Employees' Relationship Management

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European Online Journal of Natural and Social Sciences 2013; www.european-science.com vol.2, No. 3(s), pp. 922-936 ISSN 1805-3602 Employees’ relationship management: Realizing competitive advantage through Information Technology

Iran Abazari1, Mohsen Zakeri2 1Tabriz Science and Research University, Iran; 2Pardis Aras International University of Tehran, Iran

Abstract (Rogers, 2008, p.48). Like any other new management concept, ERM is viewed as an advantageous approach Employee relationship management (ERM) con- that offers mutual values for employees and employers. stitutes an emerging trend of managing human re- Major values promised to employees are the greatest sources by building and maintaining individualized and possible satisfaction of their individual needs, while the mutually valuable relationships with employees based increased attraction, retention, motivation and perfor- on information technology. However, given the early mance of employees are values promised to employ- and still emerging state, there is little knowledge and ers (e.g., Keim& Fritsch, 2008; Schweitzer & Lyons, agreement regarding ERM. Hence, the current paper 2008; Wargborn, 2009). attempts to clarify the concept and derive research im- So far, ERM has mainly been propagated by prac- plications. The formation and the strategic, procession titioners such as consultants (e.g., Moss, 2007; Rowe & and technological components of ERM are derived and Tucker, 2006) and software vendors (e.g., Lermusiaux& discussed based on the Customer Relationship Manage- Snell, 2005; Shapiro, 2007). In addition, there are a ment (CRM) concept that preceded it. As a result, a first few organizations that seem to have already adopted general outline of an interesting and ambitious concept some facets of ERM (see e.g., the results in Balthaz- is presented. Based on the outline, major implications ard, 2006 and the examples in Rowe & Tucker, 2006). for further conceptual elaboration, theoretical founda- However, given its early and still emerging state, there tion and empirical evaluation of ERM are derived to is currently little knowledge and agreement regarding propose directions for future research. ERM. A commonly accepted definition is missing, and the rare explicit delineations are often vague or yield Keywords: Employee and Talent relationship rather heterogeneous comprehensions, such as ERM management, Candidate relationship management, as a certain strategy (e.g., Wargborn, 2009), as certain Internal relationship marketing, Electronic human HR practices (e.g., Balthazard, 2006), or as certain HR resource management information systems (e.g., Shapiro, 2007). Moreover, there are comparable terms, such as “talent relationship Introduction management” (e.g., Katoen&Macioschek, 2007), “human capital relationship management” (e.g., Rowe & For some time now, the set of suggestions on how Tucker, 2006) or “candidate relationship management” to manage human resources has comprised an addi- (e.g., Keim& Fritsch, 2008), although it is unclear tional member named employee relationship manage- whether these terms denote the same concept. ment or ERM. Basically, ERM has been openly bor- This current tension between the promises and the rowed from the widely used Customer Relationship ambiguity of ERM clearly constitutes an unfavorable Management or CRM and aims at transferring prin- situation for both research and practice. On one hand, ciples of technology-based relationship building from a valuable idea for improving human resource manage- the customer to the employee domain. A general defi- ment may be overlooked; on theother hand, an insub- nition hence understands ERM as “… strategy, pro- stantial fad may be pursued. Hence, there is a need for grams and technology to effectively manage how firms conceptual clarification of ERM to decide whether and relate to prospective, current and former employees” how it should be considered in future research and prac-

Corresponding author: Mohsen Zakeri, Pardis Aras International University of Tehran, Iran. Email: [email protected]

