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Case Study Nissan:

Title: HRIS @ Nissan: A New Era in Human Resource Management

Abstract:

Information is the most vital part of survival or growth of the firm. Today
human resource has become the main competitive advantage for a firm, making
it a very critical resource. More so than ever, there is a need for fulfilling all
functions related to human resource with strategic purpose and technology
should be able to help in aligning them with the firm‟s objectives.
Human Resource Information Systems (HRIS) are one such technological
innovation which can efficiently help in standardizing such information
about company‟s employees. In this case we have tried to understand the issues
faced during the implementation of HRIS at Nissan. This case enlightens us
with the information about HRIS and its implementation in a real organization.

Keywords: HRIS; Carlos Ghosn; Nissan; Technology; Payroll Management; HRM;

Compensation Management; Recruitment; Selection; Training and Development
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Introduction

“Our strategy was not just to develop HR shared services; it was to transform human resources
throughout the entire company, to add more to the business.” - Dwain Stevens, Sr. HR Manager,
Nissan, 3rd Feb, 20101

“There are probably 50 different things that we do. The only word I can think of which pulls it
together, is culture.” - Philip Ashmore, Nissan, Personnel Director, 25th Feb, 20032

Nissan Motors, one of the top selling automobile manufacturers and the world‟s first ever
multi- brand conglomerate after its collaboration with Renault, has over 130,000 people working
for them worldwide. This global corporation needed standardized HR practices in order to
function successfully. The firm was also concerned about the overall employee satisfaction.
Having an HRIS meant a strategic investment to reduce costs across the globe and therefore, in
2010, CEO Carlos Ghosn3 introduced HRIS in Nissan, when Nissan was in troubled waters. His
aim was not only to automate the HR services but to transform HR services in the whole
organization. He implemented several plans to transform Nissan to take it out of financial
disaster; one of the strategies was to have a HRIS. The strategy behind HRIS implementation
was standardization of all HR practices throughout the organization around the world. Also he
wanted to remove all administrative and transaction type tasks from the HR personnel in all
locations around the world.

Some of the immediate benefits of implementing HRIS were an effective way of sharing
information which was HR centric. Nissan had an employee intranet but it was not designed to
be employee friendly and most of the employees did not have access to it. This ensured that there
was a need for new technology with a dynamic employee portal, where all kind of HR related
information could be made available to employees 24/7. This would allow the employees to
access information they wanted themselves, creating a help yourself attitude. The new forum
also allowed employees to make changes in the HR related information or benefits relation
information about them instead of waiting to fill forms and HR personnel doing it. These

1
Niamh Byrne, “Nissan North America Transforms HR Services”, [Link] February 3rd,
2010
2
Daniel Thomas, “Merger forces HR to rethink IT strategies”, Personnel Today, Business Source Complete,
January 18th,2005
3
Carlos Ghosn was born in Brazil on March 9, 1954, to a French mother and Lebanese father Rose and Jorge
Ghosn. The exposure he had from traveling gave him various skills which included his fluency in five languages.
Ghosn graduated from the prestigious French Ecole Polytechnique. Ghosn‟s father had a business in Brazil but his
family shifted to Lebanon when he was six years old, though his father stayed back in Brazil because of work.
Despite the absence of his father from his day-day life his father played an important role in Ghosn‟s life by
instilling discipline and core values in him. Lebanese families are close-knit families. Ghosn spent eighteen years in
Michelin Tyre Company evolving himself. After this, due to certain changes in the management structure, he moved
on to Renault for personal growth in 1996 as executive vice president.
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changes were approved by their reporting managers and reflected in their profile after required
approvals. The HRIS access has improved work life as it has helped employees obtain required
information faster as the transactions are faster. This has also helped HR people as duplicate
entry work and non-value adding tasks have been removed from their repertoire.

Ghosn had a long term benefit in mind while taking this decision; he maintained his reputation of
„Le Cost Killer‟ as this initiative helped the organization save money in efficient and
effective way. The required analysis was carried out on how a portal can help save costs and
results confirmed that apart from saving costs this was a more effective and efficient manner to
carry out administrative tasks. By February 2010, Nissan had standardized all its HR practices
across the globe. All administrative and transactional tasks were removed from HR personnel
and the dynamic employee portal was made accessible to all employees on a 24/7 basis. They
could access this information through intranet by simply logging in with their id and password to
access their information. This led to fast transactions handling for HR and it created transparency
in the system.

Background Note

In 1933, Aikawa Yoshisuke (Aikawa) (1880-1967), established a manufacturing company

Jidosha-Seizo Kabhushiki-Kaisha. This later became Nissan Motor Co. Ltd. Aikawa believed in
expansion of business. By the end of World War II, he had the biggest Zaibatsu4 in the continent.
Aikawa had some experience of American manufacturing firms, which he was able to implement
in Nissan at Japan as well. Though he steered away from the kind of cars Americans produced,
he imported their engineers and designs and used them in small car and truck segment. Nissan
was now the crown of the Japanese Industries. By 1972, Nissan had captured 33.7% market
share and was exporting vehicles.

Aikawa‟s ambition was not restricted to being an automobile manufacturer; he diversified into
real estate and insurance as well. He did not follow any philosophy, nor did he have any guiding
principles. This was a major reason why Nissan did not have a strong cohesive culture. This also
meant no proper HR policies at Nissan which was a reason for severed relationship between
workers and the management. After World War II, Nissan had more troubles on its door, with a
change in top management and with no direction due to the lack of culture. Between 1933-1951
Nissans‟ culture weakened further, as a minimum of seven presidents changed during this
period. From the crown of the Japanese industry it became the most unstable organization.
However, during this period, Nissan saw constant growth also. With the business running well,
the organization kept on growing, and the hierarchy kept increasing in tandem. Parochial
decision making started to devour the company from inside. By 1970s, this organization had high
specialization and departmentalization within. Nissan had several termites of unnecessary power

4
The term Zaibatsu was used in the 19th Century to refer to large family-controlled banking and industrial combines
in Japan.
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and politics in the personnel department which designed an elaborate system of employee
evaluation. This was a beginning of complex rules and regulations which meant reduced hard
work for employees but burdened them at the same time.

In 1990, president of Nissan, Yutaka Kume, said –„The most challenging task I faced when I
became president five years ago was to reform the corporate culture. I consider it the most
formidable challenge I faced because Nissan‟s business performance suffered not only because
of the external conditions which existed not only for Nissan but also for whole set of other
companies. I decided that the major reasons for that suffering or business predicament lay within
Nissan itself‟ (Nayebpour and Saito, 2007). This message gave clear indications about Nissans
cultural inefficiency.

Nissan was the perfect example of a typical Japanese company; it had some of the best practices
in management and production but at the same time suffered from heavy bureaucracy. Nissan
depicted Japanese culture in its practices like giving respect to elders, role of the master and
imparting knowledge and experience. This led to senior positions being held by senior people in
the organization, who had been around for years. They were also the highest paid. New recruits
were picked from some of the best colleges in the country; they joined at entry levels in the
organization and were promised jobs till they retired. Their packages initially were meager but
increased with their seniority in the organization. This clearly shows the picture of personnel
management in the organization, where we can see that promotion and performance have no
relation. Japanese culture also does not promote performance based rewards; they believe in
egalitarianism and fairness. Japanese have poor work family balance as they come to work on
holidays and work overtime hours also, because they think it makes them more faithful to the
organization.

