Abstract.
The role of Digital Human Resources Management (DHRM) in the era of globalization, especially in the COVID-19 pandemic, has made a major contribution to sustainable business performance. This is interesting to study considering that the DHRM work process will take place through mobile, electronic media, social media via the internet, and also with the help of IT (information technology). This research aims to analyze the role of Digital Human Resource Management (DHRM) in contributing to the improvement of sustainable business performance in companies in DKI Jakarta. The importance of the role of DHRM is investigated because DHRM is able to do human work through software and several applications, which are supported by the internet network. Digitalization in HRM will enable companies to operate more efficiently and relevantly in the future. This type of research is qualitative which involved managers working in oil companies and transportation companies in DKI Jakarta who used DHRM in the companies where they worked. This study analyzed the data using the triangulation method through documentation, interviews and direct observation in the field with case studies. The results of the study explain that several digital HRM practices have been carried out in several companies, but other practical activities have not been carried out optimally. This is because the support from the system and the digitization of business processes that are included in HR practices are not yet optimal. However, the company realizes that DHRM is able to improve business performance in a sustainable manner.
Keywords: Digital Human Resources Management (DHRM) · Business performance · Environmental performance and social performance
1 Introduction
In the current era of globalization and the COVID-19 pandemic, technological devel[1]opments have improved the organization’s digital performance. With digitalization, dis[1]ruptive changes are not only occurring at the company’s operational level, but also at the environmental and social levels. This is the reason that shows that during the last two decades research on DHRM has become a growing concern, with various topics investigated in the literature [1]. Digitalization is becoming one of the dominant aspects in the business world. It must be admitted that without digitalization, companies and their employees will be outdated [2, 3]. The acceleration of DHRM is increasingly being intensified by most organizations around the world as a consequence of globalization, especially in the era of the COVID-19 pandemic. DHRM is inseparable from sustainable business development. Sustainability is understood as an effort to maintain a balance between economic, environmental and social factors [4]. Today, the digital shift has been forced by external circumstances, but internal impacts also need to be considered. If organizations and leaders better understand the mechanisms behind digitization, it will be easier for organizations in building long-term strategies that are more aware and that can make a positive contribution to social and environmental change [5–7]. Just like every other part of the organization, DHRM trans[1]formation is critical where technology disruption is becoming a norm [8]. HRM teams that still rely on Excel sheets to collect and interpret data need to turn to digitization. This is because it is not only a waste of time, effort and cost, but also the accuracy factor in analyzing is relatively low. The DHRM work process will take place through mobile, electronic media, social media via the internet, and also with the help of information technology [9]. In simple terms, DHRM transformation requires implementing human resource tools, practices and strategies with the use of digitization, so that it can improve employee experience and optimize operational performance. In addition, this is also due to the need for data-based automated practices. A successful DHRM will not only optimize HR processes, but if done correctly, it can have a holistic effect in overall and sustainable organizational improvement [9]. This research wants to know how far the impact of DHRM can affect the improvement of sustainable business performance.
2 Literature Review
2.1 The Role of DHRM in Business Sustainability
Changing human resource practices from conventional to digital-based practices is very time consuming. All of which require patience and confidence that the decision to implement DHRM will succeed. Top management support is needed to prevent the organization from returning to its original practice. If companies want to be successful in this 21st century, companies must start to determine the position of human resource activities today. [10] argued that human resource management policies and practices are activities carried out by organizations effectively to achieve various goals. In theoretical studies, [11] put forward three theoretical perspectives on human resource management practices and policies, including;
1. The structural functionalism perspective, which states that the human resources department and all its activities are the result of organizational growth and/or the need to carry out activities carried out by a specialist.
2. The strategic contingency perspective, which views human resource management as a creative form of increasingly critical external pressure
3. The perspective of human resource management strategy, where human resource management activities are designed to support the company’s strategic objectives in an integral way.
