Mediating role of information and communication technology between e-HRM and organizational performance in Pakistan

Almasradi, Rajeh Bati; Al-Otaibi, Saad Aziz; Akram, Muhammad Wasim; Farheen, Nazia; Mahar, Shaza Article Mediating role of information and communication technology between e-HRM and organizational performance in Pakistan Pakistan Journal of Commerce and Social Sciences (PJCSS) Provided in Cooperation with: Johar Education Society, Pakistan (JESPK) Suggested Citation: Almasradi, Rajeh Bati; Al-Otaibi, Saad Aziz; Akram, Muhammad Wasim; Farheen, Nazia; Mahar, Shaza (2022) : Mediating role of information and communication technology between e-HRM and organizational performance in Pakistan, Pakistan Journal of Commerce and Social Sciences (PJCSS), ISSN 2309-8619, Johar Education Society, Pakistan (JESPK), Lahore, Vol. 16, Iss. 4, pp. 660-681 This Version is available at: https://hdl.handle.net/10419/268840 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by-nc/4.0/ Pakistan Journal of Commerce and Social Sciences 2022, Vol. 16 (4), 660-681 Pak J Commer Soc Sci Mediating Role of Information and Communication Technology between e-HRM and Organizational Performance in Pakistan Rajeh Bati Almasradi University of Bisha, Kingdom of Saudi Arabia Email: [email protected] Saad Aziz Al-Otaibi College of Business Administration, UMM Al-Qura University, Makkah, Kingdom of Saudi Arabia Email: saaoty[email protected]u.sa Muhammad Wasim Akram (Corresponding author) Scientia Academia Malaysia, Johor, Malaysia Email: [email protected] Nazia Farheen Department of Business Administration, University of Sialkot, Pakistan Email: naziafarheen29[email protected] Shaza Mahar Faculty of Management, Universiti Teknologi Malaysia, Johor, Malaysia Email: [email protected] Abstract Every year, businesses devote a substantial portion of their funds to purchase digital human resource management systems. The area is rapidly evolving, and a growing number of businesses are investing in e-HRM. The failure to embrace new technologies caused problems to textile sector to satisfy the operational demands of the industry. Quantitative approach is used to find the relationship between e-HRM, information communication technology (ICT) and organizational performance (OP) in textile industry of Pakistan. The study used a cluster sampling technique for data collection and SPSS and Smart-PLS software were used for data analysis. This study finds association between e-HRM and OP through ICT. It assists HR practitioners increasing their understanding of the essential role being played in achieving sustainably competitive advantage and company success by focusing on e-HRM activities. The key findings of this research emphasizes that e-HRM has an optimistic link with OP, which reduces costs and improves procedures so that quicker processes and functions may be performed. The study also provides theoretical and managerial implications. Keywords: organizational performance, electronic human resource management, information and communication technology, ICT, textile sector. Almasradi et al. 661 1. Introduction The world has shrunk into a little village as a result of technological advancement. Employee innovation and creativity contribute to the organization's profitability, which results in the retention of the Human Resource Management (HRM) department's institutions and creative capabilities. The growth of ICT over the last decade has altered social and economic norms, and it may also have an impact on how the textile industry is operated and controlled. Technical tools have been embraced by HRM as it transitions to increase efficiency. e-HRM arose to speed up HR operations and improve organizational effectiveness (Thathsara & Sutha, 2021). The goals of the textile industry have changed in the twenty-first century to complement the efficiency of e-HRM. The term e-HRM was used to refer to the HRM “transactions/practices” conducted via the Internet. The term "eHRM" refers to the use of ICT to help two people as they collaborate to conduct HR-related tasks (Poisat & Mey, 2017). The textile industry has an extensive variety of production of goods, ranging from low-labour and low-tech skills for the process. HR processes and how much your customers are satisfied helped in measuring the organizational performance. In compliance with InvestGovernmentPakistan (2020) in Pakistan’s GDP, the part of the textile industry is 8.5%. In the long run, it must be higher than expected in the upcoming years. Pakistan is the 4th largest producer of cotton and the 3rd largest consumer. E-HRM provides an opportunity to become a more viable and strategic function by standardizing the majority of the textile industry HR processes, enlightening the quality and