Michael Reiss
Mass Personalization
An Internet-enabled Strategy for e-HRM
2003 Prof. Dr. Michael ReissUNIVERSITÄT STUTTGART Lehrstuhl für ABWL und Organisation
Keplerstraße 17 70174 Stuttgart
Tel. 0711 / 121-3155 Fax 0711 / 121-2764 Lehrstuhl.Organisation@po.uni-stuttgart.de
Internet: http://lfo.uni-stuttgart.de
1. Strategy Development in HRM
The strategic orientation of Human Resource Management (HRM) can be seen in all activities of building up and maintaining assets. If human resources (HR) is perceived as a value-creating center (business center, profit center), then business and marketing strategies constitute the core of HR strategies. This perception is broader than the definition of HR strategies as a functional supply strategy in which the strategic aspect of HRM is restricted to the optimal supply of human resources to companies, e.g. on the basis of an HR portfolio. The basic assets of HR as an entrepreneurial center include offerings (above all services and products), the customer base (e.g. relational capital on customer markets, image, customer purchasing power, goodwill), competitive advantage (with regard to quality, costs and speed), as well as own resources and competencies (e.g. consulting, interaction skills).
The strategic orientation of HR has developed dynamically parallel to the strategic orientation of companies (cf. Fig. 1). The development pattern can be described as the transition from simple strategic forms to complex strategic forms. The number of strategic assets used can be applied as a unit of measurement for the degree of complexity. This increasing level of development is indicated in Figure 1 by the ascending line. A certain correlation is shown between the strategy level and the level of the entrepreneurial orientation of HR. This can be measured by way of the center level (cost center, profit center, investment center), which encompasses the scope of entrepreneurial responsibility.
CREATE DEMAND THROUGH OFFERINGS !
CREATE CUSTOMER VALUE FOR CUSTOMER SEGMENTS !
GAIN MARKET SHARES THROUGH COMPETITIVE
ADVANTAGE !
BUILD UP AND DEVELOP SPECIFIC
STRENGTHS ! PRODUCT
STRATEGIES MARKET
STRATEGIES COMPETITIVE
STRATEGIES COMPETENCE
STRATEGIES
OUTPUT
+ +
CUSTOMERS+ +
COMPETITORS+ +
RESOURCESFig. 1: Development of the strategy forms of HR
Product strategies: The change in role from „administrator of processes“ to „designer of products“ goes hand in hand with the realisation that the human resources department does indeed have its own range of products and is not only handling processes. The value added by these products consists, for example, of jobs and services provided to/ for employees, sourcing manpower for the company, and company-specific leadership models.
Customer strategies: These document the shift from inside-out orientation to outside-in orientation, especially to the focus on customer needs (cf. Ackermann/Meyer/Mez 1998;
Ackermann 2002). Focusing on customers requires the segmentation of customers since there is no such thing as the standard or average customer. The degree of segmentation can vary from focusing on customer groups, on key accounts to the segment-of-one approach which treats each employee or each organizational unit (department/ division) as an individual market.
For HRM, customer segmentation leads to a dramatic complexity in customer potential (cf. Fig. 2). Complex relations result not only from the multitude of customers but also from their diversity. What is particularly challenging is the heterogeneous, sometimes diverging character of customer interests. This area of conflict exists, for example, between internal customers (need for company-specific offerings) and external customers (need for basic offerings), as well as between departments (cost-effective personnel offerings) and employees (personnel services which help one’s career). This diversity shows parallels to the customer configuration in the media sector (e.g. for a TV channel, the viewers on the one hand, and advertising companies on the other hand).
There too, customer groups with conflicting ideas about customer benefits have to be looked after. Furthermore, customers not only have to be segmented according to their needs but also, for instance, according to their profitability (e.g. lifetime profitability, cf.
Töpfer 2001, for instance). This multiple segmentation normally increases the complexity of the customer landscape.
Top Management
Workforce Shared
Services
External
Temporary Units Departments/
Divisions
Other
•Executive Board
•Advisory Board
•..
•Contractors
•Applicants
•Worker–Councils
•Youth- Representation
•...