In 1980s Japanese economy was booming, Nissan had doubled its production to build its sales
network but in turn their debt rose to US$19.4 billion in 1998. Recession made things worse and
Nissan was soon caught in a debt trap. After going public in 1951, Nissan saw its first severe
losses in 1993. Its financial condition kept getting worse and by 1998, Nissan had incurred heavy
losses for seven consecutive years. Analysts saw several dimensions to Nissans problems. Some
said Nissan was not pursuing profits, they lacked vision to achieve, that mission was not in place
and management only took care of day-to-day operations. In reality, Nissan did not have any
quantified goals, neither was there any product planning. Toyota‟s policies and models
were copied often. The external environment was highly competitive but Nissan lacked the
urgency required to survive. Nissan lacked one of the main Japanese traits- „team-work‟.

By 1998 Nissan was under huge debt of US$20 billion and its creditors were building pressure
on them to find a partner. Nissans sales were declining, its margins were poor and it was nearing
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bankruptcy. Japanese Keiretsu5 was another reason for Nissan being in trouble, as this implied
more bureaucratic decision making process. Nissan had almost US$ 4 billion invested in
Keiretsu‟s. This was not the only reason for Nissans troubles, its poor styles and design,
infrequent model changes, and high manufacturing and parts costs were also to be blamed.
Nissan needed heavy cash infusion and managerial expertise desperately. Nissan found its savior
in an alliance with Renault in March 1999 after considering various options. The blend was
complementary for both the companies. Nissan‟s market share in North America was
what Renault needed to expand its business. Also, Japanese companies are more popular for their
expertise in quality and manufacturing practices. Nissan also had several benefits involved like
the cash pumped in by Renault helped them reduce their debts. European market became more
accessible, also Renault‟s innovative design, marketing, and financing of sales and
services would be of great help to Nissan in the long run. Louis Schweitzer, CEO and Chairman
of Renault, appointed Carlos Ghosn to the post of COO of Nissan. By 2001, Carlos Ghosn rose
to the level of President and CEO. In March, 2002, Renault upped its stake in Nissan from 36.8%
(for US $ 5.4 billion) to 44.4% (Ghosn and Ries, 2005).

With the turn into the new millennium, Nissan also turned over into a success story under
Ghosn‟s leadership. The task which looked impossible till two years ago was now working
out, Ghosn turned into a celebrity in Japan. Ghosns multi-cultural background helped him a lot in
Japan, his energy charged people around him. His work style earned him a comic series
dedicated to him to energize managers. Ghosn was popular for being “Le Cost Killer” at Renault
for sweeping cost reduction and controversial plant closings which was dreaded at Nissan as
well.

Following are all the changes in various HR practices made by Ghosn:

[Link]. HR Practice Changes Made

1 Recruitment New comers were given higher wage with
performance based rewards.
2 Talent Management It was introduced by Ghosn, this did not exist earlier
in Nissan
3 Compensation Compensation system was completely revamped with
more Performance-oriented pay system and a
“commitment and stretched-target”system.
4 Communication Oppose to old bureaucratic system, more open
communication was emphasized upon.
5 Benefits Financial incentives, rewards, promotions were
introduced.

5
Keiretsu refers to a uniquely Japanese form of corporate organization. It is a conglomeration or family of affiliated
companies organized around a single bank for their mutual benefit. Each major keiretsu is capable of controlling
nearly every step of the economic chain in a variety of industrial, resource and services sectors.
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6 Training This was made necessary as the employees had to

implement changes for further improvements.
7 Career Coach System Internal self-career path was shown on company‟s
intranet.
8 HRIS The biggest change which helped Nissans HR
department was taking away all administrative and
transactional tasks from them and giving them a
dynamic portal which was available for employees
24/7

Source: Ghosn, C. and Ries, P. (2005) Shift: inside Nissan’s Historic Revival, Currency
Doubleday Publisher, New York.

Nissan’s HRIS Partners

An expert advice always ensures smoother delivery and good work. Hence, an HRIS specialist, if
hired, can give better results. HRIS professionals know the finer details and can give guidelines
to the organization based on their previous experience.

Nissan partnered with Enwisen6 to develop its world class HR Shared Serviced Center in 2007.
Enwisen was to provide them support for communication, decision support and case
management along with direct employee access portal. The expectation was to ensure that
employees got assistance with events like benefits services which could be accessed by
employees from anywhere and at anytime. Nissan also collaborated with PeopleSoft, a third
party technical business solutions provider, to design and implement the Nissan HRIS system. The

6
Enwisen ([Link]) – helps employers dramatically improve the employee experience by making "must
do" workforce communications more effective, more strategic and less costly. Their on-demand, personalized and
searchable HR communications solutions – for benefits decision support, onboarding, work/life events, employee
policies, total rewards statements, manager effectiveness and HR/Service Center staff – are rapidly deployed,
provide a broad range of features for significantly less money than traditional communication venues and are
maintained by Enwisen. Their AnswerSource Knowledge Center suite has produced measurable ROI for hundreds
of customers, including industry leaders like Yahoo!, Memorial Health Care, DHL, Harper Collins, W.L. Gore &
Associates, Hannaford Bros. Cos., Masco and MasterBrand.

They have three key business objectives:

1. Increase satisfaction and adoption of HR/Benefits programs while reducing costs.

2. Help employees fully understand and leverage their total rewards.
3. Improve employee communications and engagement.
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PeopleSoft7 Enterprise Human Capital Management (HCM) 8.8 included PeopleSoft Enterprise
Human Resources, Base Benefits, Benefits Administration, ePay, eProfile, eCompensation,
eBenefits, eRecruit and eDevelopment solutions. This was expected to help the employees get
better access and clear information about their benefits plan, payroll and other HR related
information8.

PeopleSoft has become the HCM and self-service portal for the employees at Nissan. Enwisen
provides the on-demand communications and decision support for the whole organization. The
information related to a particular can be accessed by only them with the help of an id and
password. All those who have access to information available at HRIS are shown below, they
have different accessibility as per their rights or hierarchy in the organization. Exhibit 2 has the
users of HRIS in an order of rank for the reader‟s perusal.

Exhibit 2:
Employees Managers Senior Managers Director CEO

Through the service provided by Enwisen, managers at Nissan were able to integrate various
services provided by People Soft, like case reporting, managing records etc. We can have an
elaborate explanation with the help of Exhibit 3 of employee‟s record keeping. This
allows Nissan‟s HR staff to manage employees easily as they have real time access to specific
information related to them. This helps them respond to every individual employees query faster
which would earlier require several hours or days.

This strategic move has helped Nissan‟s HR become more comprehensive and cost
effective opposed to their earlier style of work which was manual. Barbara Levin, Enwisen‟s
Vice President, believes that „the integrated Service Center should provide excellent service to
their workforce while freeing HR to operate in a more strategic, vs. administrative role,
and we‟re committed to helping them realize their vision.‟9

7
PeopleSoft, Inc. was a company that provided human resource management systems (HRMS) and customer
relationship management (CRM) software, as well as software solutions for manufacturing, financials, enterprise
performance management, and student administration to large corporations, governments, and organizations. It
existed as an independent corporation until its acquisition by Oracle Corporation in 2005. The PeopleSoft name and
product line are now marketed by Oracle.

