ICT as the New Age of Development of HR Management

Abstract

Information and communication technologies are becoming increasingly important for the development of corporate management. This fully corresponds to the human resources management. Integrating various HR information systems with other information systems in the company (ERP, CRM, PLM, etc.), we expect a serious increase in efficiency of company results, which could lead us for a new age in HR management. The more and more elements of artificial intelligence we include in these systems, the more real this conclusion becomes. In this chapter, after the general review of the main achievements in the field, we analyze various issues related to the direction of development of information systems for human resources in terms of their applicability in the enterprises of the future (ENTERPRISE 5.0); the limit of the effective application of artificial intelligence in HR management; the main difficulties faced by human resources departments in implementing and using such systems.

1. Introduction

Digitalization is the key understanding for modern success and covers almost every possible aspects of our life—both professional and private, from digital communication (social networks and media, all types of blogs and s.o.) to directly totally new digital world (such as Meta is). Therefore, information and communication technology has very important impact on our professional and social development.

Following this line of considerations, it is absolutely impossible to imagine today’s business world without information systems. Competitiveness and effectiveness of an enterprise for years is based on the speed development of information and communication technology and its implementation in almost every sphere of doing modern business. From new customers` attraction, from production to relations with suppliers or final clients—all process of one enterprise could be integrated in some business information systems. In this regard, human resource management is one of the spheres where the implementation of information systems is growing rapidly each passing year and this focus is not just a coincidence. Employees are the most important resource of an enterprise nowadays, and it is quite reasonable to become one of the lines for the development of information and communication systems.

There are a lot of available human resource information systems (HRIS) already introduced at the market and also a number of new ones in the development phase. Something more—IT companies are willing to develop specific HRIS especially designed for their key corporate clients. Despite the various IT developments in HRIS, we could outline three major lines supporting human resource management:

• information systems for selection potential employees of enterprise.

• information systems managing available staff (including their career development, work experience, salary, timing for vacation, replacement etc.)

• information systems for training and qualifications.

Modern companies use all possible systems in attempt to improve their performance and to increase their competitiveness, which in fact is in totally accordance with the specifics of Industry 4.0. Information society and Information Technology impose new understanding of doing effective business. Without proper digitalization (as first step) and implementation ICT, the enterprise is convicted to be rejected by the market (sooner or later). Something more—the progress to Industry 5.0 will introduce new application and dimension of HRIS. Artificial intelligence will be used to complete for instance the process of new employees selection procedure with making the final decision (instead of people) who exactly among all candidates fits perfectly to the available working position.

This chapter is dedicated to human resource information systems with focus on the introducing artificial intelligence in these systems and guidelines for future possible development of HRIS.

In this chapter, after the general review of the main achievements in the field, we analyze various issues related to the following:

1. Main functionalities of human resource information system and trends for development.

2. Development of HRIS in the context of ENTERPRISE 4.0 and ENTERPRISE 5.0;

3. The limit of the effective application of artificial intelligence in HR Management;

4. The main difficulties faced by human resources departments in implementing and using such systems.

2. Literature review

Due to the fact that information and communication technologies have become the major part for both the present and future business developments, it is absolutely logical that human resource information systems are in the focus of scientific interest in recent years.

2.1 Human resource management and Industry 4.0

Digitalization and future development of Human Resource Information Systems in the context of the Industry 4.0 is no doubt one of the interesting areas, attracting scientific attention. In this line, the literature is quite rich proposing vivid discussion and different interpretation of the topic. After a profound analysis, based on a solid literature review on this specific field, authors [1] found that digital trends in human resources are distributed into three main themes: HR-Digitalization (covering future trends in workforce; new technologies; Interaction Human-Robot and New ways of working); HR-Management (covering different learning and training models, Recruitment and different selection procedures; Rewards based on individual/team performance; Talent Management); and HR-Strategy (covering different social aspects such as: Diversity and Inclusion, Leadership, Organizational Changes, and Organizational Culture). This forth industry revolution in fact requires the development of new skills and competence of employees. Temelkova [2] synthesizes a definition of the notion “digital leadership,” as a process leading to a higher added value for the organizational system, as well as to an integrated comprehensive utilization of information and communication technologies, toolset, and human resources in a digital environment in view of achieving the strategic targets of a business system through team interaction between people working with network-connected computers or mobile devices, achieved on the basis of applying a particular leadership style in a virtual environment. Some of authors directly have pointed new abilities of workers such as: “super-strength capability, augmented capability, virtual capability, healthy capability, smart capability, collaborative, social capability, analytical capability. Base” [3]. These new competences undoubtedly require and new managerial approach namely in the field of Human Resource Management (in terms of planning, hiring, and career development of staff). Some of researchers also explore the social acceptability dimension of adoption of Industry 4.0 and admit: “To unlock the digitalization of sustainable production systems, manufacturing organizations are keen to adopt digital technologies to enhance performance” [4]. At the same time, however, this can cause organization different social difficulties and challenges. Authors have analyzed seven dimensions of social acceptability: Cultural, Employee, Market, Physiological, Compliance, Safety and Behavioral Acceptability. On the other hand, some of the economy sectors (for instance, automotive industry) suffer strongly from a lack of well-qualified employees and new technologies are capable to solve for them this crucial problem. In this line comes the following conclusion: “Due to the lack of skilled workers and the reduction in automotive manufacturing costs, automotive industries are more focused on automating their manufacturing processes” [5]. In this sense, many scholars admit that successful transformation of one company from traditional to Industry 4.0 has to be implemented along with both technological and internal organizational changes at the same time. They emphasize on the pivotal role of “strategy, work design, and people management” [6]. Gallo and Santolamazza describe the specifics of new skills and abilities for an effective technician in Industry 4.0 as “has to be able to interact, as instance, with Cyber Physical Systems and robots” as well as “should be able to find relevant information and predict events by a proper use of Big Data analytics” and to have “the ability to rapidly adapt his skills to innovations” [7]. Authors also consider that the training process within the company, conducted by the Human Resource Department, will be also rapidly developed based again on the same technologies for Industry 4.0 (including smart devices and virtual reality). In this sense, Angelova develops specific indicators and overall methodology for assessing e-platforms for business meetings (as a starting point to put on proper evaluation specific elements of HRM in Industry 4.0) [8, 9]. Something more—at first glance the speed of innovations in information and communication technology suits only for new generation and our first assumption is that older employees could be rejected due to their slower adaptation to changes at working processes. But scholars succeeded to prove that “the accumulated workers’ knowledge and experience of older workers and automation of physically demanding tasks can not only improve the productivity of industrial systems but also decrease the costs of ill-health related expenditures” [10]. Stoyanova outlines the valid relation between strategic management and company staff, and this relation in terms of Industry 4.0 has to be considered even as more determining for the final effectiveness and performance of the enterprise [11]. At the same time, we have to outline that the overall principles of development of HRM in the context of Enterprise 4.0 are applicable and relevant not only for the business organizations, but also for other sectors—NGOs and public sector if these organizations are willing to be modern and innovative. The example of such type of consideration is presented in [12].