922 Social science section tice. The current paper therefore aims at offering a clari- nology-enabled realization of relationship marketing fication of the concept by generating an outline of ERM emerged. Initial CRM-systems were developed, con- and, subsequently, deriving implications for research. tinuously improved and increasingly adopted (e.g., Ko- In the outline, the formation and the components of torov, 2003; Parvatiyar & Sheth, 2001). Hence, a second ERM are discussed and subsequently summarized in a rationale for CRM was the “technology push”. synopsis. Given that ERM constitutes a frank analogy of CRM has since been widely adopted in practice CRM, these parts are derived from and compared with and constitutes a well-established research area, and the formation and components of CRM. Subsequently, even the current “paradigm” of marketing research the conceptual elaboration, the theoretical foundation (e.g., Harker& Egan, 2006; Palmer, Lindgreen, &Van- and the empirical evaluation are substantiated as major hamme, 2005; Zablah, Bellenger, & Johnston, 2004). implications to offer guidance for future research. In generalizing the concept of CRM the idea of “general relationship management” is now being discussed. Review of related literature This idea states that firms should compete by developing and maintaining successful relationships with all Formation of their stakeholders, i.e.,with employees, suppliers, Understanding the formation of a management investors, etc. in addition to customers (e.g., Frow& concept as historic occurrence and development, the Payne, 2009; Gummeson, 2002). Evidently, general formation of ERM should constitute a first aspect for relationship management asserts generalizable rela- clarification — given that this elucidates the contextual tionship management principles and not only sug- settings and the respective motivations for the concept. gests, but also postulates the transfer of the concept to Since the formation of ERM is explicitly based on the the HR domain (e.g., Frow& Payne, 2009). preceding formation of CRM (e.g., Keim& Fritsch, ERM formation 2008), the formation of CRM is first briefly traced and With the appearance of ERM roughly a decade then compared to the formation of ERM. ago the relationship management idea was occasion- CRM formation ally picked up in practice and research. The fact that Tracking the formation of CRM requires going nearly every ERM contribution explicitly referred to back about three decades to when relationship-orien- CRM (e.g., Gillenson& Sanders, 2005; Keim& Frit- tation in marketing appeared as an alternative to the sch, 2008; Schweitzer & Lyons, 2008) substantiates then prevailing transaction-orientation. Transaction- the importance of CRM in the formation of ERM. oriented marketing focused on offering standardized The existence of a widely implemented earlier concept products/services in anonymous, passive and uniform thus clearly contributed to the formation of ERM, so mass markets. Thus, the main goal of marketing con- this “conceptual push” constitutes a first explanation sisted of sale-transactions using conventional marketing for ERM formation. Beyond this, however, there were methods (e.g., Grönroos, 1997). When markets became and are remarkable parallels to the contextual settings of increasingly saturated and hyper-competitive, however, CRM formation. To begin with, severe changes in labor more and more buyer markets emerged; this created an markets were expected based on demographic changes, increasingly precarious situation for many corporations. and have partly already taken place. The shortage of As transaction-oriented marketing was not able to sat- qualified employees turned numerous labor markets isfactorily cope with this situation, the suggestion was into sellers’ markets with a clear shift of power toward made to replace it with “relationship marketing”, which employees. This lack of crucial resources constituted is a concept that aims to build long-term relationships an increasingly precarious situation for more and more that are valuable for both customers and organizations corporations, and there was clear doubt in practice as (e.g., Berry, 1983; Grönroos, 1994). Thus “market pull” to whether conventional HR concepts would be able forces are cited as a first explanation for the formation to cope with it successfully (e.g., Michaels, Handfield- of CRM. In addition, marketing-related information Jones, & Axelrod, 2001; Rowe & Tucker, 2006). As was technology forged ahead. An ever-increasing range of the case with the formation of CRM, the formation of customer-related data and functions was offered, and ERM can thus be explained by “market pull”. More- the advent of the Internet created previously unknown over, HR information technology made progress, as possibilities for communicating and interacting with an well, and an increasing amount of data and functions even larger number of distant customers (e.g., Paas & became available. Likewise, the increasing opportuni- Kuijlen, 2001; Paulissen, Milis, & Brengmann, 2005). ties for communicating and interacting with employ- Given these possibilities, the idea of CRM as a tech- ees via the Web led to the development of “electronic

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HRM” (e.g., Stone & Lukaszewski, 2009; Strohmeier, the largely overlapping principles of “personalization” 2007), and claims were made to utilize corresponding (e.g., Jackson, 2007; King& Burgess, 2008), “mass technologies, such as self-service, to realize relation- customization” (e.g., Paas & Kuijlen, 2001; Pine, ship management in HR (e.g., Dorgan, 2003; Wilky& 1993), and “one-to-one” orientation (e.g., Peppers Christie, 2000; Yang, Stafford, &Gillenson, 2011). & Rogers, 1993; Zablah et al., 2004) the consistent Again paralleling the formation of CRM, a “technology individualization of relationships constitutes the key push” furthered the idea of ERM as well. In contrast to principle for realizing mutual value. To generate au- CRM, however, ERM is neither being frequently put thentic value, customers must now be treated as dis- into practice, nor is it widely researched. tinct and unique individuals with distinct and unique needs, rather than as an anonymous, homogeneous Components mass. Creating individual value for customers should The term “components” refers to the different ele- then contribute to their attraction as well as their re- ments that constitute a specific management concept. tention—two particularly crucial aspects in saturated, Of course, knowledge of the design of and the inter- highly competitive markets. In this respect, customer dependency between such conceptual elements is vital value is conceptualized in a broad sense, referring not for the clarification of the concept. To clarify major only to the value created directly by products and cor- ERM components, individual CRM components are responding services, but also indirectly by considering examined and subsequently applied to the HR domain. the psychological and social needs of the customer. The literature in this instance reveals a heterogeneous By creating genuine customer value, organizations understanding of what the components of CRM are, create a satisfied and therefore loyal customer base, however, there are different attempts to create a com- which in turn creates organizational value through re- prehensive common understanding by viewing CRM peat purchases by those customers and recommenda- as a specific strategy which is operationalized through tion of the company to others. Hence, organizations corresponding processes and realized through cor- that succeed in creating genuine value for customers responding information systems (Boulding, Staelin, realize a competitive advantage compared to organiza- Ehret, & Johnston, 2005; Chan, 2005; Frow& Payne, tions that only focus on simply selling as much product 2009; Paas&Kuijlen, 2001; Parvatiyar & Sheth, 2001; as possible (e.g., Boulding et al., 2005; Payne &Frow, Paulissen et al., 2005; Zablah et al., 2004). Hence, 2005). In increasingly strained markets such relation- strategy, processes and information systems constitute ships should not only be established with current cus- three interrelated conceptual components, which are tomers, but also with former and potential customers elaborated in more detail below. (e.g., Payne &Frow, 2005; Zablah et al., 2004). How- Strategy ever, this strategy should only be used with customers Introducing both concepts the following section for whom the organization can actually create value, elaborates on the strategy component of CRM and and who, in turn, are actually able to create value for the subsequently derives major characteristics of ERM organization (e.g., Grönroos, 1994; Zablah et al., 2004). as a strategy. In summary, CRM initially represents a specific CRM strategy strategy, i.e., an overall plan for establishing a favorable It is commonly emphasized that CRM should be market position for the entire organization. Since this understood as a clear strategic endeavor - either as a is only a “generic” strategy organizations must refine comprehensive customer strategy (e.g., Payne &Frow, and customize for their specific situation and require- 2005) or even as an entire business strategy (e.g., Ko- ments (e.g., Zablah et al., 2004). The strategic status torov, 2003). Owing to the contextual settings of its oc- clearly underlines the extent and ambition of the con- currence this strategy is aimed at building long-term cept as opposed to a mere operative or tactical under- mutually valuable relationships between an organiza- standing, such as the frequent misunderstanding of tion and its customers: “The core of CRM is the (…) CRM as an operative IT project (e.g., Frow& Payne, dual creation of value.” (Boulding et al., 2005, 159; see 2009). The strategic component is therefore seen as also Frow & Payne, 2009; Zablah et al., 2004). The ra- crucial, and the failure to create a clear-cut strategy tionale behind this is as follows: in saturated markets constitutes the main reason for the failure of CRM with increasingly demanding customers success can no projects (e.g., Chan, 2005; Frow& Payne, 2009). longer be assured by focusing on products and transac- ERM strategy tions alone; instead, customers and their specific needs Concerning ERM there are reasonable argu- must also be carefully considered. As is expressed in ments for conceptualizing ERM as an HR domain