swiftness of available information, and refining services to employees. The role of eHRM is important for enhancing textile industry performance. The textile industry may take dominance of that technology in ensuring quality performance, development of improved working methods, and sustainable and competitive personnel policy (Iqbal, Ahmad, Raziq, & Borini, 2019). e-Recruitment, one of e-HRM practices, gives benefits to companies by minimizes the cost of hiring in Pakistan (HuaweiCareer, 2020). In Pakistan, there are limited studies conducted on e-HRM and organizational performance. However, researchers found that human capital development and occupational health & safety have a reliable impact on nonfinancial efficiency and employee efficiency. Besides, researchers documented that e-HRM practices have an important optimistic influence on organizational performance. Empirical evidence is lacking in listed firms using a quantitative research method in Pakistan. 1.1 Problem Statement The development of ICT in the past decade has amended social and economic ways of sustenance and it may influence the way an industry is managed. Nevertheless, the advancement of e-HRM strategies and policies are challenged by different values, ethics, and practices. Conventionally, HRM practices were accomplished manually without the utilization of any innovation. With the utilization of software and internet in other operational areas in the industry, the HR department additionally wanted to exploit different software-based frameworks which utilized direct information by ignoring E-HRM, Information & Communication Technology and Organizational Performance 662 innovation. As a consequence of the lack of training, information, and literature in the usage of e-HRM technology, the majority of the employees are habitual of the old HRM system. That is why the employees do not endorse the adoption of e-HRM technologies in the organizations. Regardless, it is quite feasible to overwhelm these problems by introducing ICT. Using ICT to deliver e-HRM has become an important strategy for industries who are seeking for competitive edge. ICT has a positive influence on e-HRM practices, and it directly improves industrial performance. Consequently, it creates a connection between employees and e-HRM practices. 1.2 Research Gap Additionally, behavioural research has begun to focus significantly on e-HRM and organizational performance, but there is no consensus regarding the precise kind of link. Furthermore, there is insufficient knowledge regarding the precise nature of the connection between organizational performance and e-HRM in Pakistan. Thus, this study covers this research vacuum by examining e-HRM and organizational performance in Pakistan using ICT as mediator. 1.3 Significance of Study This research addresses the impact of e-HRM on organizational performance with the mediating role of ICT in textile industry of Pakistan. Academically, the significance of the current study stems from the developing fact that use of internet is becoming an important component of organizations that needs to be considered which can be used effectively in HRM operation. Moreover, ICT is yet to be addressed with e-HRM and organizational performance of textile industry of Pakistan. Proceedings of the current study also indicates that ICT as mediator with e-HRM and OP is new notion in developing countries like Pakistan. Contextually, the current study aims to contribute to the selected area of research by giving a comprehensive view of correlation in e-HRM with ICT aspects and organizational performance in Pakistan’s textile industry. This comprehensive view will help the decision makers, HR managers and other stakeholders to recognize and understand these factors and how they can be integrated in uplifting performance of employees and organizations. 2. Literature Review 2.1 Electronic Human Resource Management In every organization, human resource department is of utmost importance. e-HRM process is widely employed in noteworthy organizations. e-HRM is very capable, economical, consistent, and dedicated to the organizations. Nowadays, businesses are focusing on electronic human resources management, also known as e-HRM. Electronic HRM has a noteworthy link with organizational performance (Shaumya & Arulrajah, 2018). Organizations need to consider how human capital can support effective business plan execution as business innovation changes. e-HRM is characterized through Winarto (2018), as a result of the planning, execution, and data utilization, innovation is produced for systems, administration, and support for two individuals or groups participating in the Almasradi et al. 663 common performance of HR activities. It is important to not undervalue the many advantageous effects of e-HRM use within firms. It means that e-HRM is merely an innovation that requires various components to be successfully applied and adopted. Zafar, Randolph, and Martin (2017) assert that the e-HRM functions are: 2.1.1 e-Recruitment e-Recruitment saves time by rapidly processing the duplication of candidates, simpler enrolment of qualified candidates improves the depiction of the possibility, gives hierarchical data between the options and the candidate for vacancies, and there is an extension of the geographical scope for candidates. Managers now rely heavily on the internet when looking for people to fill open positions (Poisat & Mey, 2017). 