8
Our Bureau, “Infosys deploys PeopleSoft 8.8 at Nissan units”, [Link] September 19th,
2006.

9
Novato, CA (PRWEB), “Enwisen Partners with Nissan North America to Build World Class HR Shared Services
Center and Direct Access Employee Portal”,[Link],August 21,2007
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The technology requirements of Nissan were to make an employee portal available to all
employees 24/7; this had to be made available to all employees working for the organization.
This meant single sign-in facility, this service also had to be HR centric, and this clearly kept all
generic or standard services out of the facility. An integrated solution was needed rather than two
separate systems for report generation and information access. Enwisen met these requirements
both technology-wise and was of great value too. Some of the major computer applications and
their types are enclosed in Exhibit 4 for better understanding.

The implementation of this plan gave rise to three tiers, where „Tier One‟ was represented by
the HR service center staff, „Tier Two‟ had the benefits administrators and „Tier Three‟
catered to the CEOs. All the above tiers are explained with the help of an example of data and its
applications in Exhibit 5. In „Tier One‟, all 12000 employees had eight people to answer their
queries and two were available at nights. Though the calls did not come at nights, still night
shifts were maintained to send a clear message of availability of the services and to enhance
employee relations. This showed Nissan wanted to hold its people‟s hands and ensure
their availability even at unconventional hours. This improved customer service for employees
immensely.

Apart from the Three Tier system, HR has divided itself into seven operational teams. Three
groups out of seven take care of administrative tasks, provides executive support, technical
support, managerial reporting and one group for attending to more challenging cases. All this
was done to maximize performance. Nissan received nearly 3500 requests per day by email and
telephone put together. The HRIS had to provide:

-Increase in productivity of 30%

- Tracking every case with record and its resolution process
- All the reports regarding daily performance, queue management & strategic objectives had to b
made.
- Increase in employee satisfaction by 40%10

All the cases were handled by executives at level one. If they were not able to handle it then
they escalated the issue to the required person. Also, all these activities were being monitored by
supervisors through sophisticated analytics and real-time dashboards. Nissan required enhancing
operational efficiency also. Hence, they made sure that workflows like standardization and
procedures along with employee empowerment and case reduction were taking place. This surely
decreased the number of inbound inquiries.

10
Case Study: Renault-Nissan betters HR, [Link], April1, 2009.
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Exhibit 3: HRIS Users by Rank

Source: DeSanctis, G., 1986, “Human Resource Information Systems: A current assessment”,
MIS Quarterly, Vol. 10, No. 1, pp. 15-27.

Earlier, HR managers at Nissan used to be burdened with manual administrative tasks like
updating inquiries, etc. Now with the help of HRIS these types of requests have receded and now
HR managers are available to handle strategic issues. Security of information on HRIS was also
given high priority as it concerned integrity and security of sensitive employee information. The
results achieved by Nissan after implementation of HRIS were highly impressive.

Challenges Faced:

Change is the only thing constant in the world and also the most difficult. The major challenges
Nissan had to deal with were at employee level regarding facing the change. The whole Human
Resource (HR) was being transformed. HR was going to change like never before in its way of
delivery of services in the whole organization. This change was going to affect everyone from
employees, managers and HR department to the management as well.

Selling change to the internal customers necessitates a committed and well resourced internal
marketing program. Change infrastructure refers to identifying the players in the change
initiative and a definition of their roles. Training needs to be undertaken to ensure that the
contemplated relevant change is inculcated by every person within the organization. It involves
altering the employee mindset to make the organization more customer-centric as well as
imparting the specific skills needed to function effectively under the new processes, designed
with appropriate practices in mind.

Nissan particularly tried to tackle the problem by maintaining open communication, they were
clear in communicating about what was being one, when and how. They made sure that
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employees were encouraged in being proactive to adapt change; they were assured about the
benefits it would bring to all from employees to organization. This was a major hurdle in the
whole process as suddenly after several years of performing a job it was going to change what
they did, where they did it and even the technology was new to use. Their world was turned
upside down by one change. For employees also it was a big change as they were use to meeting
HR people for any information and now they had access to it at one click, they had to now look
for this information themselves instead of having someone else do it for them. This technological
change meant everyone had to tend to their needs themselves. Most of the employees are used to
tending to their own business and felt that this was HR department‟s work which they had to do
now, it was a resistance to being empowered.

This change was accepted by the employees as they did not have any choice, the HR people are
still available as affiliates. But the role of HR in the organization has completely changed now.
One more reason why the change has been well accepted is because any change in policies or
new initiative is communicated to the employees easily and effectively. So the HR initiatives are
well accepted now. Employee queries are still handled on call or on one-one basis if the
employee is not clear about anything, it is just that the volume has gone down for such queries.

Benefits:

There are several benefits of implementation of HRIS. From an employee‟s perspective the
HR related information is now readily available like policies, personal information, etc. Any kind
of information from their pay slips to leaves, holidays is available a click away. This kind of
technology has changed employee‟s attitude as they help themselves now. People
get information when they want it and don‟t have to depend on anybody for it, this helps them
improve the quality of work life. It also has environment friendly benefits like less paper work.
For example, any changes that need to be made can be done by filling an online form, or any
notice which needs to be sent is simply posted on intranet. Now there are fewer delays as forms
don‟t get lost. The transactional process has become very fast.

HR people are also happier and more satisfied in their work as the administrative/transactional
work has been removed and they can now focus on more important tasks. Though there is still a
group of HR people looking at the administrative and transactional side but they are not
overloaded with calls like earlier. They are only flooded with calls when some major change has
been announced. We can also see a comparison of benefits of using HRIS with the old manual
method of maintaining records in exhibit 6.

Nissan management has always maintained that they are the partners of employees when it
comes to administering a change. Management feels they bring in the expertise and open
communication which facilitates the change. HRIS information has helped management in
decision making, now through the reports access and open communication and feedback,
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management knows what its employees like and don‟t like. This information is used
effectively in planning other changes. Business is also helped as there is higher efficiency and
satisfaction amongst the employees. Management has saved money, time and manpower. HRIS
implementation has proven to be a win-win situation for all from employees, HR, management to
the business. During the implementation of HRIS at Nissan, Ghosn was very clear about the key-
performance indicators (KPI) of HRIS. These included reduced response time in
employee‟s query and faster communication regarding policies to employees. This basically
boiled down to service given to employees, response rate and customer service. Nissan is
currently at world class measures in all the KPI‟s stated.

This goal assessment helps organization to chart out a road map of what is happening, is it going
in the right direction, it also keeps the cost factors in check. This assessment starts from the top
management and then works its way down to resources that uses HRIS. The assessment gives us
information about what has been saved with the implementation of HRIS. Before implementing
HRIS Nissan was in top quartile of expenditure for HR but after HRIS its expenses came down
to lower quartile. This complete transformation of HR services took two to three years, but at the
end it was worth the money saved.

HRIS implementation benefits are not restricted to the above discussion, there is more to it like
after one understands the capabilities of current HRIS along with considerations for the future
then HR can become the strategic partner effectively. In the initial days of HRIS in early 80s to
90‟s HRIS was mostly used to feeding data and getting compliance reports. It is only now that
HR has started assisting as a business partner by providing critical data for decision making with
the help of HRIS. During the merger the data available on HRIS helped a lot in strategic
planning.