All abovementioned presents different trends and perspectives of development of Industry 4.0 and their close relations and influence to human resource of one enterprise. Although undeniable role of this concept for the rapid increase of the enterprise performance, there are also various and controversial opinions on the confrontation line new technologies—new threats to employees and their jobs [13]. Authors admit that despite the stronger role of information and communication technologies, humans “will continue to play active roles in manufacturing process…, those roles may change over the time” [13]. Therefore, this new paradigm generates new concerns, including new approach for the prevention of human rights [14]. Some scholars find the possible solution in building strong relationship on the line human technology in order to be successful in this new fourth industrial revolution. “A key concern in Human Technology Integration is creating a compelling narrative for the future workforce, with space for both human strengths and weaknesses” [15]. In addition to these considerations, the concept for corporate social responsibility in its internal organizational domain and perspective could be also one of the working mechanisms to overcome this basic confrontation for the relative weight of human and technological force in the context of Industry 4.0 [16].

2.2 Human resource information systems and ERP systems

The author, as a university professor and scientist working closely with the practice, has over 15 years of experience with the implementation and effective use of Business Information Systems, including the modules related to HRM.

In this regard, over the years, he has conducted numerous studies and collected many opinions of various stakeholders in this process: business owners, top managers, managers at different levels, including heads of HR departments and units, system users, information system implementation consultants, business process re-engineering consultants, HRIS manufacturers, system architects of such systems, and sales representatives of various business information systems.

This experience has been gained not only among different stakeholders, but also in different types of enterprises and over different information systems, such as SMEs, multinational corporations, enterprises in different fields, both industrial and commercial enterprises; organizations in the NGO sector as well as public authorities at different levels (national, regional, and local).

In surveying these stakeholders, the main issues were related to the usability of these systems, the possibility of business process reengineering through these systems, various difficulties that users encounter in implementing and using these systems, and the additional capabilities that can be incorporated into these systems in order to effectively implement business process reengineering in human resource management. On this basis, as a consequence of this multigenerational study of different opinions and experiences in the implementation as well as modification of specific business processes, different conclusions related to the classification of the development of these systems, to their evolution, and to the trends of their development are synthesized. Some of these opinions have been presented in the previous publications of the author, and here they are developed in a summarized way in terms of the trends of human resources development mediated by the use of HRIS.

As an integral part of a modern management, human resource information systems (HRIS) respectively attract scholars` attention generating vivid discussion covering various aspects of its applicability in an enterprise. At the beginning of development of information and communication technologies and especially integrated enterprise resource planning systems, the focus for both practitioners and researchers was mainly on the added value that ERP could bring to big and multinational corporations. This line of considerations is reasonable having in mind the costs and efforts needed to be successfully integrated one ERP. With the development of technologies, the sphere of applicability of management information systems drastically increases and now, we could consider for specific HRIS designed by IT companies especially for different types (in terms of size) corporate clients. Some authors consider HRIS as a key component of modern competitive advantage of a company: “organization success widely depends on their talented pool of human resource; they are treated as a strategic asset by an organization and this could be competitively maintained through effective application of Human Resource Information System (HRIS)” [17].

A research team tracks the development of HRIS back to its beginning from the 40s of twentieth century until the latest development—passing through the four major periods of technological development, namely: client server, mainframe, cloud-based, ERP, and web-based systems. They concluded that “the majority of the studies on the application of technology to support HR, has been conducted in the last 20 to 25 years, as a response to the use of the web, as a medium for delivering HRIS” [18]. Another profound analysis on the development of HRIS is proposed by Bilgic [19], who convincingly claims the following: “Today’s HRM-related software do not deal with just payrolls, they also include recruiting and record-keeping, training and performance appraisal which have transitioned HRM from task-oriented to people-oriented.” Some of authors (based on their profound analysis on the field) even claim that sometimes the management of a company in its attempt to strive for the strategic alignment on the axis Information Technology – Business Goals often underestimates or even ignores the role of HRM especially in creating added value [20].

