS are the IT branch of the HR industry. During the 1980s, HR activities in businesses became quite accustomed to IS due to the growing usage of computerized IS in the industrial operations of developed economies. HRIS has traditionally been viewed as a component of Management Information Systems (MIS), which support an organization's HR operations (Kroenke & Hatch, 1994).

For the vast majority of organizations, corporate success will increasingly depend on the coordinated, strategic management and integration of the organization's HR and IT. An HRIS (also known as an HRMS) can be as informal as the payroll records and time cards of a small business (Kovach and Cathcart, 1999). In order to achieve this strategic coordination, people in charge of creating, implementing, running, and maintaining an HRIS must be well-versed in the organization's HR initiatives, how they relate to broader strategic planning, and the possibilities of computer and data technology (Rampton, Turnbull, & Doran, 1999).

The process of improving organizational operations that directly affect a company's profitability and capacity to achieve a competitive edge is known as human resources management (HRM). The HR division's internal operations are supported in large part by HRIS. HRIS is a group of people, forms, processes, and data used to collect, organize, disseminate, and use HR-related information. The purpose of HRIS is to lessen the manual work required of HR executives while also providing reliable information for those making HR-related decisions. By enabling HR to go beyond routine administrative chores and into strategic applications, HRIS have the ability to convert HR into a more effective and strategic function. The methods and procedures that link HRM and IT together comprise an HRMS.

The databases, programs, and computer systems known as HRIS are what businesses use to manage their HR, including payroll, leave policies, employee records, and benefits. A system called HRIS is used to gather, store, manipulate, examine, retrieve, and distribute data about HR inside an organization. An HRIS is more than just HR-related software and connected computer hardware. An HRIS not only consists of hardware and software but also comprises people, forms, policies and processes, and data (Kavanagh & Thite, 2009). The 21st century's greatest challenge for executives is not technology, but rather the art of humane management (Drucker, Dyson, Handy, Saffo, & Senge, 1997). Through HR software, HRIS connects IT and HR.

Unfortunately, it is simple for data integrity to be lost when transitioning manual systems to automated systems during HRIS implementation or while switching to a new system. It was discovered that HRM functionality and HRIS functions are related. More particular, it was discovered that there is no connection between HR functionalities and strategic integration, forecasting and planning, HR analysis, communication, and integration. While it was discovered that the HRIS's performance development, knowledge management, and records and compliance dimensions are related to and have an impact on HR capabilities (Obeidat, 2012; Shiri, 2012).

The greatest level of confidence is placed on the influence of the HRIS on time management and on HR functions, which managers believe will have a beneficial effect on organizational effectiveness. The findings demonstrate that an HRIS that is properly deployed and managed enables freely accessible information to be converted into increased information exchange, knowledge transfer, and management. As a result, the HRIS has the ability to improve decision-making processes, both in terms of speed and quality, as well as the implementation of the HR strategy (Kumar & Parumasur, 2013; Shiri, 2012). Since modern businesses are aware that their human and information resources are intertwined, the necessity to integrate HRM with IS has become a sine qua non. Because of this, HRIS is currently widely employed in all organizations, regardless of their size, duration of existence, level of operational complexity, etc (Bhuiyan & Rahman, 2014).

HRIS utilization is not only taken into account by HR professionals as a support for strategic HR functions, but also as an enabling technology. The report also shows that large-sized businesses are most likely to use HRIS extensively to support strategic HR responsibilities. Additionally, there was no discernible difference in how HRIS was used to enhance commitment management and manage union connections with organizations in relation to the size of a corporation (Sadiq, Khan, Ikhlaq & Mujtaba, 2015). HRIS transforms the way that organizations are managed and improves organizational performance for Strategic Integration (Katou and Budhwar, 2006; Ordonez de pablos, 2004; Troshani et al., 2011). HRIS enables the creation of strategic value by assisting in the design and implementation of internally consistent policies and practices that make sure the HR department helps the business achieve its goals (Troshani et al., 2011). HRIS technologies that aid in making decisions about crucial HR operations can provide strategic value (Farndale et al., 2010; Troshani et al., 2011).

Organizational performance depends on SHRM, whereas HRIS has a strong association with and beneficial influence on a variety of SHRM strategic decisions. The empirical findings demonstrate that HRIS and SHRM work well together to improve bank performance. The study comes to the further conclusion that HRIS and numerous SHRM activities in banks, such as business process re-engineering, positive union relations, management employee relations determination, training and development, and involvement in decision-making, have a strong association. The study comes to the conclusion that HRIS is a technology that will assist bankers more and provide firms a fresh new look. With SHRM tasks, HRIS becomes progressively more important (Ghafoor Awan & Sarwar, 2015).

