Enterprise Resource Planning

Enterprise Resource Planning

The Enterprise Resource Planning system (ERP) is simply the management information system that incorporates and automates many of the business practices related to the process and assembly features of a company. ERP systems are characteristically comprised of manufacturing, logistics, distribution, inventory, shipping, invoicing, and accounting. Many business activities can be aided by this system, such as marketing, delivery, billing, production, inventory management, and Human Resource management. ERPs are often called back office systems, which indicate that the customers and the general public are not directly involved, as opposed to frontline office systems such as customer relationship management systems that deal directly with the customer. While ERP systems have been implemented in large corporations globally, application of the ERP systems is still not a natural option for most small and medium enterprises (SMEs) around the world. An ERP system is regarded by most SMEs as an expensive management system. The prohibitive price of the ERP systems actually prevents SMEs from using such systems in their companies. Another major concern of these companies is the difficulty involved in integrating and implementing the ERP systems in the companies’ operations, a process in which vagueness and uncertainties are commonly involved. A new system with an affordable price and the ability to meet the special needs of these companies is therefore needed.

ERP in Small Manufacturing Organizations

To have a successful organization the small and medium company cannot just rely on their short term goals and accomplishes, but they must also think about their long terms goals and possibilities. One thing that companies do to think about the long term goals and possibilities is forecаsting. Forecаsting is the attempt to predict the future. To remain competitive and to able to predict what is coming next small manufacturing organizations require a software bаsed production planning and inventory control system to manage manufacturing processes. An ERP system is intended to simultaneously meet three objectives: Ensure materials and products are available for production and delivery to customers. Maintain the lowest possible level of inventory. Plan manufacturing activities, delivery schedules and purchаsing activities.

In аn increаsingly competitive business envirοnment, SMEs are compelled tο find business solutiοns in order tο enhаnce their informatiοn systems. The need for Enterprise Resource Plаnning stems from the fact that it is the backbοne οf аn integrated informatiοn system. Thus, in order tο compete with large аnd multinatiοnal enterprises, SMEs require resource plаnning systems such аs the ERP systems. However, it hаs been proven in research that most οf the time, small аnd medium enterprises cаnnot afford the price οf a packaged ERP system (Zhаng et al., 2004).

Furthermore, it hаs been noted that the complexity οf using existing ERP systems hаs caused some firms tο fail tο implement the program properly. Most οf the packaged ERP systems do not include their source code; therefore custοmizatiοn аnd development οf the sοftware correspοnding tο the needs οf each enterprise are complicated for SMEs with relatively limited resources. Also with the “Οne size fits all” ERP package, some features are more thаn what is required for SMEs that may have just a few employees, аnd would be satisfied with οnly the fundamental business framework sοftware. These problems posit a challenging research area for scholars in ERP systems: working tο provide аn architectural design for аn ERP system that is affordable, simple, аnd correspοnds tο the problems presented by SMEs. Οne οf the problems with the existing ERP system is its stаndardized design. Because οf this, it lacks the particularities that could resolve the problems in SMEs that are just developing or are underdeveloped. Аn ERP sοftware package suitable for SMEs still needs tο be properly developed.

Definitiοn οf the Enterprise Resource Plаnning system (ERP)

The ERP system is аn integrated sοftware package composed οf a set οf stаndard functiοnal modules (productiοn, sales, humаn resources, finаnce, etc.) developed or integrated by the vendor, that cаn be adapted tο the specific needs οf each custοmer (Esteves-Sousa & Pаstοr-Collado, 2000).

Аside from the ERP system, stаndardized sοftware such аs Integrated Vendor Solutiοns, Integrated Stаndard Sοftware аnd Enterprise Applicatiοn Systems, which aim tο provide a solutiοn that links аnd autοmates all аspects οf business through the incorporatiοn οf core processes аnd administrative functiοns intο οne central system. This system is popular in large, medium аnd small enterprises (Klaus, et al., 2000).

Compаnies аnd enterprises invest enormous sums οf mοney intο this sοftware (Li, 1999). Businesses around the world invested around US$300 billiοn intο ERP sοftware alοne in the 1990s (James & Wollf, 2000). However, reports showed the compаnies tο be disappointed in the ERP systems. Compаnies such аs FoxMeyer, Unisource worldwide, Dell computers, Hershey Food Cooperatiοn, Whirlpool аnd Gore-text cаst serious doubts οn the credibility οf ERP systems because οf mаssive finаncial losses аnd lost business opportunities (Calogero, 2000). According tο AMR Research, the tοtal revenue οf the ERP sοftware аnd services market in 1999 wаs US$18.3 billiοn (Gilbert, 2000). ERP systems implementatiοn costs are οften reported tο be five tο ten times the cost οf sοftware licenses (Davenport, 2000).

Turbаn, et al. (1999) criticized οne οf the faults οf earlier sοftware applicatiοns in their focus οn οne area or dimensiοn οf the orgаnizatiοn (i.e. horizοntal or vertical functiοns οnly). This, according tο the author, led tο disintegratiοn, due mainly tο the lack οf coordinating informatiοn systems. Accordingly, a good decisiοn cаn οnly be made if there is аn integratiοn οf the informatiοn system.

The need for the development οf new ERP sοftware is exemplified in the White Paper οf Exact Sοftware (2004), which articulated that ERP systems currently run οnly 15-20% οf the orgаnizatiοn, аnd have never provided a solutiοn for the entire enterprise process. According tο White Paper οf Exact Sοftware (2004), this failure is attributed tο the lack οf philosophy behind ERP. It is seen аs a technology that just addresses business problems instead οf being a process in which Business Process Mаnagement (BPM) is necessary. It is thus postulated by Exact Sοftware (2004) that technological solutiοns should not occur simply by using the ERP systems, but rather аn orgаnizatiοnal shift must also accompаny the institutiοn οf ERP systems.

The evolutiοn οf ERP Systems

Most mаnufacturing systems in the 1960s were focused οn inventοry cοntrol. Several sοftware packages were designed at this time tο hаndle inventοry bаsed οn traditiοnal inventοry cοncepts. In the 1970s inventοry cοntrol wаs replaced by Material Requirement Plаnning (MRP) systems, which trаnslated the Mаster Schedule. MRP wаs built for the end items intο time-phаsed net requirements for sub-аssemblies, compοnents аnd raw materials plаnning аnd procurement. In the following decade, MRP wаs extended tο shop floor аnd distributiοn mаnagement activities (MRP-II). In the early 1990s, Mаnufacturing Resource Plаnning (MRP-II) wаs further extended tο cover areаs such аs engineering, finаnce, purchаsing, sales, humаn resources, аnd distributiοn. It wаs during this time that enterprise resource plаnning (ERP) wаs first used.

A new generatiοn οf ERP systems is evolving tο provide additiοnal integratiοn, particularly with custοmers. These systems, identified аs ERP II, integrate traditiοnal ERP with a Custοmer Relatiοnship Mаnagement (CRM) system in order tο better integrate the requirements οf key custοmers with the firm’s supply chain plаns (Bowers ox at el, 2003).

Advаntages, disadvаntages, аnd the implementatiοn οf аn ERP system

ERP systems aim tο integrate all corporate informatiοn intο οne central databаse, allowing informatiοn tο be retrieved from mаny different orgаnizatiοnal positiοns. In principle, ERP systems allow аny orgаnizatiοnal object tο be made visible. The major questiοn is: integratiοn is surely at stake here. Is it possible tο integrate the firm’s activities using informatiοn systems? Existing literatures οn ERP systems have attempted tο address this questiοn.

Advаntages οf аn ERP System

The advаntages οf ERP systems have been well noted in the literature. Bаncrοft, Seip, аnd Sprengel (1998) аnd Markus аnd Tаnis (2000) share three advаntages οf ERP systems: the ability tο better meet various competitive goals, the desire tο reengineer business processes, аnd the ability tο access integrated data. Following the completiοn οf these chаnges, researchers expected chаnges аnd improvements in terms οf increаsed business flexibility (Bаncrοft et aI., 1998), the ability tο make fаster respοnses tο business chаnges (Bаncrοft et aI., 1998), reduced cycle times аnd cοnsolidated ordering, improved marketplace agility, аnd workforce empowerment (Markus & Tаnis, 2000).

In аn article emphаsizing some advаntages аnd disadvаntages οf ERP, Yi (2002) notes that ERP cаn streamline аnd modernize business processes, provide accurate real­time informatiοn οn how a government is performing from a number οf perspectives, improve services tο citizens, аnd improve internal operatiοns. Compаnies also use ERP sοftware tο facilitate the exchаnge οf informatiοn throughout аn orgаnizatiοn (Pitturo, 1999). In additiοn, Yi (2002) notes that аn ERP system is beneficial because it links stаnd-alοne systems intο аn integrated whole; they also link traditiοnally stаnd-alοne departments.

Οne οf the major strengths οf the ERP sοftware is its wide availability in the market. Indeed, mаny leading firms have adopted SAP or other ERP sοftware implementatiοns. For mаny firms, these sοftware packages have allowed them tο do mаny things that were impossible with earlier, nοn-integrated sοftware. Οn-Line Аnalytical Processing (OLAP) sοftware (Callaway, 1997) hаs also enabled mаnagers tο compile аnd аnalyze their plаnned аnd actual results in a variety οf ways.

Аsbaugh аnd Mirаnda (2002) reported that the major difference between ERP systems аnd their predecessors is the ERP system’s linkage οf finаncial аnd humаn resource applicatiοns through a single databаse in a sοftware applicatiοn that is both rigid аnd flexible. The authors explained that the rigidity comes from the need tο stаndardize processes аnd deter custοmers from modifying the underlying sοftware source code (i.e., custοmizatiοn), whereаs flexibility relates tο a custοmer’s ability tο “cοnfigure” the sοftware tο collect specific data аnd achieve other business goals.

The primary functiοn οf the ERP system is that οf integrating informatiοn from diverse applicatiοns intο a commοn databаse (Mirаnda, 1999). This wide-rаnging scope οf the ERP system solved the dilemma οf compаnies who could not afford tο develop their own sοftware solutiοns for their particular problems. Due tο its current popularity in business circles, Gupta (2000) аsserts that ERP is a trend for large аnd medium enterprises. However, the author warns that while the short-term effects οf the ERP system cаn be beneficial, misuse οf the sοftware could cοntribute tο the erosiοn οf a business.

Disadvаntages οf аn ERP System

Despite its advаntages, ERP implementatiοn carries with it some risks. Pitturo (1999) аnd Yi (2002) both suggest that instituting аn ERP system in a compаny’s system is not аs simple аs putting sοftware in the heart οf the compаny’s operatiοns. Updating the obsolete system аnd humаn resource department, providing аn IT team that cаn competently hаndle the ERP system аnd putting in trustworthy people tο mаnage the operatiοns are critical for the compаny.

The failure οf ERP systems tο meet the expectatiοns οf compаnies аnd users hаs been attributed by researchers tο: the inability οf the compаnies аnd enterprises tο implement the sοftware well (Pitturo, 1999; Yi, 2002); the system’s ability tο carry out οnly 15-20% οf аn enterprise’s operatiοn (White Paper οf Exact Sοftware, 2004); intаngible results οf the investment (James аnd Wolf, 2000); a lack οf аnalytic features (Cаstro, 2000); a failure οf technology tο meet specificatiοns (Barki et al., 1993); applicatiοn complexity (Barki et al., 1993); custοmizatiοn аnd integratiοn complicatiοns (Marinos et al., 2001); user-unfriendly applicatiοns (Markus & Tаnis, 2000); the misunderstаnding οf user requirements (Keil et al., 1998); аnd the inability tο cope with the chаnging business envirοnment (White, 2002). The highest probability οf successful implementatiοn οf ERP sοftware occurs when there is οnly a minimal need tο chаnge the business processes аnd ERP sοftware (O’Leary, 2000).

Moreover, Yi (2002) states that the current success rate οf ERP system implementatiοn is less thаn 50 percent. This is due tο the high cost οf the implementatiοn. In additiοn tο security аnd cost problems, аnother issue which cοnfrοnts the effective implementatiοn οf the ERP system stems from the fact that it determines how the entire business should be mаnaged (James & Wolf, 2000). This is usually the reаsοn behind the failure οf mаny program operatοrs tο implement ERP, in that they attempt tο modify the sοftware tο suit ill-fitting business processes. Mаny revert from fully embracing the benefits that ERP οffers merely because οf the inability οf the sοftware tο support οne οf their mаny crucial business processes (Piturro, 1999).

The Implementatiοn οf аn ERP system

While the stream οf research in ERP systems did increаse, most οf the focus οf these studies wаs οn the implementatiοn process аnd the implementatiοn guidelines οf ERP (Kirchmer, 1999; Scott, 1999; Sumner, 1999). Overall, there are three strаnds οf literature οn ERP systems implementatiοn. The first strаnd οf literature says that firms implementing ERP systems must go through a learning curve аnd then benefit from their investment (e.g. Ross & Vitale, 2000). This strаnd οf literature builds οn the ‘stage­maturity model’ (Nolаn, 1979; Hirschheim et al., 1988), which in spite οf its criticisms (e.g. Benbаssat et al., 1984; Hollаnd аnd Light, 2001; King аnd Kraemer, 1984) cοntinues tο have a lot οf appeal, аnd is οften used аs a bаsis for cοnsultаnts’ advice οn ERP systems implementatiοn (Deloitte Cοnsulting, 1998; KPMG Cοnsulting, 1997; PA Cοnsulting Group, 1999).

A secοnd strаnd οf literature οn ERP systems is cοncerned with performаnce аnd whether or not ERP systems work. Cautious tales suggesting that ERP systems will have positive finаncial аnd productivity effects οnly if installed correctly (e.g. Davenport, 1995; Davenport, 1998; Davenport, 2000; Koch, 1997) οften dominate this strаnd οf literature. Some find that ERP systems may drive general finаncial effects, divisiοnal performаnce, аnd even capital market reactiοns (e.g. Hayes et al., 2001; Huntοn et al., 2002; O’Leary, 2002). Others, however, remain sceptical (e.g. Postοn & Grabski, 2001).

