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Chapter 1 HRM in a Changing Environment

Chapter 1:

HRM IN A CHANGING ENVIRONMENT

LEARNING OUTCOMES Discuss how cultural environments affect human resource management (HRM) practices. Describe how technology is changing HRM Identify this chapter, students should be able to: After readingsignificant changes that have occurred in workforce composition Describe the HRM implications of a labor shortage Describe how changing skill requirements affect HRM Explain why organizational members focus on quality and continuous improvements Describe work process engineering and its implications for HRM Identify who makes up the contingent workforce and the HRM implications Define employee involvement and list its critical components Explain the importance of ethics in an organization.

CHAPTER OVERVIEW

The chapters opening vignette illustrates how Four Seasons Resorts and Hotels uses the Golden Rule to treat the employees as you expect them to treat the customer. While customers like to be pampered, so do the employees as evidenced by the Four Seasons being listed in Fortune magazine as one of the Best Companies to Work For every year since the list started in 1998. Overviews of todays dynamic business world, highlighting cultural environments, globalization, technology, and social history evolution, set the stage for discussions about the implications to the HR field. These topics include: multicultural issues, global workforces, HRM technology, workforce diversity, labor supply and management, contingent workforces, decentralized work sites, continuous improvement, work process engineering, employee involvement, HRM challenges, and ethics. Additional Features of This Chapter Exhibits include: 1 1: Cultural Values 1 2: FexEx Corporation Diversity Mission Statement 1 3: The Contingent Workforce 1 4: Are Layoffs Justified? 1 5: Employee vs. Independent Contractor

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Ethical Issues in HRM Invasion of Privacy on page 9 discusses the organizations right to monitor employees versus a workers right to privacy through the use of real-life examples. Workplace Issue Whats This Thing Called a Blog on page 10 examines the timely issue of blogs web logs of emails open for public view. Did You Know Chief Diversity Officer on page 11 describes how Deborah Dagit, the chief diversity officer at Merck & Co. demonstrates by example that disability accommodations are not different from flexible work arrangments for other groups. Did You Know International Diversity on page 11 has a chart depicting the percentage of women in executive ranks in various countries throughout the world. Workplace Issues Diversity Awareness on page 12 describes the variety of ways that organizations can meet the challenges of developing and motivating a diverse work force. Did You Know Working at the Future of HRM explains the biggest challenges for HR leaders today.

ADDITIONAL LECTURE OR ACTIVITY SUGGESTIONS

Ask students about current changes in the work environment which they have heard or read about. These may include friends and relatives who have been through work process engineering, their own employment as contingent workers, etc. Consider assigning this as a pass/fail interview assignment. Ask the students what role they believe the HR function played in helping organizations to manage these changes and what factors determine whether these changes are managed effectively. Provide an overview of a local or regional organization that has global operations. lead a discussion about how the local business was impacted by globalization. Ask the students to discuss how HRM might have been involved in that change.

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CHAPTER OUTLINE AND LECTURE SUGGESTIONS

I. INTRODUCTION A. Human resource management is a subset of the study of management that focuses of how to attract, hire, train, motivate, and retain employees. B. HR must understand the implications of globalization, technology changes, workforce diversity, labor shortages, changing skill requirements, changing skill requirements, continuous improvement initiatives, the contingent work force, decentralized work sites, company mergers, offshore sourcing of goods and services, and employee involvement. II. UNDERSTANDING CULTURAL ENVIRONMENTS A. The globalization of business and the continuing proliferation of multinational and transnational corporations places new requirements on HR managers. For example, HRM must develop new ways to harmoniously blend cultures. B. Todays business world is truly global. Businesses operate around the world. 1. Employees need to adapt to cultures, systems, and techniques different from their own. C. Multinational corporations (MNCs) are now commonplace. 1. HRM must ensure that employees with the appropriate knowledge, skills and cultural adaptability are available. D. Countries have different values, morals, customs, political and economic systems, and legal systems.

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A. Technology alters world economies and the way people work. 1. Technology has changed the way information is created, stored, used, and shared. 2. Thomas Friedman studied globalization and the evolution of civilization. He contends there are three eras of globalization, transportation, communication, and Countries began exploring beyond their shores leading to the discovery of the technology. new world by Columbus and the conquering of or the collaboration with other a. Globalizationand territories. to 1800 countries 1.0: From 1492 Lower costs and greater speed b. Globalization 2.0: 1880 to 2000 of transportation and communication led to the emergence of multinational companies, seeking labor and markets for the goods of the industial revolution. Globalization 3.0: 2000communication and fast, inexpensive transportation With instantaneous c. companies are now able to compete globally regardless of country of origin. B. What Is a Knowledge Worker? 1. Knowledge workers are individuals whose jobs are designed around the acquisition and application of information. C. How Technology Affects HRM Practices 1. Recruiting. On-line job posting, communicating electronically with applicants, and accepting applications on-line have all enhanced the recruiting process, often replacing word-of-mouth, newspaper advertisements, and college visits. 2. Employee Selection. Adaptability to a fast-paced 24/7 work environment and an ability to be flexible and a team player are critical selection criteria for many employees of technology-based organizations. 3. Training and Development. Web-based training offers many new opportunities for HR to enhance employee skills, such as on-demand training delivered electronically. 4. Ethics and Employee Rights. A key ethical issue today is what should be the balance between electronic surveillance and employee privacy rights. 5. Motivating Knowledge Workers. HR must structure jobs such that knowledge

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7. Communications. Todays electronic environment increases the timely communication of information and alters the traditional information paths. Blogs are new phenomenona with complicated implications. 8. Decentralized Work Sites. Companies must train managers how to establish and ensure appropriate work quality and on-time completion. They must also ensure that compensation and legal protections are appropriate in non-traditional work settings. 9. Skill Levels. Current job skills requirements will increase the need for technologically prepared employees. 10. A Legal Concern. HRM must be diligent to ensure that activities violating EEO laws do not occur via electronic mediums. HRM policy must define inappropriate electronic communications, reserve the right to monitor employee Internet and e-mail usage, and specify disciplinary actions for violations. IV.WORKFORCE DIVERSITY A. The challenge is to make organizations more accommodating to diverse groups of people by addressing different lifestyles, family needs, and work styles. B. The Workforce Today 1. Legislation, changing demographics and globalization have resulted in a more diverse work force in which minorities and women have become the fastest growing segments. 2. The numbers of immigrant workers and older workers are increasing. 3. Trying to predict the composition of the U.S. future workforce diversity is an educated guess at best, though it will consist of a heterogeneous mix of males and females, whites and people of color, homosexuals and straights, many ethic and religious groups, the disabled, and the elderly. C. How Diversity Affects HRM: 1. Need to attract and maintain a diversified work force that is reflective of the diversity

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V. THE LABOR SUPPLY 1. Is there a labor surplus or a labor shortage in the United States? VI. DO WE HAVE A SHORTAGE OF SKILLED LABOR? A. Labor trends are cyclical and difficult to predict. B. The labor shortage is a function of birth rates and labor participation rates. C. In times of a labor shortage, good wages and benefits arent always enough to hire and retain skilled workers. D. Why Do Organizations Lay Off Employees During Shortages? 1. Downsizing is part of a larger goal of balancing staff to meet changing needs. 2. Organizations want more flexibility to better respond to change. a. Rightsizing linking employee needs to organizational strategy not employed full-time with the organization. E. How Do Organizations Balance Labor Supply? 1. Organizations are increasingly using contingent workers to respond to fluctuating needs for employees. VII. CONTINUOUSworkers include part-time, temporary, and contract workers. (These are 2. Contingent IMPROVEMENT PROGRAMS defined in Exhibit 1-3.) A. This approach to management involves making constant efforts to provide better products and service to customers, with todays definition of customer including everyone both F. Issues Contingent Workers Create for HRM external and internal to the organization. 1. Core employees often receive more generous amenities than contingent workers. 2. Contingent workers may perceive their treatment to be less favorable and view 6 b. Outsourcing sending work outside the organization to be done by individuals

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1. Quality management concepts have existed for over 50 years and include the pioneering work of W. Edwards Deming. 2. Key components of continuous improvement are listed in Exhibit 1-6. 3. Kaizen is the Japanese term for commitment to continuous improvement

B. Work Process Engineering 1. Work process engineering differs from the incremental change usually obtained through continuous improvement programs in that it involves radical, quantum changes to entire work processes. C. How HRM Can Support Improvement Programs 1. Prepare individuals for change. 2. Provide training D. How HRM Assists in Work Process Engineering 1. HRMs role includes helping employees cope with the emotional aspects of conflict and change, providing skills training, and adapting HR systems, such as compensation, benefits, and performance standards. VIII. EMPLOYEE INVOLVEMENT A. How Organizations Involve Employees 1. Employees at all levels will need to delegate some of their activities and responsibilities.

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2. The benefit of a recession is that higher unemployment makes it possible to attract and hire better qualified people when the need arises. B. Offshoring 1. Offshoring is the process of moving jobs out of one country and into another. 2. Employers offshore to find necessary skills, along with reduced labor and distribution costs. C. Mergers 1. A merger involves the joining of two organizations together. 2. An acquisition is the transfer of ownership and control of one organization to another. X. A LOOK AT ETHICS A. Ethics is a set of rules or principles that defines right and wrong conduct. 1. How has the global village contributed to the need for diversity awareness in our B. Right and wrong are often difficult to distinguish. organizations? C. Employers must ensure that adopting a codeoperate in the appropriate language andthat Companies are increasingly employees can of ethics which is a formal document that communications can be understood by aand the ethical rules it expects organizational states an organizations primary values multilingual workforce. An understanding of individual frames of reference is critical as well as an understanding of various members cultures. countries to follow. Managers, employees and HRM need to understand the social context in which they are operating. Describe the workforce shifts in types of jobs during the past hundred years. What implications have these shifts created for todays human resource managers? DEMONSTRATING COMPREHENSION: Questions for Review In the 1890s most jobs were related to agriculture. Then came industrialization and a focus on specialized skilled labor jobs and a workforce of blue-collar industrial workers. During the past two decades job growth has been in low-skilled service jobs and knowledge work. For HRM managers, this translates to the need to adjust recruiting efforts to respond to the types of employees needed to be effective in todays jobs. Different skills are required for different jobs.

2.

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3.

Which groups will comprise the greatest influx into the U.S. workforce over the next 10 years? How will these groups affect HRM? Females, minorities, and immigrants will comprise the greatest influx into the U.S. workforce. Additionally, the number of older workers staying in the workplace will increase. These diverse groups bring unique skills and expectations about language, benefits, work group roles and norms, standards of performance and quality to the workplace. Employers must recognize and deal with the different values, needs, interests, and expectations of employees. How can human resource managers help employees deal with work/life issues? HRM managers have implemented programs such as flex-time and telecommuting that allow employees to balance both a career and a family. Benefit packages have been altered to reflect the needs of dual career couples. What is a knowledge worker? What HRM changes can be expected in dealing with knowledge workers with respect to recruiting, selection, motivation, and work/life issues? A knowledge worker is an employee whose job responsibilities are designed around the acquisition and application of information. Recruiting functions are shifting from paper processes to electronic. Work is no longer a 9 to 5 schedule but has become 24/7 and requires a high level of adaptability. Motivation will involve finding ways to keep knowledge workers focused on the task at hand. Telecommuting and electronic access to employees blurs the lines between home and work. Explain the increased popularity of continuous improvements and work process engineering in the past twenty years. Continuous improvements and work process engineering have been proven to have the ability to lead to major gains in cost, service, or time. Additionally, these programs help organizations prepare to deal with technology changes. What is the purpose of a continuous improvement program? What role does HRM play in assisting continuing improvements? In order to be successful, organizations must respond to ever changing customer needs and expectations. Continuous improvement programs help organizations make the appropriate changes. HRM must prepare employees to deal with change and provide

4.

5.

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Skilled capable workers + trusting environment + supervisors willing to let go + time to make it happen + training + support from the top 9. What are ethics and why are they important for organizations? Ethics are a set of rules or principles that defines right and wrong conduct. Adopting a code of ethics gives organizations a foundation for a strong ethics program. LINKING CONCEPTS TO PRACTICE: Discussion Questions How can HRM ensure that it is properly preparing the organization for dealing with the global village? HRM must first educate itself about various societal issues in other countries and be familiar with common cultural variables and the laws of other countries. It must then develop ways to effectively transfer this information to the workforce with the goal of helping multicultural individuals work together harmoniously as a team. In addition to transferring information, HRM will need to provide opportunities for some employees to develop the appropriate skills for working in the global arena. Workforce diversity is nothing new. We need only to look back to the early 1900s when thousands of immigrants came to the U.S., understand how we handled them, and then implement similar practices again. Do you agree or disagree with the statement? Explain. Agree. If you accept the notion of a melting pot, the United States has had some success in assimilating immigrants. However, racial and ethnic prejudice ran rampant in that process. Still, the United States was viewed as a model for the European Economic Community for managing diversity. A better success pattern in this country is the way 50 states have maintained some identity and autonomy and still function as united entities. Disagree. In the 1900s the opportunities provided to people for work were limited based on the individuals sex, race, and ethnic background. Today, given our laws regarding discrimination, those practices would not be allowed. What can HRM do to help ensure the highest ethics in an organization? HRM needs to take the lead in developing rules, policies, job descriptions and cultural norms that promote ethical behavior and spell out the consequences of not acting ethically. In many organizations, HRM acts as a conscience for the organization, particularly as issues pertain to employees.

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From an organizational perspective, HRM must plan for contingent workers, recruit them, help them adapt to the organization, and deal with potential conflicts between core and contingent workers. Organizations feel the flexibility and the savings on labor costs and benefits afforded by the use of contingent workers makes the effort worthwhile. Organizations need to be aware of and abide by relevant laws and policies regarding the use of contingent workers. From a contingent worker perspective opinions vary. Some workers want a more permanent status with higher wages and benefits. On the other hand, some employees find being contingent workers an excellent way to blend family and career goals. Training organizational members how to be coaches and how to empower employees will be a major HRM activity in the next decade. Do you agree or disagree with this statement? Explain. Agree. Empowering employees requires extensive training in interpersonal skills, delegating, understanding job design processes, and teamwork, to name a few. Disagree. Empowering employees is no longer a new concept. Many individuals beginning work for new employers already have been trained by previous employers. While there probably always will be a need for some training, the massive efforts of the past are just that in the past.

CASE APPLICATION 1-A: WORK/LIFE BALANCE AT BAXTER

CASE SUMMARY 1. What role, if any, does work/life balance play in the success of an organization? Explain. Baxter International is one of the worlds largest producers of medical products. Baxter Internationals implementation of work/life balance as a core value is reflected in Work/life balance is value that is ingrained in the focusing culture. The Baxter has its corporate culture.aSince the organization began corporateon this value, former CEO, achieved its earning exhibited behavior profit increases. The Kraemer example Jansen Kraemer, Jr. targets, as well as that set an example for employees by focusing on demonstrates a situation where spending time with his family was more important than a making time for his family in addition to his focus on organization has successfully company crisis that could be handled by others in the work. Baxter in his absence. One could argue that recruitment was positively impacted as well, reflected inas employee performed as a business by focusing on traditional business goals as well Baxters ability work/life balance. QUESTIONS AND ANSWERS
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to grow to 48,000 employees during the cases time frame. In addition to growing the number of employees, revenues, profits, and stock prices have all shown steady growth.

2.

How does diversity in an organization affect the organizations work/life balance? What ethical considerations exist that may drive the organization to be more work/life balanced? The workforce is becoming increasingly diverse. As discussed in the text section concerning globalization, we know that different cultures have different values, needs, expectations, and the like. For example, some cultures have a greater emphasis on family responsibilities than others. Other examples of changes in the workforce involve nontraditional definitions of the family and an increase in single-parent family. These different situations can lead to changes in what the workforce seeks, or even requires, from an employer. These new situations require employers to make decisions that may not be clearly stated in existing policy. Organizations, and even employees, may begin to question whether it is right to require an employee to choose between a parents time with a child and extra time on the job. How can organizations develop a culture that supports work/life balance? By being attuned to the needs of the companys workforce, an organization can migrate to a culture that supports these needs while still accomplishing its goals. Flexibility around work shedules is key. Supporting a new way of working that is not tied to traditional daily work hours, and recognizing an employee has a life away from work, will develop a work/life balancing culture. Since the culture of an organization flows from the top, highly visible leaders, such as the CEO in the Baxter case, set an example that will be followed by employees. Without this example, it is highly unlikely that employees will believe work/life balance is valued, regardless of what is included in any policy statements, training programs, or the like.

3.

What role does Human Resources play in making sure work/life practices? Describe. Human Resources should help the organization identify the need to modify, create or eliminate work/life practices. This is done, in part, by making sure HR management understands the diverse needs of the workforce. Accordingly, HR also needs to ensure any work/life practices adhere to appropriate laws, as well as the ethical standards of the company. Some work/life practices may require changes to HR systems and policies, such as pay practices. Take a look at the Baxter Web site Careers section (www.Baxter.com). What does Baxter do that seems to support the goal of work/life balance?

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When one looks at the Careers section of the Baxter website, work/life balance is a highlighted subject where an employee can learn about: Baxters long history in the work/life arena as well as exisiting and new programs that support employees. The tools available to assist employees and managers in creating collaborative and creative solutions to work/life issues in the workplace. Baxters culture and performance on employee-related sustainability topics, such as compensation and benefits, training and development, work/life balance and diversity. Employee rights and responsibilities under the Family and Medical Leave Act.

WORKING WITH A TEAM: UNDERSTANDING DIVERSITY ISSUES Follow the texts guidelines for this exercise. An option is to invite students in the class to discuss their international backgrounds, versus bringing in other resources from your campus.