Since Nissan has international workforce HRIS has helped by standardizing all practices for all
employees across the globe. HRIS helped manage organization structure with the cross border
employees and international workforce. Smaller details like multiple languages, salary
administration in multiple currencies were implemented.

All the efforts boil down to customer service, where employees throughout the organization are
catered to by the Human Resource department. Employees are the focus for HR to become the
effective strategic business partner. Online benefits plan and registration is one example of
transparency and open communication this also ensures efficient service to employees through
HRIS. Earlier organizations adapted the most popular software but now they are becoming more
customized as per the business requirements and to meet customer‟s requirement.
PeopleSoft HRIS is one of the best software around the world; it almost comes with a legacy. Its
database integration helps the organization in several ways.
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Road Ahead:

Automobile industry in the past has faced severe resistance to any change; it is possible this time
as well. The right approach would be to recognize nature of change and its impact on the
organization. Human resource will be the guiding factor in moving to the next era of HRIS.

The basic design of the petrol-driven engine has not radically changed since the 1920s. Like the
arrested state of development of the petrol driven engine, the software industry is approaching a
similar stage where the fundamental design of business software applications may not radically
change for many years. The future will focus on HRIS production technique, packaging and
presentation to the market (Macy, 2007).

During the times of recession, the HR function has helped in Nissan‟s re-engineering efforts. The
Nissan HR department was able to restructure themselves without affecting too many people
with the help of HRIS. Layoffs were the least; people were open to the idea of voluntary leave
with appropriate incentives. Re-engineering and cost cutting efforts were high hence the
organization sailed through the bad times. Nissan did go in losses for one quarter, but then paced
up in the next three quarters in terms of profit. Nissans market share surprisingly went up during
recession without any intervention from government in terms of funds.

It is difficult to initiate HRIS in an organization. If organizations don‟t have clear objectives for
implementation then the results would also be dubious. Hence, we should be clear about the
requirements and specifications so that the vendor can work upon them. Also an organization
should try to keep the deliverables fixed. If they are changed constantly, then the vendor looses
focus (Lynch, 2010).

On the technology front, transformation is the key for successful human resource initiatives. If
the human resource professionals know how to use the technology to their best then it is a
smooth sail for them. Certain uses like productivity boosting strategies, tracking employee
information, etc. Technology has great impact on work and people and this can be understood
with the help of HRIS implementation.
The dependence on HRIS and its several complex data elements has become a challenge for the
management. One of the difficulties is the alignment of HRIS with the corporate mission. The
unique contribution of HRIS to all corporate strategies is its people inventory aspects,
supplemented by employee cost information and the planning of human resources, careers, and
succession. In the future there would be requirement for more quantitative data and more
sophisticated analysis of the information. All the technological advancements would help HR to
get models from the employee‟s data available (Pasqualetto, 1993).

HRIS evolution has reached a critical point in the personnel area; the annual budgets of
organizations are growing by 42.8% for the same. HRIS is becoming technically sophisticated
and expanding its influence on „human resource decision making, critical issues concerning the
management of HRIS must be addressed. These issues include: definition of HRIS objectives,
developing effective strategies for servicing the needs of various user groups, and coordination
of planning with the personnel and MIS areas of the firm. Security and privacy concerns
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associated with employee record keeping, interfacing with information systems in other
functional areas, career path development for HRIS employees, and lack of cooperative
relationships between human resource and management information system (MIS) staff are
additional problems confronting the organizations.

Organizations are keen to devote resources to improving management of HRIS. But top
management, personnel management and MIS management all differ in their views of the role of
HRIS and the meaning of HRIS effectiveness. Perhaps this issue is one that cannot be resolved,
but there should be recognition of the problem prior to allocation of resources. These days due to
departmentalization HRIS may face more hindrances as all departments manage their own
independent MIS. Due to this managing information in an organization has become highly
complex as HRIS is continuing to evolve these complexities will also increase (de Sanctis,
1986).

There is a legal dimension to HRIS as well which should be known to human resource managers.
The laws keep changing and there are regulations pertaining to personnel files. During HRIS
implementation we should ensure that no such problems or lawsuits can happen due to
infringement of employee‟s right to privacy and protection. HR managers have access to a lot of
data but it is their responsibility to maintain high ethical standards in their organization (Hubbard
et al., 1998). In the near future we can expect that decisions for an organization would be taken
through a properly managed information system. The high automation is being supported by
HRIS throughout the organization. To automate these decisions we only need to keep in
consideration the programming decisions, mathematical tools being used and the scientific
approach to solve problems and finally certain predetermined decision rules should be induced in
the programming being done.
By automating Human Resource practices, HRIS saves time and money, effectively reallocates
work processes and thus provides competitive advantage and adds strategic value to the
organization. To leverage upon this exciting tool, HR managers must make use of HRIS to
achieve improved performance. Removing routine administration also will allow them to devote
their time and efforts towards more productive initiatives for their organization. Through this
description of the ways in which HRIS can be implemented and assimilated within an
organization‟s work culture we have hoped to urge HR practitioners to move towards that
direction.
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References

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[Link] [Link]/, (Accessed 5 April 2012).

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[Link]/, Accessed on 5 April, 2012).

Annual Report (2005), Nissan, [Link] (Accessed on 7 April, 2012).

Broderick, R. and Boudreau, J.W.(1992), Human Resource Management, Information

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Byrne,N. February 3rd, 2010, „Nissan North America Transforms HR Services”, [Link]
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DeSanctis G. (1986), „Human Resource Information Systems: A current assessment‟, MIS

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Freeman, I.C. (2008), „Exclusive: Spain: Nissan unions to strike over cuts‟, 7 February,
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Ghosn, C. and Ries, P. (2005) Shift: Inside Nissan’s Historic Revival, Currency Doubleday
Publisher, New York.

Hubbard, J.C., Forcht, K.A. and Thomas, D.S. (1998), „Human Resource Information Systems:
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1319-1323.

Jeter, L. W. (2001), „Mississippi eyes upcoming union vote at Nissan's Smyrna plant‟,
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May 2012).

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focus‟, [Link], (accessed on 15th May 2012).
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Lynch, P. October 25th, 2010, „What are the challenges in implementing HRIS software in large
enterprises?‟, [Link], (accessed on 15th May 2012)

Macy, J. (2007), „Component Architecture and the Technology Marketplace‟, IHRIM

Journal, Volume XI, Number 2, pp. 30-36

Maynard, M. (2003), „The End of Detroit: How the big three lost their grip on the American Car
market‟, Currency Doubleday Publisher, New York, USA.

Mohanty, M. and Tripathy S. K. (2009), „HRIS in the Indian Scenario: A Case Study of a Large
Organization‟, South Asian Journal of Management, Vol. 16, No. 2, pp. 127-168.

Nayebpour, [Link] Saito, A. (2007), „Toyota vs. Nissan – A contrast in Culture, Corporate Governance,
Operational Strategy, and Financial Performance‟, retrieved from: [Link].

Novato, CA (PRWEB), “Enwisen Partners with Nissan North America to Build World Class HR
Shared Services Center and Direct Access Employee Portal”,[Link],August 21,2007

Our Bureau, September 19th, (2006), „Infosys deploys PeopleSoft 8.8 at Nissan units‟,
[Link] (accessed on 10th May 2012).

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retrieved from: www. [Link].

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Personnel Journal, Crain Communications, Inc., 1993.