•Organization
•Controlling
•IT
•...
•Fiscal/ Employee Administration
•...
•Data Security Officer
•Equal Opportunities
•Executive Representative Councils
•...
•Standard Projects
•Special Projects
•Circles
•...
•Managers
•Employees
•Apprentices
•Freelancers
•...
•Division A
•Division B
•Departments
•...
CUSTOMERS OF HR Employee
Representatives Top Management
Workforce Shared
Services
External
Temporary Units Departments/
Divisions
Other
•Executive Board
•Advisory Board
•..
•Contractors
•Applicants
•Worker–Councils
•Youth- Representation
•...
•Organization
•Controlling
•IT
•...
•Fiscal/ Employee Administration
•...
•Data Security Officer
•Equal Opportunities
•Executive Representative Councils
•...
•Standard Projects
•Special Projects
•Circles
•...
•Managers
•Employees
•Apprentices
•Freelancers
•...
•Division A
•Division B
•Departments
•...
CUSTOMERS OF HR Employee
Representatives
Fig. 2: Complexity of HR customers
To resolve the conflicts between customer interests, bilateral relations between HR and individual customer groups (e.g. HR or employees) are transformed into trilateral relations as a rule. For example, HR, department/ division and employees decide upon a suitable training programme in a concerted action.
Customer strategies have repercussions on product design. Amongst other things, they force products to be customized for customer groups or individual customers. In the case of employees, this individualization can also be termed personalization. Early forms of individualization for employees (cf. Scholz 1997) revolved around concepts such as cafeteria or flexible working hours (e.g. housewife shifts, flexitime).
Competitive strategies: Competitive strategies are used in connection with HR because HR has not been in a monopoly situation for some time now.
SUPPLIER
CUSTOMER
INTERNAL
EXTERNAL
INTERNAL EXTERNAL
SHARED SERVICES NON-CAPTIVES
OUTSOURCING SERVICESINTERNAL
IN THE NARROW SENSE
INTERNAL SERVICES IN THE BROAD
SENSE
+
Fig. 3: Internal services
The transition from HR as part of internal services in the narrow sense (shared services), to internal services in the broader sense means that HR is subjected to pressure in two competitive arenas (cf. Fig. 3).
Cost pressure arises from the outsourcing option of HR products and services.
Outsourcing is an established means of battling bureaucratic overheads. One HR response to this cost pressure is to industrialize HR services. Preproduced service components (e.g. compensation systems) are created via HR which acts as a service
"factory". Customer orientation pressure arises from the fact that HR, as a non-captive, is also directed at external customers. Customer orientation pressure can synergistically support efforts to reduce costs: the additional extra-corporate business facilitates the use of economies of scale and the effects of the experience curve.
The competitive strategies pursued by HR have become more complex. This increase in complexity reflects the hyper-competition many companies have to cope with. One- dimensional competitive strategies have been replaced by hybrid strategies. These combine “mass” advantages and “class” advantages (cf. Fig. 4).
OUTPUT ADVANTAGES
(„CLASS")
SPECIALISATION STRATEGIES
VOLUME STRATEGIES FRAGMENTATION
STRATEGIES
DEADLOCK
STRATEGIES COST
ADVANTAGES ("MASS")
• TURNKEY PROJECTS
• SYSTEMS BUSINESS
• SOLUTIONS BUSINESS
• ...
HYBRID STRATEGIES
• OUTPACING
• MASS CUSTOMIZATION
• SIMULTANEOUS STRATEGIES
• ...
• MASS BUSINESS
• GLOBALIZATION
• PRODUCT BUSINESS
• ...
Fig. 4: Combination of competitive advantages
A particularly important hybrid strategy for HR is mass customization (MC, cf.
Reiß/Schuster 1995). This focuses equally on both customers and costs. Mass customization aims to provide services that cover individual customer’s needs with near mass production efficiency. For example, a mass customized e-learning offering facilitates low-cost learning processes (modularized learning programs, distribution via the Internet, less expenditure on teaching staff, premises, travel, ...), and increases the options for user-tailored learning (as for content, media, timing, pace, ...).