2.1.2 e-Training Most of businesses now view web-based and online learning as a more effective method of training because it is available "whenever" and "anywhere," lowering direct costs (trainers, training facilities, printed materials), as well as unforeseen costs (travel time, housing, and travel costs). As a result of these crucial and quantifiable focal points, organizations start looking for the availability of core training online, and to monitor and measure the usage of the new capabilities of employees (Kwan et al., 2019). 2.1.3 e-Compensation Organizations whether small or large should initiate process of equal compensation planning. Employers can award pay hikes fairly across the firm while adhering to spending guidelines by using compensation planning. While businesses have started expanding their boundaries, intranet and web usage has become essential (Daniel, 2018). 2.1.4 e-Performance Appraisal The use of technologies to create policies and procedures under which an individual is judged and evaluated is referred to as e-performance appraisal. Organizations may benefit from e-performance appraisal systems, especially online systems, by standardizing HRM functions (Tutik & Nathasia, 2020). 2.1.5 e-Communication Voicemail, email, mobile phones, and other e-communication systems make it easier to perform HR functions efficiently and effectively through computer systems or the internet. e-Communication provides staff with fast, reliable, and simple internet access (Al Haziazi, 2020). Organizations can use web-based knowledge-sharing services and web-based online recommendation schemes (Nurshabrina & Adrianti, 2020). 2.2 Information and Communication Technology (ICT) Engineers of ICT are creating and developing a virtual world that contributes to the new administrations and new applications which help individuals both in their work and their E-HRM, Information & Communication Technology and Organizational Performance 664 day-by-day activities. ICT is used synonymously with IT; nevertheless, ICT is signify a broader, more comprehensive itemize of integral components interrelated to computer and digital technologies than IT. ICT has become the new power in the contemporary economy wherein each business activity and each type of correspondence will be dealt through the changing structure of the ICT environment (Kwilinski et al., 2019). The goal of ICT is to improve employee life without unfavourably affecting their welfare or sense of satisfaction (El-dalabeeh, 2019). As a result, these effects must also be assessed over the full ICT lifecycle, taking into consideration the stages of creation and usage (Arora & Rahman, 2017). 2.3 Organizational Performance One of the most contentious ideas about which different scientists and academics have never reached consensus is performance. Different actions are taken by organizations to implement their long-term and short-term goals. For a company to be productive, performance levels must be measured to determine the extent of performance and to enable managers to make judgments anywhere, if necessary (Marler and Fisher, 2013; BethkeLangenegger et al., 2011; Roman et al., 2012). In this way, it might ensure that there is a useful connection between the organizational objectives and performance. Organizations endeavour to achieve certain pre-determined goals with the help of available resources. Consequently, the given concept has two aspects, i.e., the organizational target and the organizational resources, which can be considered in the definition of organizational performance (Barbini & Neri, 2017). Mostly, organizational performance is surveyed by the utilization of financial or non-financial measures. Prior studies showed the utilization of non-financial measures to assess the adequacy of organizational performance (Obeidat, Mitchell, & Bray, 2016). The core of management is organizational performance because there is no purpose for a firm to exist if it isn't moving in the direction of the determined goals and objectives. Organizations try to look into several options to maintain and improve organizational performance (Khalid, Islam, & Ahmed, 2019). Recently, a discussion about the industry has grown among experts, highlighting its potential to boost organizational performance across all geographies. 