Openly accessible at http://www.european-science.com 924 Social science section strategy (e.g.,Moss, 2007; Rogers, 2008). Only a As a first component, ERM can therefore be strategic comprehension of ERM will meet the understood as a specific HR strategy, and thus as scope and ambition of the concept and avoid the an overall plan to gain competitive advantages in drawbacks of operative misunderstandings of ERM relevant labor markets, and beyond also in general as a mere IT implementation project. markets. Being a “generic” strategy, ERM must be Referring to the mentioned labor market settings it customized by the organizations that adopt it. should be noted that the objectives of the strategy analo- gously lie in long term relationships of organizations and Processes employees which create mutual value (e.g., Schweitzer Having elaborated on the strategy component, & Lyons, 2008). Again, the consistent individualization the following section deals with CRM processes as of these relationships constitutes the key principle of an operationalization of CRM strategy, and, based value creation, and there are clear calls for “personaliza- on this, develops an understanding of ERM pro- tion” (e.g., Gillenson & Sanders, 2005), “mass custom- cesses necessary to operationalize ERM strategy. ization” (e.g., Rowe & Tucker, 2006) or “one-to-one” CRM processes orientation (e.g., Wilky & Christie, 2000) in ERM. Con- Since reaching the objectives of a strategy depends sidering individual employee needs carefully, and thus largely on an effective operationalization, a second creating genuine employee value, can contribute to the closely related component of CRM is processes, which attraction and retention of qualified employees - even are understood as a set of related successive activities and particularly in increasingly strained labor markets that have to be performed to achieve individualized, (e.g., Rogers, 2008; Keim & Fritsch, 2008). Moreover, mutually valuable relationships. As a basic principle, this should also clearly strengthen employee motiva- all CRM processes should be consistently individual- tion and performance (e.g., Cameron & Miller, 2008; ized. For instance, instead of flooding customers with Wargborn, 2009). In this respect, employee value should mass-mailing ads in marketing, only highly selective also be conceptualized in a broad sense. In addition to offers that are specifically geared toward the interests the economic needs (e.g., salary, bonuses, benefits) of of individual customers should be advertised. In this employees, their psychological (e.g., self-actualization, way, homogeneous mass activities have to consistently competence, achievement) and social (e.g., recogni- be replaced with customized measures (e.g., King & tion, relatedness, trust) needs require thorough consid- Burgess, 2008; Paas & Kuijlen, 2001). eration, as well (Schweitzer & Lyons, 2008). To determine reasonable processes, existing cat- By providing genuine value for individual employ- egorizations use the textual area of processes to dis- ees, organizations can create a satisfied and therefore tinguish marketing, sales and service as process do- loyal workforce that will in turn create organizational mains (e.g., Ngai, 2005; Parvatiyar & Sheth, 2001), value through continuous motivation and performance. while additionally specific process features are used ERM should therefore provide organizations with a to distinguish collaborative, operational and analyt- competitive advantage in relevant labor markets, but be- ical activities as process characteristics (e.g., Chan, yond that, also in their generic markets. Anticipating se- 2005; Paas & Kuijlen, 2001). rious labor market shortages, such relationships should The combination of process domains and pro- not only be built with current employees, but should cess characteristics as categorization criteria offers an also be sought with former employees (“alumni”) and instructive categorization of CRM processes, which potential employees (“candidates”). Again, relation- hence is employed in the following (see Fig. 1). ships should be established selectively only with those Collaborative processes refer to all (“front of- individuals who are actually able to create value for fice”) activities in marketing, sales and service that the organization and whose needs can actually be met involve customer interaction. Since the building and by the organization (e.g., Gillenson& Sanders, 2005; maintenance of individualized relationships with cus- Schweitzer & Lyons, 2008). Obviously, this strategy not tomers inherently involves ongoing interactions, the only corresponds directly to the CRM strategy but also CRM strategy requires direct collaboration. “Collab- brings to mind the “human relations” concept which – oration” emphasizes the active role of the customer though somewhat faded from prominence – is aimed in (e.g., Gummeson, 2002). In marketing, for instance, a very similar fashion at positive relationships with em- instead of passively receiving ads, customers should ployees by considering their socio-psychological needs actively collaborate by identifying the type and con- (e.g., Miles, 1965; Roethlisberger & Dickson, 1939). tent of the individual offers they are interested in.