Ruben, G. (1989), „Nissan employees reject union - developments in industrial elations‟,

Monthly Labor Review, September, [Link]
(accessed on 7th August 2011).

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[Link]
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 lOMoARcPSD|13238497

Welch, D. (2006), „Just How Good Is Ghosn?‟ [Link], Sept. 25 (Accessed on

17 January 2012).

Footnotes:
1
Niamh Byrne, “Nissan North America Transforms HR Services”,
[Link] February 3rd, 2010

Daniel Thomas, “Merger forces HR to rethink IT strategies”, Personnel Today, Business Source
2

Complete, January 18th,2005

3
Carlos Ghosn was born in Brazil on March 9, 1954, to a French mother and Lebanese father
Rose and Jorge Ghosn. The exposure he had from traveling gave him various skills which
included his fluency in five languages. Ghosn graduated from the prestigious French Ecole
Polytechnique. Ghosn‟s father had a business in Brazil but his family shifted to Lebanon
when he was six years old, though his father stayed back in Brazil because of work. Despite the
absence of his father from his day-day life his father played an important role in Ghosn‟s life by
instilling discipline and core values in him. Lebanese families are close-knit families. Ghosn
spent eighteen years in Michelin Tyre Company evolving himself. After this, due to certain
changes in the management structure, he moved on to Renault for personal growth in 1996 as
executive vice president.
4
The term Zaibatsu was used in the 19th Century to refer to large family-controlled banking and
industrial combines in Japan.
5
Keiretsu refers to a uniquely Japanese form of corporate organization. It is a conglomeration or
family of affiliated companies organized around a single bank for their mutual benefit. Each
major keiretsu is capable of controlling nearly every step of the economic chain in a variety of
industrial, resource and services sectors.
6
Enwisen ([Link]) – helps employers dramatically improve the employee experience
by making "must do" workforce communications more effective, more strategic and less costly.
Their on-demand, personalized and searchable HR communications solutions – for benefits
decision support, onboarding, work/life events, employee policies, total rewards statements,
manager effectiveness and HR/Service Center staff – are rapidly deployed, provide a broad range
of features for significantly less money than traditional communication venues and are
maintained by Enwisen. Their AnswerSource Knowledge Center suite has produced measurable
ROI for hundreds of customers, including industry leaders like Yahoo!, Memorial Health Care,
DHL, Harper Collins, W.L. Gore & Associates, Hannaford Bros. Cos., Masco and MasterBrand.

They have three key business objectives:

1. Increase satisfaction and adoption of HR/Benefits programs while reducing costs.

2. Help employees fully understand and leverage their total rewards.
 lOMoARcPSD|13238497

3. Improve employee communications and engagement.

7
PeopleSoft, Inc. is a company that provides human resource
management systems (HRMS) and customer relationship management
(CRM) software, as well as software solutions for manufacturing,
financials, enterprise performance management, and student
administration to large corporations, governments, and organizations. It
existed as an independent corporation until its acquisition by Oracle
Corporation in 2005. The PeopleSoft name and product line are now
marketed by Oracle.

8
Our Bureau, “Infosys deploys PeopleSoft 8.8 at
Nissan units”,
[Link] September 19th, 2006.

Novato, CA (PRWEB), “Enwisen Partners with Nissan North America to Build

9

World Class
HR Shared Services Center and Direct Access Employee Portal”,
[Link],August 21,2007.
10
Case Study: Renault-Nissan betters HR, [Link], April1, 2009.
 lOMoARcPSD|13238497

Case Study LG Electronics:

LG Electronics, Inc.: Implementing an e-HR System

Background
Case No: Case No: ES-006 Date: November 11, 2008

LG Electronics, Inc. (formerly known as Lucky-GoldStar) was a subsidiary

company of LG Group that was established in 1958 by developing the nation’s first
radio, as the pioneer in the Korean consumer electronics market. By 1965, LG
Electronics was producing transistor radios for export to Latin America. In 1967,
the company became a pioneer in the energy sector in South Korea when it
established Honam Oil Refinery and the company was the first in the country to
produce refrigerators.

Since then, LG Electronics (LGE) had made constant efforts to maintain high levels
of innovation, research and development. This made the company a successful
global electronics manufacturer. The company produced electronics, information
and communications products with more than 64,000 employees working in 76
overseas subsidiaries and marketing units around the world with annual total
revenues of more than (non-consolidated) US $16.9 billion (LG home page, 2006).
LGE comprised of four main business units: Mobile Communications, Digital
Appliance, Digital Display, and Digital Media. LGE has garnered a reputation in
innovative technology with the development of consumer electronics, home
appliances and IT product.

LGE initiated a transformation in Human Relations Management (HRM), as part of

continuous efforts to steer various reform initiatives to secure global
competitiveness. The company not only undertook activities in operations, and
sought to strengthen its competitiveness and create profitability, but also made an
effort to transform its human resource management practice. LG Electronics and its
members discarded the old vertical relationships of pursuing and keeping their
respective shares. Instead, horizontal relationships were embraced wherein workers
and managers assumed their functions and roles in pursuit of a common goal.

The above paradigm shift triggered LGE to initiate their HR transformation. LGE
targeted its HR direction in two categories according to different purposes. One was
focused on people performance improvement and the other was HR Service level
improvement. Although these two directions encompassed distinctive purposes,
they should not be isolated but should be understood as supporting and interacting
together. People performance improvement was aimed at establishing a strategic
human resource management structure. LGE practiced strategic human resource
management by following programs such as strategic staffing programs (for
planning, recruiting, and changing of positions), performance/reward programs, and
strategic human resource development programs (for career development,
succession planning, training and education). They perceived these practices as a
core of HR management, which conveyed their purpose of improving people
performance.
 lOMoARcPSD|13238497

The other direction, HR Service level improvement, was aimed at providing and
delivering effective HR service. This was put into practice by establishing a HR
Service Delivery Model, which included
 LG Electronics
the delivery strategy, process, role of responsible person, and HR performance
measurement. Furthermore, in order to deliver effective HR service, LGE
implemented a total e-HR system, that is, the Human Resource Management Systems
(HRMS), ERP and HR program solutions.

LGE practiced intensive HR policies to create value for customers through

management based on esteem for human dignity by challenging and building
employees competences. These were explained in five value streams as the basis of
LG’s main HR system: organization, recruitment, development, appraisal, and
compensation. The end result of this was the establishment of Human Resource
systems that directly recognized management philosophy and business strategy.

First, LGE sought to recruit and maintain knowledgeable employees who were
capable of using and applying their knowledge to the creation of new values and
ideas. LGE saw an individual’s creativity as the source of creating value and at the
same time respected diversity and autonomy so that each could exercise their own
creativity to their full extent. Secondly, they focused on building equal
opportunities. LGE portrayed equal opportunity in gender, race, age, religion or
nationality as a central point in building trust between people. Third, the company
emphasized and adopted competence as the most important criterion for making
personnel decisions. In order to compete in global context, the company made an
effort to attract talented individuals who pursued the top spot and who constantly
evaluated their main areas and objectives on the basis of their ability to embrace
cultural diversity. At the same time, the company hoped that their employees
pursued the number one position with interest and a challenging spirit, and
broadened their horizons. Fourth, regardless of the turbulent industry environment,
LGE tried to maintain a long term perspective on its HR policy. As the company
respected and encompassed a long term view, it also placed persistent effort in
designing a HR policy, its implementation, and lastly performance based rewards.
Similar to other organizations, the company also saw the importance of rewards
based on performance. LGE evaluated employees annually according to
competencies and performance. Based on the evaluation, promotions, incentive, and
raises were granted.

