Chapter 1

Human Resources in a Globally Competitive

Business Environment

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What will 21st century corporations look like?

What people-related business issues must managers be concerned about?

Which features will characterize the competitive business environment in the foreseeable future, and how might we respond to them?

Questions this Chapter will Help Managers Answer

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What people-related problems are likely to arise as a result of changes in the forms of organizations?

How can we avoid these problems?

How do managers and human resource departments work together?

What are the HR implications of our firm’s business strategy?

Questions this Chapter will Help Managers Answer (contd.)

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Table 1-1 Contrasting Views of the Corporation

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Staffing

Retention

Development

Adjustment

Managing Change

Activities in Managing People

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Table 1–2: HRM Activities and the Responsibilities of Line Managers and the HR Department

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Identifying work requirements within an organization.

Determining the numbers of people and the skills mix necessary to do the work.

Recruiting, selecting, and promoting qualified candidates.

Staffing Activities

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Rewarding employees for performing their jobs effectively.

Ensuring harmonious working relations between employees and managers.

Maintaining a safe, healthy work environment.

Retention Activities

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Development

… is a function whose objective is to preserve and enhance employees’ competence in their jobs through improving their knowledge, skills, abilities, and other characteristics.

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Adjustment

… comprises activities intended to maintain compliance with the organization’s HR policies (e.g., through discipline) and business strategies (e.g., cost leadership.

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Managing Change

… is an ongoing process whose objective is to enhance the ability of an organization to anticipate and respond to developments in its external and internal environments, and to enable employees at all levels to cope with the changes.

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Globalization◦ The free movement of capital, goods, services, ideas,

information, and people across national boundaries.

Technology◦ Information and ideas are keys to the new creative

economy, because every country, company, and individual depends increasingly on knowledge.

◦ The most central use of technology in HRM is an organization’s human resources information system (HRIS).

E-Commerce◦ The Internet is the foundation for a new industrial order

Features of the Competitive Business Environment

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Figure 1–1: Percentage Change in Labor Force by Age: 2006-2016

Figure 1-1: Projected Percentage Change in Labor Force by Age, 2006-2016

-6.9

2.4

36.5

83.4

84.3

-20 0 20 40 60 80 100

16 to 24

25 to 54

55 to 64

65 to 74

75 and older

Percent change

Source: U. S. Bureau of Labor Statistics (July 31, 2008). Projected growth in labor force participation of seniors, 2006-2016. Retrieved from http://www.bls.gov/opub/ted/2008/jul/wk4/art04.htm

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Figure 1–2: U.S. Population by Age and Race,2000 and 2050

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The reduced supply of workers (at least in some fields) will make finding and keeping employees a top priority.

The task of managing a culturally diverse workforce, of harnessing the motivation and efforts of a wide variety of workers, will present a continuing challenge to management.

Implications of Demographic Changesand Increasing Cultural Diversity for Managers

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The shift from vertically integrated hierarchies to networks of specialists

The decline of routine work, coupled with the expansion of complex jobs that require flexibility, creativity, and the ability to work well with people

Pay tied less to a person’s position or tenure in an organization and more to the market value of his/her skills

Responses of Firms to the New Competitive Realities

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A change in the paradigm of doing business from making a product to providing a service, often by part-time or temporary employees

Outsourcing of activities that are not core competencies of a firm

The redefinition of work itself: constant learning, more higher-order thinking, less nine-to-five mentality

Responses of Firmsto the New Competitive Realities (contd.)

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New Forms of Organization

Virtual Organization: where teams of specialists come together to work on a project and disband when the project is finished (e.g., the movie industry)

Virtual workplace: where employees operate remotely from each other and from managers

Modular corporation: where the organization focuses on a few core competencies (e.g., designing and marketing of computers or copiers) and outsource everything else to a network of suppliers

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Figure 1–3: The Modular Corporation

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Restructuring can assume a variety of forms, of which employment downsizing is probably the most common. Companies can restructure by selling or buying plants or lines of business, or by laying-off employees.

Downsizing is the planned elimination of positions or jobs.

Restructuring, Including Downsizing

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Six Sigma◦ Originated at Motorola in 1986, and became a

staple of corporate life in the 1990s after GE embraced it.

◦ Goal: Reduce variability from a process (no more than 3.4 defects per million) in order to avoid defects and increase predictability.

◦ Based on 5 steps: define, measure, analyze, improve, and control (DMAIC).

◦ Main value to corporations lies in its ability to save time and money.

Quality-Management Programs

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The fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in cost, quality, and speed.◦ Process: A collection of activities that takes one

or more kinds of input and creates an output that is of value to a customer.

◦ HR issues are central to the reengineering of business processes.

◦ It requires that managers create an environment and an organizational culture that embraces, rather than resists, change.

Reengineering

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Flexibility in schedules is the key, as organizations strive to retain talented workers.

Frequently viewed by managers and employees as an exception or employee accommodation, rather than as a new, effective way of working to achieve business results.

Flexibility

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Table 1–3: Implementing Flexibility:A Spectrum Of Practice

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Figure 1–4: Overall productivity of Top 10 Countries in U.S. Dollars

Figure 1-4. Overall productivity, expressed as GDP per person employed, in $U.S., ranks 1-10 and 39-49.

Source: Downloaded from www.nationmaster.com/graph/eco_ove_pro_ppp-economy-overall-productivity-ppp

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Figure 1-5 Productivity

INPUTS

INPUTS

OUTPUTS

OUTPUTS

LaborCapital

Equipment

LaborCapital

Equipment

Goods and

Services

Goodsand

Services

More productive organizations

Less productive organizations

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A set of objective organizational conditions and practices.

◦ Employees’ perceptions that they are safe, relatively well satisfied, have reasonable work-life balance, and able to grow and develop as human beings.

◦ This relates QWL to the degree to which the full range of human needs is met.

Quality of Work Life: What is it?

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Credible activists

Cultural stewards

Talent managers/organizational designers

Strategy architects

Business allies

Operational executors

Business Trends and HR Competencies

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Management systems that produce profits through people share seven dimensions:

◦ Employment security

◦ Selective hiring

◦ Self-managed teams and decentralization are basic elements of the organization design

◦ Comparatively high compensation contingent on organizational performance

◦ Extensive training

◦ Reduced differences in status

◦ Sharing of information

The 21st-century Corporation