The Use of Technologies to Support and Reconfigure HR Functions in 21st Century Organizational Forms Professor Noshir Contractor University of Illinois at Urbana-Champaign Center for Human Resource Management Spring 2001 Roundtable April 6, 2001

Productivity Paradox n Productivity Paradox: In 1996 US companies spent 43% of their capital budgets on computer hardware - a colossal $213 billion, and more than they invested in factories, vehicles, or any kind of durable equipment. In 1981 expenditure on computer hardware had been just 6 %. n Adding in all the associated costs, the total cost of computing for 1996 was about $500 billion in the US and more than $1 trillion worldwide. n Yet since the mid-sixties, productivity gains have stayed below 2%.

HR functions n Compensation and benefits n Strategic Resourcing n Competence Development n Communications n Internal job rotation n International transfers n Staffing

Stages of Technology Use Substitution

n Adoption based on relative advantage, observability, adaptability, compatibility, trialability n Use technologies to do old things in new ways n Organization unchanged, new infrastructure deployed n Cost savings rather than revenue generation n Examples: Automobiles, Telephone, Videoconferencing, Arpanet/Internet, WWW

Substitution Effects n U.S. Conference Board estimates National secretarial pool has shrunk by more than half a million in the past decade

u Brochure-ware u Check phone directory u Check company policies u Check schedules: shuttles, conference rooms, training sessions u Automating Transactions u Employee Self Service (ESSs) Substitution Effects in HR: Doing the same with less

Substitution Effects ?

Stages of Technology Use Enlargement Substitution

Enlargement n n To which the president of GM replied: "Yes, but would you want your car to crash every time you tried to open a window?" n If the automobile were invented in 1970 and dropped in price accordingly, while increasing features, a car would cost less than $5 and drive 25,000 miles/gallon (Economist, 1998)

Time to reach a quarter of the US population (Newsweek, 4/13/98) n 1926/TV: 26 years n 1953/Microwave: 30 years n 1975/PC: 16 years n 1983/Mobile phone: 13 years n 1991/Web: 7 years n 1873, Electricity: 46 yrs. n 1876/Telephone: 35 yrs. n 1886/Automobile: 55 yrs. n 1906/Radio: 22 yrs.

Enlargement n 1996: Total volume of greater than snail mail; total sales of PC greater than TV sets n 1999: Total volume of data traffic greater than voice; 10 fold increase in U.S. e-commerce in 10 months n Moore’s Law: Computational power doubles every 18 months n Metcalfe’s Law: The value of a network is proportional to the number of users squared

Enlargement n Current 32 bit IP addresses can accommodate 4295 million devices (2exp32) n The new proposed 132 bit IP address scheme can accommodate (3.4e38 or 340 undecillion) devices n Telecommuting grew from 4 million in 1990 to 16 million in 2000 (Telecommute America)

Enlargement Effects in HR: Doing more of the same using less n Providing more HR access to more employees via more devices: desktops, laptops, mobile phones, PDAs n Providing more individual and corporate feedback to more employees n Experimenting with more automated transactions

Enlargement effects? n At current growth rates WWW surpassed the 29 Terra bytes of the Library of Congress by 1998 (Wired). But... WWW is a library with all the books on the floor, and WWW is a World Wide Wait

Enlargement: delays n 12% of takes over 5 minutes to be delivered and 10% is delivered over an hour later (Source: Inverse Network Technology, a Santa Clara company that tests Internet performance) - Wall Street Journal 5/29/97. n Internet drop out rate 11 percent (Jim Katz, ATT labs, 1996) n In May 2000, the Love Bug virus struck 47 million users in 24 hours

Enlargement effects? n “Shadow costs” of media transformation between “Information spigots” u Electronic: phone, mobile, PDA, PC, printer, copier, fax... u “Dead tree” editions: Memos, reports, books, newspapers, periodicals...

Enlargement: Network Failures n Gigalapse: A billion lost user hours during a network failure predicted by Bob Metcalfe for did not materialize n Closest was AOL's 6.2 million people for 19 hours = 118 megalapse. n Telephones experience 30,000 people without 5 hrs. service per day = 150 kilolapse

Enlargement: Information Gap n Emerging technologies improve the amount of information among the “haves” and the “have-nots” n But the “haves” are much better informed than the “have-nots” resulting in an increase in the Information Gap

Information Gap

Productivity Paradox: Why? Giving pony express riders cell phones to call ahead to ask for water (Neuman, 1997) for water (Neuman, 1997)

Stages of Technology Use Reconfiguration Enlargement Substitution

WORK BY BID?

Coordination Theory

Transaction costs of coordination mechanisms n Hierarchies (Low) n Markets (Medium) n Networks (High)

Organizational Forms Hierarchy Matrix Network It’s the network stupid! (Hartman & Sifonis)

Fedex and cookies Interdependencies in the virtual organization can occur both internally and externally and at various levels of the firm. Firm AFirm B Corporate level Business unit level Group level Individual level

Surge of Network Organizations n More than 20,000 alliances formed worldwide in , accounting for 21% of the revenue of America’s 1000 largest firms in 1997 (Harbison & Pekar, 1999) n Is the “firewall” separating the Intranet from the Extranet the last vestige of organizational boundaries?

Reconfiguration: Examples I Workplace demographics n More than half of the European work force does not go to an office for a 9 to 5 job (Charles Handy) n Manpower has more employees than any other US organization n 25 years ago 1 in 5 worked for a Fortune 500, now less than 1 in 10 does

Reconfiguration: Examples II Virtual teams n Longitude as competitive advantage n Time zone differences are not a bug... they are a feature!