2.4 Hypothesis Development 2.4.1 e-HRM and Organizational Performance An e-recruitment system is a backend infrastructure used to manage the e-recruitment procedure. It is developed so that applicants can submit their biodata / CV electronically (Obama, 2020). It can be used as a broad term for any recruitment operation including the use of Internet and several mobile devices (Daniel, 2018). In terms of time spent looking for applicants and the accuracy of responses, e-recruitment offers major advantages (Al Haziazi, 2020). e-HRM enables the HR department to add value for the company (Alateyah, 2018). Because of the rising prices of ads, companies are creating better websites for e-recruitment (Daniel, 2018). Unwanted costs, such as those related to excessive staff turnover, poor performance, and dissatisfied customers, would have been Almasradi et al. 665 reduced through e-recruitment (Thathsara & Sutha, 2021). It is assumed that e-recruitment has propensity of enhancing organizational performance. Based on the above discussion, the following hypothesis is developed: ➢ H1a: e-Recruitment is positively associated with organizational performance. e-Training equips users with training materials across a variety of platforms. These are the resources used by employees to learn about their employment (Brown & Charlier, 2013). HR should be given more autonomy and responsibility for their daily responsibilities, selfdevelopment, and job-related preparation in order to increase employees’ interest in learning (Azizi, 2017). The majority of e-training research has been on identifying the factors that promote e-training adoption. Researchers in the past have examined the connection between individual training and organizational effectiveness (Aparicio, Bacao, & Oliveira, 2017; Kapo, Mujkic, Turulja, & Kovačević, 2020; Mohammadyari & Singh, 2015). So, the following hypothesis is developed. ➢ H1b: e-Training is positively associated with organizational performance. e-Compensation is the process of using online browser interfaces to plan, execute, and share information about pay and benefits. The use of e-compensation software allows HR practitioners and administrators to enhance their knowledge, which can improve the reliability of compensation schemes along with employee satisfaction (Stone & Dulebohn, 2013). Prior studies also confirmed that e-compensation helped the organization to improve its HR operations and organizational performance (Bondarouk & Ruël, 2009; Obama, 2020; Stone & Dulebohn, 2013; Strohmeier, 2007). Therefore, the following hypothesis is developed: ➢ H1c: e-Compensation is positively associated with organizational performance. e-Performance evaluation uses a number of measures and tools (Tarigan, Sutapa, & Mochtar, 2017). Supervisors and managers do employee evaluations based on their jobs and send the results to the HR department (Al Haziazi, 2020). As a result of the eperformance appraisal, management devoting less time and cost in performing performance evaluations (Ayers, 2015; Daoanis, 2012; Sabiu, Kura, Mei, Raihan Joarder, & Umrani, 2019). Managers can quickly determine each employee's dedication to the success of the organization because all business operations have been consolidated into a single structure. In light of this, the following hypothesis is created: ➢ H1d: e-Performance Appraisal is positively associated with organizational performance. e-Communication refers as employees communicate with their managers, supervisors, and heads using email and software. Information is shared within the organization with the help of e-communication system, It also enhances creative behaviour in the employee (Stich, Tarafdar, & Cooper, 2018). When an organization functioned in a different part of the E-HRM, Information & Communication Technology and Organizational Performance 666 world, electronic communication is essential. It helps to bring together different departments and business units that are spread out geographically (Bansler & Havn, 2003). Additionally, it reduces the amount of time needed by the employee and department as both of them instantly acquired the information. As a result, the business uses the remaining time for other production tasks to boost performance (Crowston, 1994). As consequence, the following hypothesis is developed: ➢ H1e: e-Communication is positively associated with organizational performance. 