The development of HR Shared Service Center (HR SSC)

LGE’s effort to improve their HR Service level was shown by their attempt and
output of reorganizing their HR Service Department. LGE transformed their HR
service department from an ‘Old HR service delivery model’ to a ‘New HR service
delivery model’ by implementing an in-house service center called the ‘HR Shared
Service Center’ to oversee their HR administrative activities. In other words, the
HR service departments that existed in each business units were transferred to a
centralized location to provide complete HR services under one roof. As HR
manager suggests:

“We understand the Shared Service Center is an output of company's efforts to move
towards a more efficient HR function, primarily by streamlining and centralizing
routine HR transactions and processes. It is there to act as the focal point for handling

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HR enquiries from line managers and employees.”

The benefits and original purpose of this new transition could be categorized as
follows. First, LGE hoped that this center would provide support so LGE business
units could focus on its core competencies, that is, research, marketing,
manufacturing. Second, they wanted to ensure effective use of management
resources and processes. By centralizing its processes, the company could avoid
wastes in time and human resource. They hoped to achieve a greater consistency of
the approach to HR matters across the company. Third, as the name Shared Service
Center suggested and emphasized the company (particularly the HR department)
hoped to change the way they collaborated with employees. They wanted to stress
the ‘partnership’ between the company’s employees and HR department instead of
just executing what needed to be done. Fourth, it was expected that this center
would be financially more efficient because of lower transaction costs and reduced
staffing levels. The company hoped to save approximately 35% in cost, a
percentage that was similar to other

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 LG Electronics
developed nations’ HR service. Fifth, the company could provide more customer-
focused service to their employees by focusing their HRM strategy.

LGE incorporated 5 steps in the construction of the HR Shared Service Center (HR
SSC). Figure 1 shows its road map.

SSC Road Map

Strategy Business Case Delivery model Implement Optimize

Establishment of a Collect Design of IT platform Design a Verify initial

purpose and object Benchmarking Data of HR Program
and new process change plan purpose

Identify future service Acquire commitment New process

HR service anddelivery model from top level and IT implementation
strategy road map management
on the new HR service

Advance Requirement for the reduction of complication

-Develop clear object / strategy

-Study on the business case
-Achieve mutual agreement and consensus

Figure 1: SSC Road Map

When LGE decided to embark on constructing the HR SSC, the first thing they
faced was to select the business units and processes of HR SSC that they would like
to incorporate in HR SSC on the basis of HRM and LGE competency. This
selection was made by answering the following criteria. Do we require this service?
Is this service specific to the business unit? Is the service common? (e.g. Payroll)
Can the service be measured? Do we have the skills to deliver the service? A
project team member noted:

“Although we tried to answer related questions and it may seem very easy to identify,
possibly saying YES to all, at that time, it was not an easy task to decide.”

The specific services that LGE finally decided to provide from HR SSC were
categorized as threefold. First, administrative services such as payroll, fringe
benefits, personal information, and FSE (personal file system extender) support
were included in this category. The second category was related to HR support.
They included data service providing and emailing regular HR statistics. Also, it
involved monitoring and surveying HR operations. Third was the management of
service infrastructure. This category was aimed at providing general HR contents,
that is, company HR policy, user manuals, and references. In addition, this category
also included matters of IT system improvement for HR SSC employees to continue
data management.

Implementation of Human Resource Management e- Transformation (e-

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LG Electronics
HR) Project

One of the significant developments during their human resource e-transformation

was the creation of an e-HR system to support the HR SSC. The development of
HR SSC included the implementation of an e-HR system to maximize and induce
its purpose. Started in 2001 as a HR Data Mart, the e-HR system aimed to support
the Shared Service Center more effectively by aligning and integrating it

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LG Electronics

with the existing company’s intranet/portal. The e-HR system project was an
extension of LGE’s l ERP project. Figure 2 outlines the overall master plan.

2001.3 2002.22002.92003.5 2003.12 2004.8

ERP HRMS ERPSynthesizeSynthesize StabilizationERP [Link] Stabilization

System Dev.

HR Analysis System Dev. Stabilizati on

Data Mart Design

Master
Plan
PortalStrategy Planning Develop ment Pilot Test Company diffusion

HR SSC outsourcing Stabilizati of specific on &IT features diffusion

Shared Service
HR SSC Design / Develop Planning ment
Introducti on

Figure 2: Master Plan

The main purpose of the e-HR system was to streamline HR processes and provide
a single source to access all associated employees and organizational data. It aimed
to provide the opportunity to automate labor-intensive processes and devolve
routine transactions to line managers and, in some cases, to employees themselves.
An e-HR system could also lay the foundations for a wider e-HR strategy, which
might include e-learning and online recruitment by providing more consistent and
accurate internal profile.

The main purpose of the e-HR system was to focus on the HR model that was based
on job, competency, and performance. Figure 3 presents the overall picture of this
HR model. This had to be prepared before the e-HR system implementation, and
through a separate project, issues such as the job, competency model definition,
company’s job structure definition, and competency profile and competency
development. LGE made an effort to structure overall job categories and
architecture with necessary competencies for each job category. This enabled LGE
to redefine its recruitment, development, evaluation and reward systems for the
better operation of HR Processes. According to a senior manager at HR SSC:

“This has allowed LGE to concentrate its operation of HR and organization based on
job and rational standard.”

With the e-HR system, job and competencies were managed more effectively
through a ‘work structure management’ function. Within the ‘competency profiling’
function, issues such as competency type, definition, and necessary
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LG Electronics
knowledge/skill/value (or attribute) were managed and explained. In addition, this
system provided advice and methods for giving information where and how
employees could acquire and improve necessary competencies (i.e. internal/external
training programs, books, conference/seminars, expert internet site, and internal
knowledge base).

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LG Electronics

This enabled employees to identify necessary competencies for their jobs and tasks.
For the managers, this helped to evaluate and assign the right people for the right
job in vacant positions. Also, managers could both evaluate their employees
through the competency profiling and make suggestions.

Applicant /
Strategy
Employees

Define Job (Job Analysis)

Identify competency and

needed skills

Position
Matching
Hold Competency

Availability of position /
Organize HR ERP

Recruitment Strategy Selection, Position, Transfer

Organizational Analysis Training and Education
Development Strategy

Figure 3: HR model based on job and competency

The main menus of LGE’s e-HR system were categorized as HR information

(annual income, benefits, performance index, 6 sigma belt rank), past experience,
career development program, and list of employee in the same department/team.
Several sub menus included my work, supporting work, knowledge, learning,
communication and HR service.

e-HR System Project

The overall e-HR system development project began in January 2001 and finished
in December 2002. This included LGE’s ERP development from May 2001 to
August 2002.

The decision to outsource was not an issue because companies like LGE were used
to being involved in such IT projects. According to a senior manager in HR SSC:

“We are accustomed with this type of project. Outsource or in source is not a question,
but finding a right consultant and vendor is what we always find it difficult.”

A senior manager in HR SSC continued:

“Most of times LGE decides on the LGCNS (subsidiary company of LG Group, which
was formerly a joint venture between LG and EDS named LGEDS) for any IT project.

