human_resource issues and challenges in thenew millennium

Hu man Re source Man age ment:Is sues and Chal lenges in the New

Mil len niumby Seyed- Mahmoud Aghazadeh

In tro duc tion

It is our in tent to re search the prob lems fac ing Hu man Re source Man age ment(HRM) in the com ing mil len nium. The three as pects of HRM is sues and chal -lenges that we will in ves ti gate are those of per son nel, tech nol ogy and globali sa -tion. We feel that the ad vent of the Euro pean Un ion will have a sig nifi cant im pacton the fu ture of HRM, par ticu larly in view of the in creas ingly global mar ket place.

HRM will face nu mer ous op por tu ni ties and chal lenges in the com ing mil len -nium. How well they cope in an in creas ingly global mar ket will im pact how welltheir com pany does in the mar ket place. HR pro fes sion als will need to deal withsuch di verse is sues as build ing a tal ent pool, man ag ing di ver sity pro grammes, us -ing tech nol ogy as a hu man re source man age ment tool, deal ing with em ploy mentlaw is sues and the im pact of the EURO. Flexi bil ity, the abil ity to cope, and knowl -edge will be re quired of fu ture hu man re source man ag ers. To add to the com plex -ity of those is sues is the fact that many of the fac tors are inter- related and af fectdif fer ent as pects of op era tional and hu man re source man age ment.

Per son nel Chal lenges and Is sues in the New Mil len nium

The first as pect that we will ex am ine is that of per son nel is sues and chal lenges.The be liefs of Fre der ick Tay lor, fa ther of sci en tific man age ment are still valid. Itwas his be lief that man age ment should as sume more re spon si bil ity for: match ingem ploy ees to the right job, pro vid ing the proper train ing, pro vid ing proper workmeth ods and tools, and es tab lish ing le giti mate in cen tives for work to be ac com -plished. These be liefs con tinue to be valu able com po nents of ef fec tive per son nelman age ment. The suc cess ful com pa nies or or gani sa tions will be those that areable to at tract and re tain highly skilled em ploy ees. In or der to do that, they must beable to match what the em ployee wants with what the em ployer is will ing to give.Hu man re source di rec tors and ex ecu tives are com ing to the re ali sa tion that if youtake care of your peo ple; they will take care of you. Many com pa nies are do ing this by of fer ing in no va tive and flexi ble bene fits.

Chang ing em ployee ex pec ta tions pose sev eral dif fer ent chal lenges for HRMpro fes sion als. In or der to re tain good em ploy ees and keep them happy and pro duc -tive, these chal lenges must be suc cess fully met (Sims R. and S. Sims, 1994). Com -pa nies need to first iden tify what their em ploy ees need. Com pa nies with morethan one lo ca tion should not as sume that all em ploy ees in all sites have the sameneeds. The em ploy ees needs may be a re flec tion of socio- economical or cul turalin flu ences. Af ter needs have been de ter mined, the next goal is to es tab lish a cost- effective plan to pro vide for the em ploy ee’s needs. The HR pro fes sional needs tobe aware that the em ploy ees needs are not static, they are in deed ever chang ing.

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Vol ume 22 Num ber 12 1999

Bio graphi cal Note

Pro fes sor Seyed- Mahmoud Aghazadeh can becon tacted at Pro duc tion &Op era tions Man age ment,De part ment of Busi nessAd min istra tion, StateUni ver sity of New York atFre do nia, Fre do nia, NY14063, USA

They pro vide bene fits based upon what the best par ticu lar fit is for the em ployee.One lo ca tion may of fer child- care bene fits, while an other may of fer flexi ble hoursor work ing from their home. Or gani sa tions need to build a bet ter bene fits pack age. Com pa nies need to look at their to tal re ward pack age in or der to re tain their skilled work ers to be sure that these pro grammes really add value. They should avoid be -ing rigid and try to cus tom ise bene fits to the in di vid ual em ployee.

Ya hoo! has be gun of fer ing per sonal fi nance semi nars for its em ploy eeswhose stock op tions have grown tre men dously (Ya hoo!’s stock is now worth 20times more than it was in 1996). They are also us ing par ties on Fri days and vis itsfrom Ben & Jer ry’s ice cream truck to cre ate posi tive mo rale.

