Rethinking Performance Management: Realities in South African Municipalities

*Zwelinzima Ndevu*

#### **Abstract**

Forthcoming priorities and initiatives in organisations are often based on existing gaps that have been identified through measuring performance. Measuring performance in South African municipalities is therefore fundamental in creating a foundation for the future. Through the grounded theory as a qualitative methodology, the chapter constructs a theory based on the assessment of events throughout the municipal terrain in South Africa. The theory is developed based on the performance management systems of two South African municipalities situated in the KwaZulu and Eastern Cape municipalities. Using purposive sampling, 8 interviewees were selected (four administrators and four municipal councillors). The findings indicate that in relation to the performance management systems, the relationship between the political and municipal leaders has over the years been strained. There is a lack of mutual understanding amongst staff and leadership due to the belief that community-based service delivery was strictly a political process. Though there has been dialogue regarding issues related to the performance management system, the political leadership has dominated the negotiations and dialogues in municipalities. It was further noted that there was a lack of transparency and efficiency in the performance management system in district municipalities.

**Keywords:** municipal performance, municipal systems, performance management systems

#### **1. Introduction**

Performance management systems that have been operational in both private and public sector organisations are founded on processes associated with the plans, reviews, rewards, punishment, and development of individual performance systems in the specific work environment. It has been over the years thought to be a key element in the success or failure of the management process. For such a process to be successful, employees must be aware of and believe in the organisation's mission and vision. The vision and the mission play a role in the success or failure of the employer. It is the responsibility of the organisation's/institution's leadership to plan, review, measure, reward and develop performance at all organisation level.

In most operational terrains and landscapes, the implementation of the performance measurement in an effective operational understanding is related to the utilisation of a balanced scorecard, a technique that when professionally planned and applied evaluates and measures individual and group performance in the appraisal process. The balanced scorecard can be an evaluation-based measurement instrument that paves the way to increased possibilities of organisation success.

For such processes and realities to be successful, there must inevitably be full integration of the professional performance of every employee within the parameters of the organisational and institutional strategy. This is directly related to the employees following the organisation's rules and regulations that are associated with institutional goals. This is also related to development and training, effective communication, and the relationship /s leading to existing performance and rewards.

International research has shown conclusively that the structure, processes, and functions of a successful performance management system are directly and indirectly related to the relationships, actions, performance, and overall behaviour of leadership, management, and staff at all organisational and institutional levels. This means that an analysis of performance management can only be based and rooted on the investigation of behavioural, organisational, and structural dimensions of the phenomenon. Organisational structure can be considered the root of success or failure, but the rest are equally responsible at all levels. The importance of the behavioural element at all levels is related to all employees' utilisation of the existing performance organisational systems.

Internationally the key role of a municipality is to deliver services that are essential to the development and overall well-being of communities. In their efforts, municipalities seek to ensure that service delivery is honest, transparent, accountable, economical, effective, and efficient. The municipal political and administrative leaders are responsible for formulating strategic and tactical, well-structured plans, allocating existing resources to the plan implementation, and monitoring and evaluating such a plan. At the end of the process, these are reported to their communities and the central state authorities and institutions.

A municipality's performance is a social, political, and administrative necessity of key importance as it is instrumental in focusing the immediate attention of the state oversight bodies as well as their entity's population. Communities and other entities are the final judges of the municipality's efforts, they assess the outcomes and outputs of the municipalities' efforts in the process of delivering value for money. The municipalities' performance is compared with its service delivery plans and its budgets thereby informing present and future decisions.

In South Africa, the performance management systems in municipalities have more similarities than differences in comparison with sister organisations in African countries and internationally. This is because their aims, objectives, missions and visions, policies, and processes are more or less similar. These are directly related to the efforts to fulfil their legal and humanistic duties and responsibilities for the betterment of the people who vote them into leadership positions [1].

These responsibilities are efforts directly related to honest, accountable, efficient, and effective management. These are rooted in well-structured and researched plans, transparent budgeting and implementation, and processes of monitoring, evaluation, and reporting of processes. Continuous communication with communities regarding the overall performance of municipalities is instrumental in creating and perpetuating high levels of accountability. In such a context the community, politicians, and administrators are enabled to track the progress, the challenges, the

#### *Rethinking Performance Management: Realities in South African Municipalities DOI: http://dx.doi.org/10.5772/intechopen.107960*

difficulties, and the problems that exist. They identify the possibilities for present and future improvement. Performance information also plays a growing role in budget allocations and will increasingly be used to monitor service delivery. This means the information must be accurate, appropriate, and timely [2].

During monitoring and evaluation, the most valuable reason for measuring performance in an organisation is it creates the foundation of the future, as the forthcoming priorities and initiatives are based on the existing gaps that are the root of weaknesses and mediocre or poor performance. Good performance can only be achieved through professionally based performance management systems that are well-planned and implemented. Performance management systems need public ownership; people in the municipality need to be well informed about the efforts towards pursuing results-based approaches. They need to be well informed about the market and professional initiatives associated with contractual agreements, timelines, benchmarking realities, performance contracts, risk management, and market testing.

Performance management is essential for improved service delivery in South African municipalities. This chapter contributes to the literature regarding performance management in the South African context by building a theory of performance management systems based on the experiences of municipal officials. The theory gives a better understanding of the South African municipal context in relation to performance management systems. The theory assists in rethinking the approaches to performance management in municipalities. The theory also assists in the development of strategies and creates a foundation for further research on various issues covered. Furthermore, it gives recommendations of actions that governments and related entities could try in efforts to address the challenges experienced in municipalities.

The chapter goes about this by providing a brief theoretical framework section, a methodology section followed by a data collection, and thereafter a synopsis of the data interpretation.

#### **2. The significance of trust in a public sector performance environment**

An appropriate conflict-free employment relations strategy is the key to a successful organisation. The most fundamental element of such a strategy is deeply rooted in common trust permeating all sections, divisions, leadership, management, and all employees [3].