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To achieve collaboration, different direct modes mailing the material. In this way, operational CRM re- (“touch points”, such as customer centers) and me- fers to the completion of manifold administrative tasks. diated modes (“channels”, such as e-mails) are dis- Finally, analytical processes refer to the collection, tinguished (e.g., Chan, 2005; Payne &Frow, 2005). preparation and provision of in-depth information Following the principle of individualization, ev- used to support decisions in marketing, sales and ser- ery customer should basically be offered the mode(s) vice (e.g., King & Burgess, 2008; Zablah et al., 2004). he or she prefers. For instance, if a customer dislikes Resulting from the strategy, particular informa- being contacted by telephone, this channel should, of tion needs to relate to individual customer preferences course, not be used (even for offers that are welcome). with regard to operations and collaborations, the his- If multiple collaboration modes are offered they have tory of individual customer collaborations and opera- to be carefully coordinated to avoid disruptions - es- tions, and reasonable future customer operations and pecially if customers switch between different modes collaborations. For example, marketing would obvi- during collaboration (e.g., Chan, 2005; Payne & Frow, ously profit from having in-depth information about 2005). In brief, the purpose of collaborative CRM is to individual customers' preferences, the history of indi- offer coordinated collaboration options and use them vidual customer contacts and, in particular, reasonable for the ongoing collaboration with customers. future individual customer offers and collaborations. Operational processes refer to all administrative Within the frame of analytical CRM, then, a larger (“back office”) activities in marketing, sales and service set of specific analyses – salient examples are churn, that do not involve direct customer interaction. Main- shopping cart or customer lifetime valueanalysis – was taining individualized, mutually valuable relationships established to satisfy these information needs (e.g., of course entails many operational activities that are di- Torggler, 2009). Briefly, all operational and collabora- rectly founded on the CRM strategy. Within marketing, tive decisions in marketing, sales and service should be for instance, an individualized direct-mailing campaign based on adequate information, and analytical CRM requires performing certain tasks, such as printing and is responsible for providing it.

Figure1. Categorization of CRM processes

In summary, as a basic principle the strict individ- of all resulting process segments offers a general in- ualization of all CRM processes is seen as the crucial struction on how to reach the strategic objective of cre- precondition of generating customer value. Using the ating individualized customer value, CRM processes combination of process domains and process charac- operationalize CRM strategy, and, hence, constitute a teristics offers an instructive categorization of the over- second interrelated conceptual component. all activities necessary for CRM. Firstly, the process ERM processes domains of marketing, sales and service uncover that ERM strategy also requires specific processes that CRM aims at a comprehensive and integrated con- offer operational measures to achieve the objective of sideration of all customer related activities. Secondly, individualized, mutually valuable relationships. There the process characteristics uncover that each of these is latent dissent in the current literature regarding the domains is to be realized via collaborative, operational question of which processes are reasonable for ERM and analytical activities. Since the integrated handling initially. A first group exclusively focuses on recruit-

Openly accessible at http://www.european-science.com 926 Social science section ing (e.g., Keim& Fritsch, 2008; Lermusiaux& Snell, as well. Therefore this categorization is used in the fol- 2005; Moss, 2007), which explains the term “candi- lowing (see Fig. 2). date relationship management”. By contrast, a sec- Collaborative processes refer to the interaction be- ond group focuses on all customary HR domains, i.e., tween organization and employees in recruiting, devel- beyond recruiting also development, compensation, opment, compensation, etc. — things that are required etc. (e.g., Dorgan, 2003; Rogers, 2008; Schweitzer & for building and maintaining the intended relationships. Lyons, 2008). Since only this broader view considers “Collaboration” emphasizes a far more active role for all facets of the concept it is subsequently pursued as employees, who are empowered to co-decide on the ac- “ERM”, while “candidate relationship management” tivities related to them (e.g., Rowe & Tucker, 2006). In is seen as a domain-specific sub-concept. Basically, development, for instance, career paths are collabora- the domains of recruiting, development, compensa- tively determined to balance organizational needs and tion, etc. of course constitute familiar HRM func- individual preferences. Collaboration thus indicates a tions. However, due to the individualization principle, basic change from performing activities to employees the major difference lies in the customization of all to performing activities with employees. Again it has to activities toward single employees. In development, be decided which direct (e.g., employee support desk) for example, career paths have to be individualized and mediated (e.g., employee self-service) collabora- for each employee rather than offering uniform cation modes to offer, while the individualization prin- reer paths and may therefore also include unique el- ciple involves offering the modes preferred by a specific ements. For example this might include a temporary employee (e.g., Dorgan, 2003; Moss, 2007). Offering assignment at an Italian subsidiary for an “Italophile” diverse alternative collaboration modes again requires a employee or an individual career path that accommo- careful coordination of modes in order to avoid disrup- dates a planned parental leave for an employee who tions when modes are switched. has a desire to have a child. Following the categoriza- Operational processes refer to all administrative tion of CRM, beyond process domains additionally activities related to recruiting, development, compensa- process characteristics, i.e. the distinction of collab- tion, etc., as required by the strategic aim of the concept. orative (e.g., Rowe & Tucker, 2006), operational (e.g., The main difference between this and current opera- Keim& Fritsch, 2008) and analytical (e.g., Schweitzer tional HR activities lies in the consistent orientation to- & Lyons, 2008) activities, are suggested for categoriz- ward individual employees. In operative compensation, ing ERM processes. The combination of domains and for example, payroll processing changes from calculat- characteristics as categorization criteria hence offers ing identical salary components to calculating different an instructive possibility to categorize ERM processes and even unique components for each employee.