Along with the researches devoted to the development of HRIS, there are also a number of scientific works, focusing on specific added value that HRIS brings to the final effectiveness and performance of enterprise, exploring various case studies in different economic sectors. As example here we could point out the research of scholars, who explore the role of HRIS and its impact on the operational efficiency in the context of multinational corporations. They have focused on five specific functions of HRIS and its reflection to the corporation operational efficiency: job analysis, e-recruitment and selection of staff, e-compensation and benefit, e-performance appraisal as well as e-communication. For all these five functions, authors admit that there is a positive impact on the overall operational efficiency of the corporation [21]. According to Wandhe [22], who analyzes the role of effectiveness of HRIS in the twenty-first century, there are more benefits for the company implementing HRIS such as: increase the accessibility of appropriate data both for all company’s employees as well as information for all applied for job candidates; totally new quality level of standard for the HR department; more focusing career planning, consulting and development of all staff; ability to react and adapt to rapid change environment, etc. On the other side, scholars also admit, that “companies seem to be using technology more to ease, speed up and improve their current human resource practices and procedures and less to analyse data and plan around such analysis” [23]. Specific focus is explored on the level of employee satisfaction on the effectiveness of the HRIS [24].

The analysis on the development of HRIS usually involves and another big aspect—the social price and the social dimension of this development, especially concerning the interaction between technology and humans. Authors explore the level of acceptance and confirm the “importance of the human-machine-organisation relationship to contribute to the understanding of HRIS acceptance in professional environments” [25]. Although the increasing role of HRIS in every day live of a modern digitalized company is undeniable, the scholars still admit that humans will continue to play significant part. The social dimension of this discussion has to be transformed in possible advantages that information technologies could bring and on this basis to find new solutions possibility to develop human role and intelligence.

2.3 Artificial intelligence and human resource management

One of the biggest and actual directions for scientific researches is the possibilities of using artificial intelligence (AI) especially for the purpose of human resource management. This line of scientific developments are quite actual and relevant in light of concept Industry 5.0 and in attempt of researchers to find out the key component for successful and effective business development, based on AI in human resource management. Here, we observe many standpoints—from core technical (focusing basically on the required technical equipment for introducing AI in HRM) to more “soft” skills identified by scientists again in the context of AI in HRM. For instance, a team of researchers admit that if one organization is willing to benefit from AI application in HRM, the management of this organization should have more strategic thinking and to be able to look beyond technical requirements for equipment. Authors explicitly emphasize that organization has to pay attention and to develop also nontechnical resources such as: human skills and competencies, leadership, team co-ordination, organizational culture and innovation mindset, governance strategy, and AI-employee integration strategies, to benefit from AI adoption [26].

There are also many scientific researches devoted to the specific technologies and IT instruments to improve performance of AI in more general business management context, but also in specific context of HRM [27, 28, 29]. Scholars admit that “The proliferation and use of AI-enabled innovative database management is evident in the real world with emerging AI-HR applications and solutions, such as CloudHR, SAP SuccessFactors, BambooHR, GustoHR, OnPay, CakeHR, Trakstar, Deputy, ZohoPeople and so on” [30]. Other researchers are focusing on the further development of AI in HRIS—for instance as an instrument for prevention from situation of missing deadlines, which always is one of the great challenges for any management and becomes even much more important when it comes for the project deadlines [31]. One of other suggestions is the directions of digital innovations with the key support of AI in this area, including in the context of human resource management [32].

It is quite reasonable that such powerful instrument as artificial intelligence is could generate vivid scientific discussion, including in more human and philosophic aspects. An interesting approach in this regard is presented by scientific team, which explores the perceptions of employees, computer systems, and AI. According to results of this research, the authors found out that humans consider themselves and computer systems as better than AI, but at the same time, respondents claim that humans are both weaker and less active than computer systems and AI [33]. Some researchers explore in more general context (not only for HRM) the problems caused during the interaction between natural and artificial intelligence [34]. Again in this line, but this time based on the essential regular opposition “more AI – less human employees” at the organization is dedicated to another research. Authors admit that in this specific case the role of human resource manager is very challenging due to the fact that have at the same time they have to convince people in the organization on the benefits of adoption of AI at different working processes [35]. Exploring the trends in the future development of in relation to AI-HRM, including the line of potential interest of scholars, they argue “future research may investigate the roles of institutions (as an environmental driver) as more rules and regulations emerge to formalize the interaction between AI and HRM” [35].

Despite the different standpoints, scholars agree on the basic idea that one of the biggest interventions in the field of HR development and HRIS will be namely based on the future development of AI and new horizon for the enterprise efficiency which AI could bring as an added value of its application. For instance in [36], authors explore the role of AI for revolutionizing innovation management. Therefore, the debate on the role of machine—humans—artificial intelligence—natural intelligence will continue during the coming decades in an attempt to find the key balance between social/human price and economy benefits, based on the revolutionary ideas and innovations.

3. Main functionalities of human resource information system and trends for the development (Enterprise 4.0 and Enterprise 5.0)

The basic understanding is that at present HRIS must significantly support the practitioners of the human resources department in almost all their activities, and in the future, through the use of artificial intelligence—to replace them fully, performing to a large extent (or directly in full) their professional tasks. Undoubtedly, without the presence of HRIS, a modern business organization would suffer from many problems that have the potential to become major threats to the future development of the company. It is clear to everyone that multinational corporations, as well as large companies, are to some extent doomed to use, if not ERP, then at least HRIS in their day-to-day operations, in order to ensure at least a smooth execution of business processes.

In this regard, the main basic and advanced functions provided by HRIS can be identified in Figure 1.

Figure 1.

Major functions of HRIS.

HRIS in ENTERPRISE 4.0	HRIS in ENTERPRISE 5.0
Integration at enterprise level/holding	Integration of HRIS of the enterprise with the external systems
Partial virtualization of workplaces	Significant virtualization of workplaces
Partial access to HRIS via the Internet	Full access to HRIS via the Internet
Artificial intelligence as an Advisor	Artificial Intelligence can be in two roles: Advisor and Decision Maker

Table 1.