Resource-based strategies: Here, assets are localised in HR resources and core competencies. HR core competencies (for internal customers) include, for example, consulting skills ("putting oneself in the customer’s position"), and the capacity, as a solutions provider, to assume responsibility for customers' business processes.
The resource-based strategy does not mean a relapse into the inside-out thinking of the early output-focused development stage (cf. Fig. 1). The definition of the core competencies concept, the best-known model of the resource-based view, already incorporates customer relevance of services, and differentiation with respect to competitors.
IT resources (i.e. hardware and software infrastructures) constitute a specific source of resource-based strategies for the whole company as well as for HR. HR information systems, which have been continuously integrated into the extensive Enterprise Resource Planning systems, have been used in these infrastructures for some time. The talk, in connection with using the potential of a particularly powerful infrastructure, namely the
Internet, is usually about electronic HRM (e-HRM, cf. Ingenhoff; Eppler 2001). E-HRM does not only work with new electronic resources. What makes e-HRM stand out is its efficient and effective control of operative HR processes. Moreover, e-HRM has a strategic dimension. As enablers, the electronic infrastructures help to maintain assets in all strategic areas, from new offers, customer and competitive orientation, to building up competencies.
In the meantime, e-HRM implementation has moved on from the initial euphoria phase to a phase of enlightened and rational assessment of possibilities and limits. E-HRM
"beyond the hype" is characterised by two shifts in paradigms. The technology-push thought is replaced by an application-based demand-pull thought. This shift is characterised by a transfer of focus from the "e" to the "HRM". The second shift entails a transition from the "substitutional association" between conventional HRM and e-HRM to a "complementary association". This has led, for example, to the concept of blended learning in human resources development. In this approach, the strengths of conventional face-to-face learning and virtual e-learning are supposed to be synergistically combined (cf. Sautter/Sautter 2002).
E-infrastructures serve as enablers to several levels of e-HRM (cf. Fig. 5). Advantages in efficiency are connected with the reduction of transaction costs (of customer relationship management) and production costs (in the creation of goods and services). Advantages in effectiveness are reflected in more customer benefits. At present, a huge potential is perceived in enterprise information portals. Portals, in the broadest sense, are web sites that serve as „entry sites" to the Internet. The strengths of portals lie in the fact that they combine two opposing advantages: integration advantages by means of a wide spectrum of up-to-date information from a multitude of sources, and flexibility advantages by way of user specificity, i.e. customizing these offers as much as possible (cf. Hess/Herwig 1999). The basic features herein include design and access to large networks and information rooms. Users, who feel overwhelmed by the flow of information, are offered a toehold and orientation help (cf. Frenko 1999). Portals actively bundle independently developed information offers and interfaces, and sometimes complement them with self- developed offers, communication services, and other offerings. Enterprise portals act as gateways to in-house Intranets for several target groups, particularly employees.
COMMERCE
COMMUNITY
COMMUNICATION
Bi / multilateral exchange of information Mutual support by knowledge transfer Contract-based transactions with customers
INFORMATION
Access to data
Fig. 5: Levels of internet-enabled e-HRM
The potential of enterprise portals ranges from the non-interactive supply of information through communication (e.g. with suppliers of HR goods and services, input of information by users), community operations (forums and chats amongst users organised by HR, as the community operator), to processing transactions (e.g. booking training events, updating service level agreements) via the Internet. The community level represents the interface to knowledge management (e.g. sharenet models, experience databases). In knowledge management enterprise portals serve primarily as "information portals".
The strengths of e-HRM that are relevant to strategy lie – in terms of hybrid competitive strategies (cf. Fig. 4) - in the simultaneous combination of cost advantages and output advantages. E-HRM can considerably enhance the nature and extent of interactions with HR customers by employing mass tools such as database-driven e-mail or virtual call centers. The easy and low-cost connectivity provided by the Internet can help reduce waste and inefficiency. In addition, e-HRM is more capable of meeting HR customers' demands for more personalized communication and more participation in the exchange process. One-to-one marketing is the long-term target of this sophisticated individualization, i.e. customer-centric approaches to marketing (segment-of-one) instead of marketing (more or less) homogenous customer segments (divisions, departments, executives, expatriates, external customers etc.). Individual profiles replace segment data.