State rules and procedures are significant in shaping and determining organisational imperatives, structures, systems, strategic plans, and actions of an entity. However, the quality of existing relations depends on the levels of trust. Trust is founded and cemented mainly through the strategic plans and actions of the leadership and higher management levels of an organisation. Research conclusively shows that trust amongst key stakeholders in an organisation is a key element in the success of the entity. Lack of trust within a public sector entity such as a municipality will have direct or/and indirect effects on individual or group performance [4, 5].

The latest report of the World Economic Forum ranks South Africa as the worst of 137 countries in terms of the relationship between employer and employee [6]. The report links this outcome to the very low levels of trust both in the private and the public sector.

The report identifies mistrust between employers and employees in South Africa as a phenomenon with historical roots that has been perpetuated and exacerbated by the country's lack of capacity in training, retaining, and attracting talent. This has

also been attributed to poor reliance on management, the existence of high inequality levels, unemployment, and poverty [6].

An efficient and effective state and a well-functioning market have positive effects on continuous economic and social growth and development; these further enhance corrupt–free competitiveness and GDP growth. On the other hand, unhealthy relations between employees and management bear negative impacts on organisation performance. This poses a serious threat to both sectors' ability to constructively build a more productive and equitable future for the country as a whole [3, 7].

Statutory frameworks enable workplaces to adopt and implement commonly agreed aims, objectives, strategies, and plans concerning all work-related aspects. Some of the work-related aspects are collective bargaining and the resolution of disputes in a collegial and legally-bound manner. The existence or the absence of such priorities cements or destroys trust within an organisation, especially a municipality, an organ empowered legally to be the foundation of community-based efficient and effective service delivery.

Trust within a municipality is instrumental in building and cementing cooperation, coordination, synergy, and collective decision-making and planning while mistrust is instrumental in creating and perpetuating divisions. Subsequently, conflicts damage relationships and in the long run, affect organisation stability and efficiency [8].

Empirical studies confirm that widely spread mistrust can be eased out through strict and thoroughly observed reliance on existing rules and regulations that could lead to higher productivity and better performance. High levels of trust within an organisation, lead to employees experiencing higher degrees of job satisfaction, motivation, self-belief, discipline and solid performance. In such a trust–driven environment, conflicts are resolved faster because of general agreements on key issues amongst the key elements of leadership, management, and employees [3, 4].

Such a vision within a municipality would be the foundation of accountability, transparency, honesty, and high-performance levels leading to service delivery excellence, and the development of new, fresh professional identities and relationships committed to the principles of the NDP.

Extensive research has been conducted on the experiences of municipal employees in South Africa at several levels and there is no doubt that their experiences are unique at most levels. This is because most of them are classified as 'micro-environments' in terms of human resources realities. The municipalities that can be classified as 'mega environments' (mainly found in the urban areas) are to a large extent more complicated not only because of their size but also the wider spectrum of interests created by the relationships between politicians and administrators, or politicians and the private sector service providers amongst other. The diversification of service delivery targets is also a key issue of difference [9].

Lack of harmonious cooperation and coordination within an organisation as a result of mistrust towards leadership, the management, or existing plans and decisions lead to frustration, dereliction of duty, withdrawal, absenteeism, and lack of motivation. Poor work performance, ill-discipline, and perpetual ignorance of duties and responsibilities have also been described as results of mistrust [10].

The foundation stone of trust building is employee participation summarised in the phrase 'an employee must be given a voice', pointing to collaboration, understanding, and trust-building. This could become a reality through the opening of communication channels, regular strategy, tactics, monitoring, and evaluation meetings

#### *Rethinking Performance Management: Realities in South African Municipalities DOI: http://dx.doi.org/10.5772/intechopen.107960*

and socials. Such an eventuality is the exact opposite of the 'top-down approach'. In municipalities, the later approach is represented by the political leadership (Mayor, Speaker, and senior councillor) or the administrative sector (Municipal Manager, Chief Financial Officer etc.). The most used types of 'top-down communications' includes 'leadership team briefings' electronic communication with announcements and/or instructions when the need arises, or employee surveys mainly associated with employee performance cards. When the obsession with outcomes overtakes the importance of communication, information sharing, and serious and honest engagement, trust tends to diminish [11].

Power struggles have become a common feature in municipalities, these are as a result of political or administrative battles over resources, monopoly of knowledge and/or existing opportunities for corruption. These lead to 'professional distance' between leaders, managers, and employees. This becomes the foundation of mistrust as employees feel alienated from existing municipal realities, knowledge, opportunities, and decisions. These are kept away from them in a situation where the leaders' and managers' authority cannot be challenged.

Leadership must make decisions and must take the prerogative to provide employees with the opportunities to participate actively in decision-making. Employees need to have a clear picture and an understanding of decisions made by leadership and management. Employees must be consulted for their input on key issues, it is only when such an accountable, transparent, fair, and collegial process of decisionmaking is followed that trust is built. Organisations, therefore, manifest voluntary cooperation, coordination, and synergy that are guided by solid, fruitful, and creative performance through such continuous commitment [5].

Employee performance is also related to the belief that leadership and senior management will involve and value employees' contribution to most, if not all, aspects of the organisation. This is how trust becomes a reality [12].

Given the challenges facing human resources leaderships and practitioners throughout various sectors, the only organisation culture that guarantees solid and efficient employee performance is the one characterised by active participation, continuous up-skilling and development, and collective support relations [2]. It is only such an environment where core organisation aspects can be discussed, agreed upon, and planned in terms of administrative, legal, regulatory, financial, budgetary requirements, risk management, and effective structures, systems, and processes that trust can grow [13, 14].

Trust cements a culture of inclusivity, fairness, and collegiality. It has been accepted as such by the principled position on the matter on behalf of the International Labour Organisation (ILO). They have described fair labour practices, equal and participatory treatment, freedom of expression association, and participation as the fundamental rights of employees and the foundation of common trust [15].

#### **3. Municipal performance management systems: the South African legal roots**

South Africa's 283 municipalities are classified into three categories according to the country's Constitution, six Metropolitan municipalities, 46 District municipalities, and 231 local Municipalities. Their structures, functions, and political and

administrative priorities, duties, and responsibilities are based on a widely diversified and regularly updated legislature that is enriched by a rich multiplicity of rules and regulations researched and produced by the relevant Ministries, as well as state institutions and entities.

Performance management systems in the South African municipal landscape lie in the Municipal Systems Act of 2000 [16] and the Municipal Performance Regulations for Municipal Managers and Managers Directly Accountable to Municipal Managers [17]. The two documents provide the fundamental processes such as the establishment planning and implementation of the system in every municipality in South Africa. Municipal leaders in the country must adopt a performance management system as an official institutional policy. Performance management has been described as a foundation of excellence and a foundation for honest, transparent, and effective service delivery rooted in good and honest governance, unity, and commitment.

Such a policy is rooted in the aims and objectives of a performance policy framework structure in such a way as to pinpoint the path leading to the provision of guidance. Such guidance is associated directly with the cycle and processes of the municipality. This is in terms of rooting and developing the institutional performance through meticulous planning, thorough monitoring, reviewing and evaluation, measuring and calculating, reporting, and communicating, and quality and control measures. The performance management policy framework is founded on the directives of the Municipal Performance Regulations [17]. The Municipal Systems Act [16] aims to improve the existing integrated systems processes and structures required to manage information associated with individual and group performance. It clarifies performance information associated with the definition and standards leading to the support of regular audits of existing information at specific periods. It promotes transparency, accountability, effectiveness, and efficiency. When all these are achieved, they are reported to the National Parliament, all provincial legislatures, municipal councils, and their communities through the provision of accurate, accessible, and timely performance information.

Policies associated with performance management systems lie with Section 152 of the country's Constitution which deals directly with local government as an integral part of "accountable government". Democratic principles and values described in Section 195(1) of the constitution deal with a wide variety of principles that are fundamental in the existing policies and performance management systems. These values include the promotion of institutional accountability, efficiency and effectiveness, honesty, and accountability in all sections and departments of the public domain. Furthermore, the values include the promotion of the availability of all relevant information to the population through openness and transparency, openness and responsiveness to the needs of the community, and the facilitation of a culture of public service and accountability amongst staff [18].

The White Paper on Local Government published in 1998 (RSA 1916) which was amended in 2016 [19] introduced a much wider spectrum of local government performance management practices. It was described as a catalyst for the municipality's developmental role. The crux of the new practice appeared to be increased and continuous accountability of the municipality. This would increase and perpetuate trust and belief in municipalities.

These concepts were expanded by the Municipal Systems Act, 2000 (Act 32 of 2000) [16]. Sections 4, 6, and 8 belaboured the importance of accountability. Section 11(3) described the municipal legislative and executive authority as the guide to delivery target setting; monitoring and evaluating the effectiveness and impact of all

#### *Rethinking Performance Management: Realities in South African Municipalities DOI: http://dx.doi.org/10.5772/intechopen.107960*

policies, plans, programs, and services; monitoring and regulating all tender-based services provided as well as planning, establishing, and implementing performance management systems.

Section 38 provides a plan for a Performance Management System (PMS) and it promotes the performance management culture amongst all municipal structures, political office bearers, councillors, and the administrative sector. Section 39 sets the EXCO (Executive Committee (Exco) as the responsible unit for the development of a PMS, with the municipal manager taking full responsibility. Section 40 stipulates that a municipality must establish mechanisms with which to monitor and review the PMS while Section 41 establishes the processes and components of PMS, i.e., the PTs (performance targets), KPIs (key performance indicators, performance improvement, and continuous reporting. The internal and external knowledge of all these processes is found in Section 44, while Section 42 advocates for the active participation of the communities in all aspects and steps of KPIs and PTs for the municipality. Section 43 deals with the correct applications and regulations of the key performance indicators.

Section 45 deals with the audits associated with all results of the performance measurement which are certified by the Auditor General. Section 46 deals with the municipality's compulsory annual reports, these include financial statements, audit reports, performance reports, and other reports that are legislative requirements. All records and decisions associated with official documents are submitted to the Auditor General, the political leadership, and the provincial government as per Section 46(3).

These legal foundations have been strengthened by several government documents; the Municipal Planning and Performance Management Regulations [20] was instrumental in diversifying the performance management systems and their realities. Besides a full description of the system, the document relates the connection of municipal employees with the communities as an integral part of their KPIs. This includes the access to basic services for households with low income; the possibilities of job creation for the unemployed (an integral and important element of the municipality's Local Economic Development); the conditions of households who have access to basic services; the realities of the budgetary spending as planned by the official plans and decisions of the municipality, as well as the community-based stakeholders and role players; the continuation of the employment equity in the highest levels of the municipal management and the implementation of the municipality's work skills plan.

These documents have established these duties and responsibilities to ensure that municipal leadership protects and develops the financial viability of municipalities. The operation of municipalities should be based on appropriate and well-thought-out processes. These should be implemented according to performance target founded on, the review and measurement of the performance through monitoring and evaluation as identified in sections 12, and 13 as well as performance measurements of internal auditing (Section 14).

These legal documents are enriched by the Local Government: Municipal Performance Regulations for Municipal Managers and Managers directly accountable to Municipal Managers [17]. This document sets out the directions to guide the performance of the senior municipal leaders i.e., the Municipal Managers, and all managers are directly accountable to them. The directions provided are based on the principles of unity, uniformity as well as common direction, monitoring, and improvement at all institutional levels. These regulations contain all the provisions, particularities, and requirements of employment contracts. Furthermore, they contain provisions, particularities, and requirements for all performance agreements amongst the participants in the group which includes all prescribed Core Competency Requirements and Key Performance Areas, and a very comprehensive job description of the Municipal Manager.

Amongst other documents, there is a series of very well-researched and official documents produced by the South African Local Government Association (SALGA). These are associated with municipal capacity-building strategy [21], a generic document dealing with legal, regulatory, and social realities of municipalities [22]. The "Learning Framework for Local Government" [23] and a comprehensive national human resource management and development strategy (HRM&D) act as a blueprint for local government [24].

#### **4. Conceptual framework and methodology**

The researcher uses the grounded theory as a conceptual qualitative methodology; it was used as a method of collecting, coding, shaping, and analysing data in a systematic and well-planned process in the effort to construct a theory. With particular attention to the theme of this chapter, the research process was based on a continuous assessment of existing events throughout the municipal terrain in South Africa and Africa in general. Within this process, construction, thoughts, and interactions with a plethora of existing data opened new paths of understanding and knowledge about structures, processes, functions, municipalities, intellectuals, and rural and urban communities and realities [25, 26].

The grounded theory method is the foundation of an understanding and application of new strategic paths leading to the development of empirical research-based theoretical analysis at several levels. Such a developmental method leads to the generation of new concepts in the chosen discipline and research terrain [27, 28].

Besides theory construction, grounded theory is also the foundation for the exploration of a new study area in the social and human sciences. It explores a new area of study in several intellectual and knowledge-based ways such as analysing public voices in a wide spectrum of social, professional, public, and private sectors entities and policy development initiatives [29, 30].

To construct the new theory, the grounded theory was based on a qualitative research design approach. The researcher created the theory from data emanating from the experiences of municipal performance management systems in two South African municipalities that are situated in the KwaZulu and Eastern Cape. The researcher used purposive sampling of the qualitative paradigm. 8 interviewees were selected (four administrators and four municipal councillors). The administrative officials were in middle and senior management positions in key sections (human resources and supply chain management and procurement) and the councillors were all members of the ruling party in the country, the African National Congress (ANC). The interviewees were selected based on their experience, knowledge, and understanding of political, administrative, and social realities and relationships within and outside the municipality.

The interviews were based on open-ended questions; confidentiality and anonymity were guaranteed to all respondents. The transcripts of the interviews were shown to the interviewees to confirm the truth of their responses. The confidentiality of the informants, as well as their anonymity, was maintained throughout. The sample size of the interviews was in accordance with the limits in the case of qualitative studies on phenomenological studies, which ranged between 6 and 10 [31–33].

The following questions were asked:

Following the completion of the interviews, data was coded, categorised, and analysed. The study employed a meticulous application of empirical research based on an objective analysis method. The data gleaned from the in-depth interviews was connected, triangulated, and corroborated with the existing laws, rules, and regulations associated with municipal performance management systems. The process followed qualitative content analysis in both the analysis of the interviews but also their relationship and connectivity with official documents.

The study employed the qualitative software of data analysis NVIVO version 22 to analyse, code, and categorise data to generate themes. During data analysis, a simultaneous examination of the authenticity and trustworthiness of the qualitative data themes indicated that the credibility of the data was intact.

### **5. Analysis of data**

The opinions of the eight respondents were strongly analysed and dissected. Their knowledge and experience were outlined by a range of examples related to relationships, realities, contradictions, partial and complete agreements, and disagreements on key issues associated with the performance management in their municipalities. Their opinions were considered 'general' as both administrative and political interviewees had frequent meetings with colleagues in all municipalities in their provinces.

#### **5.1 The relationship amongst municipal leadership, management, and staff in respect to the realities of the performance management system**

The question on the relationships of the structures of the municipalities produced similar responses from most interviewees. They identified existing challenges that were primarily but not exclusively rooted in the relationships between politicians and administrators. The general position primarily concentrated on existing and/or past relationship/s between the Municipal Manager and the Mayor and senior municipal councillors. Most respondents indicated that in most cases the relationship between political and municipal leaders has 'over the years' been 'strained' (Interviewees 1, 2, 3, 4, 6 and 8).

Such a position has been qualified and on occasion quantified. The problematic relationship between individuals and groups was described as the root of problems because in most cases this would take the form of 'inter-political' or 'intra-political rivalries' amongst leaders. The relationships between administrative and political leaders worsened when the incumbent political leaders belonged to different parties from those of the senior administrators, especially the Municipal Managers and the Heads of Sections and Departments close to them. The findings concur with Caillier [8] who states that relationships within municipalities are prone to conflict due to the absence of trust. Individuals working in the municipalities are prone to mistrusts each other especially if there is a difference in political party association. Politics as a zero-sum game makes one group winners and the other loses hence fostering division and mistrust.

As one senior administrator in an Eastern Cape municipality stated (Interviewee 7).

"The situation and relations between Municipal Managers and Mayors are crucial for a successful performance management system and presently here in the Eastern Cape those of us who support clean and honest service delivery for our people are worried and careful about many reasons because there are problems. Over the years there have been problems, but now they have worsened for a lot of reasons. We all know and accept that there are truths and realities we cannot afford to ignore. When the Mayor and the Municipal Manager belong to the same party as it happens in most cases here in the Eastern Cape one expects all the systems must be based on common understandings, objectives, aims, and plans. We all know the importance of organising and developing all systems and functions that will benefit our communities. Every municipality needs honest, educated, and committed staff members and this is the importance of the performance management system. For this system to be operational to the full there needs to be unity of politics, beliefs, commitments, and collaboration. At the moment it is difficult to have it so it is most likely that the systems will suffer because of the political infighting in the ANC, the ruling party in most municipalities. This means that most likely there are possibilities that the relationships amongst politicians, senior administrators and staff, in general, would be characterised by poor accountability and communication both in the municipal offices and the community. If or when this becomes a reality corruption and lack of service delivery will increase". According to Schwab [6] the situation can be attributed to poor reliance on management, the existence of high inequality levels, unemployment, and poverty.

#### **5.2 A common understanding amongst leadership and staff in terms of the realities of the performance management system**

The question on the common understanding amongst leadership and staff was responded to through the utilisation of several 'realities' that exist within the parameters and functionalities of the municipalities in which the interviewees are employed. It became evident throughout the research and analysis process that the majority of respondents believed that their answers apply to most, if not to all municipalities in their provinces.

There was a belief amongst the majority of respondents that there were several issues facing the permanent staff in the municipalities including a large number of managers who ought to learn, understand, plan, and implement their well-structured duties and responsibilities per their signed contract documents. They believed that these documents were the foundations upon which the relationship between leadership, management, and employees would be strengthened or not. This was because

#### *Rethinking Performance Management: Realities in South African Municipalities DOI: http://dx.doi.org/10.5772/intechopen.107960*

the employees' performance is as important as that of the leaders and managers (Interviewees 2, 3, 4, 5, 6, and 8).

The understanding amongst staff and leadership was and is still weak in most cases based on the belief that some politicians and some senior administrators shared. They believed that community-based service delivery was strictly a political process. This belief was directly related to 'political dominance' not only in terms of the ruling party that dominates both municipalities (i.e., the African National Congress-ANC), but also the existence of political factions within it. Interviewees s described such realities vividly and with specific examples pinpointing the political dominance at all municipal levels. This means that in most cases both high-ranking political and administrative leaders use their positions to determine the performance management audits that are fundamental not only to the progress or failure of the staff or their leadership but also to the municipality as a whole (Interviewee 1, 3, 5, 6, 7 and 8). Wright and Pandey[10] state that such lack of cooperation and coordination lead to frustration, dereliction of duty and a lack of motivation thereby resulting into poor performance.

Another issue raised by the interviewees as a burden was the professional relations between political and administrative leaders and the general staff. This was described to contribute to the weaknesses in planning and implementation of knowledge compliance, oversight of the performance management systems, as well as processes and outcomes in the municipalities (Interviewees 3,5,6,7 and 8).

It was stated that even though staff at all levels, including the sectional directors, have been obligated to study thoroughly to learn, a number of them failed to. For long periods, some key politicians and administrators including some municipal managers and those under them have been unable to relate and be instrumental in the improvement of the staff performances. Many amongst the higher and middle management staff believed that one of the reasons for such an attitude and behaviour was low knowledge levels of legal and regulatory demands associated with KPIs (Interviewees 1, 3, 5, 6, and 7).

Throughout the years, the multiplicity of laws, rules, and regulations has become a major challenge for all professional sections and levels. This has been a serious obstacle in the process of building a common understanding amongst leadership and staff in terms of the performance management system. Evidently, the lack of skills amongst staff, especially those dealing with complicated issues associated with internal audits and supply chain management and procurement has been the underlining cause of the problem. The updating rules and regulations by the National Treasury and the Auditor General creates new problems and challenges for administrative staff and politicians. Both administrative staff and politicians are obligated to receive specialised training to be able to perform their duties per the new knowledge demands (Interviewees 1, 4, 5, 7, and 8). In line with Hassan and Hatmaker [5], leadership must make decisions and must take the prerogative to provide employees with the opportunities to participate actively in decision-making. Organisations, therefore, manifest voluntary cooperation, coordination, and synergy that are guided by solid, fruitful, and creative performance through such continuous commitment.

#### **5.3 Common dialogue and employee involvement in the processes and decisions associated with the performance management system**

According to official government documents, rules, and regulations, dialogue and employee involvement are necessary, especially in the processes and decisions associated with the performance management systems. Dialogue builds up unity, common beliefs, and commitment; these actions have positive effects on organisation productivity (Interviewees 1, 2, 3, 5, 6, 7, and 8).

Despite the almost unanimous belief, there were slight differences amongst the interviewees in regard to the existing realities on the issue. There was the belief that over the years the municipal political leaderships have dominated negotiations and dialogue with managers and employees in most, if not all, municipal operational aspects including the crucial performance management system. This is so even though municipal managers legally have a very strong decision-making duty and responsibility in several operational functions and processes such as performance management. These opinions were supported by all administrative interviewees and one municipal councillor (Interviewees 2, 5, 6, 7, and 8).

Even though common and honest dialogue and employee involvement in performance management systems could lead to employees' commitment to honest and efficient engagement to excellence in their work, the opinions and attitudes of the political leaders remain questionable. The positions, attitudes, behaviours, relationships, and activities of the political leaders are keys to the success of the municipal efforts. These strengthen the aims and objectives, as well as the honest and successful service delivery. The lack of engagement of employees, especially in terms of their performance alienates them and affects their loyalty on many occasions, damage to the municipal functionality.

Similarly, Cho and Lee note that when employees are not involved or consulted on issues affecting them it creates professional distance. This becomes a foundation for mistrust as employees feel alienated which eventually affects employee's performance. Vermeeren et al. [11] concur stating that when outcomes overtake the importance of communication, trust tends to diminish. Hassan and Hatmaker [5] advocate for leadership initiatives to actively involve employees in decision making. They note that when employees have a clear picture of what is going on, it fosters solid and fruitful performance.

Municipalities are government institutions with duties and responsibilities. They are directly involved in a multiplicity of pre-determined functions including the collection of operational funds, disaster management, and service delivery amongst others. Municipal leadership needs to continuously interact with their communities to communicate their actions, plans, achievements, and failures honestly so they can win and perpetuate the communities' support. These efforts can become a reality through direct, honest, continuous, and successful interaction amongst the leadership, management, and all employees. Ultimately, this will lead to inevitable dialogue and employee involvement in the processes and decisions associated with the performance management system. The possibility of 'collaborative management' disappears in a performance management system without common dialogue and employee involvement. This means that the existing weaknesses of performance management systems will be perpetuated therefore affecting efficient service delivery (Interviewees 1, 2, 3, 4, and 7).

#### **6. Transparency and efficiency in the performance management system**

Transparency and efficiency in performance management systems are dependent on the continuous and honest engagement of the senior political and administrative leadership with all employees. Continuous and honest engagement elevates the aims

#### *Rethinking Performance Management: Realities in South African Municipalities DOI: http://dx.doi.org/10.5772/intechopen.107960*

and objectives of the municipality and leads to its success for the benefit of the community. Interviewees strongly believed that throughout the years all staff expected that leaders and managers engage and support them mainly in terms of retention, training, and development. It was believed that these leadership and management initiatives would become increase productivity. However, the feeling was that these initiatives did not happen for many reasons. Amongst the many reasons, they believed that leadership's failure had serious negative effects on staff performance; mediocre to bad governance has negative effects on service delivery (Interviewees 1, 3, 4, 6, 7, and 8).

It was felt that transparency and efficiency on the part of leaders and managers was the root of employee empowerment which when achieved increases staff commitment, leading to better performance, commitment, and dedication to duties and responsibilities. It was felt that one could not accuse all leaders and managers of not being transparent and efficient but there is a need for many of them to change their beliefs and attitudes to empower employees and simultaneously better performance (Interviewees 2,3,5,7 and 8). Schultz and Van der Walt [12] note that employee's performance is also hinged on the belief that management involve and value them. Therefore, it is imperative to change such attitude in efforts foster better performance.

Several interviewees indicated that on many occasions' transparency in municipalities depended on the political and administrative circumstances, beliefs, aims, objectives, and future aspirations of the District Municipalities. It was perceived that all local municipalities were under political and administrative dominance; there was a belief that in most cases transparency and collegiality were absent in the behaviour of the district municipalities' political and administrative systems. It was believed that the improvement of such attitudes and behaviours would be a serious improvement and a major step forward. Interviewees strongly felt that improvements in the 'intergovernmental system' could lead to a mutual mediation-based agreement between local and District municipalities. Such an agreement would reconcile 'conflict-ruined relations' that were based on resource allocations and stabilise the relationships amongst administrative and political leaders and managers.

It was also perceived that the success of such relationships would lead to the 'professionalism' of staff. This would improve present weaknesses and gaps that exist in the performance. Interviewees perceived that it was the appropriate time to replace "political deployees" (administrative staff employed because of their connections with political leaders) with well-educated and capable professionals. Newly employed professionals would be instrumental in improving skill development in the municipal administration. These would be senior and middle managers as well as technical professionals who were desperately needed (Interviewees 2,3,4, and 5).

The responses of well-educated and self-employed municipal politicians and administrators did not differ substantially when compared with the findings of seminal research conducted by the Department of Cooperative Governance and Traditional Affairs [34]. This research was produced 15 years after the first democratic elections in the country. The report outlined the weaknesses, strengths, problems, and challenges facing South Africa's municipalities at the time. The key weaknesses were observed in the financial terrain, these were associated with corrupt and ineffective financial systems, misuse of municipal funds and assets, fraud, and inadequate collection of revenue. Other weaknesses included the continuous breach of the constitutional sections 152 and 153 which outline key municipal obligations of service delivery to their communities; conflict between councillors and senior administrative management, which had negative effects on human resources and

performance environment; absence of the necessary steps and checks in the human resources and political systems.

The existence of these problems and challenges were followed by challenges associated with backlogs in several services; poor relations with their communities because of the lack of good governance, accountability, and communication; problems emanating from the administrative and political interface; fraud and corruption because of the lack of transparency, honesty, greed, and existing opportunities. All of these were considered instrumental in inducing violent protests which were associated with service delivery challenges and community demands, inter and intra- and political party infighting leading to negative effects in terms of service delivery and overall governance and delivery, and the lack of scarce skills in key administrative positions ([34], pp. 19–22).

The government officials and well-documented research pinpoint the fact that these challenges and problems led to a lack of service delivery to communities. These have been persistent over many years; it could have been a very different case if existing laws, rules, and regulations were followed. Furthermore, solid cooperation amongst the municipal political and administrative leadership, as well as a wellplanned and well-implemented performance management system, could have prevented such problems in service delivery. These could be foundational for continuous and well-functioning political and administrative relations. These mechanisms could have similar opinions, plans, and implementation for the improvement at all levels including continuous and effective monitoring and evaluation as well as sophisticated and well-functioning early-warning systems. When in existence such circumstances and situations based on an effective and efficient intergovernmental oversight would ultimately lead to the strengthening of municipal processes, functions, and structures at all levels.

One of the most important contributions of the research document was the acceptance that the problems identified were symptomatic of problems within the jurisdiction of all municipalities in the country. These situations were the cause of decisive interventions throughout the municipal terrain, this was an immediate necessity because the assessment reports of all municipalities conclusively showed substantive evidence of several acts of fraud, financial mismanagement, corruption, serious irregularities, and a wide variety of related wrongdoing. The lack of capacity of the provincial and national governments to solve such major problems called for a significant emphasis on the 'Turn-Around Strategy' ([34], pp. 25–26).

The central government's initiative named 'Turn-Around Strategy' began in 2009 as a new strategy to solidify municipalities' position as the foundation of the local, provincial, and national efforts of reconstruction and development. The aims and objectives were rooted in democratisation of society and a continuously growing economy. These aspirations could only be realised through the creation of a local government that was honest, sustainable, effective, and efficient; such a local government is an integral component of a future developmental state. The vision of the state and society was to work together to become a developmental state through a path leading to development, economic growth, and social justice.