Recent research has shown that even while the HR function has shifted to be more strategically oriented, many businesses still do not fully perceive it as a strategic partner (Lawler & Boudreau, 2009; The McKinsey Quarterly, 2006; Weis & Finn, 2005). The 500 Singaporean listed companies are the subject of a research on the use of HRIS (Teo, Soon & Fedric, 2001). According to this report, 60.3% of the organizations that implemented HRIS continue to utilize it for conventional functions. 7.9% of HRIS users use it strategically. This is a very low number. Lin (1997) conducted a further investigation on the implementation of HRIS in Taiwan. According to this report, MIS is the area that Taiwanese businesses are most interested in for HRIS deployment across the multiple HRIS levels (EDP, MIS, and DSS) (Kroenke & Hatch, 1994).

While 46.1% of respondents thought their HRIS performed thorough reporting and applicant tracking efficiently, nearly more than half of participants responded neutrally with the statement that their HRIS leverages employee talent in the right place and at the right time and uses exaggerated hiring practices. Thirty one percent of participants responded unfavorably with the statement that their organizations' HRIS eliminate unsuitable applicant early and focus on promising candidates. Furthermore, in order to use the HRIS system effectively, 65.9% of HR executives need training and development programs on it. The majority of interviewees gave a negative response when asked whether their companies use the HRIS T&D subsystem at its best. The majority of respondents agreed with the claim that their HRIS has increased productivity, reduced mistake, and cut costs (Mulat, 2015).

Additionally, 40.1% of the executives agreed with the notion that their HRIS compares and analyzes compensation packages based on internal and external salary data in order to maintain market competitiveness, while 34% of them disagreed. While 20% of respondents disagreed, 43% of them thought their HRIS had boosted the amount of usable information and improved their ability to share it. The majority of respondents said that the data produced by the HRIS improved cooperation between the administration and the HR department and brought value to the organization. Furthermore, 36.9% of participants concurred that the information obtained from their HRIS has enhanced the processes for making strategic decisions. Last but not least, just 41.3% of them said that their HR department had gained more significance and became a strategic partner in the organizations (Mulat, 2015).

Existing literature demonstrates that the use of HRIS in various situations is one of the topics that have received extensive study in numerous countries throughout the globe. All studies show that the effective management of any organization's HR operations is the key use of HRIS.

Chapter 3. Competitive Strategy for HRM

How companies gain a competitive advantage is the theme of business strategy. The business plan of the firm and its internal processes must mesh for it to be implemented. Superior performance is produced and organizational effectiveness is increased by a good fit. The retention and motivation of personnel, as well as improved organizational performance and competitive advantage, can be a result of a strategic alignment between business and human resource strategies. This study presents three distinct HR strategies based on a thorough literature assessment and Porter's generic strategies as business competitive strategies. Additionally, we carefully specify three reward system solutions that are appropriate for each HR approach. By closely integrating business competitive strategy, HR strategy, and reward systems, it is hoped to give managers guidelines for creating and putting into practice suitable reward systems under various business competitive strategies and aid businesses in effectively gaining a competitive advantage (Bowen & Ostroff, 2004; Buller & McEvoy, 2012).

Despite these various divisions, competitive strategy is made up of tools and resources that businesses can utilize to succeed in a cutthroat market. It defines superior competencies in terms of personnel capacity, system capabilities, or marketing know­how that a rival does not have. A superior resource is one that can help with the execution of a strategy (Powers & Hahn, 2004). The pursuit and implementation of a suitable business strategy will enable you to outperform rivals and generate above average earnings (Yoo, Lemak & Choi, 2006). As a result, competitive strategy analysis under various environmental situations is receiving more attention. Porter (1985) asserted that the three generic strategies, which call for various resources, organizational configurations, control processes, leadership styles, and incentive systems, might convert into superior organizational performance and competitive advantage.

The firm is viewed as a unit of resources and capabilities in the resource-based view. The acceptance of this idea has sparked curiosity about discovering the characteristics of these various resources and determining whether they have the ability to create a competitive edge (Colbert, 2004; Lopez, 2005). The resource-based paradigm thus offers a logical connection between strategic management and human resource management. Since people have a tendency to gain experience and expertise over time as time goes on and can be used to improve organizational skills, knowledge, and capabilities while assets like furniture deteriorate after their expected lifespan has passed, people are seen as valuable resources by organizations. The contingency approach also maintains that there is no one ideal organizational structure; instead, it all relies on the specific challenges a given business is experiencing. In this instance, a particular corporate plan must align with HR strategy (Porter, 1985).

