Johnson, Human Resource Information Systems, 5e
SAGE Publishing, 2021
Chapter 6: Cost–Justifying HRIS Investments
Test Bank
Multiple Choice
1. An HRIS can provide the primary infrastructure used to ______.
A. deliver HR programs
B. ensure HR regulatory compliance
C. produce the metrics that are used to evaluate HR programs
D. all of these
2. A preliminary estimate of the CBA of an HRIS investment should ______.
A. be calculated when the HRIS actual implementation begins
B. be presented to senior management before beginning detailed work on the project
C. be based on the reputation of the HRIS vendor
D. all of these
3. HRIS functionality refers to ______.
A. the ability of the HRIS to function in a cost-effective manner.
B. the number of HR programs that are operational in the HRIS
C. the benefits derived from a CBA analysis
D. how well the HRIS is integrated with other IT applications (e.g., the marketing IS)
4. The primary disadvantage of benchmarking is that ______.
Johnson, Human Resource Information Systems, 5e
SAGE Publishing, 2021
A. it allows an organization to build on the experiences of others
B. benchmarking information is becoming more widely available
C. organizations can conduct their own benchmarking studies
D. the experiences of other organizations may not generalize to your firm
5. Basing the justification of a new HRIS system or upgrade on compliance with Equal
Employment Opportunity (EEO) regulations is an example of ______.
A. the integration of the HR and legal departments
B. an organization enhancement justification
C. a risk avoidance justification
D. a compliance justification
6. Which one of the following statements about organizational enhancement strategy is
correct?
A. It is used when investments are believed to eliminate or mitigate significant future
risks
B. It is the only way to justify investment in HRIS
C. It focuses on compliance with laws and regulations.
D. It highlights how the effectiveness of the organization will be improved by investment
in HRIS.
7. Which of the following guidelines should not be a guideline for a successful HRIS
CBA?
A. The objective is improving effectiveness of the HR department.
B. focus on functionality, not products
C. develop the best estimate possible
Johnson, Human Resource Information Systems, 5e
SAGE Publishing, 2021
D. know your business
8. Investment analyses for an HRIS are based the following information ______.
A. sources of costs and benefits, cost of obtaining financing, and the time when the
organization will incur each cost
B. the time when the organization will incur each cost, the availability of the new HRIS
software, and the cost of obtaining financing
C. an estimated dollar value for each cost and benefit, the availability of the new HRIS
software, and sources of costs and benefits
D. the time when the organization will incur each cost and receive each benefit, sources
of costs and benefits, and an estimated dollar value for each cost and benefit
9. Indirect benefits are difficult to quantify because ______.
A. their occurrence may be less certain
B. indirect revenue enhancements result from direct benefits
C. they are always smaller than direct benefits
D. the HRIS does not contain the necessary data
10. In terms of estimating costs and benefits for a new HRIS, the critical time period is
______.
A. the first 6 months to 1 year
B. the first 2 years
C. the first 5 years
D. the first 8–10 years
Johnson, Human Resource Information Systems, 5e
SAGE Publishing, 2021
True/False
1. It is a good idea to start by identifying a new software application and then trying to
justify how its features or capabilities would help the organization.
2. A BCA is a comparison of the projected costs and benefits associated with an HRIS
investment.
3. An employee’s average contribution is equal to his or her pay rate.
4. Direct costs for implementing a new HRIS application in training would include
reduced absenteeism.
Johnson, Human Resource Information Systems, 5e
SAGE Publishing, 2021
5. Indirect costs for implementing a new HRIS application in training would include lost
productivity during conversion to new system.
6. Internal assessment for estimating indirect benefit magnitude provides the most
precise estimates of the baseline costs and current performance of existing processes.
7. Packaging your CBA for decision makers should be done on a single page.
8. Time saved by the implementation of an HRIS a direct cost reduction.
9. An HRIS CBA that includes an extensive analysis of costs matched with a single
source of benefits (e.g., an estimate of direct cost reductions) is a common problem in
justifying the purchase of a new HRIS.
Johnson, Human Resource Information Systems, 5e
SAGE Publishing, 2021
10. The price of hardware and software is an example of an indirect cost of HRIS
implementation.
11. An integrated information system is one built on common platforms that permit
Essay
1. What is the difference between direct and indirect benefits and costs?
Johnson, Human Resource Information Systems, 5e
SAGE Publishing, 2021
2. What does average employee contribution (AEC) and individual employee
differences (variance) in work outcomes measure in a CBA?
3. What are the three common problems that can occur in an HRIS CBA?
4. What type of benefit is time saved by employees, and why is it this type of benefit?
5. What is the difference between cost reduction and organizational enhancement as
strategies for HRIS investments?
Johnson, Human Resource Information Systems, 5e
SAGE Publishing, 2021
AACSB Standard: Application of knowledge
6. What are some of the guidelines to a successful HRIS CBA?
7. Why is it a bad idea to assume that an employee’s salary is equal to their average
employee contribution?
8. What are the three approaches for estimating benefit magnitude?
Johnson, Human Resource Information Systems, 5e
SAGE Publishing, 2021
10. What are the three steps that should be used to construct dollar estimates of indirect
benefits?