Future trends in HRIS development in the context of Enterprise 5.0.

3.1 Basic functions

1. Digitize classic business processes related to human resource management: recruiting, time management, payroll, career development, motivation, training, social environment. The main benefits due to digitalization are realized, related to the reduction of the prime cost of the business processes for human resource management.

2. Integration of information in the enterprise/organization, which allows faster and more efficient business processes involving several units in the enterprise;

3. Integration of the company’s information with external databases, such as insurance and insurance institutions, different government, or local authorities (according to the regulations of the country).

4. Searching and processing of large datasets allowing quickly finding the necessary information and its presentation in the form of a report and/or some type of official document. This feature is basic for HRIS, saving many man-days, and allows quick access to information for employees when providing it for the needs of other processes in the company, as well as for external organizations and different public authorities.

5. Integration with other, according to the specifics of the enterprise, business information systems (such as customer relationship management—CRM, warehouse management systems—WMS; supply chain management systems—SCM; product lifecycle management—PLM, and many others) in a complete enterprise resource planning—ERP solution; thus, the information received from the human resource management is available for use, processing, and analysis by all interested business processes. This function is fundamental for the modern development of HRIS, as it could claim the implementation of only one information system for human resource management is an outdated concept and now, there are available at the market many opportunities for application of integrated systems not only for big enterprises and corporations but also for the other types and size companies. HRIS has to be an inseparable part of a comprehensive ERP information platform of the enterprise.

3.2 Advanced functions

1. Analysis of large datasets. Trends stand out on the basis of statistical processing. This allows obtaining essential information, securing the implementation of human resource management processes at a qualitatively new level. New opportunities are being created: finding the average salary for a given job position in a given geographical region; future availability/shortage of workforce in the enterprise or in a given geographical region; financial analysis of the effectiveness of investments (e.g., ROI) in various human resource management activities (e.g., training) as well as many others.

2. Forecasts based on the analysis of large datasets. This function is connected to the use of elements of artificial intelligence, such as hidden facts or trends related to various aspects of human resource management, such as seasonal/climatic trends in the workforce (sick leave, vacations, leaving work, etc.); the level of remuneration that serves as a motivator for the employees of a given job position; forecasts for the implementation of work tasks during certain calendar periods/stages and many others.

3. Virtual communication with employees. Facilitated communication of employees with the Human Resources Department is one of the functions of HRIS, which not only saves man-hours, but is also a demonstration of appreciation of the employee’s personal time in his communication with the administration. Whether it is about applying for paid work leave, sending a sick leave, or keeping a job in an open space, this is always assessed positively by the employee. A well-organized communication on a virtual job application is a guideline for the potential employee for future communication in the company (especially in terms of relation of administration-employee) and can be one of the factors for choosing one company over another.

4. Creating new business processes aimed at human resource management. The use of artificial intelligence, data analysis, forecasts that can be performed, and virtual communication with employees build prerequisites for creating new business processes that are inefficient without HRIS. An example would be the booking for a specific day and time of a common workplace or meeting room (in case of such an open space policy in the enterprise), through a digital application, part of HRIS.

5. Integration of artificial intelligence in the enterprise. This feature implies not only forecasting related to the analysis of large datasets, but also an overall comprehensive approach to enterprise management using artificial intelligence, typical of Enterprise 5.0. Examples include wage efficiency (salary motivation), atypical behavior among employees (suggestive of lack of commitment, problems, poor motivation, looking for a new job and new employer, etc.); guidance by artificial intelligence at work; assistance in evaluation and selection of job candidates; early identification of talents (by key performance and individual results achieved in different task at work) and many others. The main specificity is the use of the most complete, efficient, and creative possibilities of artificial intelligence in the overall management of the enterprise. Of course, this creates many moral, legal, and psychological problems and challenges that are not part and focus of the current study.

As it became clear from the functions of HRIS discussed above, the main ones are related to the initial and classical application of HRIS in enterprises, and the Advanced functions are related to the implementation of the concepts for Enterprise 4.0 and 5.0. In this regard, on the effective application of these advanced features will be given special attention in the next two sections related to the application of artificial intelligence and new trends in these business information systems (Table 1).

Conditionally, we can consider the application of functionalities of HRIS in four important areas following the logic of search, selection, and career development of employees, in which the classical processes of human resources management are grouped (Figure 2).

Figure 2.

Groups of human resource management processes in a classical aspect.

Let us explore comprehensively these four main areas focusing on the advantages that HRIS has the ability to bring for the improvement of quality of Human Resource Management Department.

3.3 Identification of human resources needs and job announcing and applying procedure

To begin with, in order to announce vacant position in an organization, there must first be clearly identified the need to recruit new staff. Basically, there are three possible scenarios leading to the announcement of an available vacancy:

1. leaving staff—that is, in this scenario, this position exists before a job vacancy is announced, but for various reasons (e.g., retirement, maternity job leave, or sick leave, fired by the employer due to poor performance), this position is now currently available. Therefore, the documentation (job description, job qualification, specific professional requirements for the potential candidate) should be updated here only if necessary. In this specific case, HRIS will have preliminary available information with only one exclusion—when the expert is leaving on its own whish. Еven in this situation, the expert is obliged to announce in advance his intention to leave the job so that the employer can take action to recruit new staff during this period of time.

   In this specific scenario, HRIS can help a lot in several different aspects:

   • During the constant monitoring of the personnel files of employees, HRIS establishes and automatically reports on a job vacancy due to retirement, expiration of a fixed-term contract, etc.