Fit is a term used to describe how closely HR initiatives and company plans relate to one another in a way that will encourage and retain personnel. Employees are an organization's human capital. Organizations have a variety of options for rewarding staff (Lawler & Worley, 2006). The organization must put in place suitable reward systems in order to recruit, keep, and inspire people. To ensure the effectiveness of HR policies, these compensation systems aim to promote desired employee behaviors. Therefore, creating and implementing suitable compensation systems that support HR policies and meet corporate competitive strategies is a crucial issue at the moment. According to Porter, the company must choose from the three generic strategies of focus, differentiation, or overall cost leadership. A substantial corpus of study on the creation of further generic strategies has been built on this taxonomy of generic strategies (Feurer & Chaharbaghi, 1995). The generic strategy's fundamental tenet is that an industry's structure has a significant impact on the competitive strategies that an organization might have access to within that industry.

3.1 Overall Cost Leadership Strategy

The goal of organizations that pursue the general strategy of overall cost leadership is to become the sector's lowest cost producers. A wide industry segment or a number of industries are served by cost leadership firms. They usually market a standard product and take advantage of economies of scale and lower absolute costs. These businesses strive for above-average returns by placing a strong emphasis on cost reduction. There are many ways to gain a cost advantage, including economies of scale, proprietary technology, access to raw materials, persistently seeking for cost savings through experience, strict cost and overhead control, and cost minimization in areas like R&D, service, sales force, advertising, etc. An overall cost leadership strategy is appropriate in a stable and predictable environment with regard to the selection and viability of generic solutions in various environmental scenarios (Hambrick, 1983; Kim & Lim, 1988; Miller, 1988). This is because firms pursuing low­cost strategies may encounter severe diseconomies while attempting to manage expenses and boost efficiency (Kumar & Subramanian, 1998). A highly skilled and experienced personnel is another need for cost leaders (Dess & Davis, 1984; Kim & Lim, 1988). When an organization adopts a cost leadership approach, it should encourage and educate its staff on cost-controlling principles and production efficiency.

Firms pursuing a competitive strategy of innovation, the profile of employee role behaviors includes (1) a high degree of creative behavior, (2) a longer-term focus, (3) a relatively high level of cooperative, interdependent behavior, (4) a moderate degree of concern for quality, (5) a moderate concern for quantity, (6) an equal degree of concern for process and results, (7) a greater degree of risk taking, and (8) a high tolerance of ambiguity and unpredictability.

The ramifications of pursuing a competitive strategy of innovation in HRM may include hiring highly skilled individuals, granting workers more autonomy, using few controls, increasing investment in HR, providing more resources for experimentation, allowing and even rewarding occasional failure, and evaluating performance for its long-term effects. Following an innovation approach may result in sentiments of increased personal control and morale as a result of these circumstances, which will lead to a greater dedication to oneself and one's profession rather than to the employing firm (Bowen & Ostroff, 2004).

3.2 Differentiation Strategy

The general differentiation strategy seeks to produce an original good or service. Organizations that prioritize differentiation make an effort to develop differentiated goods and services that appeal to customers' specific needs, add value to their lives, and foster loyalty. Businesses that use the differentiation strategy strive to stand apart in a way that is valuable to and significant to their clients. The product itself, the method of distribution, or the marketing strategy are examples of potential sources of differentiation. Being distinctive will allow you to charge more money (Davidson, 2001).

Research, product or service design, and marketing must often be heavily funded to support the differentiation approach. Companies that are attempting to apply Porter's differentiation strategy have done so using a variety of various basis, such as differentiating based on the quality of the given customer services or the sorts of technology (Kumar & Subramanian, 1998). Dynamic and uncertain surroundings are linked to a differentiation approach (Hambrick, 1983; Kim & Lim, 1988; Miller, 1988). New technologies and unexpected customer or rival responses are frequently used to differentiate products (Lamont, Marlin & Hoffman, 1993). Here, the management control system must prioritize long-term operations and emphasize adaptability (Nilsson, 2000). In line with the differentiation strategy, the corresponding HR strategy should foster employees' innovation and adaptation.

For companies pursuing a strategy of quality enhancement, the profile of employee behaviors required is made up of the following: (1) relatively repetitive and predictable behaviors, (2) a more long-term or intermediate focus, (3) a modest amount of cooperative, interdependent behavior, (4) a high concern for quality, (5) a modest concern for quantity of output, (6) a high concern for process (how the goods or services are made or delivered), (7) low risk-taking activity, and (8) commitment to the goal.