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As a subsidiary company LGCNS knows our business process, culture and the future
directions that we wanted to follow. As you know, this is quite common in Korea as most
of large companies tend to use their own subsidiary IT consulting company. For
example, Samsung tend to use SDS.”

Apart from LGCNS, two other companies were involved in the project: LGE (a
project owner) and Oracle (ERP HRMS product vendor that was responsible for
providing IT application and solution).

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LG Electronics

LGE employees were responsible for monitoring the progress and facilitating the
development while employees from LGCNS were mainly responsible for software
and system development in cooperation with Oracle.

A project team of 35 members was formed initially. 10 of them were from LGE, 20
from LGCNS, 4 from Oracle Korea who were responsible for the application
coding, and 1 from Oracle HQ who was responsible for supporting the alignment
between the existing ERP and new Oracle HRMS module. Also, 40 software
developers who were contracted by LGCNS were involved. However, the number
of software development people from LGCNS fluctuated very often as the project
progressed.

LGCNS employees were still stationed within LGE’s HR SSC to improve the
functions of the e-HR system when it was necessary. The overall cost for the
project was approximately 9,000,000,000 Korean Won (i.e., approximately US $
9,000,000) including a Data Mart for the database.

A Project Manager mentioned:

“It was very difficult to have implemented a HR Shared Service Center. First, we did
not have any possible benchmarking company in Korea (Now, we are proud of
ourselves being the first one). Second, as we expect an operation of HR service to be
changed, we had to prepare ourselves to face many obstacles. For example, executives
who are accustomed to receiving face to face HR service (a secretarial service), they
might face difficulties to handle all their HR issues personally by themselves. In fact
some of them asked to have additional service, so that they can ask their secretaries to
look after some of administration (although that is personal).”

Operation of the HR SSC

The HR SSC was managed by both LGE HR SSC employees and contracted
employees. LGE employees were full time LGE staff responsible for the overall
management of the center. A contracted outsourcing company was responsible for
providing part-time contracted employees for LGE. They were responsible for
taking queries from LGE employees via email, phone, and bulletin boards while
using the service.

In most case, LGE employees were able to get necessary information from the
Intranet. However, in several particular cases, LGE employees needed to have case
by case instructions. When call center employees interacted with customers (i.e.
LGE employees) on the phone, they had to complete the service in the shortest time
possible and at the same time provide accurate service.

According to a manager of a HR SSC:

“At the moment, the HR SSC is run by 44 people to take a call. Managerial positions
are run by 4 senior manager, 3 managers, and 6 assistant managers. Others who are in
charge of everyday running of system consisted of approximately 35 people. Although

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LG Electronics
they have been relying on contracted people to take a call, they hope to recruit own staff
from 2006 due to the conflict between full time employees and contracted employees.”

With the help of the e-HR system, LGE was able to identify and analyze
employees’ needs and behaviors. For example, the analytical tool helped to identify
who and which job level was interested in what types of benefits. Statistical reports
could be drawn from the analysis. According to a senior manager:

“We have found that employees in LGE Mobile Communication Business Unit have
inquired a lot (with 10000 people inquired). During the February, 2006, employees in

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LG Electronics

accounting and finance have inquired mostly. We can also segment according to level
of jobs. Office workers inquired rating 53%, R&D 26%, and technicians 11%.”

LGE employees could access various HR services via different channels. They
could use the company portal/intranet, phone and internal snail mail. In addition,
employees were able to visit HR personnel who were stationed at each business
units as contact points.

To provide the best possible service, LGE carefully considered the operation of the
service. There were several reasons that LGE emphasized on the measurement. For
LGE employees, they wanted to ensure that this transformation and reorganization
of the HRM service was not only a usual change of organizational structure from
decentralization to centralization, but also something that was very important in
HRM. For employees who worked at HR SSC, they needed performance
measurement indexes for the operation of the center. The measurement index of the
service performance was identified by categorizing detailed service that HR SSC
provided. They segmented the possible errors and problems that could arise during
the use of the service whether it related to the system or human from the employees
(user) perspective. The main errors and problems were associated with the service
delivery time, service satisfaction rate, the number of claims, the error rate, and
customer satisfaction of the system. A senior manager in HR SSC mentioned:

“In 2005, we’ve achieved 66% improvement in cost per service, 53% improvement in
service delivery time, and internal customers satisfaction rate 6.2 (7.0 max). [The
internal customers satisfaction rate in 2004 was 5.8 (7.0 max)]. Overall saving of cost
was around 30%.”

Apart from main users of the SSC (LGE employees), there were other customers
who were in regular contact with HR SSC. They were external organizations, such
as, hospitals and insurance companies that collaborated with HR SSC closely.
Figure 4 shows the image of the service operation.

Customer Service Channel HR Service Center Customer

Manager HR ERP
Self Service Email Payroll/ Fringe Benefit Service HRM
Department
Data
Contents

Phone
HR Support
Apply &
Authorize

Internal
Mail Service Management External
Organization / Collaborative Firms
People
Self Service Employees 1st 2nd
Claims
stationed at each business unit Service Line Service Line Contract (e.g. Hospital,
Insurance Co.

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LG Electronics
Figure 4: Image of service operation

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Changes and Benefits introduced by Project Implementation

The development of the e-HR system permitted LGE to transform a paper-based

system to a centralized digitalized system. This transformation had several benefits
and changes.

First, the e-HR system facilitated the overall recruitment process from the
recruitment request to acceptance of position online. Managers in each department
were able to request a new recruitment via the system and they could follow the full
process until the position was filled. This helped them to share and use the
information of external and internal applicants across the company. For example, a
department could post the availability of internal positions for internal employees to
apply as well as to help them to evaluate and ensure applicants’ competencies.

For the interview, e-HR system helped to perform video interviewing. Department
managers, HR department, and applicant could get together online for the interview,
thus diminishing the need to travel.

To select competent new employees, the e-HR system provided an online test
(Situational Judgment Inventory) for applicants to evaluate themselves. The result
would be used as a reference during the interview to help the interviewer to identify
applicants that shared a common understanding regarding the company’s policy.

Second, the e-HR system facilitated the overall performance and competency
management process. The emphasis was placed not only on performance issues but
also on human resource development for individual employees. LGE practiced
MBO (Management by Object) at the beginning of every year. To emphasize their
competency, MBO was only fully completed on the condition that each employee’s
performance object and competency development had been agreed upon and
registered on the system. Also, it was to stress the importance of process until the
finalization of the MBO to ensure reliable performance evaluation. Therefore, the
employee and the manager had to register their consensus meeting date and result
on the system.

In addition, the system allowed managers to upload current year objects and targets
for employees to align their individual objects. Also, each employee could express
her/his views on job satisfaction and examine long term personnel development
management.

Third, the e-HR system helped to achieve standardization of work, process

alignment and self service in the area of management of salary, working hours, and
fringe benefit processes.

Another benefit was improvements in process alignment. Without any further work,
changes in personal information and changes in qualification details were amended
accordingly and applied to individuals’ salary management. The interconnection of

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personal information and salary management was made possible to validate data
across the HRM.

For the employees, a full screen was presented to allow them to view employee’s
salary, incentives, retirement benefits and the end of year balance. Employees could
quickly get the results of queries. For example, the result of payroll query, fringe
benefit query, and the selection of New Year’s gift were immediately notified to
employees’ mobile phone via mobile short messaging service (SMS). As a third of
LGE employees were technicians working at the product line that did not have
much time to check emails and connect to the company Intranet, employees found
this service very useful.