These principles and actions are the heart of South Africa's developmental local government, the foundation of the country's developmental state. Within this context, the strategy was set to fight against worrying signs and trends in the municipal terrain. For many years, these undermined the success and progress in the fight for a democratic and economically growing society. This strategy was planned and

#### *Rethinking Performance Management: Realities in South African Municipalities DOI: http://dx.doi.org/10.5772/intechopen.107960*

implemented in a South African context facing 'great development risk in case the local government fails' ([35], p. 3).

The Local Government Turnaround Strategy (LGTAS) concentrated on counteracting the existing forces that continuously undermined the country's local government systems. The research undertaken led to plans, designs, and implementation of the strategy. This began with pinpointing a number of the problems and challenges. These included the 'systemic factors' that were linked with the local government 'models'; political factors; skills and capacity constraints and difficulties; legislative and policy factors; accountability systems weaknesses; intergovernmental weak support and oversight; and inter-governmental systemic fiscal issues ([35], p. 5).

Five years later the South African Department of Planning, Monitoring, and Evaluation produced a critical review following up on the previous reports. A wide variety of empirically based research projects dealing with the country's local municipalities also followed up on previous reports. The official government research document dissected the challenges faced by local government. The document was produced in a context where substantial changes had taken place in the political and administrative terrain as well as that of fundamental local government reform. These reforms included the amalgamation and rationalisation of municipalities; challenging and wide mandate of the developmental local government terrain and a significant number of challenges that remained in the processes of the planning and implementation of the 'new system' leading to success [36].

Research shows conclusively that there is a need to stop the continuous appointment of 'political deployees', especially in technical and administrative positions. This is crucial because the clear separation between politicians and administrative employees will play a key role in increasing the possibilities of municipal success. Once completed, leadership must support the initiative to development of skills, and future strategies for technical professionals and senior managers. These will address the existing operational gaps in leadership, operational, and management capabilities of government. This will be in important areas such as human resource management, development planning, service delivery, performance management, governance, and community engagement ([36], p.5).

The report confirms that the inheritance of skills and capacity gaps has been perpetuated during the new democratic era, this has negatively performance management. There is a significant number of municipalities with such gaps that have been exacerbated by the restructuring and amalgamation of municipalities throughout South Africa ([36], p. 11). In terms of governance, the research findings pinpointed many challenges that existed in all categories of municipalities. These were related mainly to political patronage and interference, lack of political leadership, complex reporting demands, complicated policy agenda, and weak institutional skills and abilities in many municipalities ([36], pp. 29–30). Amongst several problems, continuous political interference, problems in the political and administrative relations leading to poor compliance and weak oversight by both groups, weak skills and knowledge bases and administrative and political leadership and employees staff inability to respond to policy expectations and administrative demands were the cause of inefficient and ineffectiveness ([36], pp. 30–31). These problems discouraged honest communication with the communities. These were also related to the role of confusion in the political section of the municipalities that involved the Speakers, Mayors, and Chief Whips, as well as ward and proportional representation councillors. These led to a lack of transparency in the committee work of the mayor's office, ineffective ward committees, and administrative confusion ([36], p. 33).

#### **7. Recommendations**

In the quest to rethink performance management, leadership, interacting with employees, providing constructive criticism, and working as a team are all important components that leads to effectiveness in performance management. Even when it comes to the challenging job responsibilities of managing a process your employees do not like or find valuable, managing a paper process, gathering data, and keeping other managers motivated to give employees helpful feedback, there are solutions available that make these chores more manageable. The six tactics listed below can help you manage performance effectively.

#### **8. Identify and share the organisation's goals and performance objectives**

This is the first step towards effective performance management since without clearly defined performance expectations, employees cannot accomplish company objectives. When describing goals or organisation objectives, managers do not always make themselves as clear as they should, and frequently, employees do not ask followup questions when they are unsure or puzzled about anything. By being as transparent and communicative as you can be, avoid these pitfalls.

Using a goal-tracking program, making a chart in the workplace, sending out emails, handing out flyers throughout the office, conducting meetings, or doing each of these things individually are all ways to establish and describe goals. When laying down goals and objectives, it's crucial to say them again so that they stick, provide visuals (such an office chart and emails) so that staff members have a reference, and, most importantly, schedule meetings to assess how things are going.

#### **9. Use technology to enhance the performance management system**

It could be time to think about trying out performance management software if you are not already. If you already have one and it is not saving you any time, your team is complaining about it, or employee engagement is low, it might be outdated and in need of an upgrade. It is essential that you start using performance management software or at the very least start thinking about upgrading because it may greatly streamline your performance management techniques.

A strong performance management software system includes both conventional reviews and 360-degree evaluations, is user-friendly for employees, has an intuitive dashboard design, enables rapid and effective reporting, and, of course, promotes employee growth. The program will assist you and your staff in maintaining control of the situation so that your business always operates effectively. Here are a few helpful illustrations of more recent performance management tools.

#### **10. Provide regular performance feedback**

While it is crucial for every organisation to communicate both company and individual goals properly, communication alone will not get you very far. Your supervisors will also need to periodically check in with teams and staff members to assess progress and offer comments. Good performance feedback highlights opportunity

#### *Rethinking Performance Management: Realities in South African Municipalities DOI: http://dx.doi.org/10.5772/intechopen.107960*

areas with a clear route for progress while reinforcing strong skill sets and positive behaviours. Feedback of this nature cannot wait until HR begins the annual review cycle. Instead, it ought to be communicated in real time and incorporated into the business culture (it should also start during the interview process, but that is another post for another time). The best method to support your staff and their work while also effectively shaping it is to provide timely performance feedback. If you now use performance software, it ought to be able to assist you in gathering frequent feedback. If not, you can get very far using free tools like Google forms, Survey Monkey, or even just a straightforward email request.

#### **11. Peer reviews**

Utilising peer reviews, commonly referred to as 360-degree reviews, is another excellent technique to promote efficient performance management. Once more, most performance management software packages have this feature. Peer reviews are beneficial because they give colleagues the chance to complement one another, draw attention to their best qualities, and identify areas for growth. While observing their co-workers, this activity teaches workers how to collaborate, enhance communication, and self-evaluate. This procedure does require some managerial or human resources control, and all peer reviews should be examined to make sure that no claims, worries, compliments, or other remarks go overlooked or unanswered.