   • The system can make analyses and forecasts for potential hospitalizations, maternity leave, and other events that can be statistically established for the enterprise. On this basis, the system may recommend starting the procedure for appointing a new employee (s).

   • From previous recruitment sessions, HRIS can maintain, as well as the contacts of the applicants, but also their performance, which is a strong starting point, in cases where a suitable candidate for the available job position can be identified.

2. Enterprise development with inclusion of new activities and/or services, which requires the formation of totally new units in the organization and elaboration of completely new documentation and job descriptions for the work positions in these new units.

   An effective management has to be proactive and not just waiting the processes to happen by themselves, including in terms of HRM and the necessity of new employees—it is aware in advance to who are the potential candidates from other employees. This is the focus of HRIS’s work in the next steps, which takes place long before the vacancy is announced:

   • identification of potential candidates.

   • motivation of candidates with the opportunity to take a higher position.

   • qualification courses for potential candidates.

   • monitoring the progress of each potential candidate.

   • proposal for selection of a candidate.

   • How effective the implementation of the abovementioned activities will be will largely depend on the capabilities of HRIS.

3. Changes in the enterprise that affects already existing jobs and their transformation into new ones (e.g., in case of optimization, automation of production, business process reengineering, and other internal organizational changes).

In case of change the company’s strategy, this can be a starting point for HRIS to assess the necessary retraining courses and manage their implementation.

In all three cases, the following HRIS options remain the following:

• HRIS maintains automatic contact with potential partners—suppliers of human resources;

• Possibility for digital submission of the candidates’ files.

In these three scenarios mentioned above, HRIS should have gathered information from advance and informed human resource experts of the forthcoming need to recruit new staff. At the same time, for the preparation and writing of the necessary documentation, including updating existing or directly developing new job descriptions, employment contracts, etc., the information collected by HRIS is essential to prevent deviations from the overall company policy and could be served as a guarantee for following internal standard (for instance: people at the same position of organization hierarchy to have the same starting level of wages).

Once the need to recruit new staff is on the agenda of the Human Resource Department, the second logical step is to find out if within the organization, there is a potential candidate(s) suitable for the vacant position. This analysis also has to be maid with the information help of HRIS comparing requirements with the already available qualification and description of employees. In case that the system indicates suitable potential candidate(s), human resources should be directed to conduct an internal selection procedure. Thereby, they will secure firstly career development for their employees and on the second place come the new ones.

3.4 Selection procedure of suitable candidate or pool of candidates

In case that such internal selection procedure is impossible, the Human Resource Department has to announce the information for vacant position for all appropriate and relevant channels (including using professional platforms, specialized sites, etc.). At the same time, HRIS could collect information both for potential and real candidates. Depending on the functionalities, HRIS also could provide initial selection of real candidates—comparing between requested and real possessed abilities, skills, qualification, expertise, experience, etc. Therefore, HR experts will be maximally relieved from reading numerous CVs and supporting documents of candidates who definitely do not meet the requirements originally set by the employer. The importance of digital possibility for job applying was already considered and recommended. Whether the submission of documents is digital (directly in the system) or the information for the candidates is subsequently included in it, a very strong effect of storing the information is achieved, including with the possibility of easy use in the future.

At this stage, however, the greatest benefit of HRIS may be in the re-selection of files. Depending on the vacancy, the procedures usually include several rounds, the first of which must always be compliance of the submitted applications with the minimum declared requirements for holding the position. This routine work can take hundreds of man-days for a large company receiving numerous applications for each position. Automatic rejection of candidates who do not meet the minimum requirements is mostly easily done with a digital application. In addition, depending on the number of applications, the selection commission may set higher requirements and preselection on purely administrative criteria can be done extremely effectively by HRIS—if a criterion is raised, it can be determined immediately how many candidates remain, which be an indication of how much the requirements should be increased. By using artificial intelligence, significant benefits can be achieved in the next stages, which will be the subject of the next part of the chapter.

On the other hand, with the help of HRIS information for all candidates is included at the database of the organization, thus forming a pool of possible suitable candidates, from which, giving the needs of the organization can be executed additional selection. This saves time and effort in the next need to go through the whole long procedure of hiring the right staff again. However, it should be noted that such a pool of potential experts is formed and works along with a very good public reputation of the organization, including in its capacity and reliability as an employer.

3.5 Time management and payroll

These processes are historically the first to begin the development of HRIS. On the other hand, they very much illustrate the integration of information about different units in the enterprise, such as human resources and accounting. The integrated processes of time management and payroll through the common information database of HRIS clearly illustrates the benefits in the following areas: saved many man-days based on more integrated and more efficient business processes; reduced possibility of making mistakes; understandable and easy processes for the company’s employees (e.g., when providing sick leave or requesting leave); automated transmission of the necessary data for information systems external to the enterprise (e.g., insurance companies); quick and efficient preparation of reports for different periods and for different groups of employees; creation of statistics and on their basis—analyzes for the efficiency of the work processes, both by departments and by employees; and many others.

At the same time, it should be noted that in these classical processes in recent years, there has been a great development. The global sanitary crisis associated with the COVID-19 pandemic has become a catalyst for many industries to transform their business processes and the overall working policy (to online and digital). Recent pandemic situation could be considered as a push-up for both public administration and business to make crucial changes. This observation is relevant especially for industries where it is possible to transform from traditional office work to home office options (fully or partially). This new workplace organization has become a big challenge for HRIS and has driven development in the following areas:

• further development of time management systems, including in the home office;

• development of opportunities for online bookings workplace, meeting room, or other part of the infrastructure of the enterprise (in case of necessity or in situation where the policy of the company requires that employees have to be physically at the office part of the working week). These systems are easily accessible from employees’ personal devices and are yet to be developed.