Reconfiguration: Examples Put your money where your mouse is n Lowest price for me: n Amazon.com n Priceline.com n Lowest price for us: n Mercata.com, n Accompany.com. n Highest price for me. n Ebay.com n Guru.com

Reconfiguration of HR Functions: Doing more “new” with more n From Efficiency to Effectiveness n From Cost Reduction to Value Creation n From Employee Self-Service (ESS) to Employee Self-Reliance (ESR) u Update personnel records u Update 401(K) benefits u Just in time training u User-driven project staffing n From Human Resource Management to Relational Resource Management

Co-evolution of Technology and HR function 1. Substitution 2. Enlargement 3. Reconfigure TechnologyHR functions Adapted from Francois Bar (2000)

Challenges for Reconfiguration n Is everyone really better informed? n From where/who do we get information? n With whom/where do we share information? n Why do we share information? n Do we use technology to publish, communicate or dialog? n Are using COTS solutions giving us a competitive advantage or staving off a competitive disadvantage?

From Human Resource Management to Relational Resource Management n The fundamental unit of such an economy is not the corporation but the individual. Electronically connected free lances or e- lancers join together into fluid and temporary nets to provide and sell goods and services (Malone, Harvard Business Review, 1998).

Reconfiguring relationships: Brokering information n When administration becomes …… amnesia-stration n Info-mediaries (John Hagel & Marc Siegel) n Importance of leveraging knowledge capital via social capital - The case of the Lovegety

n 1. Turn on the power and set the MODE button you want with MODE button. You can confirm the MODE you chose as the red indicator blinks. n 2. Lamp blinks when (someone with) a Lovegety for the opposite sex to yours set under the same MODE as yours comes near. n 3. FIND lamp blinks when (someone with) a Lovegety for the opposite sex to yours set under some different mode from yours come near. In that case, you may try the other MODES to “GET” tuned with (him/her) if you like.

Lovegety and HR n From groupware to communityware: The next killer app ??? n HR Project Staffing

Engineering/R&D is the “star” Customer Service and Corporate Operations closely tied to Engineering Manufacturing, Sales & Marketing are more remote Overall perception of Information flows

Customer Support/Services is the “star” Closely tied to Manufacturing Engineering, Corp. Operations and Sales/Marketing are more distant Information flows viewed by Customer Support/Services Information flows viewed by Customer Support/Services

Engineering is the “star” Corporate Operations, Customer Service are closely tied to Engineering Sales and Marketing are more remote Manufacturing is relatively isolated Information flows viewed by Manufacturing

Manufacturing is the “star” Engineering, Sales and Marketing are closely tied to Manufacturing Corporate Operations and Customer Service are more remote Information flows viewed by Engineering/R&D

Social and Knowledge Capital n Social networks and supporting tools n Cognitive social structures and supporting tools n Knowledge networks and supporting tools n Cognitive knowledge networks and supporting tools

Social Networks n It’s not what you know, it’s who you know.

Social Networks Nodes represent people. Links represent who knows who.

Tools to Assist Social Networks n Tools (such as Ph, WhoIs, Four11) can help reduce disparities in social networks n Example: How can I get in touch with person X?

Cognitive Social Structures n It’s not who you know, it’s who they think you know.

Tools to Assist Cognitive Social Structures n Collaboration filtering tools (such as SixDegrees) can help individuals answer the “Who knows who knows who” question -- to find out how one may be connected to those identified as knowledge experts. n Example: I understand that X is an expert in topic A. Whom do I know who knows X, and can introduce me to X?

Knowledge Networks n Who knows what? n Nodes represent the individuals, project teams, organizations, physical locations. n Links representing the shared knowledge could be (i) skills, (ii) expertise, (iii) activities, (iv) interest sets, (v) interpretations of project goals and/or missions, (vi) work flow information.

Knowledge Networks Nodes represent people. Links represent shared knowledge.

Tools to Assist Knowledge Networks n Data bases and traditional search engines such as Alta Vista. n Example: I need to find out something about topic X. Where do I get this information?

n Who knows who knows what? n Example: I need to know more about topic X. Who in my extended (direct or indirect) network can tell me more about topic X? Cognitive Knowledge Networks

Source: Newsweek, December 2000 Cognitive Knowledge Networks

Summary n Social Structures are based on “who knows who.” n Cognitive Social Structures are based on “who knows who knows who.” n Knowledge Networks are based on “Who knows what.” n Cognitive Knowledge Networks are based on “who knows who knows what.”

The Answer to these Questions.. IKNOW !!!!

Goal of IKNOW

Data Used in IKNOW n Based on organizational members’ Web pages: u Links between Web pages u Common external links from Web pages u Content on the Web pages

Data Used in IKNOW (cont’d) n Based on organizational members volunteering information about social and knowledge resources u Content: inventory of skills, expertise, etc. u Links: inventory of social networks u Incentives for volunteering information tied to performance appraisal and evaluation of help provided.

So why would one want to use IKNOW? n Makes the virtual visible. n Adds social capital to knowledge capital by adding contacts to content. n While collaboration tools help improve the process of collaboration in knowledge networks … IKNOW helps one effectively identify collaboration partners and grow the knowledge network.

IKNOW Test Beds n National Computational Science Alliance n PrairieNet n Center for Collaborative Manufacturing n USAID Global Information Systems n U.S. Army Public Works Department n Summer Workshops and Institutes n Virtual courses

Kawakami, Kenji (1995). 101 un-useless Japanese inventions. New York: W. W. Norton & Company. … inventions that seem like they’re going to make life a lot easier, but don’t. … gadgets that promise to give us something, and it is only later that we realize that their gift is undone by that which they take away Shindogu?

Using IKNOW in the Hypothetical Scenario n Demo of IKNOW IKNOW

Additional Information Program URL: for questions and suggestions: