Trends in Human Resource Management Ch.2
Focus on Strategy 6 Downsizing H R M challenged to "surgically" reduce workforce. •Most valuable employees should be kept, but they are often willing and able to find other employment before layoffs. •Early-retirement programs are humane, but they essentially reduce the workforce with a "grenade" approach. H R M must boost morale of remaining workers. •Open communication necessary to build trust: notify employees of reason for downsizing and provide downsized employees with outplacement services.
Downsizing presents a number of challenges and opportunities for HRM.
At what age do you expect to retire? A. 55. B. 60. C. 65. D. 70. E. 75. F. Never retiring.
F. Never retiring.
Focus on Strategy 3 High-Quality Standards Many companies use total quality management (T Q M). Provides guidelines for all the organization's activities. Quality improvement can focus on H R M functions. •Applying data to improve business processes.
To compete in today's economy, companies need to provide high-quality products and services. If companies do not adhere to quality standards, they will have difficulty selling their product or service to vendors, suppliers, or customers. Therefore, many organizations have adopted some form of total quality management (TQM). Total quality management (TQM) is a companywide effort to continuously improve the ways people, machines, and systems accomplish work.
Focus on Strategy 7 COVID-19 •The COVID-19 pandemic caused major layoffs and furloughs in U.S. businesses in 2020. •The impact of COVID-19 on H R M will likely continue for foreseeable future. •Congress passed several pieces of emergency legislation to lessen the blow from this catastrophic event.
HRM functions during the pandemic included: provide continuous updates to employees regarding measures adopted by the company; issue guidance to employees regarding travel; share updates from business leaders via e-mail or video; provide ongoing information on HR policies related to the outbreak; and offer education through health talks.
Focus on Strategy 5 Cost Control Some organizations have a low-cost, low-price strategy. •These organizations rely on HR to identify ways to limit costs of maintaining a qualified, motivated workforce. HR must lower costs without compromising quality. H R M can help the organization use human resources more efficiently and make H R M processes more efficient. H R M can downsize, reengineer, or outsource to control costs.
How to manage the costs while meeting the requirements is complicated. Employers need to weigh factors such as legal requirements, the costs and types of plans available, the impact on departments' budgets, and the effect on employee morale and retention, as well as on the ability to recruit new employees. Management relies on well-informed HR managers to identify alternatives and recommend which ones will best support the company's strategy. Beyond specific issues such as health insurance and the Affordable Care Act, HRM can support strategic efforts to control costs through downsizing, reengineering, and outsourcing.
Focus on Strategy 1 H R M must support company's strategy by: •Aligning policies and practices with company goals. •Supporting company decisions through quality improvement programs, mergers and acquisitions, restructuring, reengineering, outsourcing, and international expansion.
LO 2-4 Identify ways HR professionals can support organizational strategies for growth, quality, and efficiency. Traditional management thinking treated human resource management primarily as an administrative function, but managers today are beginning to see a more central role for HRM.
Sharon is a very smart and conscientious worker. However, she feels that her ideas are disregarded, and she has not had autonomy in completing her work. This situation is probably caused by a lack of
Sharon is a very smart and conscientious worker. However, she feels that her ideas are disregarded and she has not had autonomy in completing her work. This situation is probably caused by a lack of _____. A.teamwork B.knowledge management C.employee empowerment D.job security Answer: C
Change in the Employment Relationship 3 Flexibility Flexible staffing levels: •Allows an organization to quickly meet changing needs. •Alternative work arrangements include independent contractors, on-call workers, temporary workers, and contract workers. •In a gig economy, workers are typically independent contractors who control when and where they work and often are assigned work through a website or mobile app. Flexible work schedules: •Helps protect employees' free time and to more productively use employees' work time. •24/7 access may result in greater employee stress, less satisfied employees, loss of productivity, and higher turnover.
From the organization's perspective, the key to survival in a fast-changing environment is flexibility. Organizations want to be able to change as fast as customer needs and economic conditions change. Flexibility in human resource management includes flexible staffing levels and flexible work schedules. Alternative work arrangements are methods of staffing other than the traditional hiring of full-time employees (for example, use of independent contractors, on-call workers, temporary workers, and contract workers). A major reason for the popularity of contingent work arrangements is that paying contractors enables an organization to pay only for completion of specific tasks and therefore to control costs. Gig economy is a situation in which companies rely primarily on alternative work arrangements to meet service and product demands. The globalization of the world economy and the development of e-commerce have made the notion of a 40-hour workweek obsolete. As a result, companies need to be staffed 24 hours a day, seven days a week. Professional employees face long hours and work demands that spill over into their personal lives. More demanding work results in greater employee stress, less satisfied employees, loss of productivity, and higher turnover. Flexible schedules are used to recruit and retain employees and to increase satisfaction and productivity.
Technological Change in H R M 2 People Analytics The use of computers to analyze large amounts of data and offer information to guide decisions. Artificial intelligence (A I) can improve HR decisions in: •Job analysis. •Recruiting and selection. •Performance management. •Employee relations.
Artificial intelligence (AI) is technology that simulates human thinking, applying experience to deliver better results over time. It is programmed to conduct queries that enable the software to learn from data, identifying trends and patterns that enable it to deliver better results over time. Systems that include AI can adapt to change and can be set up to make decisions automatically. Another promising technology is the use of chatbots, a voice interface that, like Alexa or Siri, answers employees' questions about their insurance, vacation time, and so on.
Change in the Labor Force Internal Labor Force •An organization's workers includes its employees and people who have contracts to work at the organization. •Internal labor force has been drawn from the external labor market.
External Labor Market •Individuals who are actively seeking employment. •Number and kinds of people in external labor market determine kinds of human resources available to an organization.
Change in the Labor Force 2 An Aging Workforce Workers aged 55 and older are the fastest growing workforce group. The number of young workers between the ages of 16 and 24 is decreasing. H R M considerations: •Planning retirement. •Retraining older workers. •Motivating workers whose careers have plateaued. •Controlling the rising cost of health care and other benefits.
HR professionals need to be aware of trends in the composition of the external labor market, because these trends affect the organization's options for creating a well-skilled, motivated internal labor force. There are several practical implications of the aging workforce: •HR professionals will spend much of their time on concerns related to retirement planning, retraining older workers, and motivating workers whose careers have reached a plateau. •Organizations will struggle with ways to control the rising costs of health care and other benefits.
Change in the Employment Relationship 2 Declining Union Membership •Has been declining since 19 80s. •Consistent with individual workers taking responsibility for own careers.
Outside of government agencies, fewer U.S. workers today are union members.
High-performance work systems Knowledge Workers The main contribution to a company is specialized knowledge such as in customers, process, or a profession. Have a position of power. •Employers need the knowledge they possess. •They often have many job opportunities, even in slow economies.
Some argue that all workers are knowledge workers. Note: The high-growth jobs generally require specialized knowledge. To meet their human capital needs, companies are increasingly trying to attract, develop, and retain knowledge workers. Knowledge workers are employees whose main contribution to the organization is specialized knowledge, such as knowledge of customers, a process, or a profession. Knowledge workers are in a position of power, because they own the knowledge that the company needs in order to produce its products and services. They must share their knowledge and collaborate with others in order for their employer to succeed.
An Aging Workforce (continued) Today's workforce often brings together four or five generations. •Older workers may choose to work part time or take temporary assignments. •Creates a need for understanding the values and work habits that characterize each generation. •HR managers need to address generational differences.
There are several practical implications of the aging workforce: •Many of tomorrow's managers will supervise employees much older than themselves. •Organizations will have to find ways to attract, retain, and prepare the youth labor force.
Using Mobile Devices Access to an H R I S from mobile devices is helpful
for employees who work outside the office because they can receive and share information online easily. The benefits of products such as smartphones are enormous, but is it possible to be too accessible?
Change in the Employment Relationship 1 A Psychological Contract Unspoken expectations of both employee and employer. In today's world: •Employees expected to take responsibility in careers. •Employers expected to provide perks in exchange. •Flexible work schedules, comfortable working conditions, more control over their work, training and development opportunities, and financial incentives. In recent years, more people are job hopping. •Staves off boredom and wins rapid increases in pay and responsibility.