Fewer workers are required to achieve the same level of productivity with quality enhancement because it often entails higher levels of employee engagement and utilization. Demand increases as quality improves, but this demand may be satisfied with proportionately fewer workers than in the past.

3.3 Focus Strategy

In comparison to the first two strategies, the focus strategy is fundamentally different. When a company adopts the focus strategy, it decides to choose a certain niche within a given industry and create a specialized strategy to only target that market. Through segmentation, this sort of company aims to gain a competitive edge and generate greater profits. The focus strategy theme has two forms, each of which necessitates that the target segment's needs differ markedly from those of the larger industry market. A company that uses the cost focus strategy aims to be the low-cost manufacturer for a particular market niche. Finding distinctions between the target market segment and the larger market is the foundation of a company using the differentiation focus strategy. To achieve great performance in either the cost focus or the differentiated focus strategy, a narrow focus is insufficient. It is necessary to combine the focus strategy with the capacity to serve a particular market segment as the low-cost producer or, alternatively, to address a particular need through product differentiation. Utilizing an underdeveloped market niche is how the focus strategy is successful (Davidson, 2001).

A niche strategy is another name for the focus approach. A niche strategy may be the best course of action when a business cannot afford either a wide-scope cost leadership strategy or a wide-scope differentiation strategy. A company that uses a focus strategy gains a competitive edge in this niche market by producing at a lower cost or differentiating itself from the competition. Employees with a lot of experience and vision in this sector should be retained as part of HR strategy in order to successfully implement the focus strategy (Chen & Hsieh, 2005).

The profile of employee role behaviors necessary for firms seeking to gain competitive advantage by pursuing the competitive strategy of cost reduction is as follows: (1) relatively repetitive and predictable behaviors, (2) a rather short-term focus, (3) primarily autonomous or individual activity, (4) modest concern for quality, (5) high concern for quantity of output (goods or services), (6) primary concern for results, (7) low risk-taking activity, and (8) a relatively high degree of comfort with stability.

The capacity to acquire and maintain competitive advantage is essential to a company's development and success. Taking a calculated risk is one method for doing this. The capacity to exert control over strategic behavior in the industries in which a corporation competes is what MacMillan refers to as "strategic initiative."

3.4 The five generic competitive strategies

The three-strategy classification presented in Michael E. Porter's book Competitive strategy is expanded into five generic competitive strategies by the author. The greatest and most significant distinctions between competitive strategies come down to two things: (1) how broad or specific a firm's market objective is, and (2) whether the organization is aiming to gain a competitive advantage based on low prices or product differentiation. The following five distinct competitive strategy methods stand out:

1. A low-cost provider strategy - aims to achieve lower overall expenses than competitors while attracting a wide range of clients, typically by underpricing competitors.
2. A broad differentiation strategy - aims to set the company's product line apart from competitors in ways that will appeal to a wide range of customers.
3. A best-cost provider strategy - aims to have the lowest (best) costs and prices compared to competitors delivering products with equivalent features, giving customers more value for their money by incorporating good to great product attributes at a lower cost than rivals.
4. A focused (or market niche) strategy based on low costs - which focuses on a certain buyer segment and outperforms competitors by having lower costs than competitors and so being able to provide niche members with services at a cheaper cost.
5. A focused (or market niche) strategy based on differentiation - concentrating on a small group of customers and outperforming competitors by giving niche members unique qualities that better suit their preferences and needs than competing items.

These five general strategies for rivalry each establish a distinct market position. Each entails distinctly unique strategies for battling it out and running the company.

3.4.1 Which Competitive Strategy Is the Best?

The optimal competitive strategy out of all those discussed here will rely on a variety of variables. Customers' preferences and the nature of the competition are unquestionably important variables. A strategy to cut costs might not be as successful as one to improve quality if customers are seeking high quality. Even if the manufacturer could have passed down savings of, say, 10% or even 20%, consumers—especially industrial trial buyers—would not have been any more likely to purchase their products. A cost-cutting strategy might be the greatest way to create a competitive edge, however, if the good or service is generally homogenous, like in the overnight parcel delivery sector. But there is still a decision to be made here. For instance, United Parcel Service is working to save costs by streamlining work processes through the use of standardization, measurement, and feedback.

Roadway, in contrast, employs the same method by combining as much automation as feasible with employee autonomy and ownership (drivers own their own trucks, which come in a variety of colors; UPS drivers do not own their brown trucks). When compared to other cost-cutting strategies like wage concessions or labor reductions, these latter ones have the advantage of taking less time to implement. Although painful, cost-cutting measures like employee layoffs or compensation concessions can be quite easy to adopt. The ability to offer lower costs gives one a competitive advantage, but because it is replicable by others, this advantage is effectively lost. A notable example is how the aviation sector has used two-tiered salary contracts: Eastern, United, and Frontier Airlines signed contracts with their staff that were comparable to those implemented by American Airlines, which had a two-tier pay structure for its pilots. However, certain outside factors can make it possible for a cost­cutting plan to continue to be effective.

In comparison, it takes longer and is more challenging to adopt a quality improvement approach, whether it be through automation or quality teams. As the American auto industry has learned the hard way, it will take a lot of time for us to catch up to the competitive edge the Japanese auto sector has obtained via quality improvement.

3.5 Competitive Advantages of Using HRIS

According to Sadiq, Khan, Ikhlaq, and G. Mujtaba's (2015) research, HRIS is successfully employed as a technique to increase administrative effectiveness by enhancing the department. Its advantages can't all be measured, though. HRIS's potential value as a strategic tool is still underutilized, which limits how effectively it can be applied.

Table 1: The role of HRIS in organizational performance

Abbildung in dieser Leseprobe nicht enthalten

We can say a firm has a persistent competitive advantage when it is implementing a value-creating strategy that is not concurrently being executed by any present or potential competitors and when these other firms are unable to replicate the advantages of this strategy (Barney 1991). There are two main models that need to be taken into account. The position or environmental model is the first, and the resource­based perspective model is the second.

By implementing HRIS in organizations the following advantages can be achieved:

- The organization benefited from HRIS as a methodical process for gathering, storing, keeping, retrieving, and validating data on their human resources, personnel activities, and organizational unit characteristics. For those making HR-related decisions, it offers accurate information.
- The technology has given the firms a competitive edge, which in turn facilitated better HR decisions and improved supervision and management of their workforce.
- Organizations have increased the productivity and efficacy of their HR department activities as a result of their HRIS. In addition to pay planning, competency assessment, benefit administration, and performance evaluation, these tasks also involve management training and development, succession planning, applicant monitoring in recruiting and selection, and personnel information and identification management.

3.5.1 The position or environmental model

The firm must decide on the kind of competitive advantage it wants to gain and the parameters by which it will do so in order to be in a position to compete. Because it tries to develop a lucrative and sustainable position against the forces that decide your industry rivalry, choosing the competitive scope or the range of the firm's activities can play a significant role in establishing competitive advantage.

3.5.2 The resource-based view model

What are the company's resources? In order for a company to develop and carry out plans that increase its effectiveness and efficiency (doing things correctly), it must have control over all of the assets, organizational processes, capabilities, firm qualities, information, and knowledge (doing the right things). Traditional strategic analysis defines firm resources as strengths that companies can employ to develop and carry out their strategies. There are three categories into which business resources can be neatly divided: organizational capital, human capital, and physical capital. Physical capital resources include a company's plant and equipment, location, and access to raw materials. They also include the actual technology used by the company. Training, experience, judgment, intelligence, relationships, and insight of specific managers and employees inside a company are all examples of human capital resources. The formal reporting structure, formal and informal planning, regulating, and coordinating mechanisms, as well as relationships between groups within a corporation and between a firm and those in its surroundings, are all examples of organizational capital resources (Barney, 1991; Colbert, 2004; Ordonez de Pablos, 2004).

Pfeiffer has issued sixteen practices of competitive advantage through people using HRIS as:

a. Employment security
b. Incentive pay
c. Participation and empowerment
d. Symbolic egalitarianism
e. Long-term perspective
f. Selectivity in recruiting
g. Employee ownership
h. Teams and job redesign
i. Wage compression
j. Measurement of practices
k. Cross-utilization & cross-training
l. High wage
m. Information sharing
n. Training and skill development
o. Promotion from within
p. Overarching philosophy


Excerpt out of 88 pages


Human Resource Information Systems (HRIS) Impact Analysis in the Bangladeshi Industries. Is it fruitful in actualizing competitive strategies?
University of Dhaka
3.92 out of 4.00
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ISBN (Book)
Competitive Strategy, Competitive Advantage, HRIS, HRIS Payoff, Organizational Performance, SHRM, HRM
Quote paper
Samsul Alam (Author), 2015, Human Resource Information Systems (HRIS) Impact Analysis in the Bangladeshi Industries. Is it fruitful in actualizing competitive strategies?, Munich, GRIN Verlag,


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