The development of the implementation of human resource management practices is currently directed at the management and utilization of strategic human resources to achieve organizational goals. Consequently, managers in companies should pay more attention to the management of human resources. The management of human resources must be carried out effectively and efficiently to help achieve organizational goals by improving organizational performance.
In general, human resource management will be related to recruitment, selection, development, compensation, retention, evaluating and promoting personnel in the organization [10]. Added by [12, 13] which stated that human resource management is the life of an organization that focuses on the management and effective use of people to increase productive contributions to the organization through strategic, ethical and accountable ways. [14] defines that human resource practices are specific actions used to attract, motivate, or retrain the workforce for general human resource activities (planning, staffing, appraisal, compensation, training and development, and determining and maintain effective working relationships. The activities involved in human resource management are numerous and varied, which can be grouped into six policy areas. The six policy areas are;
1. Organizational design, including; human resource planning, job analysis, job design, work groups and information systems
2. Staffing, including; withdrawal/interview/hire, approval action, promotion/separation/transfer, outplacement service, induction/orientation and labor selection method,
3. Communication and Public Relations, including; personnel records/reports/information systems, workforce communication, suggestion system, and personnel research,
4. Performance management, including; management assessment/management by objective, productivity/expansion program and consumer-oriented performance appraisal,
5. Fulfillment, benefits and reward system, including; safety programs, health/clinical services, complaint procedures, compensation administration, Equal Employment Opportunity Commission compliance, wage/salary administration, insurance administration, non-employment compensation administration, pension/profit sharing programs, labor relations/collective bargaining,
6. Manpower and organizational development, including; management development, career planning, manpower assistance/counseling programs, skills training, layoff readiness programs and attitude surveys. These six human resource practice activities are very difficult to judge as good or bad because they are not easy to implement. This is because the company depends on the characteristics of existing policies and procedures.
In the era of globalization and pandemic-19, almost all organizations rely heavily on Internet-based performance. It will be very helpful for the HRM Department to try to understand and analyze the relationship between HRM and information technology. Adaptation of digital technology will strike the perfect balance between efficiency and innovative aspects of any organization [9]. In the era of globalization and the Covid-19 pandemic, digitalization and technology have penetrated human life to the technology needed to perform routine and even mundane tasks. DHRM will help organizations through optimization of Social, Mobile, Analytics and Cloud (SMAC) technology, so that digitization in HRM will make it more efficient and relevant in the future [9, 15]. Several studies that examine the influence of HR practices on business performance have also been carried out by many researchers [16, 17]. HRM practice is expected to involve initiatives and ideas from management to be environmentally friendly so that it can reduce costs [18], can reduce the impact on the environment [19] and can be used as capital to manage the internal and external environment in their business operations, including social relations with the community [20, 21]. Companies must be able to translate their social goals into practice, namely having the company’s social mission into reality and aligning it with the interests of the community [22]. Some of these researchers generally underline that digital human resource practices can have an influence on sustainable performance (business performance, environmental performance and social performance).
3 Method
This research approach used case studies by analyzing one particular object, namely companies that had used DHRM even though it had not been fully implemented in HRM Practices. This study places more emphasis on exploration to answer the question “How was DHRM done and why was DHRM done?” This is useful to provide an overview of the knowledge of DHRM practices that are implemented and their contribution in improving sustainable business. The events studied in this research are the extent to which digital HRM practices are in improving sustainable business performance [23–25]. This research was conducted at an oil company and liquid product transportation company in DKI Jakarta, Indonesia. The research participants are managers in developing companies that had implemented DHRM in their offices, but had not fully implemented it in every HR practice. This is because in certain practices sometimes the manager still uses a manual system.
This type of research is descriptive qualitative using primary and secondary data. Primary data was obtained from 3 managers who understood the company’s internal conditions and the need for using digitalization within the company. These three participants happened to be HRD managers as users of the digitalization system in the company. Researchers conducted written interviews and direct interviews with respondents and made direct visits to company locations. 70% of DHRM had been implemented in the company, but in certain practices, for example e-recruitment, had not fully used the digitalization system, considering the trust and psychological factors in recruitment. More emphasis was placed on character recognition, ability and honesty and trustworthiness of the applicant who was already known by people in the company. In addition, HRD staff sometimes still made special notes either through word or excel in personnel administration.
. The researchers then conducted direct interviews by coming directly to the location of the companies. The goal is to make it easier to accommodate the answers submitted and to have participants provided high responses and participation. That was needed becasue the participants were used as key participants. This research conducted validity testing by searching for references and consulting with experts. Furthermore, regarding the reliability, the researchers carried out careful field observations and re-checking process with the participants. The research team also used and conducted structured inter[1]views which were directed at the digital role of HRM practices in improving sustainable business performance. Furthermore, in testing the reliability of the study, triangulation was carried out. The way to test the reliability was by conducting interviews with other managers and staff in the field as well as the local community [26–28].
. 4 Research Result and Discussion This study focuses on the contribution of the role of digitizing HRM in maintaining business sustainability in the era of globalization and the COVID-19 pandemic. Three key participants concluded the need for careful use of DHRM. The main thing that managers actually have to do is implementing DHRM in its entirety and explore it further, whether it has been implemented according to existing procedures. The ability to carry out digitization had not been fully mastered by the staff under these managers. Besides that, there is still dependence on the owner in making decisions for recruitment. Therefore, in the future, it is hoped that a system can work for humans, so that humans can control digitization well, without any fear of using digitalization. Likewise, there should be an even distribution of digitalization capabilities among all directors, managerial and staff, so that the company will be able to maintain its business (business, environmental and social performance). A new McKinsey Global survey of executives statds that companies have accelerated the digitization of customer interactions and supply chains and their internal operations by three to four years [29]. Almost all respondents said that the company has provided at least a temporary solution to meet the many new demands on the organization, and much faster than managers thought before the Covid-19 pandemic crisis. What’s more, the respondents expect that the board of directors will invest in digitalization, in order to be able to sustain the business. The results of interviews with key participants indicate that they are more famil[1]iar with the term information technology system in HR than digital human resources management. In more detail, the results of the interview can be written as follows: Respondent X: Participant 1 “So far we have done DHRM to improve green practices in business. However, considering that the company is still family-run and the ability to digitize is not evenly distributed, even the directors themselves still don’t understand digitization, managerial staff have not used DHRM to its full potential”. “According to managers, the digitalization of e-recruitment interviewed exists, but its implementation has not been well implemented. This is because recruitment is still more from insiders, partners who know more about the abilities of prospective employ[1]ees. Meanwhile, E-training does not yet exist, because employees are still limited, and training is held as needed. E-training has not been properly scheduled. DHRM emphasizes more on the payroll system, attendance, performance appraisal, and employee data. Managers are proposing to the board of directors for a complete DHRM that facilitates HR administration and improves HR performance”.
“We now rarely hold regular meetings to discuss the digitalization system in the com[1]pany because currently the company is more focused on company development through finding new clients for liquid transportation companies, meanwhile, oil companies are focusing on finding new investors to develop their companies.” “The Board of Directors has not focused on the administrative system in the company but is more focused on finding clients and investors. In addition, the directors often hold meetings outside the office. But we think that the directors have worked hard to advance the company, so our managerial team must continue to support the directors by working better and maximizing the managerial and staff capabilities. We have to work hard, because the directors have worked hard, so, we, who work in this company, also need to work hard to be able to participate in growing the company. Nevertheless, we still think and believe that DHRM will enable us to work more efficiently, be more on a green operation basis, and focus on increasing benefits to the community.” Respondent Y: Participant 2 “We actually want to maximize the DHRM system within the company as much as possible, but sometimes the family business system is still applied in the company where we work. However, the board of directors is very open to input from management. However, because the directors are busy developing the company, they sometimes pay less attention to the use of DHRM in the company, especially to the green environment which has not been a priority for the organization.” “We propose a DHRM that uses data and analytics to measure progress at every stage of the employee life cycle, from recruitment to learning and development to retention and offboarding. This is done with the aim of the company being able to turn quickly when the given strategy does not work. Besides that, we also participate in monitoring the company’s business development so that the company can survive and even get the right investors so that the company can become bigger. In the end we will have increased welfare and feel comfortable working in this company because the directors are quite close to the employees.”