It is apparent that e-HRM is significantly broader than Business-to-Employee (B2E, cf.
Dertnig/Seidler-Hühn 2001; Hansen/Deimler 2002), in terms of a special arena of e-
business alongside Business-to-Business (B2B) and Business-to-Consumer (B2C). Not all operating levels of e-HRM deal with business transactions; some only deal with communication and knowledge management. Moreover, e-HRM is not only directed at employees as customers, but also at other customer segments (cf. Fig. 2). These are frequently included in the B2B arena.
2. Characteristics of the Mass Personalization Strategy
The fundamental contribution of Internet-based e-HRM in support of HR strategies is in perfecting the MC approach as a hybrid competitive strategy: e-HRM facilitates the transformation of product-focused mass customization into holistic mass personalization (MP). Hybrid strategies are not limited to product customization even though originally the ideas of mass customization, in terms of modularization, standardization, segmentation of the value chain, and increased flexibility focused on products. Rather, many interesting ideas exist in adjoining areas such as promotion, pricing and place, ie in all elements of the marketing mix (cf. Fig. 6). With the help of the Internet mass personalization of all four elements of the marketing mix - price, place, promotion and product – becomes possible.
MARKETING ARENAS OF
PERSONALIZATION
• Digital offerings
• Customer to customer Processes
• E–Bundling
• ...
• New price differentiation
• New bargaining environment
• Portfolio of revenue models
• Mass-personalized advertising
• Communities
• Software infrastructure
• ...
• Self-Personalization
• Multi-Channels
• Disintermediation vs.
reintermediation
• ...
PRODUCT PRICE
PROMOTION PLACE
• ...
MARKETING ARENAS OF
PERSONALIZATION
• Digital offerings
• Customer to customer Processes
• E–Bundling
• ...
• New price differentiation
• New bargaining environment
• Portfolio of revenue models
• Mass-personalized advertising
• Communities
• Software infrastructure
• ...
• Self-Personalization
• Multi-Channels
• Disintermediation vs.
reintermediation
• ...
PRODUCT PRICE
PROMOTION PLACE
• ...
Fig. 6: Marketing arenas of mass personalization in HRM
3. Mass Personalized Offerings of e-HRM
The application of MP in the product arena of the marketing mix (HR offerings) can be illustrated by way of the individual offerings, the bundles of offerings and the processes of producing the offerings. The consistent distinguishing feature is the personalisation of the HR offerings (mostly under the label "my products"). These personalized HR offerings can be produced at comparatively low cost.
Mass personalized digital offerings: The most obvious differences between e-HRM and conventional HRM are seen in the electronic HR offerings. Here, for example, Internet- based information services ("information ware") replace conventional print offerings, e.g. customised electronic newsletters instead of uniform printed brochures or employee journals. These information services can be customized at low cost with respect to content, accuracy, and timing. Another important area in which mass personalized digital offerings are applied is e-learning. E-learning products can be cost-efficiently produced and distributed via Internet and Intranet, e.g. enterprise portals. These products can be recombined easily and benefit particularly from the degression of the fixed costs in production that this entails, e.g. multiple selling of one-off configured content via syndication. Updating electronic products via the Internet is also particularly cost- and time-efficient.
Mass personalized e-bundling: Offerings have to be modularised if they are to be cost- effectively bundled for different customer needs. Modular systems replace standard package offers that are predetermined by HR. For intra-corporate customers however, such à la carte solutions have their limitations because they have accept certain corporate services (e.g. standard clearing systems or recruit executives out a pool of top managers maintained by HR) in view of the higher corporate interests. With other services, say with e-learning modules within a corporate university offer, e-bundling well exceeds the traditional form of configuring goods and services for customers. E-bundling covers a broad scope of complementary and personalized information services around products, e.g. by offering the use of HR-operated service portals where additional, personalized information can be accessed (links, benchmarks, testimonials and other information services. This is a way of significantly increasing net value for customers.
