Human resource issues and challenges for e-business

American International College Journal of Business, Spring, 2001 by Margaret E. Mitchell

Abstract

E-business has changed the way in which business is conducted. In this paper these changes are analyzed for specific human resource management (HRM) functions: (HR) planning, job analysis and job design, recruitment and selection, orientation, training, and compensation. All these functions are affected by changes in the business environment, technology, and potential labor force of e-business. These changes create challenges for human resource professionals who must recognize the inherent differences between e-business and traditional brick-and-mortar business. HR professionals must adapt to these changes quickly in order to maximize the performance of e-business.

Introduction

The increasing use of the Internet and the accompanying emergence of a Web-based economy have lead to changes in business conditions and practices. Some observers have predicted that these changes will transform the nature of business (Ulrich, 2000). Attention related to these changes often focuses on changes in the way in which business is conducted. These changes include those found for customer relations, marketing, inventory control, and/or other functions clearly affecting the way in which business is conducted. However, it is important to note that all changes related to the way in which business is conducted affect employees working in these business, whether they are directly or indirectly related to the "E" side of the changing business. Effects on employees often are forgotten (or at least given lower priority) as businesses focus on the more obvious changes associated with e-business.

In this paper changes related to e-business are considered along with observed and/or recommended changes in the human resource management (HRM) of businesses that either focus on e-business or include e-business as one of the methods used to conduct business.

The Change to E-business

E-business redefines traditional business models. It uses a business strategy employing digital media and network technology in order to optimize customer value delivery. It utilizes Internet-based computing, which supports the open flow of information between systems. E-business uses business portals (established over the Internet) to interact with customers. Technology is used as the actual cause and the driver of the business strategy so that the product or service is developed, better choices are provided to the customer, and delivery options are enhanced (Karakanian, 2000).

Some of the most obvious changes found in the move from traditional business to e-business include the rapid speed of accessing information, the greater availability of information, the increasing speed with which business can be conducted, and reduction in the effects of geographical distance on methods used to conduct business. However, the move to e-business, which has been described as a move to a new economy, goes beyond using the Internet as a tool. The changes require modifying the way in which business is conducted and success is measured. These changes are reflected in words such as the following: full customer service (Siebel, 1999); profiling (Siebel, 1999); enterprise relationship management (Siebel 1999); competing on affiliation (Evans & Wurster, 1999); deconstruction (referring or new forms of industry) (Evans & Wurster, 1999); navigators (referring to those who control entry to the Web) (Evans & Wurster, 1999); ecosystems (Tapscott, 1999); digital bazaars (Schwartz, 1999); invisible inventory (Siebel, 1999); virtual integration (Magretta, 1999); e-business community (Tapscott, 1999); virtual marketplace (Siebel, 1999); and richness and reach of information (Evans & Wurster, 1999).

Effects of E-business on Human Resource Management

Human resource management obviously is affected by the move to e-business. Effects include a compressed technology cycle, growing demand for faster and better service, and greater dependence on speed as the determinant of success (Greengard, 2000). Human resource management professionals can address these effects if they recognize the opportunities and threats inherent in conducting e-business. For example, Greengard (2000) identified seven guidelines for human resource professionals who want to maximize the benefits of e-business and move at the necessary speed:

1. Understand the fact that the Internet makes e-business fundamentally different from other methods of conducting business. E-business requires identifying new ways to communicate and new business models, so there must be more creative thinking and less bureaucracy. The Internet creates new opportunities. However, the possible benefits of these opportunities can be realized only if people move quickly and effectively enough to take advantage of them.

2. Obtain the support of senior management HR needs to justify the need for specific changes and show the possible benefits of these changes.

3. Create a task force or team who can make decisions quickly. In many cases these teams must include members from different departments because successful e-business requires participation from different departments. Also, the team members must be able to communicate effectively and understand the concerns of others. All this teamwork and communication must be completed at an increasingly fast pace. Decisions must be made quickly, and recommended actions must be implemented swiftly.