Trends In Human Resource Management Chapter Two Trends In Human Resource Management

What do I Need to Know? Describe trends in the labor force composition and how they affect human resource management. Summarize areas in which human resource management can support the goal of creating a high-performance work system. Define employee empowerment and explain its role in the modern organization. Identify ways HR professionals can support organizational strategies for quality, growth, efficiency, and international operations. Summarize the role of human resource management in an Internet economy. Discuss how technological developments are affecting human resource management. Explain how the nature of the employment relationship is changing. Discuss how the need for flexibility affects human resource management.

Introduction The early years of the 21st century have shaken the complacency of U.S. workers and forced them to take a fresh look at the way they are working. An examination of some of the new trends that are currently shaping the nature of HRM today are presented in the following slides.

Change in the Labor Force The labor force is a general way to refer to all people willing and able to work. The internal labor force consists of the organization’s workers- its employees and the people who have contracts to work at the organization. The external labor market is comprised of individuals who are actively seeking employment. An organization’s internal labor force is derived from its external labor market.

An Aging Workforce The Bureau of Labor Statistics tracks changes in the composition of the U.S. labor force and forecasts employment needs. Projections for 1996-2006, indicate the U.S. labor force will grow from 134 to 149 million workers. Some of the expected change involves the distribution of workers by age. Youth labor force, workers between the ages of 16-24, is expected to grow faster than the overall labor force for the first time in 25 years. The fastest growing segment will be workers aged 45-64. By 2015, workers aged 40 and above will exceed the number under 40 for the first time ever. Organizations will struggle with ways to control costs and will have to find new ways to attract, retain, and prepare the youth labor force. Values tend to change from one generation to another as well as during different life stages.

Age Distribution of U.S. Labor Force, 1990 and 2010

A Diverse Workforce The greater diversity of the labor force challenges employers to create HRM practices that ensure they fully utilize the talents, skills, and values of all employees. Labor market growth of female and minority populations will exceed the growth of white non-Hispanic persons. Managing cultural diversity involves many different activities. How diversity affects HRM practices: Staffing perspective Work design perspective Training perspective Compensation perspective

Projected Racial/Ethnic Makeup of the U.S. Workforce 2006

Skill Deficiencies of the Workforce The increasing use of computers to do routine tasks has shifted the kinds of skills needed for employees in the U.S. economy. Employees must be able to handle a variety of responsibilities, interact with customers, and think creatively. Most organizations are looking for educational achievements and a college degree is a basic requirement for many jobs today. The gap between skills needed and skills available has: Decreased ability to compete because they sometimes lack the skills to upgrade technology, reorganize work, and empower employees.

High-Performance Work Systems High-performance work systems are organizations that have the best possible fit between their social system and technical system. Some of the trends in today’s high-performance work systems are: Reliance on knowledge workers Empowerment of employees to make decisions Utilization of teamwork

Knowledge Workers Knowledge workers are employees whose main contribution to the organization is specialized knowledge. The reliance on knowledge workers affects organizations’ decisions about the kinds of people they are recruiting and selecting.

Employee Empowerment Employee empowerment means giving employees responsibility and authority to make decisions regarding all aspects of product development or customer service. HRM practices such as performance management, training, work design, and compensation are important for ensuring the success of employee empowerment. For empowerment to succeed, managers must be trained to link employees to resources within and outside the organization. The use of employee empowerment shifts the recruiting focus away from technical skills and toward general cognitive and interpersonal skills.

Teamwork Teamwork is the assignment of work to groups of employees with various skills who interact to assemble a product or provide a service. Work teams often assume many activities traditionally reserved for managers. Virtual teams rely on communication technology to keep in touch and coordinate activities. Teamwork motivates employees by making work more interesting and significant.

Focus on Strategy At a growing number of organizations, HR professionals are strategic partners with other managers. The specific ways in which HR professionals support the organization’s strategy vary according to their level of involvement and the nature of the strategy.

Business Strategy: Issues Affecting HRM

Focus on Strategy High Quality Standards: Mergers and Acquisitions: To remain competitive in today’s economy, organizations need to provide high-quality products and services. Total quality management (TQM) refers to a company-wide effort to continuously improve the ways people, machines, and systems accomplish work. TQM has several core values. Mergers and Acquisitions: Mergers: Two companies becoming one. Acquisitions: One company buying another. HR professionals have to sort out the differences in the two companies’ practices with regards to compensation, performance appraisal, and other HR systems.

Focus on Strategy Downsizing: Downsizing presents a number of challenges and opportunities for HRM. All employees should be informed: Why the downsizing is necessary What costs are to be cut How long the downsizing will last What strategies the organization intends to pursue HRM can provide downsized employees with outplacement services to help them find new jobs.

Focus on Strategy Expanding into Global Markets: In order to meet challenges, U.S. companies must Develop global markets Keep up with competition from overseas Hire from an international labor pool Prepare employees for global assignments. Employees who take assignments in other countries are called expatriates.

Focus on Strategy Reengineering: Outsourcing: Reengineering is a complete review of the organization’s critical work processes to make them more efficient and able to deliver higher quality. Reengineering affects HRM in two ways: The way the HR department accomplishes goals may change The HR department must help design and implement change Outsourcing: Outsourcing refers to the practice of having another company provide services. HR departments help with a transition to outsourcing and many HR functions are being outsourced such as: Payroll administration Training Recruitment Selection

Technological Change in HRM Advances in computer-related technology have had a major impact on the use of information for managing HR. A human resource information system (HRIS) is a computer system used to acquire, store, manipulate, analyze, retrieve, and distribute information related to human resources.

A Changing Economy The way business is conducted has changed rapidly during the past few years and will continue to do so. Many companies are connecting to the Internet to gain an advantage over or keep up with competitors. Electronic business (e-business) is any process that a business conducts electronically, especially business involving use of the Internet. E-business involves several forms of buying and selling goods and services: Business-to-consumer Business-to-business Consumer-to-consumer

Human Resources in E-Business E-business creates many HRM challenges. HRM needs to maintain a balance between accommodating the unique needs of an unstructured and creative workforce and enforcing necessary policies and procedures.

E-HRM Applications in Other Organizations The development of e-business has included ways to move HRM activities onto the Internet. The processing and transmission of digitalized HR information is called electronic human resource management (e-HRM). Some major implications of e-HRM include: Employees in different areas can work together Companies can search wider areas for talent Recruiting can utilize online services Employees from different areas can receive the same training Privacy is an important issue of e-HRM. Information technology is changing the way HR departments handle record keeping and information sharing. Employees can gain information through self-service.

Changes in the Employment Relationship A psychological contract is a description of what an employee expects to contribute and what the employer will provide the employee in exchange for the contributions. From the organization’s perspective, the key to survival in a fast-changing environment is flexibility. Flexibility in HRM includes: Flexible staffing levels Flexible work schedules

Changes in the Employment Relationship Alternative work arrangements are methods of staffing other than the traditional hiring of full-time staff. Independent contractors On-call workers Temporary workers Contract company workers From employees’ perspective, alternative work arrangements provide some flexibility for balancing work and non-work activities. The globalization of the world economy and the development of e-commerce have made the notion of a 40-hour workweek obsolete. Offering flexible work schedules provide organizations with many benefits.