Respondent Z: Participant 3
“Our managers are in talks to propose to the board of directors that DHRM utilize social media, such as recruiting using social media facilities and including social media in learning strategies. That includes consumerizing HR and reimagining HR self-service as a truly user-friendly experience for employees. But we still support the current board of directors who are very busy. Even with the zoom meeting, the meeting of the board of directors to find investors and develop the company can be carried out at any time. We as the management team are happy to support the company’s vision and mission, although currently the implementation of DHRM has not been fully implemented in the company where we work. However, the board of directors is very concerned about business sustainability and managerial also actively participates in the development of the company. We even feel that this company belongs to us too because of our closeness to the board of directors.”
“The most important thing in the implementation of DHRM is the effectiveness and efficiency in managing human resources. This can be done by increasing employee productivity through DHRM and DHRM is made cloud-based so that data is safe and easily accessible”.
5 Conclusions, Limitations and Implications
Based on the results of the research presented, it can be concluded that DHRM was highly considered by the managerial staff at the research site and had been carried out even though it is only 70%. Managers realized that DHRM was important for the company but the directors and staff did not fully have the desire to practice the company’s digitalization system as a whole. This is due to the uneven knowledge of digitization capabilities. Therefore, there is a need for digitalization training which is attended by directors, managers and staff. Likewise, recruitment that currently does not utilize E
Recruitment owned by the company is expected to be able to utilize social media so that it can enable companies to get qualified employees in accordance with company expectations. Social media can also be used for learning and e-training, and it is hoped this will be included as a special training agenda.
The company also has not completely focused on the company’s internal green environment, because the company is currently focusing on company development. This study has limitations, namely the number of participants involved is only three people. This may allow this study to be less useful for general conclusions. Researchers conducted in-depth interviews, even saw the condition of companies that are all busy with their respective responsibilities, so that there was no right time to take part in digitalization training. From the results of interviews with managers, and literature reviews from previous studies, the authors conclude some of the company’s advantages when utilizing DHRM facilities, as follows:
1. DHRM is not only for HRM administration, attendance and payroll systems, but DHRM can improve the HRM process by using analytics to determine what is and is not aligned with the HRM strategy.
2. The duplicative system used can be streamlined, for example HR and the learning system, into one portal so that it can be more efficient and effective
3. Using a mobile-first strategy can help provide a better employee experience for job candidates and workers by making HR self-service and other processes easier to use, which in turn can increase engagement and retention.
4. Taking an agile approach to strategy, processes, and people, where projects are launched quickly and iteratively, can lower the risk of widespread strategy and technology failure that cannot be easily changed.
5. By using design thinking throughout technology implementation, HR can ensure that employees truly adopt digitization. If that doesn’t work, design thinking can help HR leaders and professionals quickly change direction.
6. Cloud Human Capital Management and talent management systems can streamline processes across the employee lifecycle, lower costs, and enable integration of modern tools and technologies.
The implication of this research is to provide views on the importance of practicing HRM digitization for companies that are developing. In the era of globalization, especially during the COVID-19 pandemic, organizations need to pay attention to the readiness of industry 5.0 and the company’s competitive advantage. Organizations must implement a first mover in the field of DHRM, so that it can be something interesting but must still consider the costs and risks that will be borne. This must really be taken into account carefully and thoroughly in order to remain profitable
