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_________________ Chapter 1 HRM in a Changing Environment

Chapter 1:HRM IN A CHANGING ENVIRONMENT

LEARNING OUTCOMES

After reading this chapter, students should be able to:

Discuss how cultural environments affect human resource management (HRM) practices.Describe how technology is changing HRMIdentify significant changes that have occurred in workforce compositionDescribe the HRM implications of a labor shortageDescribe how changing skill requirements affect HRMExplain why organizational members focus on quality and continuous improvementsDescribe work process engineering and its implications for HRMIdentify who makes up the contingent workforce and the HRM implicationsDefine employee involvement and list its critical componentsExplain the importance of ethics in an organization.

CHAPTER OVERVIEW

The chapter’s opening vignette illustrates how Four Seasons Resorts and Hotels uses the GoldenRule to treat the employees as you expect them to treat the customer. While customers like to bepampered, so do the employees as evidenced by the Four Seasons being listed in Fortunemagazine as one of the “Best Companies to Work For” every year since the list started in 1998.Overviews of today’s dynamic business world, highlighting cultural environments, globalization,technology, and social history evolution, set the stage for discussions about the implications tothe HR field. These topics include: multicultural issues, global workforces, HRM technology,workforce diversity, labor supply and management, contingent workforces, decentralized worksites, continuous improvement, work process engineering, employee involvement, HRMchallenges, and ethics.

Additional Features of This Chapter

Exhibits include:1 – 1: Cultural Values1 – 2: FexEx Corporation Diversity Mission Statement1 – 3: The Contingent Workforce1 – 4: Are Layoffs Justified?1 – 5: Employee vs. Independent Contractor1 – 6: Components of Continuous Improvement

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Ethical Issues in HRM – Invasion of Privacy on page 9 discusses the organization’s rightto monitor employees versus a worker’s right to privacy through the use of real-lifeexamples.

Workplace Issue – What’s This Thing Called a Blog on page 10 examines the timelyissue of blogs – web logs of emails open for public view.

Did You Know – Chief Diversity Officer on page 11 describes how Deborah Dagit, thechief diversity officer at Merck & Co. demonstrates by example that disabilityaccommodations are not different from flexible work arrangments for other groups.

Did You Know – International Diversity on page 11 has a chart depicting the percentageof women in executive ranks in various countries throughout the world.

Workplace Issues – Diversity Awareness on page 12 describes the variety of ways thatorganizations 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 HRleaders today.

ADDITIONAL LECTURE OR ACTIVITY SUGGESTIONS

Ask students about current changes in the work environment which they have heard or readabout. These may include friends and relatives who have been through work processengineering, their own employment as contingent workers, etc. Consider assigning this as apass/fail interview assignment. Ask the students what role they believe the HR function played inhelping organizations to manage these changes and what factors determine whether thesechanges are managed effectively.

Provide an overview of a local or regional organization that has global operations. lead adiscussion about how the local business was impacted by globalization. Ask the students todiscuss how HRM might have been involved in that change.

Assign to or provide for students: brief articles from newspapers and/or business magazines thatillustrate some current HR challenges. Have small groups of 3-6 students each read and reporton one of the articles. (You will need to address the acceptability of Internet articles.)

You might also want to ask if any students have been to another country and what theirimpressions were of the culture. This is also an opportunity to integrate students’ experiences asinternational students (in your country or abroad). Did the students encounter any difficultiescommunicating? Did anything make them uncomfortable? How did they adjust in thosecircumstances? Relate their answers to how HR supports such situations.

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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 howto attract, hire, train, motivate, and retain employees.

B. HR must understand the implications of globalization, technology changes, workforcediversity, 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 andtransnational corporations places new requirements on HR managers. For example,HRM must develop new ways to harmoniously blend cultures.