In the management of working hours for the white color workers, the e-HR allowed
self management through a web based system. Previously, the working hours were
managed by a person in charge in each department. Now, individuals could check
and register times and dates when they needed to work over time (e.g. coming into
the office on Sundays).

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The fringe benefit management process was also made easier by the e-HR system.
Previously, any benefit application had to be approved by managers, but now they
could apply for benefits according to their need and the company regulations. Proof
of certification and documents could be sent to the HR SSC later by internal post.
Individuals could review the current status of the process online. Once benefits
were confirmed and provided by the HR SSC, such information was then notified to
the employee’s manager, so that the manager could express their
congratulations/wishes/condolences. This helped manager to know and get
interested in employees’ welfare.

Fourth, the e-HR system facilitated routine work. Now, employees could amend
personal information and apply for benefits directly. Previously, employees’
personal information was handled the HR department employees in the respective
business unit where employees worked. Now, with the help of the new HR SSC
with the e-HR system, employees could manage their personal data unrestricted by
geographical location. Furthermore, the e-HR system allowed self service so that
employees could personally update their information, such as, address and
telephone numbers and so on.

For the managers, they could manage HR (i.e. employees) through the ‘manager
self-service system’. For example, they could show department objectives, manage
employee’s performance, and recommend incentives and annual salary level. Also
managers could recommend necessary training and education courses.

On the downside, HR SSC faced many telephone calls from employees in the
beginning of the use of the e-HR system. As they were accustomed to inquiring via
telephone, employees just picked up the telephone handset. It was thus quite a
volume of calls to handle, guide and explain where information was in the system.
This made the system developers and HR SSC employees aware of the importance
of the system user interface and content of the e-HR system. Several of the HR SSC
employees mentioned the notion of ‘service pull’ and ‘service push’ in relation to
the customer service. As one of the HR SSC employees noted:

“I have experienced the behavioral changes and the mental attitude towards conducting
his work. Previously, I was to provide HR service to employees when they need (Service
pull), however, now, it is my job to provide and push services (Service push).”

Functional features of e-HR system

The first was the authorization feature. When there were large numbers of
employees, a manager could share and transfer his/her HRM duties to his
subordinates and other team leaders through the authorization function within the
system.

The second feature was the automated work flow. Through this function, a preset
process could be followed. For example, applying, authorization, agreement,

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confirmation, notification due date, and notification unfinished work could be
automated accordingly.

The last feature was enabling data track. For example, if a new employee was
supposed to start work a month later, the HR manager could input the work start
date accordingly. This helped managers to perform their job in real time (when they
made a decision) to prevent a failure in inputting necessary data. This also helped
administration staff to prepare office equipment such as the computer and desk.

Challenges faced by LGE during e-HR implementation

LGE found the process of implementing a new e-HR system a major task
undertaking both in terms of cost and time. Furthermore, integrating the e-HR
system into LGE’s ERP system was something that they never challenged.

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The main focus of the project was to implement new technology to leverage the
reconfiguration of HR SSC. However, there were other challenges that LGE faced
during the implementation process. The main challenges are outlined in this section.

First, LGE went through a M&A with one of its subsidiary companies (now a
Mobile Communications business unit of LGE) in which the company needed to
reconfigure all of their employees’ HR data under one roof.

Second, LGE’s ambitions to be a global leader in consumer electronic market placed

a load on their implementation. As the company tried to align their work (i.e.
planning, strategy, purchasing, logistics, etc.) processes according to the value
chain, they expected a new process innovation. This innovation process aimed to
provide the same platform, service, and management in all LGE branches in Korea
and abroad. LGE considered that these changes were necessary for them to prepare
to be a global leader. The HR SSC was no exception to this change and had to
accept the burden of preparing to provide a global standard of HRM practice.

Third, employees (users) presented unsatisfactory remarks at the beginning of the

use of the system. This was mainly by employees who needed to send out
documents by post or special courier. Although the completion of the service
delivery was late with a delivery time of 12.5 days before the system
implementation, it could be done at the same place with face to face interactions.
The short time scale in service delivery time and the local point of contact led
employees to see the benefits.

Fourth, during the development period in particular, IT and system development

issues placed HR SSC in a difficult situation. The software package from Oracle did
not include all the necessary elements that LGE sought within the system. The
package presented categories that were founded on American HRM practice. For
example, American HRM practice was based on self regulation that did not need
much support on HR issues, while Korean employees needed detailed management
of work and support from the HR center. In addition, in the user interface issue,
LGE found the need to develop a few items with their own specification. In
particular, HR SSC wanted to view complete categories of the menu rather than the
segmented step by step view that the Oracle package presented.

Fifth, due to the sensitivity associated with personal data, HR SSC was not able to
incorporate all elements that they had in mind. Elements such as changes in an
appointment or promotion had to be restricted to HR personnel which did not allow
individuals to change their information. In addition, amendment of personnel
information regarding increases in the number of family members and degrees
awarded was also restricted. Employees were asked to present appropriate
documents for HR SSC employees to change the information for them.

Sixth, managing projects which needed to be incorporated and aligned with LGE’s
ERP system required a significant amount of effort in handling the careful
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configuration of the system. A HR manager explained:

“We strongly think (100%) that works on the process innovation should be carried out
before hand and jobs on IT can come in later. The reason that we had to do process
innovation and IT implementation without much time difference are due to the
implementation of overall ERP in the company. Meanwhile, how fast you can realize the
errors and correct depends a lot on the understanding of the business process.”

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Author Information

Shan-Ling Pan
Department of Information Systems
School of Computing, National University of
Singapore 3 Science Drive 2
Singapore 117543

Email:
pansl@[Link]
Tel: (65) 65166520

Shan-Ling Pan is the coordinator of the Asian IT Case Series, NUS. He is a faculty member in the
Department of Information Systems, School of Computing, National University of Singapore. His
research interests include enterprise system implementation, eGovernment, IT-enabled
organizational transformation and knowledge management. As a case study researcher, Dr. Pan has
conducted and published more than 30 case studies on Asian organizations. He has published two
case books in 2004 and 2006: “Managing Strategic Enterprise Systems and E-Government
Initiatives in Asia: A Casebook” and “Managing Emerging Technologies and
Organizational Transformation in Asia: A Casebook”.

Hyun-Jeong Kim
College of Business
Administration Inha
University

Email: kimhj@[Link]

Hyun Jeong Kim is an Assistant Professor of Organization HRM in the College of

Business Administration at Inha University, Republic of Korea. Her primary
research focuses on the recursive interaction and integration of organizations and
technology, with particular emphasis on issues such as transformation, human
resource management, learning in the organization. She has conducted an e-
government case study research and published findings in Government Information
Quarterly.

Mahdieh Taher
Research Assistant
Asian IT Case
Series School of
Computing
National University of Singapore

Email:
isct1088@[Link] Tel:
(65) 84091047

Mahdieh Taher is a research assistant at the Asian IT Case Series, NUS School of Computing, NUS.
Her research interests are e-Government, Analysis and Design of Information System, Information
Technology Management, and IT Strategic Planning. Her research has been published in the Journal20
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Information Technology Era, IEEE International Workshop and International Electronic City Conferen

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