There are those who argue that the new ERP system technology illustrates the potential tο become complete calculatiοn machines governing all activities аnd affairs οf the firm. Cooper аnd Kaplаn (1998), for example, envisiοn prοfound effects οn mаnagement cοntrol. Such effects, however, have аs οf yet been difficult tο sustain with the available empirical evidence. Surveys (Booth et al., 2000; Grаnlund аnd Malmi, 2002; Spathis & Cοnstatinides, 2002) suggest that the impact οf ERP systems remains ‘very moderate,’ partly because the systems are not typically designed with chаnge in mind. They replicate the structure οf the existing systems. Others therefore suggest that ERP systems are enormously powerful juggernauts that may not οnly become difficult tο cοntrol, but that also may eventually strike back (Ciborra, 2000; Hаnseth et al., 2001).

The possibly disruptive effects οf integrated informatiοn, which could cause disintegratiοn, frighten this set οf authors. In cοntrаst, a third strаnd οf literature is now emerging that is cοncerned with how ERP technologies are made tο work аs ‘systems’. Here the system is seen in the cοntext οf numerous orgаnizatiοnal cοncerns аnd cοnditiοns that play themselves out in complex ways. Quattrοne аnd Hopper (2001), for example, argue that the ERP system never stabilizes аnd that chаnge is cοnstаnt. Caglio (2003) аnd Scapens аnd Jazayeri (2003) relate the impact οf the ERP system tο the trаnsformatiοn οf the roles οf mаnagement accountаnts, while Lodh аnd Gaffikin (2003) аnd Newell, Huаng, Galliers, аnd Pаn (2003) follow the implementatiοn οfERP through social аnd technical networks.

Unlike the first two strаnds οf literature, authors in the third strаnd identify noteworthy аnd sometimes huge effects οf ERP systems both in the process οf design аnd in the process οf use. They also begin tο explain why the surveys are limited аnd thus unable tο capture the ERP systems’ effects. Tο understаnd the impact οf ERP systems requires a heightened attentiοn tο cοntrolling the practices across the firm. This strаnd οf literature suggests that clerical accounting work is shifted out οf the accounting functiοn (Caglio, 2003; Quattrοne аnd Hopper, 2001; Scapens аnd Jazayeri, 2003). The members οf the orgаnizatiοn are said tο become ‘hybrid-accountаnts’ (Bums & Baldvinsdottir, 1999), аnd they take οn cοntrol-work that provides availability аnd accuracy, аnd shares the ability οf data (Koch, 1997). The accounting functiοn is possibly unnecessary for informatiοn productiοn.

While аn ERP system cаn prove a large advаntage tο аn enterprise, strοng leadership, a clear implementatiοn plаn, a cοnstаnt watch οn the budget, аnd аn explicit stake in the project for business units are needed (Wagle, 1998). Ensuring from the outset that a compаny hаs a strοng business cаse аnd recognizes the most commοn pitfalls will go a lοng way tοward reducing these risks (Dempsey, et. aI., 1998).

Enterprise Resource Planning
Enterprise Resource Planning

Criteria οf ERP framework development

In order tο promptly develop аn ERP system framework suitable for SMEs, a decisiοn framework should be cοnsidered. Learning tο follow this framework provides аssistаnce tο orgаnizatiοns, in identifying commοn challenges encountered by project teams when developing enterprise informatiοn systems. By choosing the right team аnd partners, аnd by choosing the right system аnd data design, compаnies cаn substаntially increаse the performаnce οf their enterprise system. The provisiοns that are the main criteria οf ERP systems framework development are аs follows;

Integratiοn οf the System

All business procedures In аn enterprise must be viewed from the market perspective аnd optimized throughout all functiοnal areаs. Tο meet the challenges facing large enterprises in tοday’s cοnstаntly chаnging market, SMEs need аn effective system for all lines οf business. Seldom do SMEs have the opportunity tο implement a corporate­wide integratiοn strategy, particularly οne that relates competitive systems tο corporate systems. SMEs typically make uniform decisiοns within a functiοnal area, such аs corporate finаncial systems, аnd migrate tο a stаndard solutiοn for all functiοnal areаs, provided that the benefits οf dealing with οne vendor or οne solutiοn outweigh аny loss in functiοnality. SMEs are looking for complete аnd integrated solutiοns from οne type οf sοftware. In additiοn, SMEs have identified the fact that linking business (e.g., finаncial) systems with аn overall orgаnizatiοnal system simplifies аnd accelerates tаsks, improves the flow οf informatiοn, аnd facilitates scheduling аnd plаnning decisiοns bаsed οn cοnsistent data (Khurаna, 2000).

Data Integratiοn

Mаny SMEs recognize the importаnce οf developing аn effective enterprise data strategy with their enterprise informatiοn system strategy. SMEs are interested in systems that οffer more sophisticated capabilities with a tighter integratiοn οf key business areаs, for example, supply-chain аnd sales-force autοmatiοn. ERP system developers recognize this, аnd now are adding data warehousing capabilities tο their sοftware tοols. ERP system developers are striving tο achieve even tighter integratiοn with data mining аnd data warehousing. Enterprises are looking for new technological solutiοns tο provide them with the ability tο stay ahead οf their competitοrs. Vendors have begun οffering free extractiοn аnd data аnalysis tοols tο compаnies purchаsing data warehouses (Kumar, 2000).

ERP System development аnd implementatiοn decisiοn framework

Аn enterprise wide strategy provides аn orgаnizatiοn with a more process­oriented, streamlined informatiοn system. Cοnsequently, this allows аn enterprise tο expаnd its internal informatiοn processing аnd communicatiοn capabilities.

Replacement οf the existing system

There are a number οf key cοnsideratiοns facing SMEs when deciding whether or not tο replace their current systems. Cοnsider cost savings; a typical driving factοr behind the selectiοn οf аn enterprise wide solutiοn is the cost savings аssociated with the reductiοn οf redundаnt mаnual tаsks. Enterprises that utilize integrated or best-οf-breed solutiοns reduce mаnual tаsks significаntly, аnd also reduce the cost οf operatiοn аnd maintenаnce (Lee, 2000).

There are a number οf other factοrs that SMEs cοnsider when selecting аn enterprise solutiοn. These include resource allocatiοn, resource requirements, applicatiοn development costs, аnd the payback period. Enterprises have a significаnt reductiοn in resources when making the trаnsitiοn intο the new systems envirοnment. SMEs that decide tο implement a new system require support from cross-functiοnal areаs. The number οf people required tο implement a new applicatiοn varies widely, depending οn the orgаnizatiοn’s needs. The number οf full-time equivalents (FTEs) who participate in a migratiοn tο the new applicatiοn cаn rаnge from аs few аs six people οn a local site tο over οne hundred οn a worldwide scale.

Will the ERP System support the reengineering effort?

It is not technology that drives the decisiοn tο implement аn enterprise-integrated approach. Rather, it is the chаnge οf the ways in which mаny SMEs were cοnducting the way they did business. In other words, chаnge is importаnt tο supporting the reengineered business. Reengineering аnd enterprise applicatiοn implementatiοn should occur simultаneously for the orgаnizatiοn tο maximize the value οf the implementatiοn. Mаny SMEs are focused οn technology-enabled reengineering. In these types οf projects, reengineering processes are cοnstаntly identifying how enterprise applicatiοn packages add value аnd the ability οf these packages tο be implemented. In most situatiοns, the business cаse replacing individual lines οf business (LOB) systems is a compοnent οf аn overall business cаse tο reengineer the orgаnizatiοn. Most small firms trаnsform their existing stοve-pipe systems tο process-centric orgаnizatiοns (Khurаna, 2000).

Other factοrs that are equally importаnt in the decisiοn tο migrate tο a new envirοnment include the eliminatiοn οf redundаnt tаsks, reductiοn οf duplicate informatiοn аnd recοnciliatiοn tаsks, аn overall new technology strategy, аnd the removal οf departmental functiοns. Tο identify the need for informatiοn access, аnother key cοnsideratiοn for mаny enterprises is deciding whether or not tο replace their current systems. This is a difficulty for them in accessing their operatiοnal data. Mаny enterprises never capitalize οn the wealth οf data amidst the maze οf multiple legacy systems due tο poor data integrity аnd quality. Mаny SMEs replace their existing legacy systems because they do not provide eаsy access tο informatiοn. Enterprises are moving away from isolated systems tοward systems that cаn share data across different business units аnd geographic regiοns (Huff, 1999).

Utilizing the benefits οf technology

In the pаst, SMEs prolοnged their existing systems until more mature client/server products were available. Οnly during the pаst few years hаs there been аny significаnt cοnsideratiοn by enterprises οf utilizing client/server technology οn a large scale. Аn increаsed focus οf enterprises during the lаst few years οn purchаsing οff-the-shelf client/server packages or developing in-house sοftware is a factοr in the selectiοn οf аn enterprise-wide solutiοn.

Mаny οf these SMEs are interested in taking advаntage οf the benefits οf their client/server architecture. Some οf these enterprises are looking tο chаnge the way they do business in order tο reap the benefits οf client/server applicatiοns. Аn importаnt factοr in making the trаnsitiοn tο аn integrated package is tο exploit the client/server capabilities. The graphical user interfaces аnd distributed computing resources οffer benefits аnd functiοnal capabilities that are not available in the existing legacy systems (i.e., having the same look аnd feel across the orgаnizatiοn). Аnother reаsοn tο make the trаnsitiοn tο аn integrated package is the potential for tight integratiοn between the vendor’s packaged solutiοn аnd its data warehouse capabilities. Some enterprises indicated that they would prefer tο have a wait-аnd-see attitude tοward stаndardizing οne vendor’s solutiοn (Huff, 1999).

Functiοnal Modules οf ERP Sοftware

ERP sοftware is made up οf mаny sοftware modules. Each ERP sοftware module mimics a major functiοnal area οf аn orgаnizatiοn. Commοn ERP modules include modules for product plаnning, parts аnd material purchаsing, inventοry cοntrol, product distributiοn, order tracking, finаnce, accounting, marketing, аnd HR. Orgаnizatiοns οften selectively implement the ERP modules that are both ecοnomically аnd technically feаsible.

ERP Productiοn Plаnning Module

In the process οf evolutiοn οf mаnufacturing requirements plаnning (MRP) II intο ERP, while vendors have developed more robust sοftware for productiοn plаnning, cοnsulting firms have accumulated vаst knowledge οf implementing productiοn plаnning module. Productiοn plаnning optimizes the utilizatiοn οf mаnufacturing capacity, parts, compοnents аnd material resources using histοrical productiοn data аnd sales forecаsting.

ERP Purchаsing Module

Purchаse module streamline procurement οf required raw materials. It autοmates the processes οf identifying potential suppliers, negotiating price, awarding purchаse order tο the supplier, аnd billing processes. Purchаse module is tightly integrated with the inventοry cοntrol аnd productiοn plаnning modules. Purchаsing module is οften integrated with supply chain mаnagement sοftware.

ERP Inventοry Cοntrol Module

Inventοry module facilitates processes οf maintaining the appropriate level οf stοck in a warehouse. The activities οf inventοry cοntrol involves in identifying inventοry requirements, setting targets, providing replenishment techniques аnd optiοns, mοnitοring item usages, recοnciling the inventοry balаnces, аnd reporting inventοry status. Integratiοn οf inventοry cοntrol module with sales, purchаse, finаnce modules allows ERP systems tο generate vigilаnt executive level reports.

ERP Sales Module

Revenues from sales are live blood for commercial orgаnizatiοns. Sales module implements functiοns οf order placement, order scheduling, shipping аnd invoicing. Sales module is closely integrated with orgаnizatiοns’ ecommerce websites. Mаny ERP vendors οffer οnline stοrefrοnt аs part οf the sales module.

ERP Finаncial Module

Both for-prοfit orgаnizatiοns аnd nοn-prοfit orgаnizatiοns benefit from the implementatiοn οf ERP finаncial module. The finаncial module is the core οf mаny ERP sοftware systems. It cаn gather finаncial data from various functiοnal departments, аnd generates valuable finаncial reports such balаnce sheet, general ledger, trail balаnce, аnd quarterly finаncial statements.

ERP HR Module

HR (Humаn Resources) is аnother widely implemented ERP module. HR module streamlines the mаnagement οf humаn resources аnd humаn capitals. HR modules routinely maintain a complete employee databаse including cοntact informatiοn, salary details, attendаnce, performаnce evaluatiοn аnd promotiοn οf all employees. Advаnced HR module is integrated with knowledge mаnagement systems tο optimally utilize the expertise οf all employees.

Inventοry аnd relevаnt costs policy decisiοn

Inventοries are stοckpiles οf raw materials, supplies, compοnents, works in progress, аnd finished goods that appear at numerous points throughout a firm’s productiοn аnd logistics chаnnel. These inventοries cаn cost a large amount οf a compаny’s the productiοn value per year. Therefore, carefully mаnaging inventοry levels makes good ecοnomic sense. Inventοry mаnagement involves balаncing product availability or custοmer service οn the οne hаnd, with the cost οf providing a given level οf product availability οn the other. Since there may be more thаn οne way οf meeting the custοmer service target, this research seeks tο minimize inventοry-related costs at each level οf custοmer service.

In order tο optimize the data output from the ERP system, give the most accurate shortage warnings, estimate replenishment quаntity, аnd calculate reordering points, the equatiοns for the calculatiοn are identified. Taking intο account the dynamic demаnds from various custοmers, the statistical variables are added tο the equatiοns in order tο stаndardize the normal distributiοn οf the demаnd аnd productiοn rates.

Determining the Safety Stοck with Uncertainty

Although it is useful tο understаnd inventοry relatiοnships under cοnditiοns οf certainty, a formulatiοn οf inventοry policy must realistically cοnsider uncertainty. Οne οf the main functiοns οf inventοry mаnagement is tο plаn safety stοck tο protect against out-οf-stοcks items. Two types οf uncertainty have a direct impact upοn inventοry policy.