B. Today’s business world is truly global. Businesses operate around the world.

1. Employees need to adapt to cultures, systems, and techniques different from theirown.

C. Multinational corporations (MNCs) are now commonplace.

1. HRM must ensure that employees with the appropriate knowledge, skills and culturaladaptability are available.

D. Countries have different values, morals, customs, political and economic systems, andlegal systems.

1. Businesses need to be understood within their social context.2. HRM must develop mechanisms to address:

a. Language differences in a multi-lingual workplace.b. Cultural variables such as status differentiation, societal uncertainty, assertiveness,

and individualism.c. Group and individual conflict caused by differences in background, language, and

customs.d. The differences between an individualistic society, like the United States, and a

collective society, such as Japan.3. Not all HRM theories and practices are universally applicable, so HRM must

understand varying cultural values.

III.THE CHANGING WORLD OF TECHNOLOGY

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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, andtechnology.

a. Globalization 1.0: From 1492 to 1800 Countries began exploring beyond their shores leading to the discovery of the

new world by Columbus and the conquering of or the collaboration with othercountries and territories.

b. Globalization 2.0: 1880 to 2000 Lower costs and greater speed of transportation and communication led to the

emergence of multinational companies, seeking labor and markets for thegoods of the industial revolution.

c. Globalization 3.0: 2000 With instantaneous communication and fast, inexpensive transportation

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 acquisitionand application of information.

C. How Technology Affects HRM Practices

1. Recruiting. On-line job posting, communicating electronically with applicants, andaccepting applications on-line have all enhanced the recruiting process, oftenreplacing word-of-mouth, newspaper advertisements, and college visits.

2. Employee Selection. Adaptability to a fast-paced 24/7 work environment and anability to be flexible and a team player are critical selection criteria for manyemployees of technology-based organizations.

3. Training and Development. Web-based training offers many new opportunities forHR to enhance employee skills, such as “on-demand” training deliveredelectronically.

4. Ethics and Employee Rights. A key ethical issue today is what should be thebalance between electronic surveillance and employee privacy rights.

5. Motivating Knowledge Workers. HR must structure jobs such that knowledgeworkers stay focused on the task at hand.

6. Paying Employees Market Value. Supply and demand for technical andprofessional employees requires creative compensation packages to attract and retainworkers.

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7. Communications. Today’s electronic environment increases the timelycommunication 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 andensure appropriate work quality and on-time completion. They must also ensure thatcompensation and legal protections are appropriate in non-traditional work settings.

9. Skill Levels. Current job skills requirements will increase the need fortechnologically prepared employees.

10. A Legal Concern. HRM must be diligent to ensure that activities violating EEOlaws do not occur via electronic mediums. HRM policy must define inappropriateelectronic communications, reserve the right to monitor employee Internet and e-mailusage, and specify disciplinary actions for violations.

IV.WORKFORCE DIVERSITY

A. The challenge is to make organizations more accommodating to diverse groups of peopleby addressing different lifestyles, family needs, and work styles.

B. The Workforce Today

1. Legislation, changing demographics and globalization have resulted in a more diversework force in which minorities and women have become the fastest growingsegments.

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 andfemales, whites and people of color, homosexuals and straights, many ethic andreligious 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 diversityin the general population.

2. Need to foster increased sensitivity to group differences.3. Must deal with the different values, needs, interests, and expectations of employees.

D. What Is a Work/Life Balance?

1. 24/7 electronic access to employees blurs the lines between work life and personallife.

2. The place one works and the hours one works, including how many hours, are alsoconsiderations when trying to balance work and family life.

3. Employers will need more work schedule flexibility, especially with the Gen X andGen Y workers, who value family and leisure over careers.

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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 aren’t always enough to hire andretain 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 strategyb. Outsourcing – sending work outside the organization to be done by individuals

not employed full-time with the organization.

E. How Do Organizations Balance Labor Supply?

1. Organizations are increasingly using contingent workers to respond to fluctuatingneeds for employees.

2. Contingent workers include part-time, temporary, and contract workers. (These aredefined in Exhibit 1-3.)

F. Issues Contingent Workers Create for HRM

1. Core employees often receive more generous amenities than contingent workers.2. Contingent workers may perceive their treatment to be less favorable and view

themselves as less critical to the organization.3. HRM must focus on issues including:

a. How to have workers available when neededb. How to attract quality temporariesc. How to motivate employees who are receiving less pay and benefitsd. How to quickly adapt them to the organizatione. How to deal with potential conflicts between core and contingent workers

VII. CONTINUOUS IMPROVEMENT PROGRAMS

A. This approach to management involves making constant efforts to provide better productsand service to customers, with today’s definition of customer including everyone bothexternal and internal to the organization.