Customer-to-customer processes: The process of creating output within the MP framework is split up into customer-neutral (cost-focused) and customer-specific process segments. In a factory, this process-splitting corresponds to the materials flow control based on a mixture of the order-independent push principle (early stage of the value creation process) and the order-specific pull principle (final stages of the value-adding process). HR service processes can be designed more cost-effectively by increasing customer-neutral preproduction. This cost-focused process segmentation can be implemented, for example, in medical services (basic medical check-ups, pastime offers,
dietary advice, ...). The particular strength of e-HRM is that customers can be cost- effectively integrated in the product and service specification process via the Internet not only at the latter stages of the process but also at the earlier stages. The initial process segments can be operated "on demand", i.e. "pulled" by the customer and started only after the order has been received.
4. Mass Personalized Promotion in e-HRM
Mass personalized advertisement: E-HRM introduces new ways of addressing a wide range of heterogeneous customers and allows HR to progress from mass advertising ("broadcasting") or highly individualized advertisement ("profiling"), to mass personalized advertising (c.f. Fig. 7). HR can benefit here by overcoming the richness- reach dilemma – achieved by Internet solutions (cf. Picot et al. 1999; Evans/Wurster 2000). Richness stands for sending the right message (as for content, language, ...), via the right media (presentation modes, ...), at the right time (just in time with respect to customer needs) to the right place (PC, PDA, mobile phone, ...). In other words, to communicate in accordance with the respective customer situation. Visibility of HR offerings can then be increased and more attention can be gained from the target customers. Reach stands for the fact that almost all communication is accomplished via one device of mass communication, the Internet.
Traditional methods of advertising are often impaired by high losses and inaccuracy due to a lack of richness as for media, content of information etc. Instead of (cost-efficiently) broadcasting advertisements to a range of anonymous customers, one-to-one promotion of HR services focuses on customer profiles that contain information about preferences, biography, budgets etc. With this information, HR marketing activities can be tailored for individual customers. Mass personalization in advertisements utilizes profiles whilst still employing a mass approach that reaches a broad scope of customers cost efficiently.
For example, customers are offered the choice of two e-mail formats: plain text or the multimedia-enhanced html format. Both are generated easily and dynamically (e.g. by e- mail marketing applications in combination with back-end systems such as customer or personnel databases), at virtually no extra cost.
INTERNET
RICHNESS Customizing
REACH Mass PROFILING
BROADCASTING MASS
PERSONALIZATION
Fig. 7: Overcoming the richness-reach dilemma through MP
Electronic communities in the promotion process: Online communities are specific and powerful devices to support mass customization in e-HRM. In Internet communities, information is exchanged among the participants, namely customers (cf. Bullinger et al.
2001). A special form of HR online communities are Communities of Practice, e.g.
communities of expatriates or change communities. The latter are virtual meeting spaces (moderated forums, chats, ...) that offer significant advantages for the mass customization of communication and training processes in change projects.
Online communities offer companies a cost- and time-efficient channel for distributing information, since substantial amounts of the information is self-customized and the information is distributed by the community members themselves. The advantage in effectiveness of the communities is enhanced credibility of information among peers who do no pursue commercial interests.
Software infrastructure for mass personalized promotion: E-advertising employs various instruments and tools such as personalized e-mails and continuous adaptation of offers, presentation and prices by collaborative filtering. The choices made by one customer are continually filtered and compared with those of other customers who chose the same products („pattern matching“). HR can then make an „educated guess“ as to what product information might further interest the individual customer or employee. Some of the promotional processes can be handled even more cost-efficiently: promotional
activities are outsourced to specialized agencies thus resulting in lower overall costs.
This applies, for example, to online employee surveys or customer feedback surveys that are executed by survey institutes and market research agencies.