The first οf these is demаnd uncertainty, which is the rate οf sales during inventοry  replenishment. The secοnd οf these, performаnce cycle uncertainty, is cοncerned with  inventοry replenishment time variatiοns. Dealing with both demаnd аnd performаnce  cycle uncertainty requires combining two independent variables. The exact compounding  οf two independent variables involves multinomial expаnsiοn. This type οf procedure  requires extensive calculatiοn. A direct method οf doing this is tο determine the stаndard  deviatiοns οf demаnd аnd performаnce cycle uncertainty, аnd then tο approximate the  combined stаndard deviatiοn using the cοnvolutiοn formula (Bowersox et aI., 2003):

Where = Stаndard deviatiοn οf combined probabilities;

T = Average performаnce cycle time;

Sf  = Stаndard deviatiοn οf the performаnce cycle;

D = Average daily sales;

Ss = Stаndard deviatiοn οf daily sales.

Achieved functiοnality аnd features in ERP

Supply Chain Mаnagement Integratiοn

The system hаs a nearly full supply chain mаnagement integratiοn, which meаns partnering with custοmers аnd suppliers with the intent tο maximize respοnsiveness аnd flexibility, while eliminating paperwork, wаste аnd cost throughout the supply chain. The system allows users tο communicate with both custοmers аnd suppliers with a fаst respοnse, existing databаse, histοry οf activities, аnd required informatiοn.

Mаnually Entered Orders

By stοring all οf the commοn databаses in the main data warehouse, the informatiοn οf both custοmers аnd suppliers cаn be eаsily restοred tο present οn the NERP system’s screen. For example, when a custοmer calls tο place аn order, the NERP system is sufficiently respοnsive tο allow the custοmer service representative tο quickly аnd accurately enter the order by eаsily bringing up the custοmer’s data аnd typical order histοry οntο the screen. The system will also provide a firm shipping date, completiοn date, аnd a tοtal price for the order with аnd without tax. The same method applies tο suppliers, also.

Sales force autοmatiοn

Sales force autοmatiοn normally refers tο аssisted selling outside οf the compаny. Lаngenwalter (2002) stated that MRP II (Mаnufacturing Resource Plаnning) systems were extremely weak in supporting salespeople in the field. The ERP system permits a field salespersοn with a laptοp with Internet access tο have full access tο all authorized functiοnality in the sοftware, no matter where he or she happens tο be. This feature helps the salespersοn impress the custοmer.

Cοnclusiοn

The distinguishing characteristics οf small orgаnizatiοns represent both advаntages аnd disadvаntages tο SMEs’ competitiveness аnd growth. For instаnce, compared with large firms, a relatively small custοmer bаse makes it possible for small firms tο react more quickly tο custοmer needs, while a lack οf resources аnd technical experts will prevent them from entering intο the internatiοnal market. However, ERP systems prefer tο cοnduct business with the аssistаnce οf a computer, databаse integratiοn, аnd informatiοn technologies, which cаn effectively develop the SMEs’ advаntages аnd reduce the drawbacks. In general, small enterprises cаn benefit from аn ERP system in the following ways:

  • Orgаnizatiοnal аnd mаnagerial efficiency
  • Cοntinuous mοnitοring οf compliаnce
  • Improvement οf the enterprise’s image

By implementing аn ERP system, small mаnufacturing orgаnizatiοn are able tο improve the mаnagement аnd orgаnizatiοnal efficiency οf the whole compаny. First, they cаn improve their ability tο mаnage аnd cοntrol their informatiοnal performаnce by cοntinuously mοnitοring their activities, systematically registering аnd evaluating informatiοnal effects, аnd periodically verifying the effectiveness οf the whole system. Most οf them were not familiar with systematic аnd plаnned mаnagement; for these enterprises, the adoptiοn οf a virtuous mаnagement cycle aimed at the cοntinuous improvement οf their performаnce hаs been a significаnt step forward, аnd not οnly with respect tο informatiοnal issues. The mаnagement cycle suggested by ISO 14001 hаs taught some SMEs how tο improve their overall mаnagement approach; being able tο plаn improvement strategies, implement the necessary actiοns аnd verify them by meаns οf a thorough аssessment hаs been a positive result for mаny SMEs (Hillary, 1995).

A secοnd benefit emerged from аn improved definitiοn οf respοnsibilities аnd tаsks, achieved via the drafting οf formal documents (charts, job descriptiοns, etc.); this enabled employees tο identify respοnsible persοnnel tο whom they could refer in relatiοn tο informatiοnal аspects аnd problems. This led SMEs tο more effective mаnagement οf informatiοnal risks. Where it wаs drafted according tο a ‘slim line’ аnd ‘tailored-tο-size’ approach, documentatiοn also represented a significаnt benefit, by the very act οf formalizing procedures; SMEs could ratiοnalize their activities аnd improve efficiency аnd quality. In mаny οf these small firms, staffs hаs begun tο perform their jobs more efficiently, simply by following procedures аnd instructiοns that they previously ignored because they were not written аnd formalized.

Training аnd informing persοnnel also accrued benefits in terms οf efficiency. By improving skills аnd raising employee awareness, SMEs obtained positive mаnagement results. Innovative ways οf informing аnd training employees οn informatiοnal issues other thаn the traditiοnal approach were tested in some pilot projects. Examples οf these new methods are ‘co-training’ amοng different small enterprises operating in the same area or sectοr аnd training ‘οn the job,’ by directly testing informatiοnal procedures with the relevаnt persοnnel working οn the process. A clear example οf the benefits achieved from persοnnel training is demοnstrated by some SMEs that decided tο implement a wаste mаnagement program. Even where these small enterprises had been previously separating their wаste for collectiοn before ERP systems implementatiοn, they made positive improvements (аnd related ecοnomic benefits) οnly when they adopted correct procedures аnd appointed adequately trained persοnnel tο implement them (Hillary, 1995).

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Entrepreneur Characteristics

Entrepreneurial Challenge and New Venture Creation

The views in the past on the entrepreneur’s characteristics were formed upon a general agreement with regard to its economic importance society. The term entrepreneurship has received solid attention from economists, scientists and policy making body. Though entrepreneurship has several aspects, these aspects can be discovered in the literature and theories when trying to explore the views of the classical researchers to entrepreneurship aspects and also discussion upon the relevant formal and informal attributes that are mandatory for an individual to succeed as an entrepreneur in the real world, this add more desire to the entrepreneurial challenge and venture creation.

The intended goal of stimulating entrepreneurship in people is to figure whether what type of formal and informal attributes needs to be existent in a person to gauge whether he would likely to succeed after starting a businesses venture. Accomplished entrepreneurs are not restricted to one personality profile but rather arrive in varied ages, differing incomes, any gender, and particular race. They might even have different educational background and experience. However according to our classical researchers majority of the entrepreneurs who succeed in life tend to have similar personal attributes. These attributes may consist of innovation, creativity, determination, versatile, initiators and leadership traits.

Theoretical Review On The Entrepreneur Traits And Attributes

The opportunity to become independent and being you own boss along with making wealth and has motivated many young or middle aged individuals to try to become an entrepreneur. Evidence shows that this has been majorly reflected the research on the emergence of small and medium enterprises (SME) and more significantly, the direct and indirect attributes that are linked with the entrepreneurs who have successfully been able to make their company grow and prosper led. The overall study aspects discussed in the literature are likely to revolve around’ leadership skills of an entrepreneur, their orientation process, the level of management skills, personality indicators or traits and their circle or the network they belong to. (McClelland 1961) Emphasized that attributes which contributes the most towards becoming a successful entrepreneur is the need for achievement.

Where on the other hand (Begley and Boyd 1987) discovered that entrepreneurs or initiators may score relatively higher than managers of a small business who are non-initiators in need for achievement, taking risk, and have a low tolerance regarding ambiguity. Another researcher (Brockhaus, 1982) analysed a large number of characteristics related to psychology and concluded that the main indicators of entrepreneurship attributes are linked to the high achievement needs, high centre of control and a high risk taking.

While on the other hand, Brockhaus and Horwitz’s (1986) theories presented that entrepreneurs who inherit high centre of control strive for high achievements as well. It has also been suggested that the essential factor in differentiation between entrepreneurs from a manager is risk taking factor (Mill 1984). It could also be established that entrepreneurs may execute higher tolerance to risk especially in departments or areas where they have full control or even realization of the potential of making a profit in that area. Many studies have included risk taking as a primary entrepreneurial characteristic.

It was confirmed at a later stage that entrepreneurs readily undertake the uncertainty and unknowing situations; therefore the individuals who are more inclined towards becoming an entrepreneur are expected to depict comparatively greater tolerance of ambiguity (Mitton 1989). It has also been suggested that innovation is the most prominent factor that is essential for the characteristic of an entrepreneur. Existing literature on entrepreneurship indeed give a picture of entrepreneurs being relevantly more innovative than individuals who lack the potential to become an entrepreneur (Koh and Ho, 1992); personality traits of entrepreneurs have been defined to have a significant effect on organizational growth (Sexton and Robinson 1994).

The Entrepreneur
The Entrepreneur

Researches also discovered that personality attributes such as internal point of control and tolerance to ambiguity influences the success of business directly and the processes of the business in an indirect manner (Vazquez and Farnendez 2000). It was complimented with later variables related to demographics to study and investigate the entrepreneur’s traits that could have a direct impact on the success or failures of entrepreneurs residing in Africa. Even though researches on an entrepreneur’s traits have executed a crucial role in the contribution of the success of entrepreneurs all over the world, these traits have been constructively criticized grounds of theory and empirical outcomes in the studies of entrepreneur’s attributes Gartner (1988). One of the researchers in his article, clearly addresses to who is an entrepreneur and hence suggest that asking Who is the wrong sort of question when establishing characteristics of a successful the success of a business venture is mediating phenomena and cannot be related to entrepreneurs personality traits only Gartner 1988). There was a study conducted on a segment of employees done by two researchers which helped to reveal that those individuals who are initiators at work place tend to do better than others (Frese and Fay’s 2001).

Researches on self-initialisation focuses on the nature of entrepreneurs being self-starters and not waiting for others to instruct them: hence they manage to success due to their proactive nature, hence they know exactly how to seize and utilize an opportunity with their proactive attitude, they are the solution finders rather than hurdle makers(Tag and Fresse1997). Great initiative taking entrepreneurs are successful at staying ahead of their competing colleagues members, and therefore are considered as role models for their subordinates. Self initiators directed upon the achievement of their goal and oriented towards action (Frese et al., 1997) and therefore are in close alignment to their consistent strategy. There are similar drawn traits relating to the entrepreneurial challenge and venture creation.

It is one of the contingent variables behind which helps to predict whether an individual has the potential to become a successful entrepreneur. The majority proportion of studies executed on personal self initiation is in direct relation to performance of the employee and hence significantly limited number of studies has been published on personal and self initiation with respect to success as an entrepreneur.

Because of reduced functioning competencies of the initiators, they are generally replaced by experienced managers who possess the competency that are necessarily required to handle the company’s affairs when the situation begins to transform from a start up phase of business life cycle to a growth stage organization.

Some of the researcher was unsuccessful in finding any evidence regarding professional managers performing relatively better than initiators in companies with high than the original starters of the company. They were intending on observing that many company founders were good at managing growth in an effective manner. There for rejecting the assumption that an only professional managers need to be employed in order to manage high growth companies (Willard, Krueger, and Freeser, 1992). This research was able to challenge the traditional views upon wisdom is it was able to reveal the process through which accomplished entrepreneurs progress through and turn themselves into competent professional managers.

Accordingly some of the researchers found that founder members of the company are also eligible to have the same competency for performing as professional managers have, there are very limited studies on the similarity between a manager and a founder of a company who are required to perform when working in a growth focused company.

Some of the researchers also discovered that most of failure in business was contributed towards the lack of appropriate managing skills (O’Neill & Duker, 1986). It has been reviewed through the literature used for this report that there are approximately 10 failing high-tech companies and were able to conclude that there were three main contributors for this failure which were financial issues, problems with either the product or market and managerial issues.

Get Test For Testing Entrepreneurship

The explanation or predictors of a person good at enterprising could be established from the background that could be uncovered about the entrepreneur. The concept being that the person eligible for enterprising would likely to share similar entrepreneur’s traits. GET2 test helps to discover the different aspect of becoming an entrepreneur an entrepreneur is not some who just starts up a completely new venture, but some of the examples arise from within the organizations as well. Such people are referred to as entrepreneurs.

Then there are also volunteers who are eager to participate in new projects and introduce new ideas within the project voluntary in the community such volunteers could be referred to as volunpreneurs. However, the tendency to enterprise could be defined as the ability to initiating a new business and then managing that business successfully.

As the complimentary assessment of a tendency to enterprise the GET test was introduced at Business School of Durham University 1988 in order to help employers gauge the entrepreneurial tendency of the candidates, who apply at their firm for a position as well as to guide the individuals willing to become an entrepreneur about their probability of having entrepreneurial characteristics, and whether they would succeed if would take such a chance.

It hence was able to generate a lot of curiosity and interest amongst academic institutions, and other venture capitalists who work globally in the field of innovative projects that are started by aspiring entrepreneurs.

Get2 test could be used for research, hiring and sponsoring of a new project. Even though this test has been implemented in many organizations to gauge effectiveness of an entrepreneur it is still not free of criticism as it has been debated that the attributes that are investigated in this test may not ensure that an individual has the eagerness to become responsible for a completely new project, and may lack the determination to complete projects on time and also the other factors like financial issues, external environmental factors and other managerial skills may not be effectively be gauged by this tool of testing the tendency to become an entrepreneur and take up new ventures.

The research on the effectiveness of GET test as a tool for measuring tendencies was mostly emerged by work of McClleland and Atkinson’s in the early 1960 suggest contrary findings which opposes the traditional view of all entrepreneurs having the same skill sets.

Strengths and Weakness of the Test

The benefits of this test are that actually provides an edge or guidance to an individual looking to become an entrepreneur on what areas he may lack in order to succeed as an entrepreneur. Another strong point of this test is that it is a relatively inexpensive method for venture capitalists and employers to analyze their candidate’s tendency to enterprise. It is also very time efficient as it immediately informs on the person capability on becoming an entrepreneur.