A psychological contract is a description of what an employee expects to contribute in an employment relationship and what the employer will provide the employee in exchange for those contributions. It describes unspoken expectations that are widely held by employers and employees. In exchange for top performance and working longer hours without job security, employees want companies to provide flexible work schedules, comfortable working conditions, more control over how they accomplish work, training and development opportunities, and financial incentives based on how the organization performs. Employees realize that companies cannot provide employment security, so they want employability. This means they want their company to provide training and job experiences to help ensure that they can find other employment opportunities. Some employees engage in job hopping, the intentional practice of changing jobs frequently—say, every year or two—especially in recent years, when the national unemployment rate had dropped to historic lows with employers offering attractive salaries and benefits to fill open positions.53 Job hopping can be appealing to an employee as a way to stave off boredom and win some rapid increases in pay and responsibility.
Application HR Tasks Example Employee selection: Developers are working on software that can analyze videos of interviews to provide data about candidates' behavior associated with particular characteristics. Workforce planning: Software can analyze hourly pay to identify and predict situations in which companies are paying for overtime, pointing to opportunities for better workforce management to reduce this expense. Compensation A payroll system maintains information about salaries, bonuses, and other pay and automatically computes taxes and benefits costs to be withheld. It keeps pay records up-to-date and shares information with banks receiving direct deposits . Orientation of new employees New hires at Royal Bank of Canada use a "preboarding" system to get information about the job, their team, and the company culture. Training: Training modules are available online for employees to download as they identify relevant skills they want to learn. A training system may also include information about career paths and the necessary skills for each.
Advances in computer-related technology have had a major impact on the use of information for managing human resources. Decision makers can easily obtain large quantities of data and manipulate it with spreadsheets and statistical software. Furthermore, much of the data can be processed automatically, as illustrated in Table 2.2.
Focus on Strategy 4 T Q M Core Values 1.Methods and processes are designed to meet the needs of internal and external customers. 2.Every employee receives training in quality. 3.Quality is designed into product or service to prevent errors from occurring. 4.Organization promotes cooperation with vendors, suppliers, and customers to improve quality and hold down costs. 5.Managers measure progress with feedback based on data.
Based on these values, the TQM approach provides guidelines for all the organization's activities, including human resource management. To promote quality, organizations need an environment that supports innovation, creativity, and risk taking to meet customer demands. Problem solving should bring together managers, employees, and customers. Employees should communicate with managers about customer needs. Quality improvement can focus on the HRM function itself. One area where managers are increasingly pressing for improvement is performance management.
Skill Deficiencies of the Workforce Physical strength and mastery of machinery no longer as important. Desired skills today: •Mathematical. •Verbal. •Interpersonal. •Decision making. •Computer/technology. Many employers accept candidates without an education; then offer training to correct any skills gaps. Manufacturing companies are looking for people who can operate sophisticated computer-controlled machinery.
Employees must be able to handle a variety of responsibilities, interact with customers, and think creatively. To find such employees, most organizations are looking for educational achievements. A college degree is a basic requirement for many jobs today. Some companies are unable to find qualified employees and instead rely on training to correct skill deficiencies. Other companies team up with universities, community colleges and professional schools to design and teach courses ranging from basic reading to design blueprint reading.
Focus on Strategy 2 Mergers and Acquisitions •Mergers: two companies become one. •Acquisitions: one company buys another. •HR must be involved in resolving inevitable conflicts between companies' practices.
HRM should have a significant role in carrying out a merger or acquisition. Differences between the businesses involved in the deal make conflict inevitable. Training efforts should therefore include the development of skills in conflict resolution. Also, HR professionals have to sort out differences in the two companies' practices with regard to compensation, performance appraisal, and other HR systems.
Technological Change in H R M 3 Sharing of Human Resource Information Employees can now access much of HR info through self-service. •Especially convenient when combined with mobile computing devices. •Also being used for management tasks, such as compensation and performance management. •Offers benefits in terms of privacy and efficiency. An HR dashboard is a display of how the company is performing on specific HR metrics.