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1. Quality management concepts have existed for over 50 years and include thepioneering 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 obtainedthrough continuous improvement programs in that it involves radical, quantumchanges 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. HRM’s role includes helping employees cope with the emotional aspects of conflictand change, providing skills training, and adapting HR systems, such ascompensation, 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 andresponsibilities.

2. Emphasis needs to be on participative management using group decision making andinvolvement of employees on work teams.

B. Employee Involvement Implications for HRM

1. HRM must provide training to help empower employees in their new roles.2. Involvement programs can achieve greater productivity, as well as increased

employee loyalty and commitment.

IX. OTHER HRM CHALLENGES

A. Recession

1. HR professionals are confronted with challenges that accompany a recession withlayoffs, lower morale, worker resentment, and the need to retrain those that remain.

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2. The benefit of a recession is that higher unemployment makes it possible to attractand 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.

B. “Right” and “wrong” are often difficult to distinguish.

C. Companies are increasingly adopting a code of ethics which is a formal document thatstates an organization’s primary values and the ethical rules it expects organizationalmembers to follow.

DEMONSTRATING COMPREHENSION: Questions for Review

1.

2.

How has the global village contributed to the need for diversity awareness in ourorganizations?

Employers must ensure that employees can operate in the appropriate language and thatcommunications can be understood by a multilingual workforce. An understanding ofindividual “frames of reference” is critical as well as an understanding of variouscountries’ cultures. Managers, employees and HRM need to understand the socialcontext in which they are operating.

Describe the workforce shifts in types of jobs during the past hundred years. Whatimplications have these shifts created for today’s human resource managers?

In the 1890’s most jobs were related to agriculture. Then came industrialization and afocus 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 andknowledge work. For HRM managers, this translates to the need to adjust recruitingefforts to respond to the types of employees needed to be effective in today’s jobs.Different skills are required for different jobs.

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3.

4.

5.

6.

7.

8.

Which groups will comprise the greatest influx into the U.S. workforce over the next10 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 willincrease. These diverse groups bring unique skills and expectations about language,benefits, work group roles and norms, standards of performance and quality to theworkplace. 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 thatallow employees to balance both a career and a family. Benefit packages have beenaltered to reflect the needs of dual career couples.

What is a knowledge worker? What HRM changes can be expected in dealing withknowledge workers with respect to recruiting, selection, motivation, and work/lifeissues?

A knowledge worker is an employee whose job responsibilities are designed around theacquisition and application of information. Recruiting functions are shifting from paperprocesses to electronic. Work is no longer a 9 to 5 schedule but has become 24/7 andrequires a high level of adaptability. Motivation will involve finding ways to keepknowledge workers focused on the task at hand. Telecommuting and electronic access toemployees blurs the lines between home and work.

Explain the increased popularity of continuous improvements and work processengineering in the past twenty years.

Continuous improvements and work process engineering have been proven to have theability to lead to major gains in cost, service, or time. Additionally, these programs helporganizations prepare to deal with technology changes.

What is the purpose of a continuous improvement program? What role does HRMplay in assisting continuing improvements?

In order to be successful, organizations must respond to ever changing customer needsand expectations. Continuous improvement programs help organizations make theappropriate changes. HRM must prepare employees to deal with change and providetraining for new techniques and processes. When there is drastic change, HRM must beprepared for the increased emotional impact to impact to employees.

What are the necessary ingredients for a successful empowerment program?

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Skilled capable workers + trusting environment + supervisors willing to let go + time tomake 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 acode 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 dealingwith the global village?

HRM must first educate itself about various societal issues in other countries and befamiliar with common cultural variables and the laws of other countries. It must thendevelop ways to effectively transfer this information to the workforce with the goal ofhelping multicultural individuals work together harmoniously as a team. In addition totransferring information, HRM will need to provide opportunities for some employees todevelop the appropriate skills for working in the global arena.

“Workforce diversity is nothing new. We need only to look back to the early 1900swhen 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 thestatement? Explain.

Agree. If you accept the notion of a melting pot, the United States has had some successin assimilating immigrants. However, racial and ethnic prejudice ran rampant in thatprocess. Still, the United States was viewed as a model for the European EconomicCommunity for managing diversity. A better success pattern in this country is the way 50states 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 basedon the individual’s sex, race, and ethnic background. Today, given our laws regardingdiscrimination, 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 culturalnorms that promote ethical behavior and spell out the consequences of not actingethically. In many organizations, HRM acts as a “conscience” for the organization,particularly as issues pertain to employees.

Discuss the implications of hiring contingent workers from both the organizationaland contingent worker perspective.

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From an organizational perspective, HRM must plan for contingent workers, recruitthem, help them adapt to the organization, and deal with potential conflicts between coreand contingent workers. Organizations feel the flexibility and the savings on labor costsand 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 theuse of contingent workers.

From a contingent worker perspective opinions vary. Some workers want a morepermanent status with higher wages and benefits. On the other hand, some employeesfind 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 ordisagree 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 individualsbeginning 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 thepast are just that – in the past.

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

CASE SUMMARY

Baxter International is one of the world’s largest producers of medical products.Work/life balance is a value that is ingrained in the corporate culture. The former CEO,Jansen Kraemer, Jr. exhibited behavior that set an example for employees by focusing onmaking time for his family in addition to his focus on work. Baxter has successfullyperformed as a business by focusing on traditional business goals as well as employeework/life balance.

QUESTIONS AND ANSWERS

1. What role, if any, does work/life balance play in the success of an organization?Explain.Baxter International’s implementation of work/life balance as a core value is reflected inits corporate culture. Since the organization began focusing on this value, Baxter hasachieved its earning targets, as well as profit increases. The Kraemer exampledemonstrates a situation where spending time with his family was more important than acompany crisis that could be handled by others in the organization in his absence. Onecould argue that recruitment was positively impacted as well, reflected in Baxter’s ability

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to grow to 48,000 employees during the case’s time frame. In addition to growing thenumber of employees, revenues, profits, and stock prices have all shown steady growth.

2.

3.

4.

5.

How does diversity in an organization affect the organization’s work/life balance?What ethical considerations exist that may drive the organization to be morework/life balanced?

The workforce is becoming increasingly diverse. As discussed in the text sectionconcerning globalization, we know that different cultures have different values, needs,expectations, and the like. For example, some cultures have a greater emphasis onfamily responsibilities than others. Other examples of changes in the workforce involve“nontraditional” definitions of the family and an increase in single-parent family. Thesedifferent 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 maynot be clearly stated in existing policy. Organizations, and even employees, may begin toquestion whether it is “right” to require an employee to choose between a parent’s timewith 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 company’s workforce, an organization can migrateto a culture that supports these needs while still accomplishing its goals. Flexibilityaround work shedules is key. Supporting a “new” way of working that is not tied totraditional 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 theCEO in the Baxter case, set an example that will be followed by employees. Without thisexample, 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.

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 oreliminate work/life practices. This is done, in part, by making sure HR managementunderstands the diverse needs of the workforce. Accordingly, HR also needs to ensureany work/life practices adhere to appropriate laws, as well as the ethical standards of thecompany. 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 doesBaxter 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 ahighlighted subject where an employee can learn about:

Baxter’s long history in the work/life arena as well as exisiting and new programsthat support employees.The tools available to assist employees and managers in creating collaborativeand creative solutions to work/life issues in the workplace.Baxter’s culture and performance on employee-related sustainability topics, suchas compensation and benefits, training and development, work/life balance anddiversity.Employee rights and responsibilities under the Family and Medical Leave Act.

WORKING WITH A TEAM: UNDERSTANDING DIVERSITY ISSUES

Follow the text’s guidelines for this exercise. An option is to invite students in the classto discuss their international backgrounds, versus bringing in other resources from yourcampus.

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