Figure 2. Categorization of ERM processes

Finally, analytical processes refer to the collection, laborative ERM (e.g., Lermusiaux& Snell, 2005; Rowe preparation and provision of the in-depth information & Tucker, 2006). Major information needs to refer to required to support decisions in operational and col- individual employee preferences, to the history of indi-

Openly accessible at http://www.european-science.com 927 Social science section vidual operations and collaborations and, in particular, urgent need for efficient implementation. As a conse- to reasonable future operations and collaborations. For quence, CRM systems offer a broad spectrum of op- instance, operational and collaborative recruiting will erational functionalities that are commonly subsumed obviously profit from information concerning concrete under the categories of marketing, sales and service preferences (e.g., working conditions, pay, career), the automation (e.g., Torggler, 2009). Within these cat- complete contact history (e.g., channels, participants, egories the extensive mass customization of activities results), and suggestions for reasonable future activities constitutes a crucial general functionality. The mass (e.g., invitation to a recruiting event, information about customization of advertising content allows the gen- a future vacancy) relating to a specific candidate. Given eration of individualized mailing ads, to give but one this fact, ERM obviously requires broad and deep infor- example within operational marketing. mation that is not offered by current analytical activities Naturally, the analytical processes also require and therefore has to be provided based on complemen- advanced information systems support, so CRM tary data and advanced analysis methods (e.g., Strohm- systems offer sophisticated analytical functionalities eier & Piazza, 2010). (e.g., Chan, 2005; Torggler, 2009). Beyond merely In brief, ERM processes are comprised of col- ascertaining and querying relevant data, advanced laborative, operational and analytical activities “predictive” analytics are offered, which not only within the familiar, however consistently individu- describe but also predict relevant phenomena and alized HR domains. In this way, ERM processes recommend suitable activities (e.g., Chen & Popo- operationalize ERM strategy and thus constitute a vich, 2003; Paas & Kuijlen, 2001). A simple exam- second, closely interrelated ERM component. ple: in analytical sales the “shopping cart” analysis constitutes a familiar predictive analysis that is used Information systems to inform about customers’ specific product prefer- Completing the discussion of conceptual com- ences and to recommend individual product offers. ponents, the following section presents the features In summary, CRM systems comprehensively of information systems, which are used as “enabling map CRM processes (for a deeper delineation e.g., technology” to realize CRM processes, and, based Torggler, 2009). Since the processes cannot be imple- on this, elaborates on features of information sys- mented efficiently without corresponding CRM systems, which are necessary as “enabling technology” tems, these are compulsory “enablers” of CRM (e.g., to realize ERM processes. Chen & Popovich, 2003; Chan, 2005). In this way, CRM (information) systems CRM systems offer the necessary realization of CRM In order to achieve the intended objectives the re- processes, and with it, the underlying CRM strategy. spective CRM processes require an efficient realization. CRM systems thus constitute the third closely interre- Given the type and scope of the activities suggested, the lated conceptual component of CRM. CRM therefore use of suitable information systems is an obvious, even represents a management concept based on informa- indispensable choice (e.g., Chen & Popovich, 2003; tion systems as a compulsory “realization” compo- Parvatiyar & Sheth, 2001; Chan, 2005). nent, while CRM, of course, cannot be reduced to To begin with, the need for ongoing collaboration CRM systems (e.g., Payne &Frow, 2005; Zablah et al., with numerous, mostly distant and dispersed custom- 2004). By now, there is a voluminous market of pre- ers’ demands information technology support. Hence, packaged, yet customizable CRM systems. These are current CRM systems offer a larger set of collaborative either implemented as a single CRM system or as a set functionalities, such as tools for realizing and admin- of interrelated systems that offer the necessary func- istering special collaborative units (“customer inter- tionality (e.g., Paulissen et al., 2005; Torggler, 2009). action centers”) or for managing and maintaining all ERM (information) systems customer contacts across different touch points and Paralleling CRM, ERM processes need to be im- channels in a coordinated way. Among the techno- plemented efficiently as well. Given that type and scope logical channels in particular, web-based collabora- of depicted processes are not suitable for “manual” tion (“e-commerce”) plays an outstanding role and processing information systems thus again are an in- is therefore widely supported (e.g., Torggler, 2009). dispensable “enabler” of ERM, what is to be discussed Web-based product support is one notable example of in the following. Initially information systems have to collaborative service. In addition, since the individu- offer collaborative functionalities, which are necessary alization of operational activities in marketing, sales for the ongoing interaction with numerous employees. and service clearly boosts operational effort, there is an Again, these functionalities should refer mainly to the

Openly accessible at http://www.european-science.com 928 Social science section systematic administration of relationships – for in- ERM systems constitute indispensable “enablers” of stance, with tools for managing specialized collaborative ERM (e.g., Lermusiaux & Snell, 2005; Rowe & Tuck- organizational units (“employee interaction centers”). er, 2006). Providing the necessary realization of ERM In addition to the administration of collaboration, spe- processes, and with it, of the underlying ERM strategy, cific technical channels for collaboration have to be of- they thus constitute the third interrelated component of fered. Due to its broad potential for application as well ERM. Compared to previous HR approaches, this is the as its high efficiency, web-based collaboration plays an first time a concept has been suggested that requires the important role, and there are clear calls for using ex- use of information systems as compulsory “realization isting e-HRM technologies to realize collaboration in component”. Again, however, ERM systems should not ERM (e.g., Dorgan, 2003; Wilky& Christie, 2000; Yang be equated with the entire concept. The obvious tech- et al., 2011). A prominent example: employee self- nology orientation of ERM indicates its close affiliation service functionalities (e.g.,Marler & Dulebohn, 2005) to e-HRM. Understanding e-HRM as a concept that could be used to efficiently implement the intended uses information technology for both networking and empowerment of employees (e.g., Hamerman, 2002). supporting different actors in their shared performing of In sum, ERM systems must provide collaborative func- HR tasks (Strohmeier, 2007) allows us to classify ERM tionalities to offer, administer and coordinate different as one peculiar way of implementing e-HRM. Com- modes of collaboration with employees. Operational pared to the currently often technology-driven views functionalities basically resemble the functions of cur- of e-HRM, ERM explicitly adds a processual and stra- rent HRIS, while the individualization of activities in tegic dimension to the discussion and therewith points recruiting, development, compensation etc. constitutes out some promising opportunities for the future devel- a peculiarity. Because individualization is crucial for opment of e-HRM. Arguably, there are already diverse success on the one hand, but, unfortunately, boosts op- offers of ERM systems (e.g., Hamerman, 2001, 2002; erational effort on the other hand, a largely automated Rogers, 2008; Yang et al., 2011). (“mass”) customization is necessary. In compensation, However, given the heterogeneous understanding individualization can, for example, mean offering a of ERM, existing systems have to be carefully evaluat- broader range of different compensation components to ed based on actual functionalities rather than on mere meet differing individual expectations. designation. A prominent ERM system (Siebel, as de- These components have to be offered, arranged, scribed in Oracle, 2009) serves as an example to clarify administered, etc. mostly automatically using a com- this. A comprehensive web-based employee self-ser- pensation automation module. In this manner, ERM vice is offered as a major collaborative functionality, systems are necessary to systematically automate the and this channel can be broadly individualized. With respective individualized operational activities. this, a crucial collaboration option is offered, however, Finally, analytical functionalities should provide the potential additional channels and touch points, as dis- required in-depth information concerning employee cussed above, are not available. Referring to operation- preferences, historic collaborations and operations and al functions, it is mainly the domains of competency recommended future collaborations and operations management, performance management and employ- (Dorgan, 2003; Rowe & Tucker, 2006). It is obvious ee development that are automated. This means first of that analytical functions in particular demand informa- all that not all domains required by the concept, for in- tion systems support. Compared to current HR ana- stance, recruiting, are supported. Moreover, there are lytics (e.g., Strohmeier & Piazza, 2010), the intended no options to further individualize these domains. In predictive and recommendatory analyses constitute in- particular, this aspect indicates substantial differences novations. Within analytical development, for instance, in the comprehension of ERM - given that individual- the automated recommendation of an individualized set ization constitutes the core principle of creating em- of successive training measures and job assignments for ployee value in the above description. Finally, broader each employee constitutes an example of a reasonable analytical functions are offered as well via query-based recommendatory analysis. In this way, all operational charts, tables, and alerts, among others. However, pre- and collaborative decisions within all domains have to dictive and recommendatory functions – such as rec- be supported by corresponding analytics. ommending suitable actions for individual employees In summary, ERM (information) systems must – are not available. In this way, systems presented un- map ERM processes systematically in order to carry der the ERM label may offer some of the ERM func- out the necessary processes. Since the type and scope of tions demanded above, while other, possibly crucial the respective activities preclude “manual” processing, ERM features may not be available. As a consequence,