Information technology is changing the way HR departments handle record keeping and information sharing. Today HR employees use technology to automate much of their work in managing employee records and giving employees access to information and enrollment forms for training, benefits, and other programs. Self-service is a system in which employees have online access to information about HR issues and go online to enroll themselves in programs and provide feedback through surveys. This means employees have online access to information about HR issues such as training, benefits, compensation, and contracts. A growing number of companies are combining employee self-service with management self-service, such as the ability to go online to authorize pay increases, approve expenses, and transfer employees to new positions. More sophisticated systems extend management applications to decision making in areas such as compensation and performance management.
Focus on Strategy 10 Expanding into Global Markets The Global Workforce Offshoring. Reshoring. Hiring from developing nations has some challenges. •Whether workers in the offshore locations can provide the same or better skills. •How offshoring will affect motivation and recruitment of employees needed in the United States. •Whether managers are well prepared to manage and lead offshore employees.
International Assignments •Expatriates. •HR must select expatriates carefully and help prepare them to work internationally. •Good candidates understand and respect the cultural and business norms of the host country, while having language skills and technical ability. LO 2.5 Summarize ways in which human resource management can support organizations expanding internationally. To survive, companies must compete in international markets as well as fend off foreign competitors' attempts to gain ground in the United States. Companies must develop global markets, keep up with competition from overseas, hire from an international labor pool, and prepare employees for global assignments. This global expansion can pose some challenges for human resource management as HR employees learn about the cultural differences that shape the conduct of employees in other parts of the world. Talent comes from a global workforce. Organizations with international operations hire at least some of their employees in foreign countries where they operate. The efforts to hire workers in other countries are called offshoring—moving operations from the country where a company is headquartered to a country where pay rates are lower, but the necessary skills are available. More recently, greater reliance on automation (which reduces the importance of labor costs), even in the services sector, and concern for quality and flexibility have driven a trend toward reshoring, or reestablishing operations in North America. Hiring in developing nations such as India, Mexico, and Brazil gives employers access to people with potential who are eager to work yet who will accept lower wages than elsewhere in the world. Challenges, however, may include employees' lack of familiarity with technology and corporate practices, as well as political and economic instability in the areas. Important issues that HR experts can help companies weigh include whether workers in the offshore locations can provide the same or better skills, how offshoring will affect motivation and recruitment of employees needed in the United States, and whether managers are well prepared to manage and lead offshore employees. Organizations must be prepared to send employees to other countries. This requires HR expertise in selecting employees for international assignments and preparing them for those assignments. Employees who take assignments in other countries are called expatriates.
High-performance work system Employee Empowerment •Employees are allowed to make more decisions; they share in resulting losses and rewards. •Leads to more innovation and sharing of ideas. •H R M practices such as performance management, training, work design, and compensation should be considered. •Employee engagement leads to higher productivity, better customer service, and lower turnover. •Shifts the recruiting focus away from technical skills and toward general cognitive and interpersonal skills.
LO 2-3 Define employee empowerment, and explain its role in the modern organization. Employee empowerment means giving employees responsibility and authority to make decisions regarding all aspects of product development or customer service. Use of employee empowerment shifts the recruiting focus away from technical skills and toward general cognitive and interpersonal skills. Employees who have responsibility for a final product or service must be able to listen to customers, adapt to changing needs, and creatively solve a variety of problems.
Technological Change in H R M 1 HR Information Systems •Improve accuracy and efficiency. •Support strategic and day-to-day decision making. •Help avoid lawsuits. •Provide data for evaluating programs or policies. •Cloud computing expands use of H R I S. •Organization can set up an intranet to protect information.
LO 2-6 Discuss how technological developments are affecting human resource management. Human resource information system (HRIS) is a computer system used to acquire, store, manipulate, analyze, retrieve, and distribute information related to an organization's human resources. HRIS can help HR professionals think strategically and support talent management by integrating data on recruiting, performance management, and training to fill positions. Cloud computing is the practice of using a network of remote servers hosted on the Internet to store, manage, and process data. An intranet is a network that uses Internet tools but limits access to authorized users in the organization.
Focus on Strategy 9 Outsourcing •Gives company access to in-depth expertise. •Is often more economical. •HR helps with the transition to outsourcing, and many HR functions are also outsourced.