2.4.2 ICT as a Mediator The creation of e-HRM functions requires a well-managed ICT infrastructure. The HR administration and ICT work together to measure operational accuracy. It boosts productivity while lowering time and cost, which enhances organizational performance (Elhazzam, 2015). Employees can focus on more important tasks because e-HRM relieves them of a lot of manual effort (Adam, Alhassan, & Afriyie, 2020). Ejemeyovwi, Osabuohien, and Osabohien (2018) show that the development in e-HRM functions and practices would boost innovation and create a competitive advantage. The procedure of erecruitment and ICT use for employee recruitment ensure redundancy of the efforts (Apanasovich, Alcalde-Heras, & Parrilli, 2017). Application tracking system, Web 2.0 Artificial Intelligence (AI), and HR apps are examples of similar software used in the process. By posting job positions online, candidates can respond with their resumes (Girard & Fallery, 2011). The above discussion concluded the following hypothesis: ➢ H2a: ICT mediates the relationship between e-recruitment and organizational performance. By utilizing ICT resources, e-training is seen as a useful tool for both the trainer and the trainee. ICT lowers the time constraints, enabling organizations to execute more successfully. It also removes obstacles so that people can receive education wherever they are and whenever they choose (Abd ELhamid, Salama, Hassan, & Ayad, 2020). e-Training technologies also aid the human resource in capacity building. It is regarded as a useful procedure for planning and implementing future plans to enhance organizational performance (Zainab, Awais Bhatti, & Alshagawi, 2017). The above discussion concluded the following hypothesis: ➢ H2b: ICT mediates the relationship between e-training and organizational performance. e-Compensation is frequently viewed as one of the key variables that might influence an employee's performance, which therefore has an effect on organizational performance (Amudavi, 2018). Employees prefer to work for companies that can conveniently manage their pay and benefits systems. ICT apps assist in monitoring employee performance and providing compensation based on determined criteria (Muqaddim & Hosain, 2021). Employers discover that their employees stick with them longer and perform better when Almasradi et al. 667 they select the incentives and rewards electronically (Shah, Michael, & Chalu, 2020). The above discussion concluded the following hypothesis: ➢ H2c: ICT mediates the relationship between e-compensation and organizational performance. Throughout the year, the formal process of performance evaluation is continuing, and it is challenging to alter and judge whether employee evaluations are fair (Karanja, Sang, & Ndirangu, 2018). Unfair judgment may have a negative impact on employees’ attitudes and productivity, which could harm an organization’s performance. Employees can improve their performance by using ICT in performance appraisals by receiving detailed feedback about where they need to grow. These kinds of comments are necessary to boost an organization's performance at all levels (Saha & Majumder, 2017). The above discussion concluded the following hypothesis: ➢ H2d: ICT mediates the relationship between e-performance appraisal and organizational performance. It has been established that ICTs like the Internet, mobile phones, digital media, and others i.e., e-communication makes a significant contribution to the organization’s HR policies. The HR department will severely be impacted by technological advancements (Roman et al., 2019). ICT implementation has improved efficiency, resulting in more competitive markets. Technology adoption has largely allowed organizations to achieve a competitive edge (Folayan et al., 2018). Organizations must be able to invest in ICT and incorporate it into their HR functions. The above discussion concluded the following hypothesis: ➢ H2e: ICT mediates the relationship between e-communication and organizational performance. Following framework shows all hypotheses including mediating relationships. E-HRM, Information & Communication Technology and Organizational Performance 674 Table 4: Model Estimation Hypothesized Path Path Coefficient T Value C → ICT 0.244 2.534 C → OP 0.47 4.763 CM → ICT 0.34 3.9 CM → OP 0.078 5.716 T → ICT 0.168 6.634 T → OP 0.278 2.749 PA → ICT 0.345 2.134 PA → OP 0.045 3.44 R → ICT 0.253 4.029 R → OP 0.024 2.241 ICT → OP 0.379 3.217 C=Compensation, CM= Communication, T = Training, PA= Performance Appraisal, R= Recruitment, ICT= Information Communication Technology, OP= Organizational Performance To evaluate the direct impact of e-HRM practices on ICT and organizational performance, model estimate (Table 4) was executed using SmartPLS bootstrapping. Figure 2 shows that e-compensation significantly influence ICT and organizational performance (t=2.534, t=4.763) respectively. Meanwhile, e=communication also effects ICT (t=3.9) and organizational performance (t=5.716) as shows in figure 2. It also shows that e-training has direct relationship with ICT and organizational performance (t=6.634, t=2.749) respectively. e-Performance appraisal also effects ICT and organizational performance positively (t=2.134, t=3.44). It is also confirmed that e-recruitment has direct relationship with ICT and OP (t=4.029, t=2.241). On other hand, ICT has direct relationship with organizational performance (t=3.217). Hence, H1a, H1b, H1c, H1d, and H1e are supported. 