3.6 Career development

Once we have appointed staff, the main effort of the Human Resources Department of a modern organization is to focus on the implementation of a consistent and comprehensive policy to ensure their career development. As we all know, in the age of information and communication technologies, when companies offer a lot of great (but also and very similar) products and services, the competitive advantage may be due to a well-motivated expert team working for the organization. In this sense, one of the main efforts of human resource management is to guarantee and ensure the personnel development of each employee, taking into account his professional qualities, competence, expertise, and individual preferences. In modern organizations, the overall career development policy of the employee team is implemented on the basis of information provided by HRIS and additional analysis carried out by HR experts. This is especially true for companies from the creative and IT industries, where management of the company has to build appropriate and friendly environment where employees could create. According to the results of specific research, conducted by the author for the purpose of another study, focusing on the degree of commitment of employees working in IT companies in Bulgaria, employees clearly pointed out that the attractiveness of the salary is the most important factor for their motivation, but right after that, they put the role of positive microclimate and opportunities for professional development.

Based on all of the above-mentioned, it should be noted that a significant part of the usefulness of an HRIS is the opportunities provided for the implementation of the following business processes:

• Career development related to the assessment of the capabilities of each employee. Very often, this process is intertwined with the process of reporting what has been done for a certain planning period. In this way, people can be directed to achieve better results, as well as to specify the specialists who are appropriate to be developed in their careers.

• In this regard are related trainings and qualification courses, which not only allow to increase work results, but are also an additional motivation for staff in connection with their career development. HRIS information systems can not only provide information to the whole process, making its implementation very effective, but also create an opportunity to assess the return-on investment ROI, a function embedded in many modern HRIS.

• On the process of using HRIS (especially if it is with artificial intelligence), it is possible to profile the individual employees and according to their specific motivating factors to achieve the greatest possible degree of their commitment to the company’s goals;

• We must not forget that the early identification of talent can be a very useful area for the company. Usually, this can be supported by artificial intelligence, which is the focus of the next part of the chapter.

• Social environment—creating conditions for creative work and good team spirit. Improving the efficiency of the implementation of these processes is rooted not only in the management functions of such processes, but also in the unified database of employees, which can assess what are the desired directions of development of the social environment by employees. Opportunities for direct communication with HR staff through HRIS are important, which is especially useful for sharing information about corporate news and events, but it is also a good opportunity to conduct opinion polls of employees in connection with the social environment.

• The significant benefits that such systems can have in organizing and supporting Corporate Social Responsibility cannot be ignored.

As much as the motivation of the staff may not seem to be linked to the proper work of HRIS, this, albeit indirect, connection should not be overlooked, given that such a system can ensure that minimum basic working conditions are met. In this case, for example, we can comment on the guarantee of mandatory rest, especially when working part-time or shift work, in compliance with work discipline, the possibility of annual vacation, as well as opportunities for substitution between colleagues, etc. Rest coincides in a specific period, and it is through the use of HRIS that the danger of only the same staff using their annual vacation during this period can be overcome (and here, of course, the role of the direct supervisor of these staff is also important). At the same time, the system can quickly check the extent to which, for example, an employee participates in training funded by the organization and the extent to which he/she shows a desire for self-development and self-improvement.

Therefore, with the help of HRIS, it is possible to make a very correct planning of the overall annual workload of employees, distributing the work and tasks relatively evenly and therefore relatively fairly. In this sense, the information system can indeed be seen as guaranteeing minimum/basic standards of work, thus ensuring, in particular, the rights of employees in terms of effort involved—reword—career development.

At the same time, thanks to the information it collects for each employee, forming his complete work file, the system can generate various reports related to the need to conduct training for different groups of employees and/or teams. In the case of a multinational corporation and/or a large enterprise, the training of the teams is largely carried out with internal resources of the organization (including trainers, training materials, needed equipment, etc.). The time needed to conduct the training, including the format in which it can be conducted, the necessity to interrupt the usual work and tasks of employees, their replacement so as not to disrupt the work process—all this can be planned and implemented using the potential and the capabilities of the information system. HRIS could be used not only to select and show the staff needed to be trained but also for the overall planning of the training.

Social environment could be considered as an indirect result from the efficient work of HRIS, due to the fact, as already mentioned that it creates and guarantees the basic conditions for organizational culture and atmosphere. Human resources are inherently a horizontal activity in an organization, as they relate to each employee, regardless of his place in the hierarchy, opportunities, specializations, qualifications, individual preferences, etc. Therefore, the way people are managed is key to the overall organizational development and the creation of an appropriate environment (we can really even talk about a specific atmosphere of social interaction) in which each employee can trace their own contribution to the implementation of organizational goals and at the same time be clear about what he/she has achieved with this contribution to his own organizational and career development.

One of the many benefits that HRIS undoubtedly creates is to a large extent the elimination of the personal moment of evaluation by HR experts, thus contributing to building institutional confidence and increasing the engagement of employees in the organization. With the increasing implementation of HRIS and using objective data of everyday activities of HR experts, the element of subjectivity is largely being erased—this applies both to the selection of a candidate for a vacant position and, for example, to the attestation procedure of staff—in this sense, through such a system, it is impossible for an employee who has regularly and conscientiously performed his/her duties to receive a lower attestation grade than an employee who has more mediocre results in performing the tasks, as all information should be available in the system and therefore, it will be easy to be checked and at the same time—difficult or impossible to manipulate.

This equal treatment of all employees at the first time by the HRIS and at the second step—by the HR experts of the HR Department, in fact creates confidence once between managers and employees and secondly builds trust between employees themselves.