Many organizations are increasingly outsourcing business activities. Outsourcing refers to the practice of having another company (a vendor, third-party provider, or consultant) provide services. Outsourcing gives the company access to in-depth expertise and is often more economical as well. Many HR functions are being outsourced. Outsourcing initially focused on routine transactions such as payroll processing and on complex technical specialties such as managing retirement accounts and, more recently, health care coverage. Today's outsourcing is moving more into areas that automate processes and support decision making.
A Diverse Workforce Growing diversity in race, ethnicity, and gender. Fastest growing racial group is multiracial, and fastest growing ethnic group is Hispanic. Immigration is an important source of growing diversity. H R M considerations regarding immigration: •Supply of and demand for labor. •Need to comply with laws.
Other foreign-born workers in the United States arrived in this country without meeting the legal requirements for immigration or asylum. These individuals, known as undocumented or illegal immigrants, likely number more than 10 million. While government policy toward immigrants is a matter of heated public debate, the HR implications have two practical parts. The first involves the supply of and demand for labor. Many U.S. industries, including meatpacking, construction, farming, and services, rely on immigrants to perform demanding work that may be low paid. In other industries, such as computer software development, employers say they have difficulty finding enough qualified U.S. workers to fill technical jobs. These employers are pressing for immigration laws to allow a greater supply of foreign-born workers. The other HR concern is the need to comply with laws. In recent years, Immigration and Customs and Enforcement has intensified its enforcement of immigration laws, including more audits of employers to ensure that they are following proper procedures to avoid employing undocumented immigrants and more unannounced raids on worksites suspected of being out of compliance.
Focus on Strategy 8 Reengineering Undertaken to deal with rapidly changing customer needs, new technology. Effects on H R M: •How HR accomplishes goals may change dramatically. •HR must design and implement change so that all employees will be committed to the reengineered organization's success. •Often results in employees being laid off or reassigned to new jobs.
Rapidly changing customer needs and technology have caused many organizations to rethink the way they get work done. Therefore, many organizations have undertaken reengineering—a complete review of the organization's critical work processes to make them more efficient and able to deliver higher quality. Ideally, reengineering involves reviewing all the processes performed by all the organization's major functions, including production, sales, accounting, and HR. Reengineering affects HRM in two ways. First, the way the HR department itself accomplishes its goals may change dramatically. Second, the fundamental change throughout the organization requires the HR department to help design and implement change so that all employees will be committed to the success of the reengineered organization. Employees may need training for their reengineered jobs. The organization may need to redesign the structure of its pay and benefits to make them more appropriate for its new way of operating. It also may need to recruit employees with a new set of skills. Employees may need training for their reengineered jobs. Often, reengineering results in employees being laid off or reassigned to new jobs, as the organization's needs change.
High-performance work system Teamwork •Increases employee responsibility and control. •Virtual teams rely on communications technology to keep in touch and coordinate activities. •Can motivate employees by making work more interesting and significant, and may lower labor costs. •Being agile involves weaving the development process into the organization's activities and strategies.
Teamwork is the assignment of work to groups of employees with various skills who interact to assemble a product or provide a service. One way to increase employee responsibility and control is to assign work to teams. Work teams also contribute to total quality by performing inspection and quality-control activities while the product or service is being completed. Technology is enabling teamwork even when workers are at different locations or work at different times. These organizations use virtual teams—teams that rely on communications technology such as videoconferences, e-mail, and cell phones to keep in touch and coordinate activities. Teamwork can motivate employees by making work more interesting and significant. At organizations that rely on teamwork, labor costs may be lower as well. Teamwork is a necessary component of more and more computer programming tasks. Companies that develop software are increasingly using an approach they call "agile," which involves weaving the development process more tightly into the organization's activities and strategies. In agile software development, self-directed teams of developers and programmers work directly with the business users of the software, using as much face-to-face communication as possible. Users of agile software development say it increases customer satisfaction and speeds up the time from concept to usable software.
High-performance work systems are organizations that have the best fit between: •Social system (people and how they interact). •Technical system (equipment and processes).
Trends in high-performance work systems: •Reliance on knowledge workers. •Empowerment of employees to make decisions. •Use of teamwork.