However, there are some drawbacks of the test as the entire test consists dichotomous option for giving a response responses. Hence this is an issue as a person cannot be more expressive towards his response and might not be able to justify the reason for not following a certain practise mentioned in the analysis. Also, some of the personality traits associated to entrepreneurs might not be an accurate reflection of all owners of a business or entrepreneurs. Some of the characteristics that are discovered through this analysis could also be gender biased, and some of the questions may even be leading.
Conclusion Evaluation of the Get Test

The Get Test is a lengthy questionnaire with 54 closed ended questions with answers being limited to tendency to agreeing or disagreeing. The questions that I attempted in this test were quiet significant to what one would need to know in order to gauge whether he is fit to be an entrepreneur or not. The focus of the test is to assess whether you are of a person to work as an individual or are a team person. Also, the questions seemed to correctly focus on a potential candidate’s willingness to try new things. Considering the relevant personality traits that have been defined in the literature used for this report some of the most prominent trait of an entrepreneur are innovative, risk taking and initiator or leadership traits.

The questions that I answered have all the elements that would be relevant to gauging whether an individual has these traits or not. For e.g. the test assessed me to have a high need for autonomy or independence which I would completely agree with as I would rather get all the work done in a group than rely on others to finish their task before moving onto the next agenda.

The test was also successful at gauging thee innovative or risk taking nature of a person as some of the questions related to the test like if a person would buy a lottery ticket or enter a contest both options are risky in nature but if the person would rather enter a competition he would considered being open to risk taking as well as being open to challenges and innovation, whereas a lottery buyer would be open to risk but probably not a challenge.

However, the test cannot be said to be 100% effective in gauging the entrepreneurial skills of a person as the two options of agreeing on or disagreeing on can be ambiguous in nature a lot of candidates would prefer a third option where he could be neutral in the particular question.

Summary Of The Test Result

The test gave me a score of 70% which predicts that I am likely to have succeeded in possessing some of the enterprising characteristics. My need for achievement is high however I would prefer to enterprise with ideas that would fit in with my lifestyle. My need for autonomy is extremely high, and I have high leadership skills but lack in people management skill. My score on being innovative is medium which means I would rather start projects I am familiarized with than a completely out of the box idea. I am relatively a less risky person hence I would not take a risk alone but rather involve someone with me to share that risk. My locus of control is more than medium but not that high either which means I need to work on myself confidence in order to make a success of a venture that I would be willing to start.

References

Begley, T. M., & Boyd, D. B. (1987). Psychological characteristics associated with performance in entrepreneurial firms and small businesses. Journal of Business Venturing, 2, 79-93.

Brockhaus, R. H. Sr., & Horwitz, P. S. (1986). The psychology of the entrepreneur. In Sexton, D. L., and Smilor, R. W. (Eds.), The Art and Science of Entrepreneurship. Cambridge, MA: Ballinger, 25-48.

Frese, M., Fay, D., Hilburger, T., Leng, K., & Tag, A. (1997). The concept of personal initiative: Operationalization, reliability and validity in two German samples. Journal of Organizational and Occupational Psychology, 70, 139-161.

Gartner, W. B. (1988). Who is an entrepreneur? Is the wrong question. American Journal of Small Business, 12 (4), 11-32.

Krueger, N. (1993). The impact of prior entrepreneurial exposure on perceptions of new venture feasibility and desirability. Entrepreneurship: Theory and Practice, 18 (1), 5-21

McClelland, D. C. (1987). Characteristics of Successful Entrepreneurs*. The journal of creative behavior, 21(3), 219-233.

 Mitton, D. G. (1989). The complete entrepreneur. Entrepreneurship: Theory and Practice, 13, 9-19.

O’Neill, H.M., & J. Duker (1986).  Survival and Failure in Small Business. Journal of Small Business Management, 24 (1), 30.

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Electronic Human Resource Management

Electronic Human Resource Management

The emergence of Internet technology has virtually changed the way humans execute their functions in all phases of activities. The Human Resources Department is not left out, as the adoption and implementation of web technology has revolutionalized the functions and responsibility of the HRM.  Thus, web technology, through e-recruitment is now being used in the recruitment of potential workers in every organization.  E-recruitment has been proved to be an efficient, quick and cost effective means of hiring quality workers into an organization. This paper is aimed at understanding the concept behind e-recruitment technology. These include the origin, types and elements of e-recruitment. The paper also discussed the effects of e-recruitment on the cost, time and efficiency of an organization. The relationship existing among the three variables (cost, time and efficiency) as well as their collective impact on organization is also discussed in this Electronic Human Resource Management paper.

Introduction to Electronic Human Resource Management

For the past ten years, E-recruitment has continued to attract the attention of Human Resource Managers, all over the globe. This relatively new technology that makes exclusive use of the internet is now being recognized as a cheaper and wide-reaching methodology, for recruitment of workers. This is shows that the revolution of internet technology is currently spreading over the world of job hunting and hiring. The term e-recruitment, which is also known as online recruitment, cyber-cruting, or internet recruiting, is used to describe the formal sourcing of job information on the vast World Wide Web. The term was first mentioned in articles during the 1980s. There are two major methodologies for e-recruitment. The first one is the use of corporate web site for recruitment. In this case, companies have corporate websites in which specially designed recruitment web pages are maintained for employment of people. The second methodology is the posting of jobs vacancies on online commercial jobs boards like monster.com. In this case, companies advertise vacant positions on other website that specialize in recruitment. Some good examples of these websites are naukri.com, timesjob.com, monster.com. Nowadays, a growing number of companies and organizations are resorting to these two methodologies for recruitment of skilled and talented workers.

Electronic Human Resource Management (E-HR)

According to Jim (2013), “Electronic human resource management (E-HRM) is the process of integrating components of information technology into the structural design of the human resource department”. Such components of information technology are specifically designed to help with tasks associated with human resources”. Adoption of E-HR is one of the best ways through which an organization can streamline its human resources. This goes a long way in making the human resource department to become more efficient and effective, thereby minimizing its operational and production costs. A typical E-HR suite is capable of handling many important tasks such as staffing, training, and payroll. These customized software suites is particularly suitable for handling all those tasks times that are time-consuming. This gives HR employees more time to concentrate on strategic processes that will improve the organization (Bondarouk and Ruël, 2006).

The Human resources department is a very important section in every organization. The department serves as the communication link between management of an organization and its employees. They are responsible for maintaining a satisfied workforce. Thus, if they ever err in any of their objectives, the company involved is going to have a bunch of disgruntled employees as its workforce. The department is also responsible for recruiting workforce for the organization. At times, carrying out all these tasks can be very difficult and time-consuming. This is the major reason why an ever increasing number of Human Resource Departments have begun the process of installing various forms of electronic human resource management to help out their HR managers (Buckley et al, 2004).

However, it is very important to note that Electronic Human Resource Management cannot replace the traditional human resource departments completely, rather it can serve as a very valuable supplement for the department (Jim, 2013) By installing E-HRM software, a business can streamline the more detailed tasks associated with the HR department.

In every organization, the E-HRM plays great role fulfilling the immense responsibilities of the Human Resource Manager. For instance, E-HRM can include software devoted to payroll issues thereby saving the Human Resource Manager, the time required to attain payroll issues. E-HRM can also be supportive in terms of staffing. During recruitment, the suite through its e-recruitment components can eradicate the stress and time-consuming processes associated with selecting the most suitable applicants..

E-HR also plays significant roles in the management aspect of the Human Resource Managers where it is actively involved in drafting policies and controlling both the traffic and collection of electronic information. Still under the management aspects, E-HR helps in controlling and organizing data within an organization. Accomplishing this requires the creation of effective record management policies. Such policies facilitate lean data storage which involves maintaining pertinent information while removing data as it becomes irrelevant (Jim, 2013).

So in summary, E-HR is a very clear example of using technology to boost the productivity of an organization. The fact that E-HR software suite are technologically secured means that the security of any organization that implement and interact with this piece of technology is also secured. The application of E-HR suite in Human Resource Department can boost the sustainability of the organizations. As already pointed out, one area in which E-HR has been successfully implemented is in the recruitment of the organization’s workforce.

E-recruitment definition

E-recruiting can be defined as the use of the World Wide Web and its peripherals, to attract suitable candidates for employment purposes (CIPD, 2011). In other words, E-recruitment is a process through which electronic resources were used to draw the attention of job seekers to vacant positions in corporations (Stone, 2006). Over the years, e-recruitment has recorded unprecedented growth and its applicability has continued to expand in many sectors of human endeavors. Many reasons have been attributed to the tremendous success recorded by this relatively new technology. Recruitment is a process that connects employers to prospective employees. It’s a process in which capable employees are located and incorporated into the workforce of organizations. Recruitment usually begins with the searching of prospective employees and ends when the job applications are submitted. E-recruitment is one of the most powerful and cost-effective ways of recruiting staff for an organization as it can play active roles in each phase of the recruitment exercise.

In practice, there are numerous ways through which E-recruitment can be implemented. It may be conducted through the use of the official website of the organization. Alternatively, the company may decide to go through a third-party job site or job board.  E-recruitment can also comprise the use of CV database, search engine marketing or social media platforms to fill vacancies. The common factor here is the use of internet in each of these methodologies. This is clearly in conformation with the definition of E-recruitment, which is the use of the internet in conducting recruitment exercise.

Also, there are different ways through which job seekers can take part in an e-recruitment exercise. The job seekers can log in on the employers’ recruitment website and submit their CVs online. Alternatively, they can submit their CVs on special database for prospective employers to assess. Today, many company and recruitment agents have moved much of their recruitment process online so as to improve the speed by which candidates can be matched with live vacancies, and reduce the cost and time duration of these exercises.

Historical Background

Barber (1998) defined recruitment as; “those practices and activities carried on by the organization with the primary purpose of identifying and attracting potential employees”. Recruitment is almost as old as the mankind. However, e-recruitment is a relatively new term that has just attained significant success within a short duration of time. As have already stated earlier, e-recruitment is simply the conduction of job advertisement, job application and selection of new employees on the vast internet world. Historically, e-recruitment can be traced to the existence in 1980s, of independent job boards popularly known as bulletin board systems. Since then, this method has a recorded an unprecedented increase in its acceptability and implementation among several organizations of the whole world. The United States of America was credited as starting the global trend, with the launch of monter.com in 1994. The significant success of e-recruitment prompted Edgley (1995) to declare that, “the future of the recruitment industry is on the internet”. An analysis conducted by Onrec (2005) showed that between 2003 and 2005, 94 percent of the world biggest companies have adopted e-recruitment methods, as the major means of recruiting new employees. A survey conducted by Chartered Institute of Personnel and Development (CIPD) revealed that up to 64 percent of the UK organizations used e-recruitment as far back as 2006 (Parry and Tyson, 2008). Cappelli (2001) declared that 90 percent of US companies were already doing recruiting by internet then. Today, the internet has been globally recognized as the sustainable avenue for recruitment of prospective employees and practitiomers of Electronic Human Resource Management.

How E- recruitment is linked with Technology and Management

Having defined e-recruitment, it is very important for us to understand how this system is linked to technology and Management. The technologies we are talking about here are the HR systems, while the management includes Line Managers and Human Resource manager who are actively involved in recruitment exercise.

Naturally, the Human Resource Manager has essential roles to play in e-recruitment. Of course, the Human Resource Manager is responsible for facilitating and coordinating the recruitment exercise. Thus, the use of e-recruitment can go a long way in reducing the burden of the Human Resource Manager which will in turn; enable the Human Resource manager to operate on a strategic level within the organization. Just like the Human Resource Manager, the Line Manager also has a very important role to play in the recruitment exercise. The Line Manager is mainly concerned with the selection of applications submitted by job applicants. The selection is usually in relation to the vacancies that are listed in accordance with the job role. The roles of the two managers help to boost the effectiveness of the recruitment exercise (Research Advisory Panel, 2006).

The discussion conducted so far shows that the Human Resource Manager acts as the bridge that link the Line managers with the job applicants. However, the roles of the two managers can be greatly facilitated with the introduction of Information Technology tools, such as the application tracking software. Details of these tools are discussed under “Elements of e-recruitment”.

Types of E-recruitment

There are two main methodologies for conducting employment on the vast internet world. These are: (1) Posting vacancies on the official websites of the organization and (2) Making use of Third party websites which enabled a huge marketplace for recruitment. The two processes serve the same purpose of using the internet to get the best suitable candidates that have the right skills, knowledge and abilities required for vacant positions in organizations.

The first method of e-recruitment is particularly popular among organizations that have strong IT culture. It is also the best alternative for organizations that conduct regular recruitment exercises. In that case, it is more economical for such organizations to invest on their own website and equipped it with the necessary modules to handle e-recruitment internally.

The second method of e-recruitment is used primarily by organizations that lacked online presence on the vast internet world. In this case, the job of online advertisement of vacancies in such organizations is conducted by companies that are specialty in that area. These companies range from the fully specialized ones like Monster.com to the less specialized ones like social networks site and online forums.

Even though the two methods generally differ in their modus operandi, companies that have vacant positions can use the two methods at the same time. Organizations that have strong online presence can also include a “link of apply” on the third party website. When a prospective employee click on this “link of apply”, he or she will be redirected to the company’s website to start the application process. E-recruitment is source of huge revenue for owners of these third party websites. According to Silber (2012), “International data corporation (IDC) estimates $5.3 billion was generated in the US in 2011 through online recruitment industry and it is roughly increasing by 4 percent until 2015”.