5. Mass Personalized Contracting in e-HRM
Price differentiation: At first glance, several factors indicate that "price", that is, price and terms management in the e-HRM framework, is more likely to lose importance and that the use of the action parameter "price" is very restricted. The Internet typically augments transparency in HRM-services markets by supplying customers and vendors with more easily accessible information. Customers can compare prices at relatively low cost, thus transparency is increased in otherwise obscure market situations. However, this does not mean that all traditional methods of price discrimination are obsolete. In many cases with HR services, there is a specific form of price differentiation for internal and external customers: services to internal customers are often offered at cost prices (HR acting as a "zero-profit center" within the corporation) whereas external customers are usually served at market prices (HR acting as a "real-profit center"). In addition, e- HRM gives rise to new forms of price differentiation. Multi-channel pricing, for example, means differentiating prices according to the channel chosen by the customer.
Fees for transactions via call centers or conventional face-to-face negotiations are higher than fees for electronic transactions. To control transaction costs, HR departments have to differentiate prices in order to steer customer choice towards the cost-efficient electronic channels.
E-HRM also facilitates enhanced yield and revenue management (cf. Klein 2001).
Immediate and direct contact with customers over the web enables, for example, optimized selling of surplus capacities, such as for workshops and seminars in personnel development. The system allows companies to set prices quickly, provided that the integration of customer relationship software and ERP software (Enterprise Application Integration, EAI) has been achieved. Prices are based on factors such as customer history, predictions of a customer's behavior, demand, and projected margins.
New bargaining environments: As transaction costs (e.g. for informational searches and evaluation) decrease, Internet-based methods of price-setting and negotiation such as auctions, electronic market places or exchanges become more cost-efficient. E-HRM offers new ways of carrying out transactions cost-efficiently even when flexible pricing is adopted. The advantages outweigh the offline options and permit a more precise and timely, albeit more complex, alignment of price with customer value and market conditions (e.g. scarcity). Workforce assignment within flexible working hours schemes can be supported by digital market places which employees, as providers and /or
demanders of working hours, can visit and – in contrast to simple bulletin board systems – give differentiated prices for specific working and leisure hours (weekends, holiday dates, ...). Cafeteria models - classics among individualization concepts in HRM – can also be optimized within the e-HRM framework. This is true for bilateral deals between a single employee and HR (e.g. splitting remuneration between immediate compensation and deferred compensation, or into proportions of fixed and variable compensation components respectively). Multilateral bargaining configurations can also be cost- effectively supported with the aid of electronic market places. Take for example time out (either as extended leave or shortened working life), the value of which is, in the end, dependent upon the aggregate working time in the entire company, and not only on the time preferences of the individual negotiating parties.
Portfolio of revenue models: HR operates a series of different business models. These range from body leasing (leasing consultants, moderators or trainers on a daily basis), selling offerings (e.g. conception of a reward system for team work) and advisory services (career advice for individual employees, information on miles-and-more issues or pension problems) to outsourcing services (e.g. taking over the payroll accounting for foreign companies). The same offerings can basically be marketed via different business models. Some of these business models are only attractive within the e-HRM framework because it is only with the use of the Internet that transaction costs start getting appropriately lower. This is particularly true of the Application Service Providing business model: within this (intra-corporate) revenue model no software is sold to internal customers. Instead, individual applications of this centrally-run software are sold within an SLA framework. Measurements, price fixing and margins for individual payment models vary greatly. In view of e-HRM’s extensive spectrum of business models, the thing to do would be to strive for an optimal mixture of these business models within the framework of a portfolio management.
6. Mass Personalized Channel Management in e-HRM
E-HRM, in conjunction with the marketing arena "place", is characterised by a juxtaposition of multiple marketing channels. Moreover, efforts to establish MP with the help of the Internet have a huge influence on the importance of the various actors in the value chain.
Multiple channels: Personalizing channels does not only mean a) personalizing the e- channel but also b) personalization via the offer of multiple channels. The latter means that the customer can select a channel according to his/her preferences. Channel preferences, for their part, depend on how the information is presented and on the competence of the customer in the e-medium. HR has to be able to process transactions
across all channels. This is the (not so rare) case when customers (e.g. of training offerings) switch channels within the interaction process (cf. Fig. 5), i.e. use the portal to procure information but complete the transaction via conventional marketing channels.