The HR de part ment needs to be come em ployee cham pi ons. Work ers arecon stantly be ing asked to do more with less. For mer em ploy ment con tracts, which were based on job se cu rity and pre dict able pro mo tions, have been re placed withfaint prom ises of trust. As a re sult, re la tion ships with em ploy ees be come tran si -tional with em ploy ees giv ing their time and not much more. Em ploy ees who feelthat they are valu able are will ing to share deals, work harder and re late bet ter tocus tom ers.

The Sears de part ment store has com piled data that showed a small in crease in em ployee com mit ment re sulted in a meas ur able in crease in cus tomer com mit -ment and store prof it abil ity.

Sears, Roe buck and Com pany found them selves in a 10- year busi ness down -turn and knew that they had to change their strat egy and cul ture. In Sep tem ber1992 Ar thur Mar ti nez be gan head ing up the mer chan dis ing group. He made manysweep ing changes that in 1993 pro duced a sales in crease of more than 9% and a to -tal re turn for share hold ers of 56%. In or der to en sure that this suc cess would con -tinue he cre ated a core group of sen ior ex ecu tives that be came known as thePhoe nix Team. He worked to em power this core group to think and cre ate theirown plan for im ple ment ing and sus tain ing the nec es sary changes. They de vised aques tion naire that was, and still is, pe ri odi cally given to em ploy ees. By us ing 10out of the 70 ques tions, they have pro duced a model that shows a 5 point im prove -ment in em ploy ees’ at ti tudes will drive a 1.3 point im prove ment in cus tomer sat is -fac tion and this will drive a .5% in crease in reve nue growth. Ap ply ing this modelto 12 months of sales equates to em ployee sat is fac tion and cus tomer sat is fac tioneach in creased by nearly 4%. This equates to $200 mil lion in ad di tional reve nuewhich in turn re sult is an in crease of al most a quar ter of a bil lion dol lars in mar ketcapi tali sa tion.

They found that two ar eas of em ployee sat is fac tion had the larg est ef fect onem ployee loy alty and be hav iour to ward cus tom ers. These ar eas were their at ti tude to ward the job and to ward the com pany. Sears pro vides ex ten sive train ing to theirnew sales as so ci ates and has em pow ered them by giv ing them greater de ci sionmak ing author ity. They use town hall meet ings to seek in put and dis semi nate in -for ma tion to their em ploy ees. They stress that the em ploy ees are ex pected to “sat -isfy the cus tomer.” Sears was for tu nate that the pub lic’s per cep tion was posi tiveand saw them as be ing hon est.

On Janu ary 1, 1995 Sears Uni ver sity in Chi cago was es tab lished and hastrained more than 40,000 Sears’ man ag ers. They re ward the em ploy ees by bas ing

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Man age ment Re search News

all long- term in cen tives on non- financial as well as fi nan cial per form ance. Byutil is ing a tele phone sur vey, they are able to ob tain feed back from the cus tom ersof their per cep tion of the serv ice that they re ceive. This is done through the use ofan 800 number. Cus tom ers are ran domly se lected to par tici pate in the sur vey.They re ceive $5.00 to wards their next pur chase if they agree to an swer twenty- four ques tions about their shop ping ex pe ri ence. Through the cod ing pro vided they are able to iden tify which as so ci ate waited on the cus tomer and thereby pro videsin for ma tion to the in di vid ual em ployee on how the cus tom ers per ceive them.

The Hu man Re source De part ment of an or gani sa tion has never been as nec -es sary as it is to day. How ever, this de part ment needs to es tab lish a new role andagenda. It should also fo cus on out comes rather than just on staff ing and com pen -sa tion. It needs to find ways to en rich the organi sa tion’s value to cus tom ers, in ves -tors, and em ploy ees. Ul rich (1998) has sug gested four ways for HR to de liveror gan isa tional ex cel lence:

1. Part ner with sen ior and line man ag ers to move plan ning from the con -fer ence room to the mar ket place.

2. In or der to de liver ef fi ciency to re duce costs and yet main tain qual ity,be come an ex pert in the way work is or gan ised and exe cuted.

3. Be come a cham pion for em ploy ees while work ing to in crease em -ployee con tri bu tions, spe cifi cally com mit ment and abil ity to de liver re -sults.

4. Be come an agent of con tinu ous trans for ma tion, shap ing pro cesses anda cul ture that will im prove an organi sa tion’s ca pac ity for change.

In most com pa nies, HR is charged with play ing “pol icy po lice” and regu la -tory “watch dog.” Some more em pow ered HR de part ments over see re cruit ment,man age train ing and de vel op ment pro grammes, and de sign ini tia tives to in creasework place di ver sity. These de part ments are of ten not con nected with the “realwork” of an or gani sa tion.

Op er at ing man ag ers and HR pro fes sion als need to form a part ner ship to re -think and re con fig ure the vari ous func tions and be come com mit ted to out comes.Line man ag ers are an swer able to the share hold ers to cre ate eco nomic value; thecus tom ers for prod uct or serv ice value; and the em ploy ees for cre at ing work placevalue. There are five criti cal busi ness chal lenges that need to be faced: Globali sa -tion, Prof it abil ity through growth, Tech nol ogy, In tel lec tual Capi tal, and Change,change and more change.

Man ag ers are con stantly be ing chal lenged to bal ance the de mands to thinkglob ally and act lo cally. Peo ple, ideas, prod ucts and in for ma tion must be movedaround the world to meet the lo cal needs. Vola tile po liti cal situa tions, global tradeis sues, fluc tu at ing ex change rates, and un fa mil iar cul tures now en ter into busi ness de ci sions. These man ag ers must be come schooled in the ways of their in ter na -tional cus tom ers. They must en hance their abil ity to learn to work to gether to man -age di ver sity, com plex ity, and am bi gu ity.

Most west ern com pa nies have al ready ac com plished gains from down siz ing, reen gi neer ing, de- layering and con soli da tion. They must now look at reve nuegrowth. This will re quire them to be crea tive and in no va tive. They need to en cour -

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age shared learn ing among their em ploy ees. Or gani sa tions who choose to growthrough merg ers, con soli da tions or joint ven tures need nec es sary skills to com -bine dif fer ent work pro cesses and cul tures.

This brings us to the chal lenge of in tel lec tual capi tal. The most suc cess ful or -gani sa tions will be the ones who can at tract, de velop and re tain in di vidu als whohave the abil ity to man age a global or gani sa tion that is re spon sive to cus tom ersand the op por tu ni ties be ing pre sented by tech nol ogy. It will be the HR de part -ment’s re spon si bil ity to find, as simi late, de velop, com pen sate and re tain these tal -ented em ploy ees.

Com pa nies are hav ing a dif fi cult time find ing skilled work ers. A net one mil -lion skilled jobs are ex pected to be cre ated over the next ten years with no pro -jected in crease in sup ply. They must come to the re ali sa tion that they need toin vest in train ing their em ploy ees. This train ing will not only im prove the qual ityof the la bour pool but also lead to more com mit ment on the part of em ploy ees.This com mit ment will lead to higher pro duc tiv ity. The old con tract of job se cu rityand fair wages in ex change for worker loy alty has been bro ken. In come ine qual ityhas in creased the ra tio of CEO pay to that of the other av er age worker has jumpedfrom 27:1 in 1973 to 48:1 in 1991. The gap con tin ues to grow from 45:1 to 173:1when re stricted stock, stock- options, and other long- term pay outs are in cluded.Com pa nies need to ad dress this is sue and work to re tain their skilled em ploy ees.

Large com pa nies are now com pet ing with small com pa nies for ex ecu tives.The smaller com pa nies can of fer op por tu ni ties for greater im pact and wealth. Theav er age ex ecu tive to day will work in five com pa nies. In the past, ex ecu tivesworked in one or two com pa nies. It is pro jected that in ten years the av er age ex ecu -tive could work in seven com pa nies. Ex ecu tive tal ent has long been an un der man -aged com pany as set. Peo ple have not been made a pri or ity. Su pe rior tal ent will beto mor row’s prime source of com peti tive ad van tage. The ques tion needs to beasked, why would a tal ented per son want to work here?

The cur rent la bour force is liv ing longer and is health ier than the last gen era -tion. Adults have been found to be go ing back to school to im prove and up datetheir skills. It is likely that they will not be re tir ing in the same way that their par -ents did. They will proba bly con tinue to work, or pos si bly re tire from one ca reerand en ter an other. The younger mem bers of the work force will be com pet ing withthe older mem bers for jobs.

In the global econ omy, or gani sa tions that can quickly put strat egy into ac -tion, man age pro cesses in tel li gently and ef fi ciently, ob tain the most from theirem ploy ees, and make change seem ef fort less.

The HR de part ment must ori ent and train line man age ment to ini ti ate prac -tices that will achieve high em ployee mo rale. They must be the em ploy ee’s voicein the de ci sions be ing made by man age ment. Op por tu ni ties need to be pre sentedfor the em ploy ee’s per sonal and pro fes sional growth. Re sources have to be put inplace to as sist the em ploy ees to meet the de mands be ing placed upon them. Toolssuch as work shops, writ ten re ports and em ployee sur veys can be util ised to helpman ag ers un der stand.

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In con clu sion, in or der to achieve long- term eco nomic per form ance it is cru -cial that or gani sa tions de velop their people- based strate gies. Down siz ing has notbeen able to rem edy prob lems with prod ucts or serv ices. It has cre ated low em -ployee mo rale and mo ti va tion due to job loss and fear. Cost cut ting such as this is aone shot deal and rep re sents a sin gle event that can not be re peated over and overagain.

Good cus tomer serv ice de pends on hav ing peo ple who feel good about theor gani sa tion and care about the cus tom ers. The peo ple, cul ture and abili ties of anor gani sa tion can cre ate com peti tive ad van tage. If your work force has a high com -mit ment to the or gani sa tion, they will work harder, smarter, and save on ad min is -tra tive over head that might be pres ent when al iena tion ex ists be tween la bour andman age ment.

Many in sti tu tional in ves tors are tak ing the non- financial per form ance meas -ures of a com pany into con sid era tion when mak ing de ci sions to buy or sell stock.These non- financial per form ance meas ures in clude man age ment per form ance,cus tomer sat is fac tion and em ployee re ten tion. In a re port en ti tled “Meas ures ThatMat ter” from Ernst & Young’s Cen tre for Busi ness In no va tion, non- financialmeas ures were given one- third of the weight when mak ing in vest ment sales de ci -sions. For the de ci sions to buy, 90% of the re spon dents stated that at least 20% of agiven de ci sion re flected non- financial per form ance and greater than one- thirdplaced the fig ure at 40- 60%. This re port was fol lowed up with a simu la tion that re -vealed in ves tors’ per cep tions of im prove ments in non- financial per form ancecould have a ma jor im pact on share price. This study im plies that com pa nies needto track non- financial per form ance and make Wall Street aware that they do so.

Dis abili ties, di ver sity and globali sa tion also play a part in the chang ing em -ployee ex pec ta tions. The fed eral gov ern ment has even sanc tioned some of theseex pec ta tions. The Ameri cans with Dis abili ties Act man dates that em ploy ers andserv ice pro vid ers main tain a cer tain level of ac ces si bil ity for peo ple with dis abili -ties. Com pa nies must pro vide their em ploy ees with the nec es sary equip ment toper form their job in a safe man ner. This can range the gamut of key board rests topre vent the ag gra va tion of car pal tun nel syn drome to in stall ing wheel chair rampsand door open ers.

Tech nol ogy Chal lenges and Is sues in the New Mil len nium

The use of tech nol ogy is an im por tant fac tor in vir tu ally all op era tion’s de ci sions.Op por tu ni ties for the in no va tive use of new or im proved tech nolo gies ex istthrough out op era tional man age ment. What tech no logi cal is sues and chal lengeswill com pa nies face in the new mil len nium? One im por tant is sue that com pa niesmust con sider is that tech nol ogy should not be used for the sole pur pose of util is -ing tech nol ogy, but to im prove the pro duc tiv ity of a com pany and its re turn to theshare holder. How will the use of tech nol ogy im pact the ex ist ing or gani sa tion?Some fac tors that should be con sid ered when im ple ment ing tech nol ogy in clude:auto mated manu fac tur ing pro cesses, per son nel soft ware pack ages, in tel lec tualprop erty rights, com mu ni ca tion, col labo ra tion, Inter nets and In tra nets. In ad di -tion, the Hu man Re source pro fes sional needs to set goals; re al is tic, rea son able,chal leng ing, at tain able goals. Long, in ter me di ate and short- term as pects shouldbe con sid ered when mak ing tech nol ogy de ci sions.

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The mod ern of fice hastele phones, com put ers withmo dems, and copi ers. Whenthese are linked over tele phonelines or via space sat el lites andmi cro wave dishes, they makeup a tele com mu ni ca tion sys -tem. The ad vent of the tele -com mu ni ca tion sys tem hasopened up the door to globalmar ket ing. Inter nets and In tra -nets make it pos si ble for com -pa nies to have al mos tin stan ta ne ous com mu ni ca tionworld wide. They also al lowde part ments with a com pany or even com pa nies them selves tocol labo rate on a global scale.Be cause of ac cel er ated changes in tele com mu ni ca tions and tech nol ogy, the in no -va tions and cul ture of the most pro gres sive econo mies in the world (such as can beseen with the Japa nese, Ameri can and Euro pean mar kets) are be ing ab sorbed inpart by other na tions and cul tures (Za jas, 1997).

One big is sue that has evolved with the use of tech nol ogy in the work place isthat of in tel lec tual prop erty rights. Who is the owner of what is cre ated? Does it re -main with the em ployee or does the com pany who pro vides the ma te rial to pro -duce it be come the owner. This is a par ticu larly thorny is sue and vari ouscom pa nies deal with it in a va ri ety of ways. Some com pa nies keep sole own er shipof in tel lec tual prop erty, while oth ers may ei ther re lin quish own er ship to theauthor or ne go ti ate a set tle ment of some sort.

Why are com put ers and the use of task spe cific soft ware pack ages an is sue inHRM? The pri mary rea son for the ex is tence of any busi ness or gani sa tion is tomaxi mise prof its. In or der to maxi mise prof its, or gani sa tions must not only maxi -mise reve nues but also mini mise costs. In creased ef fi ciency is the most pro duc tive way to mini mise costs. This ap plies both to hu man re source func tions as well as toauto mated manu fac tur ing pro cesses. If used prop erly, com put ers, with their speed and ac cu racy, can in crease the ef fi ciency of the HRM de part ment, not to men tionthe en tire com pany, thereby maxi mis ing reve nues while mini mis ing costs. Per -son nel soft ware pack ages can be a boon or a bane to the hu man re source man ager;de pend ent upon how care fully they are se lected. When con sid er ing the im ple men -ta tion of en ter prise work force man age ment, there are five key points that need tobe con sid ered:

* Map hu man re sources pro cesses: Be fore de cid ing on the best soft wareop tion, com pa nies need to have a clear un der stand ing of the HR hir ingand man age ment pro cesses al ready in place. HR ex perts need to ex am -ine stream lin ing the old pro cesses to en sure that what is be ing built is abet ter so lu tion, not just auto ma tion of a bro ken sys tem.

* Think about the en ter prise: Bring ex ecu tives from other ar eas of thecom pany into the dis cus sion and in ves ti gate what type of ac cess is

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HR Facts and Fig ures

Enterprise- wide work force man age ment sys tems are ap -peal ing given that HR pro fes sion als regu larly face thefol low ing is sues:

$1500.00 per em ployee is spent by the av er agecom pany to pro vide ba sic HR serv ices - more than twice what the top per form -ers spend.

50% or more of HR’s ef forts are de voted tolower value, rou tine ac tivi ties.

325 job ti tles and six dis tinct job grades areregu larly tracked by the typi cal HR or -gani sa tion.

2.3 rec ord changes are proc essed by HR an -nu ally for each com pany em ployee.

16 third party sup pli ers, on av er age, areman aged by HR.

needed to more closely in te grate busi ness ob jec tives with the HR de -part ment. Have a clear list of the en ter prise is sues the new so lu tionneeds to ad dress.

* Re search ven dors care fully: In ves ti gat ing a soft ware com pa ny’s fi nan -cial and tech ni cal serv ices is criti cal when buy ing from a new com pany. Since many of the work force man age ment so lu tion pro vid ers are start -ups, ask about cre at ing a code es crow or an other type of con tin gencyplan to en sure ac cess to the soft ware code in case the com pany closes its doors.

* Look for flexi bil ity and scal abil ity: What type of re la tion ship does theven dor have with ERP (en ter prise re source plan ning) ven dors? If theyhave part ners and of fer other prod ucts that can be used with a va ri ety ofdif fer ent ap pli ca tions, chances are in te gra tion will be eas ier.

* Dis cuss fu ture plans with your ERP ven dor: Does your ERP ven dorhave plans to of fer simi lar types of fea tures in a fu ture up date? If not,de ter mine what type of sup port it will of fer in in te grat ing your bolt onHR so lu tion to the back- end ERP mod ules.

Globali sa tion Chal lenges and Is sues in the New Mil len nium

The third as pect of HRM is sues and chal lenges in the new mil len nium is that ofglobali sa tion. Global com pe ti tion is here to stay. We have seen rapid growth inemerg ing world mar kets. There are new stan dards of global com peti tive ness. Ef fi -ciency and added value to goods and serv ices are the bene fit of this globali sa tion,but it does com pli cate the job of the op era tions man ager. How an op era tion makesthe tran si tion from do mes tic to global to achieve its strat egy re quires care fulanaly sis. Some of the fac tors that should be con sid ered in clude: the Euro pean Un -ion, Po si tion ing Strate gies, Global Bench mark ing, Com pe ti tion, Cul tural Im pactand Eco nomic Im pact.