#### **12. Reward and recognition**

Applying rewards and engaging in proactive management are two ways to ensure results at work. This simply means that there is never any need for penalties at work because your staff always know what is expected of them. As a result, everyone is placed on an equal playing field with clear expectations and measurable objectives. Rewards and incentives are also a powerful tool for letting workers know that you value them, appreciate their efforts and hard work, and want them to keep up the good work.

Similarly, having an effective "HR Toolbox" in place that enables managers to identify slipping workers early on and offer constructive criticism aids in stopping an issue before it even arises. Thus, "Pre-emptive Management" is all about interacting with your staff to let them know what is expected of them, what is not, and how to achieve the objectives that have been set.

#### **13. Feedback sessions**

Setting aside time to meet with your team and discuss how things are doing with your stated goals and objectives, also known as progress reports or progress meetings, is crucial for achieving those goals and objectives. These meetings can be held once a week, once a month, or whenever frequently you see fit. Make sure your team is aware that attendance is required. This improves the accuracy of the progress feedback and enables you to create plans. Never get together for the sake of getting together. You want to have a topic that is both important to discuss and worth talking about. Meetings may be held less regularly and used as checkpoints throughout the year if you feel that everything is going well, that employees are receiving performance feedback

and acting on it, and that the business is Never get together for the sake of getting together. You want to have a topic that is both important to discuss and worth talking about. Meetings may be held less regularly and used as checkpoints throughout the year if you feel that everything is going well, that employees are receiving performance feedback and acting on it, and that the business is moving in the right direction. Have meetings as soon as possible if you wish to discuss any difficulties, worries, questions, or ideas. Maintaining your team's involvement, knowledge, and awareness is crucial to the seamless operation of the machine that is your company. Moving in the right direction. Have meetings as soon as possible if you wish to discuss any difficulties, worries, questions, or ideas. Maintaining your team's involvement, knowledge, and awareness is crucial to the seamless operation of the machine that is your company.

#### **14. Conclusions**

The findings of the present empirical study bare serious similarities with research undertaken by the South African government state departments, therefore, drawing a conclusion pointing to the reality that 'the more things change the more remain the same'. The municipalities need to undertake radical changes given the harsh realities of the present, especially those associated with the Covid-19 pandemic, perpetual corruption, xenophobic uprisings, increased poverty, and climate change-ridden devastations in the Eastern Cape and KwaZulu.

The priority lies in the stabilisation of the political-administrative interface challenges that are instrumental in the municipalities' downfall. One of the key issues to be addressed is political patronage in which employees are appointed based on political and/or factional support of the ruling party. It is a fundamental need that political representatives are separated from the administrative staff. This should form the basis for the employment of well-educated and highly skilled administrators who after following developmental plans, designs, and advanced training can upgrade the municipal performance significantly.

These initiatives can only be successful through a decisive movement aimed at the improvement of the intergovernmental municipal system and existing protocols at all levels. Such a move will add strength to the intergovernmental protocols that exist between district and local municipalities. Such a movement will be important to solve the existing problems associated with the existing conflicts regarding the allocation of existing resources and responsibilities.

The improvement of participatory governance and accountability at all municipal levels needs to be a key aim and objective. For this to become successful, a performance management system that is well-planned, structured, and implemented is a key priority. This is because only such a system can provide solutions to the municipality and its citizens since it is rooted in a collective and forward-looking leadership and management. This can be achieved through the unification of community-based, political and institutional initiatives planned and implemented with one aim and objective: to strengthen and develop an active and decisive public participation energy and action with the strong alliance of local community leadership, civil society, and Ward Committees.

Once these initiatives are introduced and developed, South African municipalities will be strengthened as there will be active support and oversight from both provincial and national governments. Concurrently, active community participation will increase in the process.

*Rethinking Performance Management: Realities in South African Municipalities DOI: http://dx.doi.org/10.5772/intechopen.107960*

### **Author details**

Zwelinzima Ndevu Stellenbosch University, Stellenbosch, South Africa

\*Address all correspondence to<EMAIL_ADDRESS>
© 2022 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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#### **Chapter 13**

## ICT as the New Age of Development of HR Management

*Kiril Anguelov*

#### **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.

 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:

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:

#### **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

#### *ICT as the New Age of Development of HR Management DOI: http://dx.doi.org/10.5772/intechopen.106929*

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 reengineering 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

#### *ICT as the New Age of Development of HR Management DOI: http://dx.doi.org/10.5772/intechopen.106929*

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, cloudbased, 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 peopleoriented." 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 coordination, 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 [27–29]. 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

#### *ICT as the New Age of Development of HR Management DOI: http://dx.doi.org/10.5772/intechopen.106929*

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**.

#### **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.

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**

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**).

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.

#### **Table 1.**

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

**Figure 2.**

*Groups of human resource management processes in a classical aspect.*

#### **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:

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:

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:

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.

#### *ICT as the New Age of Development of HR Management DOI: http://dx.doi.org/10.5772/intechopen.106929*

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:

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:

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:

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:

#### **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.

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

where *E*—effectiveness of the use of cost for AI in HR management; *Cistart*—costs for execution of operation, that is, creating added value without the use of an AI solution, \$; *Cmfinal*—costs for execution of operation m, creating added value with the use of an AI solution, \$; *Yqstart*—costs for execution of non-value-added operation q without the use of an AI solution, \$; *Ypfinal*—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:

	- 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;

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:

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.

#### **Acknowledgements**

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

#### **Author details**

Kiril Anguelov Technical University of Sofia, Sofia, Bulgaria

\*Address all correspondence to<EMAIL_ADDRESS>
© 2022 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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