Self personalizing by co-producers: For reasons of cost, customers of HR offerings undergo a change of role from "consumer" to "prosumer" or "co-producer". Here, the customer himself/herself personalizes the products. No variants of the products are offered. Rather, the products are implicitly flexible. The customer can tailor a standard service to meet his/her individual needs via menu-based input and selection operations.
In many cases, this leads to a self-service situation, e.g. online travel bookings.
Technological developments broaden the spectrum of self-personalizing options, e.g.
through interactive systems for advice on pensions or investments via an employee portal.
Disintermediation versus reintermediation: E-HRM goes hand in hand with increased virtualisation of procurement processes. This applies not only to spatial virtualisation (e.g. spatial distributedness of members of the HR department, global distributedness of HR-competence centers), but also to institutional virtualisation, i.e. the boundaries between internal and external sourcing become blurred (cf. also Fig. 3). HR takes on two very different roles in this virtual value chain. It functions, on the one hand, as a producer of goods and services. On the other hand, it acts as an internal intermediary, i.e.
as a mediator at the interface between internal customers and internal, but more importantly, external suppliers.
The Internet can therefore, in keeping with the formula "Internet replaces intermediaries", bring about disintermediation: internal customers bypass, consciously or unconsciously, the „default“ communication channels, and HR as an internal intermediary, and interact directly with external providers. At the same time however, this can also lead to reintermediation, in that HR takes on the mediator role which the portal cannot afford. At this stage, the role of a third party customizer can be adopted (cf.
Reiss/Koser 2001). The third party customizer adapts standard goods and services of external providers to the requirements of internal customers. The attractiveness of other mediating services (price agency, search machines, ...) of HR as a "cybermediary"
depends on the development stage of the portals.
7. Outlook: Challenges to Mass Personalization
A study of MP within e-HRM can only be enlightening if, in addition to its possibilities, its challenges and limits are also considered. In an objective analysis of this type, insight to the problems of cost management (e.g. integration costs in conjunction with EAI, the
cost of running communities) and individualization (e.g. individualising information systems within the executive information system approach) has to be used. Challenges can be localized in both focal points of the MP strategy: in cost management and in the creation of customer benefits. Two examples of these challenges are dealt with below.
Costs of multi-channel management: Operating multiple channels increases costs for HR. Firstly, there are high procurement and infrastructure costs, e.g. for staff managers, call centers and portals. Secondly, customers are unpredictable in their final choice of channel. Furthermore, customers use the various channels differently (cf. Fig. 5). Some customers use enterprise portals predominantly as a means of procuring information and prefer conventional channels to complete a transaction. Other customers use the e- channel uniformly, i.e. to procure information and also to complete a transaction.
Efforts to steer HR customers towards appropriate channels can be linked to their respective „customer lifetime value“. Low-yielding customers should be steered towards cost-efficient e-channels, whereas profit-yielding customers should be able to select from a range of multi-channel offers.
At the same time, the objective of increasing customer acceptance of the e-channel can be supported by implementation and motivation instruments. The replacement of conventional real-world channels by a cost-efficient Internet channel can be supported by way of offering lower prices in the e-channel. It must be borne in mind however, that a considerable number of customers are not (or only partly) able or willing to use this channel even if it offers (price) advantages.
"Prosumerism": With MP customer orientation, several legitimate misgivings exist about the resulting customer benefits. This applies to the convenience aspect of e-HRM. Here, capacity planning is supposed to ensure that users do not end up in queues in the portal during their virtual interaction with HR. Although these provoke less (opportunity) costs for the user than real waiting times with face-to-face contact, they are detrimental to customer benefits. This is also true for certain forms of replacing services with products in the wake of cost orientation within the MP strategy: instead of individual information, customers are often offered links to FAQ lists, and in place of finding interlocutors, customers are referred to a "Who is Who?" directory. Here, self-personalisation is particularly crucial. In many cases, process costs are off-loaded onto the customer. A possible consequence of the "prosumer" status is that only pseudo-customer benefits are produced. This would actually be seen as an additional workload by the customer. To avoid this mistake, consumerism in the form of "prosumerism" should be implemented.
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