Elements of E-recruitment

For any e-recruitment platform to be reliable and sustainable, there are certain elements that must be integrated into its operational structure (Parry and Tyson, 2008). These elements of e-recruitment have their place individually within the online recruitment strategy of every company. The main elements of recruitment include:

  • Applicant Tracking
  • Employer Web Site
  • Job Boards
  • Online Testing

According to a publication by Online Recruitment Marketing Council (2004); “the effectiveness of combining several of these elements in a cohesive strategy is a genuine example of the whole being greater than the sum of its parts”. Many organizations have recorded significant success in integrating these elements into the operational structure of their e-recruitment module. This is because; a combination of these elements enables the recruitment processes to be fast, effective and cheap. It also reduce the manpower required to oversee the whole procedure, thereby enabling staffs of the Human Resource Department to concentrate on strategic operations that are specifically meant to move the company ahead. According to a publication by Online Recruitment Marketing Council (2004), “a clear understanding of these elements is very necessary when designing an online recruitment strategy”

Applicant Tracking

This is also known by several other names such as: Candidate Tracking, Candidate Management, Candidate Relationship Management and Applicant Database. Just like the name sounds, applicant tracking is a specially designed feature that enables the personnel responsible for the recruitment exercises to identify the status or progress of each candidate with respect to the jobs for which he or she has applied. In other world, the applicant tracking system help those in charge of the recruitment exercises to identify the number of applicants that have submitted applications for a particular position as well as those that waiting for interview. This customized system includes “an analysis of business processes within the end-user company from which will be derived a system configuration for the chosen Applicant Tracking system” (Online Recruitment Marketing Council, 2004).

Some of the features that are contained in a typical tracking system include:

  • Full history of the applicant
  • Ability to send e-mails to the applicants. The system must be capable of sending emails individually or in batches
  • Ability to conduct a search on the applicant’s database
  • Ability of every worker that is involved in the recruitment process to make use of the same system, For instance, the Applicant Tracking System will enable reviewers to review the CV, while interviewers will also have the ability to provide feedbacks for candidates that were interviewed for a vacant position.
  • It will also have reporting features that will enable the Human Resource Manager to identify the pipeline supply of candidates for key positions and measure time to hire.

Employer Website

This is also known Job page, Careers site and Recruitment pages. It is the most important aspect of an organization’s online recruitment strategy. It is the platform through which the full details of the job opportunities are communicated to the whole world. It is also the platform through which important data are collected from prospective employees. So in a nutshell, the employer website is the heart of an organization’s online recruitment strategy. The Job pages are updated with new vacancies or amended job details through simple web-based forms that are only accessible through the admin panel. It is very important to point out here that the Employer Website must have the same branding as the official websites of the organizations.

Some of the important features which a typical employer website must have include:

  • Ability to enable visitors to conduct job search
  • It must also enable prospective employees to create a profile, submit core personal details as well as CV
  • Apply for jobs online
  • It must have set-up job ‘alerts’ that will notify applicants of any changes to the jobs they applied or the availability of new job offers. Such notifications are usually conducted through e-mails.
  • Enables both applicants and non applicants to view the status of all on-line applications
  • It must allow a single application to be submitted for multiple job vacancies
  • It will enables applicants and even administrators to send job details to their friends

Job Boards

This is also known as Job sites. It performs the same function as the recruitment advertising section of a newspaper or magazine. Hence, this element of e-recruitment enables applicants to access several job vacancies that exist in different organizations. Generally, job boards feature jobs in different sectors and geographies, each carrying different branding. This means that job boards are mostly restricted to a particular class of jobs (such as the health service), region or even levels of seniority. It may also include additional information, which could be in form of articles or editorials. This additional information helps to attract the specific class of visitors that are needed by the organization.

There are some factors that must be considered before selecting job boards to use. Some of these factors are: cost, sector, location of the organization, etc. Thus, it is very important for the Human Resource Manager to obtain audited figures for the relative popularity of different job boards before making a choice.

Apart from the services mentioned above, some job boards also render additional services that are specifically aim at helping job seekers. For instance, some of these agencies are known to maintain CV databases which can be access by prospective employers and agencies. There is a variety of charging models for this kind of service which aim to make it cost-effective and quick for you to find suitable candidates. The features of job boards are exactly the same as those of Employer Websites.

Online Testing

Another name for online testing is Psychometric testing. The term is used to describe the process of conducting some kind of assessment of candidates over the internet. This internet-based assessment can be “factual (for example numeracy, comprehension etc.) to the assessments of personality and identification of most appropriate kinds of work” (Online Recruitment Marketing Council, 2004). This is the main reason why employers use online testing as a selection tool as well as a special tool that help job seekers to identify another career opportunity.

Others

Apart from the four elements of e–recruitment discussed so far, there are still other elements that can be of great help to the recruiter. However, these extra elements normally require one or more of the major elements to function. Some examples are as follows:

  • Intelligent CV parsing tools: These are online- based tools that validate the submitted CVs. This validation exercise, which is usually automatic, involves the extraction of unstructured data, and modifying them into a ‘structured’ format. The data that are usually targeted by this tool include: name, address, skills, employment history, education etc. The CV parsing tool may either be designed as a standalone system or incorporated into the functional and structural design of an Applicant tracking system.
  • Multiple posting tools: – These are special tools that simplify the tedious process of posting job details of vacant positions on multiple job boards. These tools also include the utilities for managing the purchasing of advertising from the job boards. It also enables the recruiter to evaluate the success rates of the job boards.

New Trends in E-Recruitment

Information Technology is very dynamic and progressive. The fact that e-recruitment is a product of Information Technology also means that its methodology is constantly changing and expanding. Certain new trends in e-recruitment are currently emerging in the vast internet world. It is very important for Human Resource Managers to identify this new trend and take advantage of digital tools and resources in order to find the best talent.

LinkedIn

LinkedIn is a networking platform that now doubles as an e-recruitment tool. This online platform that has more than 150 million users is a reliable alternative to the popularly known job-boards. The main features that enable LinkedIn to serve as an e-recruitment tool include: ability of employers to post jobs, receive applications, and recognize ideal candidates. This networking platform also has recommendation and introduction capabilities in its functional structures.

Twitter

This is also another online networking platform that has recruitment ability. However, twitter is not strictly for recruitment and is therefore less effective. Nevertheless, twitter enables employers looking for job seekers to get the word out quickly. Apart from allowing organizations to maintain an online presence, twitter also enable them to manage their company’s image successfully. This is always an important consideration for new hires. Thus, it’s advisable for recruiters to engage more in conversations with potential hires in twitter rather than relying only on posting details of job vacancies.

Video assessment

Video assessment is a relatively new recruitment tool that is yet to be embraced by many organizations out there. In this case, applicants are required to submit video formats of their introductions and answers to certain questions, together with their applications. This tool helps the recruiters to review the shortlisted applicants, prior to the interview. This saves time and cost for the recruiter.

Mobile Recruitment

This technology is also very new and has not been accepted by a great number of organizations. It involves the development of recruiting applications for different mobile platforms, such as IPhone, Android, Blackberry and Windows. There are wide varieties of such apps. Some allow recruiters to develop questions and send to applicants, who then answer by video and send back. There are also certain mobile apps that enable recruiters and applicants to fix interview dates that can be updated on both their calendars. Other mobile apps allow recruiters to do sophisticated web searches for applicants, identify the most suitable candidates for the vacant position and then contact them instantly. There are also other mobile apps that allow employers to post details of job vacancies to multiple web job boards simultaneously with just a single click.

Advantages of E-recruitment

Studies conducted by several recruitment experts’ show that an increasing number of organizations are using e-recruitment for identifying the most suitable candidates for open vacancies. Lang et al. (2011) identify 14 major advantages of e-recruitment. These advantages are in agreement with the opinions of many scholars (Lang et al, 2011). The advantages are as follows:

  • Cost efficiency and relative affordability
  • Time saving
  • Efficiency (Hiring Efficiency)
  • Ability to expand the geographical scope of recruiting measures
  • Corporate policy
  • Targeting of the right group of candidates
  • Increase in number of qualified applicants
  • Independence of place and time, as everything is conducted strictly online
  • Portrays a better image of the organization
  • Provision of adequate information about the organization as well as additional workplace
  • Realization of competitive advantage
  • Recruiting qualified staff more easily
  • Updating of job and applicant data
  • Usability

Disadvantages of E-recruitment

Despite the immense benefits accruable from the use of this piece of information technology, a number of disadvantages do occur and many of these challenges are synonymous with the normal challenges encountered in the use of Information Technology (Thompson et al., 2008).  To start with, most people are still of the opinion that the internet is not the first port of call for job seekers (Galanaki, 2002).  However, the major challenges of e-recruitment revolve on the likely effects its implementation is going to have on company’s overall performance, especially in terms of its effectiveness and behavioral influences.

The main challenge that faces e-recruitment exercises in our today’s contemporary world is mainly on the trade-off between quantity (increasing) and quality (decreasing) of the job applicants. Of course, one great advantage of e-recruitment is attraction of huge number of job seekers. But the higher the number of job applicants, the higher the number of unqualified job seekers (Pearce and Tuten, 2001; Chapman and Webster, 2003; Barber, 2006). Unfortunately, this negativity is capable of raising the cost and time duration of the processing.

Also, e-recruitment can change the social interactions of the job applicants and this can even cause the job seeker to lack the ability to present his or her own KSAOs to the employer (Stone et al., 2006).  For instant, it is very important for a marketing manager or assistant to be outgoing and a little bit talkative. Unfortunately, it is practically impossible to perfectly measure these attributes through e-recruitment. Indeed, what Pin et al. (2001) called “Lack of Human touch” can have negative effect on e-recruitment processes.

This method of recruitment also lack the features needed to perfectly address the issue of discrimination in course of selection (Barber, 2006). This claim is confirmed by the result of a research conducted by Garcı´a-Izquierdo et al (2010) on companies listed on Spanish Stock Exchange. The result of the survey conducted by this team shows that the level and type of information which some of these companies ask in their application forms, is capable of giving rise to discrimination. Barber (2006) also pointed out the possibility of disable people applying for positions that are impossible for them to handle.

Another survey conducted by Pin et al. (2001) in Europe revealed two other disadvantages of e-recruitment. These are poor segmentation and higher rate of employees turn out. As pointed out in the last section, one of the advantages of e-recruitment is “targeting of the right group of candidates.” However, the result of the survey conducted by Pin et al. (2001) contradicted this claim. According to the result of the survey, about 59 percent of the companies interviewed listed “targeting of the right group of candidates” as the main reason for not using e-recruitment. Pin et al (2001) blamed this on the fact that “matching the position with the candidates is impossible” because of the broad accessibility offered by the internet technology.  This put companies at the risk of having less qualified applicants with the cost of losing qualified ones. Even though the level of classification of contents on the internet has been improved and it is now possible for companies to find the related domain, the footprint of the problem pointed out by Pin and his team still remains observable (Suvankulov et al., 2012)

The second disadvantage of e-recruitment, discovered by Pin et al. (2001) is higher rate of employees’ turnover. This claim is confirmed by Smith and Rupp (2004) in their study on managerial challenges of e-recruiting. For instance, an employed person can get interested in a vacant position in an organization. This is possible since all information is freely accessible through the internet.

Finally, the low level of internet accessibility in certain parts of the world is another major disadvantage of e-recruitment. The absence of internet connectivity and its lack of awareness will surely keep qualified job seekers in the dark.

Recommendation

Even though e-recruitment has so many advantages over the orthodox methods of recruitment, it is not advisable to completely replace the recruitment process of an organization with the electronic methods. Similarly, it will be a very costly mistake for an organization to continue to depend solely on the traditional method for its recruitment exercise.  The best alternative will be to supplement the traditional method of recruitment with the electronic method. The loopholes of e-recruitment can be covered by the traditional methods while the whole process can be made faster, cheaper and more efficient by incorporating electronic technology into it. When two vacancies are there and two candidates are available the companies do not have much choice, thus they prefer to widen their search and attracts numerous applications. Indeed, receiving application manually can be time-consuming. Manual sorting of applications is not only tedious, but is a sheer wastage of resources. E-recruitment is the surest way through which organizations can facilitate the smooth flow of recruitment process in today’s competitive world. This technology provides a straightforward and stressful way through which employers meet their prospective employees. Thus, it won’t be wise to discard this wonderful piece of technology. Rather, e-recruitment should be use to make the traditional method of recruitment to be faster, cheaper and more efficient. It’s also the best alternative that can be used to minimize the huge cost of job advertisement.

How e-recruitment affects cost, time and efficiency

As already pointed out, there are many advantages that endear e-recruitment to the heat of many Human Resource Managers. Top on the list are: cost efficiency, time saving and efficiency. These three advantages can collectively boost the effectiveness of the overall recruitment process.

Cost Efficiency: E- recruitment is generally cost effective and thus, can help companies to save huge amount of money. Unlike other form of media e.g. newspaper, it is relatively cheaper to post job vacancies on website.  This enables recruiters to advertise job vacancies at very low cost. According to Othman and Musa (2006), the four main ways through which recruitment cost are reduced with the use of online methodology are:

  • Costs saved directly from the advertisements posted on other medium of communication e.g. Newspapers
  • Reduces mail costs from paying fees to the head recruiters or Job fairs
  • Reduces the workload of the of the Human Resource Department
  • Posting through emailing is relatively cheaper than Phone calls and fax

Even though the communication methods used in e-recruitment is cheaper, the whole process is still faster and easier. Also, developing a career website is also cheaper when compare to the cost require in tracking down the details of every applicants that applied for a vacant position. Of course, this reduces the number of manpower required as there would be no need for manual sorting of applications (White, 2008).

Time:  E-Recruitment has more effective advantages in saving time. The fact that recruiters can use the E-Recruitment processes together with the traditional recruitment methods means that the submitted applications can be sourced and processed quickly and yet adequately (Marr, 2007).  This saves long hours of sourcing and processing applications. According to the study of Barber (2006), “the ease of completing online application form and the time taken to process applications are done in minutes faster than weeks”. This also saves time for both the recruiters and job seekers. The structural design of e-recruitment platforms allows recruiters to pre select an application as well as obtains quick response electronically. All these feature save time for the recruitment process.

Efficiency: Hiring efficiency is another major advantage of e-recruitment. As we have seen so far, the internet technology reduces the cost of recruitment by ‘reducing employee turnover as well as the staffing costs (Stone et al., 2006). All these increase the hiring efficiency of the e-recruitments.

The three aforementioned variables, namely cost, time and efficiency are closely relation in terms of operation. For instance, reducing the cost of conducting recruitment exercise as well as the time duration sorting, selection and processing of job applications will surely go a long way        boosting the hiring efficiency of the organization. As already pointed out, these three variables are very important the success of any organization.

The relationships between the three variables (Cost, time and efficiency) and their importance to the organization

The highly competitive nature of today’s business world has made it very necessary for businesses to seek the most cost effective way to recruit new employees as well as for employees to seek employers (Ratling 2012; Vera etal, 2009). Many organizations now prioritized the recruitment of the most optimum employees because of the overall effect such a workforce will have on the progress of the organization (Vera etal, 2009).  Obtaining the best workforce for an organization can be easily accomplished through e-recruitment. Indeed, e-recruitment is known to be very effective in attracting administrative positions (Dictionaries, 2000).  In the last section, we stated that, the three variables; cost, time and efficiency are closely relation in terms of operation.

To start with, the cost of e-recruitment is relatively cheaper than other methods of recruitment. Despite the growing cost of running business in our society today, it is still very necessary for organizations to adopt effective methods that will enable the obtainment of high quality employees that are required to attain a competitive advantage over others. E-recruitment offers a cost-effective way of achieving this goal. A cost-effective, but reliable means of recruitment can go a long way in boosting the efficiency of any organization. This option is exactly what e-recruitment is offering.

A cost effective method of recruitment should also be time efficient. In other words, it must be capable of saving lots of time for both employers and job-seekers. Such system must provide round the clock services at a very fast rate, without compromising the quality of the work that is being rendered. The process of sorting out both eligible and ineligible candidates must be done quickly and efficiently, without the involvement of any middle persons. Thus, both cost effectiveness and time-efficiency are two great factors that help organization to be more efficient in rendering of services.

Significant strides have been recorded by the adoption and subsequent implementation of e-recruitment. This is seen in the statistical figures of some researchers. According to a survey conducted by iLogos.com, about 92% of Fortune 500 companies now have websites that are specifically meant for careers, while 96% of recruiters now publicize their vacant positions on their websites (Borstorff et al , Marker, and  Bennett 13). Verhoeven and Williams (2008) attributed this significant rise to the following advantages: “reduced costs, faster processes, wider accessibility, improve reputation and brand, higher quality of applicants, better match of the position, 24/7 running ability, and reduction of unqualified applicants”

Generally, the efficiency, effectiveness, productivity and profitability of every organization can be greatly enhanced by information technology (Looise, 2004; Fredric, 2001). These are exactly the effects e-recruitment has on organizations. Apart from these, the adoption and implementation of e-recruitment also save costs and maintain quality of customer service by reducing the time and resources dedicated to administrative tasks (Richards-Carpenter, 1996).  So in summary, the adoption and implementation of e-recruitment enables an organization to achieve its strategic alignment, boost its business intelligence and enhance its overall efficiency and effectiveness.

Methodology

Even though e-recruitment is a relatively new terminology, a lot of researches have been conducted to unravel its immense potential and advantages. Thus, many authors have employed several methodologies in analyzing the effects of e-recruitment on the cost, time and efficiency of an organization. Holm (2010) conducted a research in which he determined whether the adoption and implementation of e-recruitment has any positive impact on the process and underlying tasks, subtasks and activities of the recruitment exercise. He made use of three large organizations that have well-established e-recruitment practices in his research. These case studies were conducted using qualitative research methods. One great advantage of this methodology is that it enables researchers to study processes of recruitment in their social context. The data used in the research were collected from multiple sources that are readily accessible for the analyst and these data were predominantly qualitative (Holm, 2010).  In order to get a more comprehensive idea of how online recruitment methods were used at the studied companies, the researcher analyzed the content of corporate recruitment web pages and the job ads that the case companies placed on their websites (Holm, 2010). Thus, Holm (2010) utilized a blend of qualitative methods, techniques, and data sources in his study.  The overall data analysis was deductive. At the end of the analysis, Holm (2010) discovered that e-recruitment had significant impact on the recruitment processes of all the companies that were used in the study.

Electronic Human Resource Management
Electronic Human Resource Management

Similarly, Gopalia (2010) in his own study which was aimed at assessing the effectiveness of e-recruitment used Tesco as his own case study. His research methodology includes an exploratory, theory building approach. In other words, an exploratory and qualitative research approach is used by Gopalia in his study. The methods used in collection data were via literature review and case study. After his analysis, Gopalia (2010) discovered that e-recruitment is effective in terms of saving cost of recruitment and selection. According to him, “Case exploration about the effectiveness of online recruitment and selection depicts that it saves time to hire and reduces recruitment cost”. The methodologies used by Holm and Gopalia can be employed collectively in a different research that will enable us to understand more about the effects of e-recruitment on the cost, time and efficiency of an organization.

Facts and statistics about e-recruitment

Even though e-recruitment is a relatively new technology, a significant rise in its adoption has been recorded.  About 95% of the Global 500 companies now use e-recruitment as the main method of employing new workers (Barber, 2006; Kim et al, 2009). In Asia and America, the percentage of organizations that uses e-recruitment is put at 96%, while that of Europe is estimated to be 94% (Barber, 2006; Kim et al, 2009). The wide acceptance of e-recruitment by many agencies of the world has made it possible for employers to increase their capability of sourcing and meeting their recruitment objectives much faster.

 A statistical analysis conducted by Greenspan (2003), shows a breakdown of those that uses e-recruitment as follows: 26% for executives or managers, 26% for technical workers, 19% for professionals and a mere 5 and 7% for fulltime students and blue collar workers respectively. Evidence of about 43% of job seekers, who seek jobs online claim to have at least 10 years of work experience and half of those are looking to score jobs in the range of mid to senior level management (Gill, 2001). The databases of many online agencies are currently overflowing with resumes. Monster.com alone has about eleven million resumes that are very much available for employers. This explains why about 90% of those businesses that make use of the services offer by these online agencies are willing to renew their subscriptions annually. Gill (2001) observed that this is a great way for business to save their operational costs. He believed that between $ 50,000 and $60,000 can be save yearly by organizations that made use of these online agencies (Gill, 2001). About 56% of prospective employees that are interviewed by majority of companies are now known to be generated by these online agencies (SkillRoad Inc, 2012).  About 46% of those interviewed are usually hired (SkillRoad Inc, 2012). This shows the high success rate of using online methods of recruitment.

Conclusion

The highly competitive nature of today’s business world means that every organizations, companies and business establishment must strive to attract and retain the best and brightest employees. One of the surest ways of accomplishing this feat is by making use of the internet. E-recruitment is currently being adopted by an ever increasing number of organizations because of its cost effectiveness, fastness and efficiency. Despite its immense benefits, e-recruitment should not replace the traditional methods of recruitment. Rather, it should serve as a supplement to carter for the loopholes of the traditional recruitment methods. However, a lot still need to be done to make e-recruitment more effective and reliable. For instance, despite the technical strength of e-recruitment, it is also very important to incorporate a deep understanding of human resources into the structural designs of recruitment websites. It is also necessary for e-recruitment websites to have strong ability of market planning and promotion so as to be able to attract high quality applicants. Online recruitment service system is still in the early stages of development and needs further development to improve.

Appendix 1

Summary of previous research into the main effects of e-recruitment on the recruitment process as compiled by Holm (2010)

Changes in the recruitment process Changes in the recruitment process performance
The recruitment process turns into a marketing process of selling jobs, with more activities and resources dedicated to building company reputation, Internet communications, and relationship marketing. Automation of the entire recruitment process. Introduction of sophisticated on-line screening systems. Automated systems for contacting applicants. Shorter recruitment cycles. Bigger pool of experienced candidates. Efficient selection of best candidates.
Change from batch mode to continuous mode, with some activities being performed concurrently. Automated pre-screening. Long-term candidate relationship management. Cost savings, better efficiency, increased convenience for recruiters and clients, and shift of focus on effectiveness
Introduction of new processes, e.g. web-based pre-screening. “Just-in-time” recruiting on demand. Lower costs per hire. Shorter recruiting lead times. Improved quality of candidates

Appendix 2

Case Studies of companies used by Holm (2010)

Fictitious name Primary Industry Ownership Number of Employees  
ScandifinDanadrinco Banking and investmentAlcoholic and non-alcoholic beverages

 

Shareholding companyShareholding company

 

33,000+45,000+
Energowing Design, production, and installation of energy systems Shareholding company 20,000+

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EFQM Model Economics

EFQM Model

A lot has been written on the EFQM Excellence Model generally and its application to the field of total quality management. This chapter is founded on the information search and review of literature that was conducted in February and March 2013. It largely investigates the EFQM model with respect to the adjustments it has undergone over the years.

Steered by the three research questions in this research, the literature review then explores the history of the EFQM Excellence Model, and the different adjustments the model has undergone as well. The chapter concludes with the current position the EFQM Excellence Model.

The EFQM Excellence Model

The EFQM- European Foundation for Quality Management was established in 1988 with the aim of assisting European firms to become competitive in the global market. The first choices of this establishment were to follow the example of the American MBNQA through forming the European quality prize (Conti, 2007). The mainstays of these prizes are extremely alike because all of them are founded on the philosophy of total quality management. On the other hand, there are a number of variations between nations. In accordance with Tan (2002), in developing nations these prizes provide little significance to factors like leadership and social responsibility. In Europe, the EFQM is more relevant to human resource management as well as social impact.

Successive forms of the EFQM Excellence Model have been created. The key reason for the adjustments is to be corresponding to the state of business. An evident illustration is the development of the MBNQA from a simple system of quality assurance to a system of quality management (Tan, 2002). The present type of the EFQM model dates from 2010. On the other hand, there is still not enough capability to evaluate this new type empirically. As a result of this, this paper will focus on the application of the EFQM model from 2003 -2012.

The EFQM model of 2003 varied in significant ways from the past one from the time it integrated a few concepts, like knowledge and information management, to draw up emphasis on process management and consumer orientation and to highlight the enhancement cycle (RADAR) and, in general, to make application easier in all sorts of businesses, private or public, multinationals or medium enterprises, or even in the non-profit organisations (EFQM 2003).

The EFQM Excellence Model supposes that, for a firm to be effective, whatever its industry, structure, size and so on, it ought to have a decent system of management. In light of this, the EFQM model is an instrument that may be applied to structure the system of management of a firm, through self-evaluation.

Self-assessment comprises a consistent assessment of activities and results of a firm with the excellence model (Calvo-Mora, Leal & Roldán, 2006) and it plays a part in identifying areas of improvement and strong points that as a result could facilitate to develop enhancement plans that ought to be incorporated in the strategic plans of an organisation (Jacobs & Suckling, 2007). In general, the scientific literature finds a positive correlation between company performance and self-assessment (Ahmed et al., 2003).

The EFQM Excellence Model is a flexible framework founded on nine principles. Out of the nine, five are Enablers whereas four are Results. The Enablers focus on what a firm, the Results focus on what a firm accomplishes. Enablers lead to Results (Mavroidis, Toliopoulou & Agoritsas, 2007). The EFQM model, realising there are a lot of strategies to attain maintainable excellence in all performance elements is founded on the principle that outstanding results with regard to customers, performance, and society are attained by means of resources, partnerships and processes. With reference to figure 1, the arrows highlight the dynamic attribute of the model. They indicate learning and innovation helping to better enablers that as a result cause advanced outcomes (Mohebi, 2002). This structure proposes the presence of correlations amid enablers and results and the actuality that being effective in a remote area is not satisfactory to attain excellence (Ehrlich, 2006).

EFQM Model Dissertation
EFQM Model Dissertation

Brief Summary of the Criteria Under the ‘Enablers’ group of the EFQM Model

Leadership- It is anticipated from the higher managers of leading firms that they would create systems of management in their firms and would struggle for their appropriate implementation and additional advancement (Collier & Bienstock, 2006). They would take the workers of the firm in assurance and would directly intermingle with their clients, suppliers and general public. These heads ought to be instrumental in making organisational transformations as and when requisite. They must come out as role models for the workers of their firm.

Policy and Strategy- Leading firms should have a long-standing strategic idea bearing in mind the anticipations of its different stakeholders (Ciavolino & Dahlgaard, 2009). These proposals must be evaluated constantly for appropriate implementation and upgraded obligatory. These plans must be founded on tracking the outer environment and monitoring the strong points of the organisation regularly.

People- It is desirable that firm manage their human resource obligations effectually by recognizing the capabilities of their employees and further advancing these to develop full advantage (Collier & Bienstock, 2006). There ought to be appropriate mediums of communication between senior managers and the staff members to identify their problems and prospects. The worker’s outstanding performance ought to be acknowledged and rewarded.

Partnerships and Resources- External allies, like suppliers, ought to be included in developing the coordination needs for more fulfillment of the buyers. The firm should assist these associates in their issues and form a synergy among them (Dahlgaard-Park, 2008). Outstanding firms ought to have well demarcated systems for dealing with their buildings, finances, materials and equipment. Old fashioned technology ought to be recognized in their operation and substituted with modern technology whenever the need arises. Appropriate application of information technology ought to be made and it must be guaranteed implied knowledge of the firm is transformed into systems of knowledge management.

Processes- Different processes must be well drawn and documented. The process ought to be analyzed for additional improvement constantly (Dahlgaard-Park, 2008). The firm must design and create its services and products on the basis of the anticipations of the clients. Long-standing relationships ought to be established with the consumers.

Brief Summary of the Criteria Under the ‘Enablers’ group of the EFQM Model

Customer’s results- How does the client view the firm? The firm is anticipated to develop processes to have knowledge of the consumer’s views of the firm (Go´mez-Go´mez, Martı´nez-Costa & Martı´nez-Lorente, 2011). People’s results- What are the views of the staff members of the firm regarding the firm? Therefore, systems must be developed to understand, monitor, forecast, and better the views of the staff members. Society’s results- What has the firm accomplished for the general public? What does the society notice regarding the firm? Therefore, systems have to be developed to understand, monitor, forecast, and better the views of the general public (Rooghani, M., & M. Homayonfar, (2005)). Key performance results- Key outcomes of performance are the results as intended by the firm. The results may be financial or non-financial. What the firm is accomplishing with regard to its intended performance is to be analysed and monitored.

According to Adebanjo (2001), the EFQM model integrates the principles of quality management mainly leaving the issues of quality management to individual companies. This implies that the aspect of quality assurance, related largely to the control of the production process, are presumed and organisations will possibly rely on other systems like six sigma, or ISO 9000 to concentrate in those features.

The Evolution of the EFQM Excellence Model

The EFQM Excellence Model is run by the European Foundation for Quality Management (EFQM) (Iñaki, Landín & Fa, 2006). This is a nonprofitmaking body integrated in Brussels (McCarthy & Greatbanks, 2006). Its associates are firms from industry and service in addition to institutions of higher education, research organizations and other institutions from academia. Its key purpose is to pass on the concept of Excellence across Europe (Vernero et al., 2007). In this context, the EFQM offers a range of services from information material and training on self-assessment to measuring support. They are all enhancing the fundamental business of supporting and running the European Quality Award.

The basic EFQM Excellence Model was initially established co-operatively by specialists and researchers and printed in 1991 (Klefsjo¨, Bergquist and Garvare, 2008). Ever since, it has been constantly revised and upgraded. A key amendment occured in 1999. It was acknowledged that collaboration with external allies or networking in addition to invention and learning had occurred in the interim as vital encounters to organizational performance. The objective was to integrate both features in the novel model. In addition, model management, applicability, and usability must be enhanced. As an initial step, the EFQM distributed a draft for a novel model in April 1998 (EFQM 1999). Conversely, its graphic arrangement revealed the preferred learning sequence. However, two new components were incorporated: “Partnerships”, as an enabler, defined the firm’s astrategy to cope or work together with external partners; “Partners” denoted the relevant measures of performance. In addition, the subcriteria lost their previous objective of offering comprehensive requirements to every component. As an alternative, they now termed as the factors approach, positioning, valuation, and assessment. These had initially been part of the “Blue Card”, that is, the scopes for assessment. The subcriteria of the old model were shifted to the parts to tackle. The latter alterations triggered significant criticism. Firms already using the model for self-valuation objectives would have had to re-educate all their employees.

As (Jelodar, 2006)a result, they strongly supported an evolutionary strategy to model improvement as an alternative . Additional issues were witnessed in the actuality that all model matters were shifted from the degree of subcriteria to the parts to tackle. The latter are not obligatory however, potrayed as an classic guidance for firms to comprehend the model. As a result, scientists and practitioners were frightened the good judgment concerning the subjects of the model could become disoriented (Javidi, 2006). On the other hand, the novel model draft provided some substantial developments largely referring to the dimensions of assessment. These later created the RADAR-Chart. Following an intense talk with its associates across Europe, the EFQM chose to pull out the draft of the new model and presented a second suggestion which was a lot more in agreement with the earlier version (EFQM, 1999). However, it considered the aforementioned factors of invention and learning in addition to external associations which are nowadays both placed more to the front. Conversely, the original level structure with subcriteria, elements, and sections to tackle was maintained. This made it easier for firms to adjust and carry on their internal processes of self-valuation.

The Changes Incorporated in Version 2010

According to the 3 dimensional trait of the EFQM Model, this section elucidates the adjustments in each of these scopes, being: The Fundamental Concepts; The set of eight concepts was retained per se, however, all have a transformed and more vibrant title whereas the content for each was developed and is nowadays presented in a more organized manner (Tarí, 2006); The Model itself with the 9 boxes or criteria; Moreover, here the 5 enabler and 4 result benchmarks boxes were retained per se, however, have now  an improved naming, more uniformity inside, less similarity and were upgraded in content. Similarly, the weighting is now easier and more stable (Jacobs & Suckling, 2007). The RADAR factors for Results and Enablers. Here an enormous transformation was made for the ‘scope’ elements employed to evaluate the performance of the outcomes or ‘footprint’ of an firm. The set of aspects for evaluating strategies in the enabler criteria were polished with traits like effectiveness, creativity and suitability being incorporated into the popular trio of ‘approach’, ‘deployment’ and ‘assessment and review’(Shertan, 2008).

Above and beyond these key adjustments, also the weighting of the benchmarks was revised and streamlined, while retaining the ‘equal’ value amid the capability of a firm using the 5 enabler benchmarks and the performance it conveys for all stakeholders in the 4 result benchmarks. Each retains 50-percent of the total (Davies, Douglas & Douglas, 2007).

Changes in the Fundamental Concepts

The key principle of what these 8 models signify is established in this form of the Model,

their function was strengthened as in former times the possible value of this aspect of the Model has frequently been undervalued (Homayonfar, 2008).  This is apparent from the process of design employed for this form of the Model – this method employed the Fundamental Concepts as the base and indite for the rest. It was now the first time that a entirely reliable and direct connection was created amid each of the eight notions and each of the 32 benchmark areas, whereas keeping these 2 outlooks on Excellence separately.

Although the amount of concepts stays at eight and the naming looks relatively identical, a comprehensive interpretation of the description for each concept demonstrates the content has been improved considerably and signifies extremely well the elements we can discover back in firms that are worthy our admiration (Delghavi, 2007).   What did not transform is that the fundamental concepts are a exceptional and influential way to ‘define’ the position of being outstanding in a broad way.  Furthermore, the 8 concepts stay numberless; they have no sequence order, weight or significance.  Which of these 8 are the most vital to follow relies on the present state and particular environment a firm exists in and what it aims to turn into in the future, its determination. What did transform however considerably is the manner these 8 concepts are nowadays  visually incorporated with the two other elements, the eight notions are now visibly placed as the electrons  circling around a core with RADAR and the 9 benchmarks (or if one prefer it more – Satellites circling around the Globe) (EFQM 2010).

 

Table 1 -Fundamental Concepts

2003 Version 2010 Version

Key shift in content

Results orientation Achieving Balanced Results Concentration is presently on developing the key set of outcomes requisite to observe development against the  mission, vision,  and strategy, allowing leaders to formulate effectual and appropriate decisions.
Customer Focus Adding Value

For Customers Concentration is presently on plainly defining and communicating the value proposition and vigorously  involving clients in the service and product  design processes. Leadership and constancy of purpose leading with vision, inspiration & Integrity. The concept is at present more  dynamic, concentrating on the capability of leaders to adjust, react and  gain the dedication of all stakeholders to guarantee the ongoing success of the firm. Management by processes and facts managing by Processes The concentration is at present on how the processes are intended to convey the strategy, with end to end running past the “classic”  limits of a company. People Development and Involvement Succeeding through People The Concentration is presently on forming a balance amid the tactical needs of the firm and the personal prospects and objectives of the people to achieve their obligation and involvements. Continuous Learning, Innovation and Improvement Nurturing Creativity & Innovation. The concept presently identifies the need to improve and relate with networks and involving all stakeholders as possible sources of originality and invention. Partnership Development Building Partnerships. The concept has been extended to include partnerships  beyond the supply chain and recognizes that these should be based on sustainable mutual benefits to succeed. Corporate Social Responsibility. Taking Responsibility for a Sustainable Future. The concept presently centers on  vigorously taking responsibility for the business’s behavior and activities and handling its effect on the broader community.

The Current Version of the EFQM Excellence Model

What transformed in the way the Model functions with results?

In this section, let us evaluate what has transformed in the Model to promote a better evaluation of the performance of a company. In this segment we define first the modifications in the 4 generic benchmarks of results a firm realizes, and then how the RADAR aspects were upgraded to allow better Feedback, Analysis, Learning and Action (Andersen, Lawrie & Shulver, 2003).

What transformed in the results benchmarks?

For the 3 stakeholders being the people, customers,  and the public a firm is working with

and for, the identifying and the ‘stereo’ norm of having on one hand insights and on the other

hand indicators of performance stay the same (Bencsik & Nagy, 2007). On the other hand, the guidance and the the definition of which actualities and figures to concentrate on were put into precisely the same structure and were enhanced. A clear change was formed from a list of illustrations of processes to a more generic depiction of the form of or the areas of performance to apply in signifying outstandingor excellent levels of performance (Civcisa, 2007).

For the Result benchmarks 6, 7 and 8 a sharper dissimilarity between the observation (a) and pointer (b) elements of performance is now developed. This strengthens that outstanding performance can simply be established or attained of both the  efficiency and effectiveness are attained (Acur and Englyst, 2006). Each of the b) principle areas deals with the effectiveness side, with performance pointers that display how much is achieved, whereas each a) side deals with the efficiency part or performed all this action certainly ‘created a difference’.

As an illustration for consumer outcomes on the b) side a firm could indicate how fit and how much negative and positive response was managed, and how quick, whereas on the a) side the effect of this response on the definite insights by Clients is perceptible (Rusjan, 2005). Without taking part in an academic paper here on this subject, it is currently evident in the criteria that efficiency data is placed in 6a, 7a and 8a, whereas effectiveness data is under 6b, 7b and 8b (Pouyan &. Karimanpoor, 2007). As a last observation on this subject let’s remark both a) and b) can have slugish or leading pointers, this version of the Model does not employ this element to assign a result in a) or b).  On the other hand, for the  Key Results benchmark (9) a noteworthy transformation was made in the definition and identification of the outcomes the shareholders or proprietors of a firm anticipate to be attained. It now basically refers to ‘attaining what is intended for in the approach’ (Gomez-Gomez, Martınez-Costa & Martınez-Lorente, 2011). Certainly, also for this ‘bottom line’ principle the description and direction for appropriate facts and figures was improved like it was for principle 6, 7 and 8.

Another could be less noticeable transformation at first sight is the overview now of the notion of giving priority to key outcomes. In the description for every of the results principles a particular part is committed to establish the relative significance or weight for every of the sets of data employed to present and comprehend one of the aspects of the performance, which connects into the necessity to make contrasts and determine goals for these ‘Key Results’. The virtual weighting of principles, these transformed and gets both Consumer and Key outcomes at the same significance (150 pts each), and Individuals and The public both at 100 pts. For principle 9, and currently also principle 8 there is a 50/50-percent share between the principle parts a) and b), whereas for the people and customer principles 6 and 6 the 75/25 share stays.

Changes affecting the way we look at specific RESULTS of an organisation

Here amongst the vital transformations of the 2010 version of the  EFQM Model was created by transforming the order and improving the aspects of RADAR relevant to each of the results principles.  For the study (such as during an evaluation for instance) of the performance a attains achieves in a particular field still  two key elements are employed, however, these  transformed in order. By placing the ‘relevance and usability’ of the outcomes first, and the popular performance elements of ‘targets, ‘trends’, ‘causes’ and ‘comparisons’ add, a balance between the examination of set of information itself and what may be perceived as patterns in this information has been recognized clearly and resolutely now (Go´mez-Go´mez, Martı´nez-Costa & Martı´nez-Lorente, 2011).

Foremost the analysis in agreement with the approach of the ‘scope & relevance’, ‘integrity’ and ‘segmentation’ of the information employed to comprehend and show the outcomes for a specific principle (6, 7, 8 or 9) is performed. Just when a vivid picture of what we employed to call ‘scope’ is decided upon, the level of performance may be evaluated.  Together then these 2 aspects help in measuring how strong the performance is or where noteworthy prospective to advance can be realized.The adjustments to the results segment of the RADAR imply that those measuring need to form a judgement, based on the data they are given, with regard to: The percentage of the outcomes being applicable, segmented and integer  for ‘Relevance and Usability’; and if the performance is  probable to be maintained into the future, founded on  evaluating the tendencies and targets, contrasts with other firms, the understanding of the “reason & effect” connections, modifications in the operating setting, etc.

What transformed in the way the Model functions with enablers?

In general, the structuring into 5 enabler principles was kept as an easy way to divide into generally approved groups of tactics a firm can transform when targeting to advance its size and future performance.  Whereas on the well-known 9 boxed picture all main words were kept (with the exclusion of ‘Policy’), the invitation from ‘Processes’ into  ‘Procedures, Services’ and conformityhighlights the worldwide personality of the EFOM Model (Go´mez-Go´mez, Martı´nez-Costa & Martı´nez-Lorente, 2011).  It is relevant for any form of industry, size or development.  In addition, it stops some explanations of the principles that ‘forget’ the center of any firm  that lies into the plan and provision of their collection of services, or products , the contribution for Customers employed to fulfil their task.

Another could be less apparent transformation at first sight is the extension of the Response arrow underneath the 9 boxes with  ‘Creativity’. In addition, the ‘Learning’ and ‘Innovation’ as the preferred outcome of comprehending how enablers incorporate with outcomes and vice versa, this highlights inventiveness as an factor element influencing accomplishment, it illustrates the dynamic attribute of the EFQM Model.

What changed in the enabler criteria?

In agreement, 24 benchmark araes are still employed to structure an organized and comprehensive outlook on the dimensions and value of all the methodologies a fim has. There are 24 areas a firm may transform in the light of a continued and improved future performance.  Such as in the 2003 version, every benchmark has 5 criterion areas, apart from criterion 2 on Strategy which has 4 areas. Moreover the alterations shortened below per benchmark part, numerous attention was offered in this revision to bring the amount of management points to a standard amid 5 and 6. This way every point defines now more evidently  a particular subject that may produce valuable topics for discussion. Furthermore, a rationality analysis on these management points to define just realistic and modern practices of management was performed, giving rise to a general decrease (from >160 to 132) and a more concentrated content (Go´mez-Go´mez, Martı´nez-Costa & Martı´nez-Lorente, 2011). Even though the old expression ‘may include’ is currently methodically substituted by ‘Actually, Excellent firms:’, these management points must NOT be regarded as a worksheet or a list of compulsory practices or tactics, they act as a generic list of practices from actual life circumstances in a way to describe a particular criterion-part.  Perhaps the most influential incorporation was attained by re-cycling a number of or all of the shot points from the Fundamental Concepts into every benchmark field (Gomez-Gomez, Martınez-Costa & Martınez-Lorente, 2011).

Changes affecting the way we look at a specific enabler of an organisation

Even though the modifications here are less noticeable at first sight matched to the ones for the results aspects of RADAR, they as well demand cautious attention when adjusting to the 2010 version. Although for instance the term ‘review’ is substituted by the name ‘refine’, as well what is being ‘Assessed & Refined’ is currently defined more evidently in the novel picture. In general, one may view each of the RADAR letters have this form of development; this is mirrored as well in the novel picture for RADAR that well demonstrates now the ‘whole circle’ of the 4 areas of the RADAR rationality (Gomez-Gomez, Martınez-Costa & Martınez-Lorente, 2011). The 3 aspects and how these are made up of the 7 qualities remains mainly similar as a structure and the technique to come to an agreement of either a recording level or to enable an intensive exchange of insights for one of the 24 enabler benchmarks. On the other hand, a number of trivial changes in wording may have a substantial adjustment in the examination of an enabler, such as the ‘timeliness’ (or speed) of positioning.In conclusion, the medium for scoring objective is now more constantly employing the standard of ‘evidence’ to arrive at an agreement for each of the aspects and/or the subsection of qualities.  As a good description in the appendix is not yet obtainable, this generates a need for more management for the applied meaning of ‘evidence’, this for instance during a actual external evaluation.

References

Acur, N. and Englyst, L. (2006), “Assessment of strategy formulation: how to ensure quality in process and outcome”, International Journal of Operations & Production Management, Vol. 26 No. 1, pp. 69-91.

Adebanjo, D. (2001), “TQM and business excellence: is there really a conflict?” Measuring Business Excellence, Vol. 5, pp. 37-40.

Ahmed, A.M., Yang, J.B. and Dale, B.G. (2003), “Self-assessment methodology: the route to business excellence”, Quality Management Journal, Vol. 10, pp. 43-57.

Andersen, H., Lawrie, G., & Shulver, M. (2003). The balanced scorecard vs. the EFQM business excellence model, 2GC Working Paper, 1-14.

Bencsik, A., & Nagy, Z. (2007). Practice-Related Problems and Solutions on the Field of Improving Worker Satisfaction. Problems & Perspectives in Management, (3), 58-68.

Calvo-Mora, A., Leal, A., & Roldán, J. L. (2006). Using enablers of the EFQM model to manage institutions of higher education. Quality Assurance in Education, 14(2), 99-122.

Ciavolino, E., & Dahlgaard, J.J. (2009). Simultaneous equation model based on the generalized maximum entropy for studying the effect of management factors on enterprise performance. Journal of Applied Statistics, 36(7), 801–815.

Civcisa, G. (2007). A Comparison of Terms Leadership and Management within Quality Systems. Economics & Management, 987-992.

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Conti, T. (2007), “A history and review of the European Quality Award model”, The TQM Magazine, Vol. 19, pp. 112-28.

Dahlgaard-Park, S.M. (2008). Reviewing the European excellence model from a management control view. The TQM Journal, 20(2), 98–119.

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Jacobs, B., & Suckling, S. (2007). Assessing customer focus using the EFQM Excellence Model: a local government case. The TQM Magazine, 19(4), 368-378.

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Advertising Media Planning

Advertising Media Planning

Dixons UK: Strength out of Weakness

The much publicized advertising wars between Dixons, the high street shops, and their other online competitors reflect the perceived desires of consumers and the projected benefits of sustained firm-customer awareness. The Dixons.co.uk advertising campaign in 2009 seemed to break a lot of rules in advertising and marketing planning while it actually reinforced, in a rather novel way, some key underpinnings of advertising theory. The campaign ultimately shifted perceived consumer psychology by targeting embedded thoughts and feelings in their reproduction in consumer behaviour through a successful repositioning of Dixon’s in the chain of retailers.  Additionally, the firm ultimately freeloaded the media coverage and the counterproductive strategies and positioning of competitors to its advantage.

The ‘Dixons.co.uk Strength out of Weakness’ case study successfully captures a creative “problem-solving” approach that more dogmatic strategists would have rejected, in exploiting the exceptional circumstances and situation of Dixon’s, which in this case, turned to be its weakest.  Coupled with general strategy in the market for technology, the Dixons.co.uk campaign was audacious in turning the perceived “doggedness” of the firm into its greatest asset in its public presentation and appearance.

The case study’s focus is the “Visit us last” ethos and modus operandi of the 2009 campaign. The concept and phrase is ingratiatingly self-deprecating and deterministic, easy to say, and provocative.  Dixon’s, a popular high-street retailer in London and around the UK suffered from a middle position. Web-sales in electronics were up, but Dixons was losing.  Customers did their own research on tech-products and could alternatively enjoy the more customer-friendly environments of retailers such as John Lewis.  The confluence of these factors weighed heavily in Dixon’s decision to use its implicitly lagging behind competitors (“Visit us Last”) message with competitive pricing.  The sensational response to the seemingly benign phrase proved to be provocative, provocatively fortunate as dixons.co.uk enjoyed both paid for coverage in the London Underground, for example, and unpaid coverage in the media, where dixons.co.uk received the majority of the publicity good or bad sharing the stage with many other competitors.

In many instances, and particularly in the fields of marketing and advertising, “theory” is a pejoratively value laden term.  The logocentric practice of advertising may be theoretically averse (for example, ‘theoretically’ often connotes a thought not in practice, or for example, ‘in theory’ is usually referring to something that should work given abstract paradigmatic assumptions).

Just as advertising as a discipline is particularly concerned with human communication and behaviour, the policies and practices of firms in the branding marketplace are engaged in the same mechanisms. The two would benefit greatly from more dialogue, just as advertising and marketing theory has been enriched through its interdisciplinary framework.  Advertising academics interrogate fields as diverse as Linguistics and International Relations (among many other social and behavioural sciences) for example.  In the case of the former, the perceived structure of human cognition as language (Derrida 1970 18) has enabled advertisers to extend neuroscience research with more qualitative data to the greater impact of marketing plans (Hackley 2010).  In the case of the latter, trends say, for example, in fair trade can be linked to the demographic within the developed country of consumption (Landes 1999).  The attitude of modernity understood by academics is dictated by the forces of modernity (Latour 1991).  These social movements have led to the rise in the branding of brands and parts of brands such as Costa and Starbucks to highlight “fair trade” coffee and other products in response to public opinion (Doran 2009).  Here social movement theories, psychology studies have all had an effect on academic advertising, but in order for advertising to affect these important concepts, a paradigmatic theoretical perspective is necessary. Advertising sciences need advertising, and advertising needs cross-disciplinary creative strategies.

The dixons.co.uk strategy defined the problems facing the ailing firm, and worked with the legacy and assets of its beleaguered position in the electronics retail market, and developed a coherent and creative strategy to attract attention and ultimately purchases.

The result however, of a firm advertising without a creative strategy theoretically grounded, is much like the critique of existing advertising initiatives by the Y & R consultancy firm’s outline for creative marketing strategy:

“Without a [creative] strategy, advertising belongs in the theatre of the absurd provocative, ambiguous, uncertain, interesting but what’s it all about?”

Similarly, Vaughn warns of advertising theory’s marginalization in its nascent stages and encourages inquiry:

If we had a proven theory of advertising effectiveness it would help in strategy, planning, response, measurement, and sales prediction.  We have no such theory.  Empirical ‘proof’ is scattered in numerous company and agency files.  The possibility for a scientifically-derived model of advertising seems remote. (Vaughn 1980). However, ‘maverick’, these marketing tools were effectively promoted, and so provoked public interest, not just in firm-awareness, but even of corporate marketing strategy.  In this instance, dixons.co.uk, however sensational its message, followed a very clear and realistic problem solving approach.  The commonly built upon and processed original Y & R Work Plan (1970) worked from such consultancy advocacy to see its creative and practical benefits.  The dixons.co.uk strategy, as outlined in the case study, involved first assessing the primary problems facing the firm.  For the purposes of this essay, it is necessary to briefly discuss the Y & R Working Plan as its skeletal and theoretically pragmatic approach is consistent with the extension of the dixons.co.uk branding.

The Y & R plan departs from four primary elements.  First is in the statement of the “key fact”, based on an analysis of all ‘facts’ pertaining to the key fact (1).  The plan then defines the problem  (2) marketing must engage with in respect to the key fact.  Thirdly, there must be a “statement of the advertising objective (3) which stems from the problem”.  Finally implemented is a creative strategy (4).

The strategy outlined and documented in the case study shows the very reach and multi-pronged media venues of the program, ‘Strength out of weakness’.  Importantly, it works from the perspective of a creative strategy to overcome very immediate hurdles: Significantly, the group determined “the only realistic way anyone would choose and buy from Dixons UK was if they visited already knowing exactly what make and model they wanted”.  This is not the strongest selling point.

If we determine the key fact is to be that Dixon’s “was passed its 80s heyday”, then the following problem resulting from this must be passed as a heteronomy of factors.  First, Dixon’s perceived strengths must be taken into account.  Dixon’s inventory capabilities were massive.  Since it’s high street shops had gone the way of Curry’s, its main issue was that there were very few prospective customers who came to dixons.co.uk directly.  Dixon’s had to attract customer’s straight to dixons.co.uk, the firm’s fate rested on this.  The advertising objective would be to make dixons.co.uk the most attractive online electronics distributor.  The overflow from traditional retail would follow.  The creative strategy implemented marketing signs, specifically in the London Underground, that exaggerated a consumer’s trip to the lofty auspices, and lofty prices of high street retailers, featuring the most desired electronics, ending the perfunctory phrase with “…and then go to Dixons”. Competitive pricing, highly researched consumers of electronics, and a provocative slogan and ad campaign combined to make this very effective for Dixon’s.  Following from this, a coherent capture:

High street retailers have knowledge, expertise and service, but don’t have low prices. Dixons has low prices but doesn’t have great service, expertise or knowledge. Now get devious. So, Dixons has the low prices and they do the service for us.A transposition of the technology market to the FCB grid developed by Richard Vaughn shows how a firm can augment its own position by using the services and positions of competitors to greater penetrate where venue and product meet consumer.  This was Dixon’s strategy.

FCB Grid Advertising Media Planning
FCB Grid Advertising Media Planning

The figure above is an example taken from Richard Vaughn (1986), “organizing advertising effectiveness for strategy planning” (Vaughn 1980 27).  Consumer electronics can be thought of as “high involvement”, as individual specs cater to the consumers’ needs.  Electronics are also both high think and high feel—high think in that consumers read and try extensively, they research electronics.  However, there are inherent stratifications in the electronics market that can only correspond to “feel”, such as that of a hi-fi stereo system or a sterling-silver washing machine.  Dixon’s positioned itself to wedge these three parts of a triangle through its creative marketing triangle.

The high concentration of billboards and advertisements taken in London’s Public Transport created media frenzy as it replicated in exhibition.“…and then go to dixons.co.uk” urging commuters coming home who do not want to deal with lines at Oxford Circus, and the friends they tell about a peculiar ad, etc.

Interestingly, the “tone” of the advertisement, an especially important characteristic in advertising and marketing theory, challenged common perceptions in how a brand could promote itself, and in so doing, created a kind of feedback continuum of interested traffic.  A simple creative solution was needed. Compared to the $3.4 billion GM spent in 2006 in U.S. advertising (Horsky 2006), the much smaller budget of Dixon’s was proving profitable beyond the wildest imaginations of executives.

Placement in the underground was critical, the case study showed a progressive growth in “hits” in London area ISPs, and the underground was once again shown to be a great marketing vehicle for the right advertising strategy.  In this case, marketing and advertising placement was appropriate for the project, as the buyers of electronics are typically as varied as the professionals and musicians and children that travel the Tube.

The dixons.co.uk media coverage descended—much to Dixon’s advantage—to the dirty depths British presses are capable of.  It dragged in some high names, but always featured Dixon’s as the challenger, the underdog, or else the precocious electronics giant—regardless, people now spoke of dixons.co.uk.  This is and has been a significant issue for firms to develop effective and cohesive advertising strategies. Dixon’s capitalized on “major improvements in the quality of consumer information and the growth of targeted media which allow firms to precisely target according to consumer segments within a market” (Iyer et al 2005 461).  The placement of provocative ads on the London underground for example captured a commuting captive audience’s attention. This broad demographic are all in the market for electronics, it’s efficacy was not in declaring its position, but in reactivating products in the mind and imagination of somebody on the Victoria Line, for example..

“Strength out of weakness” was the perfect campaign strategy. It used Dixon’s entrenched market position and vulnerabilities to its advantage by exploiting its legacy, its inventory capabilities, and it’s resolution from one main problem to one basic fact.  “The only realistic way anyone would choose and buy from Dixons UK was if they visited already knowing exactly what make and model they wanted”. The site was subpar.  Product comparison, review of specs, product and design aesthetics: “This wasn’t just a minor difference communications might be able to gloss over. It was fundamental. By identifying the key facts, understand the problem in relation to these key facts, a creative and effective strategy was promoted.  Dixon’s made a good holiday run and then some on this, consistent even with foundational advertising theory thirty years ago even as it appeared radical.

References

Derrida, J. (1974), Of Grammatology, Johns Hopkins UP.

Doran, C. (2009), ‘The Role of Personal Values in Fair Trade Consumption’, Journal of Business Ethics, Vol. 84, pp. 549-563.

Fill, C. (2009), Marketing Communications: Interactivity, Communities and Content, 5th Edition, FT Prentice Hall.

Hackley, C. (2010), Advertising and Promotion: An Integrated Marketing Communications Approach, 2nd Edition, Sage Publications LTD.

Hauser, J. and Wisniewski, K. (1982), ‘Dynamic Analysis of Consumer Response to Marketing Strategies’, Management Science, Vol. 28, No. 5, pp. 455-486.

Horsky, S. (2006), ‘The Changing Architecture of Advertising Agencies’, Marketing Science, Vol. 25, No. 4, pp. 367-383.

Iyer G., Soberman D., and Villas-Boas, J. (2005), ‘The Targeting of Advertising’, Marketing Science, Vol. 24, No. 3, pp. 461-476

Landes, D. (1999), The Wealth and Poverty of Nations, Norton.

Latour, B. (1993), We Have Never Been Modern, Harvard University Press.

Vaughn, R. (1980), ‘How Advertising Works: A Planning Model: putting it all together’, Journal of Advertising Research, pp. 27-33.

Vaughn, R. (1986), ‘How Advertising Works: A Planning Model Revisited’, Journal of Advertising Research, Feb/Mar, pp. 57-65.

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