As Jones (1998) ex plains in his book, the fol low ing points pro vide a pre limi -nary per spec tive of the Euro pean Un ion. “It is unique, it is un fin ished, it has beenan ex er cise in par tial in te gra tion, its de vel op ment has been very un even, it hasbeen an elite proj ect, it in volves the in ter twin ing of po liti cal and eco nomic ob jec -tives, it is a prod uct of many in flu ences, its cen tral con cepts are ‘fuzzy’, it in volves the ten sion be tween ‘in ter gov ern men tal ist’ and ‘su pra na tional’ in flu ences, and fi -nally, it is the world’s most ad vanced proj ect in re gional in te gra tion.” In spite ofthe nebu lous con di tion of what the Euro pean Un ion is and where it is go ing, it hashad a sig nifi cant im pact upon world trade. There are many rea sons why a do mes tic busi ness op era tion will de cide to change to some form of In ter na tional op era tion.These rea sons range from the tan gi ble to the in tan gi ble.

Eco nomic Im pact - Be yond the ques tions of po liti cal and eco nomic sta bil ity,the bene fits to the United States of a suc cess ful Euro could be con sid er able. By re -plac ing the French franc, the Ger man mark and nine other na tional cur ren cies, thepro gramme should make it eas ier and less ex pen sive for Ameri can com pa nies tosell their prod ucts and serv ice. Mul ti na tional Ameri can com pa nies are al readyamong the larg est in Europe, and many smaller Ameri can ex port ers are in creas -ingly look ing to Europe (Ste ven son, 1999). One im por tant role for HR pro fes sion -als in a mul ti na tional com pany is to be the pur veyor of cur rent and cor rect

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in for ma tion. Many em ploy ees are con cerned about how the Euro would af fect theway that they are paid and the bene fits that they will re ceive. Em ploy ees are alsocon cerned how the Euro will im pact on their com pany and the busi ness that theydo. As com pa nies specu late and re act to changes in the Euro pean mar ket place inthe years ahead, op por tu ni ties to in tro duce ma jor changes in HR strat egy will arise (Rob erts, 1999). It will be vi tal for the HR pro fes sional to be aware of thesechanges and to use them to their best ad van tage.

Why are global op era tions im por tant? There are a number of rea sons why acom pany would con sider ex pand ing their area of op era tion. Com pa nies can re al -ise a re duc tion of costs, par ticu larly those costs in curred by la bour, taxes and tar -iffs. They can also re al ise an im proved sup ply chain along with a re duc tion ofrisks. These re duced costs, along with the im proved sup ply chain would per mitthe or gani sa tion to learn how to im prove op era tions and pro vide bet ter goods andserv ices. Fi nally, mul ti na tional ex pan sion would make it pos si ble not only to at -tract new mar kets, but also to at tract and re tain global tal ent as well. Globali sa tionis also hav ing a big im pact on supply- chain man age ment, hu man re source is sues,qual ity, po si tion ing, lo ca tion and pro cess strate gies. It is the Hu man Re sourcepro fes sion als’ job to be able to sup ply the op era tional side of the busi ness with em -ploy ees ca pa ble of per form ing the req ui site tasks in volved in ca pac ity plan ning,lo ca tion plan ning, op era tions sched ul ing, fa cili ties and lay out de sign.

In the past, the ef forts of many com pa nies to deal with a di verse em ployeepopu la tion were man dated largely by le gal pres sures or moral con cerns in re gardsto fair ness. These is sues of work force di ver sity, al though com plex and com pli -cated now will be come more of an is sue for those com pa nies op er at ing on a globalscale. Suc cess ful or gani sa tions will re act to di ver sity as the im por tant busi ness is -sue it is by im ple ment ing pro ac tive, stra te gic hu man re sources plan ning. Short- term strate gies de signed to cir cum vent the situa tion will keep an or gani sa tionfrom ef fec tively po si tion ing it self in to mor row’s world of cul tural, gen der, andlife style di ver sity (Sims, R. and S. Sims, 1994). Yet an other as pect of di ver sityaware ness is what a par ticu lar cul ture deems ac cept able. Ethi cal con sid era tionssuch as the at ti tude to wards em ployee theft and brib ery can have sig nifi cant im -pact on the op era tions of a com pany. Com pa nies must be aware of po ten tial prob -lems or situa tions and have a plan to deal with them.

Dis cus sion/Sum mary/Con clu sion

In con clu sion, sweep ing changes con tinue to re shape the work place. To day’s hu -man re source pro fes sional plays a vi tal role in help ing their or gani sa tion re maincom peti tive in the mar ket place. They need to be a knowl edge able, skilled busi -ness part ner. The Hu man Re source pro fes sional in the new mil len nium will wearmany hats. They must be able to use their sense of com mit ment, in ter per sonalskills and train ing to help make their com pany suc cess ful. Changes in the work -place dic tate that they cul ti vate com pe ten cies in their own credi bil ity, com mu ni -ca tion skills and decision- making skills. The Hu man Re source pro fes sionalshould be a stra te gic part ner; ad min is tra tive ex pert; em ployee cham pion; andchange agent. They should be able to pres ent the vi sion of their com pany clearly.They must have a clear and func tional per cep tion of Op era tional Man age mentneeds.

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What are the ques tions re main ing? There are al most as many as when westarted. How will com pa nies choose to deal with the is sues that we have dis cussedin the new mil len nium? There is much in for ma tion to be as simi lated when con sid -er ing the prob lems fac ing Hu man Re source pro fes sion als in the fu ture. How willeach of these three dif fer ent yet inter- connected fac ets af fect their choices? Whilenot hav ing a crys tal ball, we can make some gen er ali sa tions.

* In re gards to per son nel is sues and chal lenges, we have de ter mined thatthe most suc cess ful or gani sa tions will be the ones who can at tract, de -velop and re tain in di vidu als who have the abil ity to man age a global or -gani sa tion that is re spon sive to cus tom ers and the op por tu ni ties be ingpre sented by tech nol ogy.

* The im ple men ta tion of tech nol ogy will con tinue to be a driv ing force inthe suc cess of com pa nies in the fu ture. Firms that know how to use tech -nol ogy find it an ex cel lent ve hi cle for ob tain ing com peti tive ad van tage(Heizer, J. and B. Ren der, 1999).

* Globali sa tion is hav ing and will con tinue to have a big im pact on the ba -sic is sues of op era tion man age ment; lo ca tion strate gies, supply- chainman age ment, hu man re source is sues, qual ity, and pro cess strate gies.

We have learned that Hu man Re source pro fes sion als need to take a pro ac tive role in the suc cess of their com pany. They need to ex am ine the stream lin ing of oldpro cesses to en sure that what is be ing built is a bet ter so lu tion, not just auto ma tionof a bro ken sys tem. In es sence, the Hu man Re source pro fes sional must move from “the back room” to the “board- room.” They need to em pha sise the im por tance ofcon tinu ous prog ress and man ag ing change through goal set ting. Fi nally, we havelearned that em pow ered em ploy ees have proven to be more pro duc tive.

Five Year Sur vival Rates of Ini tial Pub lic Of fer ings

One of the clear est dem on stra tions of the causal ef fect of man age ment prac ticeson per form ance comes from a study of the five- year sur vival rate of 136 non- financial com pa nies that ini ti ated their pub lic of fer ing in the US stock mar ket in1988. The re sults are so com pel ling that pru dent in ves tors may want to use thesere sults in evalu at ing new com pa nies. The firms stud ied came from nu mer ous in -dus tries rang ing from bio tech nol ogy to food serv ice re tail ing and var ied widely insize, with half em ploy ing fewer than 110 peo ple but with 20 per cent hav ing 700 ormore em ploy ees. Five came from for eign coun tries. By 1993, some five yearslater, eighty- one firms, or 60 per cent of the sam ple were still in ex is tence.

Wel bourne and An drews (1996) de vel oped two scales, along with other fac -tors, for ex plain ing com pany sur vival. The in for ma tion used in meas ur ing thefirms’ man age ment prac tices came from their of fer ing pro spec tuses and thus ispub licly avail able. The first scale meas ured the value the firm placed on hu man re -sources and was com prised of five items: (1) whether the com pa ny’s strat egy andmis sion state ments cited em ploy ees as con sti tut ing a com peti tive ad van tage; (2)whether the com pa ny’s ma te ri als men tioned em ployee train ing pro grammes; (3)whether a com pany of fi cial was charged with re spon si bil ity for hu man re sourceman age ment; (4) the de gree to which the com pany used full- time em ploy eesrather than tem po rary or con tract work ers; and (5) the com pa ny’s self- rating of itsem ployee re la tions cli mate. The sec ond scale meas ured how the or gani sa tion re -

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warded peo ple; it was com puted, us ing 10-1 code, by sum ming whether the com -pany had stock op tions for all em ploy ees; stock op tions only for key em ploy eesand man age ment; profit shar ing for all em ploy ees; profit shar ing for key em ploy -ees and man age ment; and other group- based in cen tives, such as gain shar ing.

The em piri cal analy sis (Wel bourne and An drews, 1996) dem on strated thatwith other fac tors such as size, in dus try, and even prof its sta tis ti cally con trolled,both the hu man re sources value scale and the re ward scale were sig nifi cantly re -lated to the prob abil ity of sur vival. Moreo ver, the re sults were sub stan tively im -por tant. The dif fer ence in sur vival prob abil ity for firms one stan dard de via tionabove and one stan dard de via tion be low the mean (in the up per 16 per cent thelower 16 per cent of all firms in the sam ple) on the hu man re source value scale wasal most 20 per cent. The dif fer ence in sur vival de pend ing on where the firm scoredon the re wards scale was even more dra matic, with a dif fer ence in five- year sur -vival prob abil ity of 42 per cent be tween firms in the up per and lower tails of thedis tri bu tion.

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Ta ble 1: Prin ci pal em piri cal stud ies of IT and pro duc tiv ity

Econ omy Wide orCross Sec tor

Manu fac tur ing Serv ices

Os ter man (1986)Bai ley and Chak rabarti (1988)Le feb vre and Le feb vre (1988)

Roach (1989)Brooke (1991)

Love man (1988)Weilll (1990)

Mor ri son and Berndt (1990)Ba rua et al. (1991)

Siegel and Grili ches (1991)Bryn jolfsson and Hitt (1993)

Cron and So bol (1983)Franke (1987)

Har ris and Katz (1989)Roach (1989)

Al par and Kim (1990)Noyelle (1990)

Par sons et al. (1990)Strass mann (1990)

Bryn jolfsson and Hitt (1993)

Source: Adapted from Bryn jolfsson (1993)

Ta ble 2: In for ma tion work force in four de vel oped coun tries (per cent age per year)

Coun try 1840 1860 1880 1900 1920 1940 1960 1970 1980

UnitedKing dom

4.6 5.6 7.9 12.4 19.8 24.4 33.1 36.6 ----

UnitedStates

---- 5.8 6.5 12.8 17.7 24.9 42.0 46.4 46.6

Aus tra lia ---- ---- ---- ---- 11.5 16.3 22.5 27.5 30.2

Ger many ---- ---- ---- ---- ---- ---- 24.6 30.7 33.2

Source: Adapted from Kim (1994)

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Ta ble 3: Bene fits de rived from IT ap pli ca tions in large firms

Key Com peti tive Di men sion Con cepts de scribed in Main te nance

Ef fi ciency Use of IT to re duce cost in func tional ar eas (McFar lan 1984)In ter nal and inter or gani sa tional ef fi ciency (Bakos and Tre acy1986)Com para tive ef fi ciency (Bakos 1987)Pro duc tiv ity (Syn nott 1987)

Func tion al ity New prod ucts and serv ices (Par sons 1983; McFar lan 1984)Cus tomer serv ice (Ives and Lear mouth 1984)Dif fer en tia tion (Por ter 1985)Add ing value for cus tom ers (Clem ons and Kim brough 1986)Unique prod uct fea tures (Bakos 1987; Bakos and Tre acy 1988)

Unique prod uct fea tures (Bakos 1987; Bakos and Tre acy 1988)

Threat Buyer and sup plier power (Par son 1983)Cus tomer and sup plier switch ing costs (Bakos 1987)Switch ing costs and search- related costs (Bakos and Tre acy1988)

Pre emp tive ness Pre emp tive strikes (Mac Mil lan 1983; Clem ons 1986)Po si tional ad van tages and tim ing (Bakos 1987)First- mover ef fects (Clem ons and Knez 1987)

Syn ergy In te gra tion with com pany strat egy (King et al. 1986); In for ma tion Week (1987)

Source: Sethi and King (1994)

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human_resource issues and challenges in thenew millennium

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