Openly accessible at http://www.european-science.com 929 Social science section it must be evaluated on a case-by-case basis whether a formation systems as interrelated components - given system offered actually contributes to the strategic ob- that strategy is operationalized by corresponding pro- jective of mutually valuable relationships and the resul- cesses, while processes and strategy are realized by cor- tant managerial responsibilities of ERM. In any case, responding information systems. the market for ERM systems seems to still be in the The final definition of ERM as the strategy of developmental stage, and a broader availability of sys- building and long-term maintaining individual- tems that comprehensively support the concept should ized mutually valuable relationships with selected not be assumed without further investigation. former, current and potential employees, which is operationalized through collaborative, operational Synopsis and analytical processes and realized through the collaborative, operational and analytical function- Based on the above, a verbal synopsis that allows alities of information systems offers a first compre- us to compare major aspects of CRM and ERM and hensive understanding of the concept, which can be to derive concrete definitions can be offered (see Fig. finally visualized in a graphical synopsis (see Fig. 4). 3).Initially, the major terms to designate both concepts are presented. These mostly refer to the respective con- Implications cept as a whole, yet “candidate relationship management” denotes a specific sub-concept of ERM oriented With the above elaboration of ERM the outline of toward the recruiting domain. Relating to the respective an emerging concept for managing human resources formation both concepts resemble in constituting reac- electronically becomes visible. However, as this trea- tions to “market pull” and “technology push” forces. tise is far from being comprehensive, the need for In addition, as a consequence of its advanced and well deeper research becomes obvious, as well. In par- established state, CRM doubtlessly constituted an ad- ticular, the conceptual elaboration, theoretical foun- ditional “conceptual push” for ERM. Both concepts dation and empirical evaluation of ERM constitute are to be understood as clearly strategic endeavors that three major interdependent areas of future research. aim at competitive advantages on respective markets. Elaboration While CRM aims at competitive advantages in the gen- Despite the general ERM outline developed eral market, ERM aims at advantages in labor markets above the concept is still in its “embryonic” phase- (based on increased attraction and retention of employ- especially if compared with the advanced state of ees) and subsequently in general markets as well (based CRM. Hence, in order to understand it better and on increased motivation and performance of employ- develop it further, an elaboration of ERM must ees). The major principle of yielding these competitive clearly be the first task for future work. advantages in both concepts is building and maintaining This elaboration should first refer to potential individualized mutually valuable relationships with se- streams and accentuations of the concept. In this re- lected individuals of the respective target group. spect, ERM should be systematically classified into a Both concepts are likewise based on collaborative, general relationship management approach (e.g., Egan, operational and analytical processes, which, of course, 2003; Frow& Payne, 2009) in order to identify com- refer to different process domains of the two corporate monalities and peculiarities of ERM compared with areas. In CRM these are marketing, sales and service, other relationship management concepts. Also, the while in ERM the entire set of HR functions such as potential segmentation of ERM into sub-domain con- recruiting, development and compensation are rel- cepts such as “candidate relationship management” evant. For an efficient realization of processes both in recruiting (e.g., Keim& Fritsch, 2008) or “learner concepts are reliant on corresponding information relationship management” in development (e.g., Sim- systems, which serve as “enablers” of concept. To map mons, 2005) needs deeper consideration with regard to and support the respective processes integrated collab- possible commonalities and peculiarities. orative, operational and analytical functionalities are The need for further elaboration, secondly, refers to be offered by the respective systems categories. In particularly to the ERM components. Refinements of both corporate areas it is the first time a concept re- the strategy component, for instance, may reveal dif- quiring the use of information systems as an important fering varieties, such as those related to different la- realization component has been suggested. Based on bor market segments. Processes refinement refers to the synopsis, concrete definitions of both concepts can manifold concretizations to determine which concrete be derived. These refer to strategy, processes and in- analytical, operational, and collaborative activities are

Openly accessible at http://www.european-science.com 930 Social science section to be performed and how. In this respect, the develop- nent needs refinement. This refers to aspects such as ment of a deeper understanding of the individualiza- requirements engineering (elaborating concrete function (customization, personalization) of HR activities tionalities needed), market analysis (elaborating con- constitutes an especially pressing task for the future. crete functionalities already offered) and systems de- Finally and in particular, the technological compo- sign (developing innovative ERM prototypes).

Figure 3. Verbal synopsis and definition of CRM and ERM

One way to further elaborate on ERM is to Foundation keep learning from CRM, given its advanced and Being mainly a practitioner concept, ERM current- well-researched state. The transfer of conceptual ly rests on implicit background assumptions rather than elements from CRM to ERM, however, should on explicit theoretical foundations. Theoretical founda- be done cautiously, as an unreflected adoption tions, however, are needed to provide an overall justifica- may turn out to be inadequate or even detrimen - tion, i.e., a systematic explanation of why and how ERM tal. Additional support for elaborating on the actually succeeds. It should only be pursued further if concept may thus be offered by the theoretical there are strong theoretical arguments for ERM. More- foundation and empirical evaluation of ERM, as over, theoretical foundations are also necessary for the discussed below. further development of ERM as demanded above.

