Human resource requirements for e-business

E-business implementation requires specialist skills that may not be present within an organization. The range of specialist skill requirements is indicated with Figure 10.8. The Econsultancy (2005) research showed that over half of respondents felt it was a challenge, although there were more pressing challenges.

E-business project managers have a choice of building a new skills set within their organiz­ation or outsourcing and partnering with other organizations.

Even more problematic than selecting the right type of staff is attracting and retaining e-business staff. If we want effective, experienced staff then these will demand high salaries. We will be competing for these staff with dot-com companies that are trying to recruit and also other established medium-to-large companies that are looking to build an e-business capability. Smaller companies that cannot afford to recruit into each of these areas will have an even trickier problem of needing to find all of these skills rolled into one person!

1. Staff retention

The difficulties in staff resourcing for e-business do not end with the recruitment of staff. As Crush (2000) says, ‘Getting good staff is difficult, keeping them is a nightmare!’ Since there is a highly competitive marketplace for e-business staff, many staff will want to move on to further their career. This will often be after the company has spent some time training them. The job characteristics model developed by Hackman and Oldham (1980) provides a useful framework for designing jobs that provide a good experience to improve staff motivation and so help retention. The five intrinsic characteristics of a job are:

1. Skill variety.
2. Task identity, how well the work is defined relative to other tasks and whether an employee sees a job through ‘from start to finish’.
3. Task significance or the importance of the work.
4. Autonomy or freedom in completing work.
5. Feedback from employer.

To enhance these psychological characteristics Hackman and Oldham (1980) suggest the following approaches can be used:

• Task combination – by combining tasks employees see more of the whole task.
• Natural workgroups – this also helps in task combination through creating a team to complete task.
• Establish customer relations – this helps in task significance.
• Vertical loading – employees take responsibility for tasks completed by supervisors.
• Opening feedback channel – from internal or external customers, via managers where necessary.

As well as making employees’ roles more challenging and enjoyable, another approach is to share the skills between staff, so that if key staff leave, then not all their knowledge will leave with them. Certain types of collaboration referred to in the E-consultancy (2005) report can assist with staff sharing knowledge and experience:

• Co-locating staff– including marketing staff in the digital team or e-commerce staff in the marketing team was mentioned.
• Job-swapping – a slightly different approach, which also involves co-location, was noted as effective.
• Interim collaborative teams (‘SWAT’ teams) – a temporary multi-disciplinary team (for example, teams from e-commerce, marketing and technology) is formed to drive a partic­ular initiative or performance improvement, e.g. home page improvement, web analytics or supporting customer journeys between channels. This approach is reported to be used by Amazon.
• Creation of a central ‘Centre of Excellence for Digital Marketing’ can provide a clear resource which marketing staff can turn to for advice and best-practice documentation. Members of this team can also be involved in proactively ‘spreading the word’ through involvement in training or operational campaign planning.
• Combined planning sessions – rather than the digital team developing a plan and then discussing with the marketing team who may then incorporate it into their plan, a more collaborative approach is used with both working on creating an integrated plan.

2. Outsourcing

Given the difficulties of recruiting new business staff referred to above, many companies turn to third parties to assist with their e-business implementation. However, there is a bewilder­ing series of supplier choices. Complete Activity 10.2 to help understand the choices required.

We are seeing a gradual blurring between the types of supplier shown in Table 10.3 as they recruit expertise so as to deliver a ‘one-stop shop’ service, though they still tend to be strongest in particular areas. Companies need to decide whether to partner with the best of breed in each, or to compromise and choose the one-stop shop that gives the best balance; this would arguably be the new media agency or perhaps a traditional marketing agency that has an established new media division. Which approach do you think is best?

Observation of the practice of outsourcing suggests that two conflicting patterns are evident:

• Outside-in. The company starts an e-business initiative by outsourcing some activities where there is insufficient in-house expertise. These may be areas such as strategy or online pro­motion. The company then builds up skills internally to manage these areas as e-business becomes an important contributor to the business. The easyJet case referred to in Case Study 8.1 is an example of this approach. The company initially partnered with a digital media agency to offer online services, but once the online contribution to sales exceeded 20 per cent the manage­ment of e-commerce was taken inside. The new digital media agency was, however, retained for strategic guidance. An outside-in approach will probably be driven by the need to reduce the costs of outsourcing, poor delivery of services by the supplier or simply a need to concentrate a strategic core resource in-house as is the case with easyJet.

• Inside-out. The company starts to implement e-business using existing resources within the IT department and marketing department in conjunction with recruitment of new media staff. They may then find that there are problems in developing a site that meets customers’ needs or in building traffic to the site. At this point they may turn to outsourcing to solve the problems.

These approaches are not mutually exclusive, and an outside-in approach may be used for some e-business functions such as content development, while an inside-out approach is used for other functions such as site promotion. It can also be suggested that these approaches are not planned – they are simply a response to prevailing conditions. However, in order to cost e-business and manage it as a strategic asset it can be argued that the e-business manager should have a long-term picture of which functions to outsource and when to bring them in-house.

The increased use of outsourcing marks a move towards the virtual organization. With the introduction of electronic networks such as the Internet it becomes easier to outsource aspects of the production and distribution of goods to third parties. Employees may work in any time zone and customers are able to purchase tailored products from any location. For example, a digital media agency may use programmers in Asia or Eastern Europe to develop web-based solutions for clients. Alternatively, contact-centre staff responding to voice con­tacts and e-mails may use overseas staff. Through doing this, they are able to increase the number of hours worked on projects per 24-hour period and also enjoy lower staff costs, even though, for example, Indian employees are well paid in local terms. Hallowell (2001) notes that the degree to which businesses can automate or outsource their human resources is strongly dependent on the type and level of service expected for a particular type of prod­uct. This can be significant in governing their scalability or capacity for growth without taking on additional staff. He says that customer service in e-commerce are:

described as ‘virtual’ (either pure information or automated) and ‘physical’ (requiring some degree of human intervention). … because the nature and quantity of physical service necessary to deliver value to customers influences the quantity of human intervention required, it also influences a firm’s ratio of variable to fixed costs, which alters its ‘scala­bility’. The paradox comes in that while reduced scalability is viewed negatively by many venture capitalists and proponents of ecommerce, the cause of that reduction in scala­bility, human intervention, may help a firm to differentiate its offering to customers, thus providing a source of competitive advantage.

He concludes:

For firms that are very high on the scalability continuum, the need for physical service does not present a ‘scalability’ problem. At these firms, information is the core service offering. Physical service is relatively insignificant, both from customers’ perspectives (use of physical service is infrequent, if at all) and from the firm’s perspective (it represents a very small portion of total costs). Thus, these firms do not rely on physical service (and the employees it requires) to differentiate their offering; their differentiation tends to come from the quality of their content and the ease with which users can access it.

In contrast, firms that sell non-information services such as travel, or goods such as books, toys, or antiques require significantly more complex physical service operations. The degree to which they need more physical service is inversely proportional to the degree to which they are ‘scalable’.

Case Study 10.1 explores the extent to which outsourcing of core business processes is possible.

Source: Dave Chaffey (2010), E-Business and E-Commerce Management: Strategy, Implementation and Practice, Prentice Hall (4th Edition).