4. Development of HRIS in the context of ENTERPRISE 4.0 and ENTERPRISE 5.0

In addition to the above presented main functionalities of Human Resource Information System and trends of development, it is also appropriate to explore what will be the difference for HRIS in the transition from ENTERPRISE 4.0 to ENTERPRISE 5.0. The enterprises of the future put in a new context the requirements to the management of human resources, respectively to the information systems supporting this process. The direction of development toward ENTERPRISE 5.0 can be drawn, taking into account the changes occurring in the current top companies in the context of ENTERPRISE 4.0. Some of the trends stand out in ENTERPRISE 4.0:

1. Integration of all business processes in the enterprise on the basis of a unified information system. This is reflected in the fact that HRIS is part of a complete ERP solution both at the level of concrete company and the overall integration on the holding corporation level or related companies.

2. Virtualization of workplaces. Home office is one of the clearest evidences of this trend.

3. Access to HRIS both via the company’s Intranet and via the Internet. This is an important element and helps to submit, update, and use HRIS information at any time and from any place, and the level of capabilities is determined by the level of security provided. The level of HRIS information security will be commented as one of the main difficulties and respectively one of the biggest challenges related to the implementation of HRIS including concerning its future development.

4. Introduction of elements of artificial intelligence in the management of individual processes related to the management of human resources and performing in this regard analyzes and forecasts. The full range of existing AI capabilities is used: Expert System., Fuzzy Logic, Metaheuristic Methods, Machine Learning. In ENTERPRISE 4.0, the introduced artificial intelligence has the meaning of advising and alarming for potential future adverse effects. The decision to respond to alarms and follow advice on the other hand remains for the human and is the role of the person responsible for the business process or part of it.

What will be the requirements for HRIS in ENTERPRISE 5.0? As a comparison with the above, the development can be expected in the following areas:

1. Integration of the information system of the enterprise or holding with the information systems of contractors, customers, national databases. In the field of HRIS, this implies the integration of HRIS with the databases of human resource providers, national insurance and insurance institutions, and the national tax system of the country/countries to which employees are taxable.

2. The trend toward virtualization of workplaces will intensify, with a number of professions being able to be performed virtually on the one hand, and others disappearing and being replaced by those in which machines and equipment are operated remotely.

3. Full access to HRIS information both on the company’s Intranet and on the Internet on the basis of resolved information security issues.

4. Increased use of artificial intelligence (AI) in all HRIS-managed processes, including the ability for artificial intelligence to make its own decisions.

5. The limit of the effective application of Artificial Intelligence in HR Management

Essential for the development of HRIS is the limit of the effective application of artificial intelligence. From this starting point of view, it could be considered that there are three criteria that determine the limit of effective application of artificial intelligence:

1. The economic criterion. It is related to the optimization of costs related to the business processes of human resource management. Using AI can significantly change business processes, reducing many of the operations, while others will be cheaper. In this regard, the following formula (1) can be proposed to calculate the effectiveness of the use of AI in HR management. The formula takes into account the general case when there are both operations that create and do not create added value from the user’s point of view.

   $$E=\frac{{\sum }_{i=1}^I{C}_{\mathit{\text{istart}}}+{\sum }_{q=1}^Q{Y}_{\mathit{\text{qstart}}}}{\left[{\sum }_{i=1}^I{C}_{\mathit{\text{istart}}}-{\sum }_{m=1}^{М}{C}_{\mathit{\text{mfinal}}}\right]+\left[{\sum }_{q=1}^Q{Y}_{\mathit{\text{qstart}}}-{\sum }_{P=1}^P{Y}_{\mathit{\text{pfinal}}}\right]}$$E1

   where $E$—effectiveness of the use of cost for AI in HR management; $C_{\mathit{\text{istart}}}$—costs for execution of operation, that is, creating added value without the use of an AI solution, $; $C_{\mathit{\text{mfinal}}}$—costs for execution of operation m, creating added value with the use of an AI solution, $; $Y_{\mathit{\text{qstart}}}$—costs for execution of non-value-added operation q without the use of an AI solution, $; $Y_{\mathit{\text{pfinal}}}$—costs for execution of non-value-added operation p, with the use of an AI solution, $; I—number of operations creating added value in business process j without the use of an AI solution, $; M—number of operations creating added value in business process j with the use of an AI solution, $; Q—number of non-value-added operations in business process j without the use of an AI solution, $;P—number of non-value-added operations in business process j with the use of an AI solution, $.

   This indicator is intended to determine the complex benefit of reducing business processes due to AI: reduction and consolidation of value-added processes and non-value-added ones.

   The values of this indicator can cover the following cases:

   1. $E<0$—the proposed implementation of AI solutions is not economically justified because the costs of implementing the business process with the use of AI are higher;

   2. $0<E<N$—the proposed implementation of an AI solution is not economically justified because the benefits of AI do not met the desired level of efficiency. The value of N is determined by the vision and understanding of the management of the enterprise and shows what is the desired increase in the efficiency of the business process;

   3. $E>N$—the proposed implementation of an AI solution is economically justified because it corresponds to the desired degree of process efficiency.

2. Technical limitations. The limit of possibilities based on both scientific developments and industrial AI solutions is constantly growing. We are currently at a stage where many areas of AI use, related to HRIS, are being developed with great force, such as:

   • AI for human profiling based on behavior analysis;

   • AI for human recognition based on analysis of biometric data;

   • AI for finding hidden trends in phenomena based on the analysis of large datasets;

   • AI for recognizing atypical behavior.