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Figure 4. Graphical synopsis of ERM

Concretization of ERM components should be rectly with individual needs and preferences, comprise based on theoretical rationales wherever possible to “immaterial” components, or match or even exceed ensure a reasonable future development. Hence, es- employee contributions. The social exchange theory tablishing the theoretical foundations of ERM is a (e.g., Blau, 1964; Homans, 1958) can offer a third second crucial task for the future. useful approach. Relationships could be explained as In order to realize this task, theories that directly the process of negotiated exchanges between two par- address human relationships and exchange should be ties. Since the approach directly explains the initia- particularly promising. For instance, the psychologi- tion, maintenance and withdrawal of relationships as cal contract theory (e.g., Cullinane & Dundon, 2006; a result of an ongoing subjective cost-benefit analysis Rousseau, 1995) should offer an appropriate initial in direct comparison with other possible relationships, framework for understanding the entire relationship it should then be possible to explain the (non-)attrac- process, since the formation, development, and main- tion and (non-)retention of employees. In brief, such tenance, and also the breaching of implicit contracts relationship and exchange-oriented theories should be are explained. Viewing relationships as implicit mu- used to provide a deeper understanding, overall justifi- tual expectations and obligations between employ- cation and further elaboration of ERM. ers and employees, this approach clearly supports the The existing research on “employee–organiza- expectation of positive ERM outcomes such as retention relationships (EOR)” (e.g., Coyle-Shapiro & tion, motivation, and performance if mutual promises Shore, 2007; Shore et al., 2004) should offer further and expectations are kept and met. The inducement valuable foundations (principles) beyond behavioral contribution-theory (e.g., Barnard, 1938; March & theories. EORs are usually viewed as an emergent Simon, 1958) could be another basic foundation of socio-economic phenomenon that research has to ERM. Being basically a theory that explains motiva- investigate and understand. As a consequence, EOR tion based on inducements and contributions, positive research refers to multiple topics and results such as outcomes – in particular, employee motivation and context, types, or possible outcomes of EOR (e.g., performance can be explained. As a consequence, ad- Shore et al., 2004), whereas actively managing re- ditional statements concerning adequate inducements lationships so far has not been a major topic. This are to be expected; e.g., inducements should fit di- lack of transferring EOR knowledge into reasonable

Openly accessible at http://www.european-science.com 932 Social science section suggestions for practice is perceived as a clear limi- share in strained labor markets. This will, however, tation (Coyle-Shapiro & Shore, 2007). Referring to only work effectively if relevant competitors do not this, a combination of EOR and ERM research may pursue comparable strategies. A broader or even constitute a mutually valuable step. general adoption of ERM will result in a “zero-sum EOR should be able to complement ERM by situation”. Organizations would then compete for offering missing foundational insights, while ERM employees on a clearly increased level of effort, but could in turn complement EOR by offering the without perceptible improvements. ERM may even missing practice suggestions. turn into a “hygiene factor”, i.e., organizations without ERM will suffer from serious competitive disad- Evaluation vantages, whereas organizations with ERM will not Given that ERM is currently based on diverse un- be able to realize perceptible competitive advantages. confirmed assumptions, the empirical evaluation of Obviously, this “zero-sum proposition of general these assumptions clearly constitutes the third task of ERM success” also needs future consideration: future work. ERM should only be pursued further if P 4. Success of ERM depends on the strategic (re-) there is clear empirical evidence to support it. In par- actions of relevant competitors. Having identified the ticular, the crucial success-related assumptions need major underlying assumptions of ERM success, the confirmation. Constituting the overarching argument next step is an empirical test. However, the supposed for ERM, the basic assumption to be evaluated may current lack of practical ERM adoption puts obvious be called “proposition of ERM success”: limitations on feasible methods of data ascertainment. P 1. ERM leads to mutual value for employees Hence, methods that do not rely on larger samples – (advanced satisfaction of individual needs) and em- such as case studies or experiments – have to be employers (advanced attraction, retention, motivation ployed despite their respective limitations. and performance of employees). ERM success will, however, depend on differ- Conclusions ent moderating influences. First and foremost, the proper implementation of ERM should constitute a Employee relationship management consti- precondition for success. As described, proper imple- tutes an emerging trend in practice, which so far mentations should comprise a strategy, process, and was characterized by a tension between promises information system component. These components and ambiguity of concept. The current paper hence should be thoroughly integrated (“internal fit”) and aimed at the reduction of ambiguity by elaborating then customized for a specific situation (“external a basic outline of the concept and by deriving major fit”). Evidently, these two conditions directly corre- implications for future research. Starting with the spond to the configuration approach of management; formation of the concept, it could be clarified that hence, the assumption to be evaluated can be called ERM is a response to increased labor market pres- “configuration proposition of ERM success”: sures and increased information technology poten- P 2. Success of ERM depends on the systematic tials. By subsequently elaborating on the conceptual customization and integration of strategy, processes components ERM could be portrayed as the strate- and information systems. gy of building and long-term maintaining individu- Another critical point for ERM success is the realized, mutually valuable relationships with selected quired consistent individualization, which, on the one former, current and potential employees, which is hand, constitutes the key principle for creating genu- operationalized through collaborative, operational ine employee value, but on the other hand, also boosts and analytical processes and realized through the the realization effort. As described above, ERM as- collaborative, operational and analytical func- sumes that information systems are able to resolve this tionalities of information systems. As a result, the dilemma mainly by means of the automated mass cus- outline of an interesting and ambitious concept of tomization of activities. Hence, the “proposition of in- managing human resources electronically could be dividualization automation” should also be evaluated: presented. ERM hence might well offer a systematic P 3. Success of ERM depends on the potential way for HRM to cope with the increasingly strained of information systems for automating individual- labor markets of the future. However, before actu- ized activities. ally recommending the concept for application, As a final important point, ERM is a strategy future research has to solve the interrelated tasks of aimed at enlarging the individual organizational conceptual elaboration, theoretical foundation and

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