4.5 Mediating Role of ICT between E-HRM Functions and OP Sobel test (Z) was used to scrutinize the mediating role of ICT between e-HRM function and OP. Through table 5, the influence of ICT had been shown. Z-value=2.166, p=0.015 evident that ICT had a significant mediating effect between e-HRM and OP. e-HRM function e-training value of z=3.200 and p=0.00 had a strong relationship with OP via the mediation of ICT. The value of z=2.113 and p=0.017 demonstrate that the mediation impact of ICT was positive and significant between e-compensation and OP. The e-HRM functions e-performance appraisal and e-communication had values of z=2.887 and p=0.014, z=2.733 and p=0.018 respectively, which depicts that ICT had a significant mediating effect. So that H2a, H2b, H2c, H2d, and H2e are supported. Almasradi et al. 675 Table 5: Sobel Test Predictor Mediator Outcome Z value P value Status H2a e-Recruitment ICT OP 2.166** 0.015 Accepted H2b e-Training ICT OP 3.200*** 0 Accepted H2c e-Compensation ICT OP 2.113** 0.017 Accepted H2d e-Performance Appraisal ICT OP 2.887** 0.014 Accepted H2e e-Communication ICT OP 2.733** 0.018 Accepted Note: Sobel test whether ICT mediates the relationships presented. *p<0.1; **p<0.05; ***p<0.01. 5. Discussion Pakistan is experiencing a fundamental transition as the country's economic prosperity is relying on a competent and educated population. Pakistan is now going forward with confidence in all industries that focus on human skills. Organizations all around the world have adapted to deploy e-HRM and start experiencing the transformative performance. An evidence-based approach might benefit e-HRM. As a multi-field developed by HRM, ICT, and organizational sciences, a gap has begun to form between what researchers study and what professionals need to know. 5.1 Implications of the Study The study's main goal is to highlight the impact of e-HRM on organizational performance. The HR managers and higher management of the company receive a variety of recommendations from the study's realistic approach. First, businesses should invest in the e-HRM system due to its importance for enhancing organizational performance. Second, HR is important because of the growth of e-HRM, which is the foundation for all businesses in defining their roles and procedures. As a result, firms must develop and enhance their systems and use e-HRM to increase their cost-effective performance and complete HR duties quickly. Thirdly, by placing more emphasis on the strategic component of HR, eHRM lessens the administrative burden on HR practitioners as they carry out their obligations. Fourthly, ICT contributes to the automation and simplification of activities, decreases administrative hurdles, and record-keeping, and, when necessary, offers HR information to management which helps in time and talent management. 5.2 Limitations & Future Research This study will have a broader scope and potential in the future. For in-depth analysis, future studies can opt mixed method i.e. interviews of the participants and survey approach. E-HRM, Information & Communication Technology and Organizational Performance 676 The study focused only on companies listed in PSX, future scholars take the sample size from SMEs of the textile industry. There are thirteen e-HRM practices of which five are discussed in this study, future researchers may take other practices for further study. Moreover, future research can also check the relationship of e-HRM and organizational sustainability with the mediation role of ICT. Data security can also be used as a moderator between e-HRM and ICT. The sample size in current study is taken from a developing country, scholars may focus on developed countries. 6. Conclusion We can better understand what is known about the field of e-HRM and which areas need further research by using systematic research syntheses. From an organizational aspect, eHRM hasn't gotten much attention in literature. Our research indicates that e-HRM positively affects organizational performance, which is consistent with the other researchers (Ahmed, 2019; Lazazzara et al., 2020; Roman, 2017). 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