     It should be noted that the development of AI is one of the ways to ensure information security and not only on the basis of analysis and recognition of biometric data. Similarly, a person’s behavior in an information system (e.g., word choice or keystroke speed) can be a sure indication (after learning AI about specific human behavior) of a person’s presence in the system. In parallel to this, recognizing an employee’s atypical behavior can:

   • be an indication of an ongoing process;

   • suggest a certain behavior (dissatisfaction; desire to change employer; over ambition, etc.).

3. Moral and legal restrictions. The introduction of AI in every human activity can be viewed through its legal and moral aspects. Only with the development of the capabilities of AI, and the desire as well as acceptance to use, will the discussion be productive and at this base—the legislation will be improved. As the legislation on personal data protection is in the process of development, the related legislation on the use of AI will be established by creating the technical prerequisites for creating AI solutions at a much higher level than the current ones.

Exploring these three limitations, it should be also taken into consideration that the introduction of AI should not be in the form of a “new toy” for the company’s management, which it can boast of. The implementation of AI must be legal and necessarily economically justified based on the company’s priorities and strategic goals.

6. The main difficulties faced by human resource departments in implementing HRIS

The following three main groups of risks can be identified during the implementation of HRIS:

1. Deterioration of business processes. During the implementation, the implementers do not understand in full capacity the business processes of the enterprise, which is why the new human resource management processes with HRIS not only do not achieve the desired results, but also become slower, require more man-days for implementation, and generate negative opinions from users of the system. The basis of any business information system should be business processes and the desire to make them faster, cheaper, and more user-friendly. Sometimes, however, HRIS is bought as a “shiny new toy” that the company’s management thinks has super power for automatically achieved business goals. This is not the case at all! This predetermines the need to include many intellectual resources, on one side to understand the existing business processes but also on the other side—to optimize them (without losing their meaning and specificity of the enterprise), and on the third to be realized according to the capabilities of the specific HRIS solution. In this regard, every major and serious company developing and offering such software has a methodology on the basis of which it claims to ensure results (e.g., accelerated SAP). The percentage of implementations for which the desired results have not been achieved or the initially set budget has been exceeded or the initially set deadlines have not been met shows the importance of this issue and clearly demonstrates that no methodology without brain and heart involvement can guarantee results.

2. Lack of effective interaction between the top management of the enterprise, the implementers from the internal team, and the external consultants. Each implementation is the result of the efforts of the above-mentioned groups. In order to achieve the desired effect, there must be full synergy between these three sides, each of which has its own specific role, which cannot be compensated by the others. In addition to the strategic vision, senior management must provide unconditional support in connection with the ongoing reengineering actions (see next risk). The internal implementation team must be most familiar with both the current business processes and the overall direction of development of the enterprise, its specifics, traditions, and experience. In this regard, the main task of the internal team is both to assist in describing the processes and to monitor the extent to which the new processes will meet the requirements set by senior management. The external consultants (if they are good) have both knowledge of the capabilities of the specific HRIS solution, but during their previous implementations, they have gained experience reflecting in established good practices. It is very important to note here that the experience is accumulated in a domain, a type of industry. For example, the experience of human resource management processes in an oil company and in the IT sector differs significantly. In this regard, external consultants must not only indicate how best the technical solution will “dress or suit” the business processes of human resource management, but also suggest good practices that cannot propose the employees of the company, part from the internal implementation team.

3. Resistance to change. Human psychology makes human distrustful of change, especially when these changes lead to totally new working strategy, destroying already build working habits and teams and/or requiring training and/or requiring more effort based on stronger control by HRIS and/or simply leading to insecurity for job position. This is the reason for the need to plan measures to overcome resistance to change. A very important factor here is the clear and consistent policy of the top management.

7. Conclusion

Human capital management poses various challenges in a modern context. At present, it is impossible to effectively manage the processes related to the staff of the companies without their digitalization. This is clearly confirmed by the researches of many scientists. In this regard, they use a class/category of specialized human resource information systems. In a modern context, these systems are part of the company’s Enterprise Resource Planning.

At the same time, the correct digitalization of human resource management processes is not possible without a proper understanding of the main functionalities of the Human Resource Information System and trends for development. In this regard, the chapter presents both basic functions and advanced functions, the implementation of which we have to follow for in a modern context.

The change of the companies, of their business processes inevitably reflects in the processes of human resource management, respectively in the digitalization of these processes. In this regard, the characteristics and development of HRIS in the context of ENTERPRISE 4.0 and ENTERPRISE 5.0 are indicated.

One of the main directions in the development of digitalization of processes is related to the increasingly focused use of artificial intelligence in Human Resource Information Systems. In this regard, three important groups of limitations have to be carefully evaluated, before integration of AI in HRIS, namely: economic efficiency, the development of science and practice, and moral and legal limitations. In order to determine the economic feasibility of the implementation of Human Resource Information Systems with AI, an indicator has been proposed that determines the degree of cost reduction for the new process compared with the original one.

At the same time, when digitizing the processes, it is necessary to take into account various risks. The chapter identifies also three main groups of risks associated with deterioration of business processes, lack of effective interaction and communication between the top management of the enterprise, the implementers from the internal team, and the external consultants and the risk of resistance to change.

The important contributions of this chapter are related to the identification of main functionalities of Human Resource Information System and trends for development (Enterprise 4.0 and Enterprise 5.0), as well as clearly described potential limitations in the use of artificial intelligence in human resource management activities. In this sense, the main findings and conclusions of the work will help both researchers and scholars as well as practitioners in making important decisions related to the use and implementation of HRIS. At the same time, this work helps to enrich and extend the multifaceted discussion related to the use of artificial intelligence in human resource management. From this perspective, the work can serve as a basis for future researches in the field of development HRIS especially in the context of using AI.

Acknowledgments

The author would like to thank the Research and Development Sector at the Technical University of Sofia for the financial support.