Several managerial trends are having an impact on human resources. Many of the major demographic trends for the future are relatively well known.
Nonetheless, these massive changes in demography have important implications for human resource management. Major changes include an ageing workforce, the baby born age glut, the baby bust labour shortage, increased racial diversity, and greater feminization of the workforce.
Internet, e-mail, fax machines, cable modems, digital subscriber lines, personal computers, other forms of telecommunications, and express mail make up of forces that have been able to relocate geographically while continuing to perform the same work for their employers via telecommunications technology.
The trends in HRM can be studied under the following heads: A. Management Trends B. Demographic Trends C. Trends in the Utilisation of Human Resources.
A. Management Trends:- 1. Work Team 2. Virtual Team 3. Open – Book Management 4. Management of Diversity 5. Total Quality Management 6. Reengineering 7. Management of Professionals 8. Managing in the Aftermath of Mergers and Acquisition.
B. Demographic Trends:- 1. Ageing Workforce 2. Labour Shortages 3. Greater Racial Diversity 4. Changing occupational Distribution for Women 5. Dual-Career Couples.
C. Trends in the Utilisation of Human Resources:- 1. Telecommunication 2. Relocation of Work 3. Growing Use of Temporary and Contingent Workers 4. Employee Leasing 5. International Development 6. Global Sourcing of Labour.
Recent Trends in HRM: Management Trends, Demographic Trends and Trends in the Utilisation of Human Resources
I. Management Trends
Several managerial trends are having an impact on human resources.
1. Work teams,
2. Virtual teams,
3. Open-book management,
4. Management of diversity,
5. Total quality management,
7. Management of professionals, and
8. Managing in the aftermath of mergers and acquisitions.
Because of the increased heterogeneity of the workforce, managers must be prepared to deal with the challenges associated with such demographic changes. Effective management of diversity can increase an organisations’ productivity through several avenues, one of which is increased problem-solving ability. Such productivity may result from increases in creativity that has been hypothesized to be related to heterogeneity.
For example bilingualism and biculturalism have been found to be related to divergent thinking, which in turn has been hypothesized to be associated with creativity. Recently, it has been demonstrated that ethnic heterogeneity in small groups is associated with increased quality of ideas generated for solving problems.
Increased heterogeneity also may bring another benefit – the prevention of the “group think” phenomenon that occurs only in cohesive groups. However, whether these benefits will be obtained is dependent on how well diversity is managed. Such factors as the amount of diversity, communications, ease of discussing differences, cultural awareness training, and awareness of background information on group members affect the quality of idea generation.
Through such contributions, the management of diversity may enable companies to gain competitive advantages. In addition to diversity related creativity and problem- solving advantages, companies also may be able to tap gender and racially diverse markets better acceptance from these markets as a result of a good public image based on diversity. As an example, the Avon Corporation has had success with this strategy.
Companies having good records in managing diversity may be able to attract better employees. Organisations that do a good job of managing diversity also tend to be more flexible because they have broadened their policies, are more open-minded, have less standardised operating methods, and have developed skills in dealing with resistance to change.
Although prejudice still exists, there is evidence that progress has been made. For minorities and females, obtaining jobs with companies is less of a problem than it was in the past. Instead, any apprehension about minorities and females is more likely to be faced as per options of their qualifications. These perceptions are affected by the fact that, on average, minorities and females have less training and education.
As Roosevelt Thomas has stated – “Companies are worried about productivity and well aware that minorities and women represent a disproportionate share of the undertrained and undereducated.” To the extent that companies generalize from classes to individuals and make unfounded attributions, they underestimate the value and contribution that minorities and females tend to plateau earlier than those of male non-minorities.
Two caveats on the implications of the diversity literature seem warranted one is that some of the empirical literature recommends that researchers should seek to determine the optimal level of heterogeneity because there is a curvilinear relationship between heterogeneity and performance.
An example of such a recommendation is that “groups should pay careful attention to how much they increase diversity … too much diversity can lead to communication problems and unavoidable conflict.” Unfortunately, if one had knowledge of an optimal level of heterogeneity, the application of such information to increase performance weight lead to specific consideration of race, ethnicity, or gender in making work assignments, which would appear to violate civil rights legislation.
A second caveat is that much of the past research on racial diversity has focused on blacks and whites but has not devoted much attention of Hispanics. Hispanics are the fastest growing segment of the workforce. Thus, managers need to be sensitive to diversity issues for all races and nationalities as well as gender and other forms of workforce diversity.
2. Work Teams:
Work teams have been of increasing interest to managers in a number of leading companies, such as Procter & Gamble, Eli Lilley and Motorola. These companies have developed substantial expertise in the utilisation of teams. John R. Katzenback and Douglas K. Smith define work teams as “a small number of people with complementary skills who are committed to a common purpose, performance goals, and approach for which they hold themselves mutually accountable.”
A number of benefits have been attributed to the use of work teams as an organisational form. These include improved decision making, improved performance, improved quality and increased flexibility afforded by the ease with which they can be created and disbanded. The use of teams may also lead to reduce labour costs, lower employee turnover, greater service efficiency, facilitation of change resulting from reduced individual threat and shorter product development cycle.
Empirical analysis of the long-term performance of work teams involved in business simulations has provided some evidence of this effectiveness.
In spite of the advantages, there are also some disadvantages with the use of work teams as they are sometimes subject to the dysfunctional group think phenomenon and norms of production restriction. Further, as researchers Eric Sandstorm, Kenneth P. De Meuse, and David Futrell have pointed out, the literature on work teams provides mixed evidence on their effectiveness and identifies a large number of factors that potentially influence work team effectiveness.
These include developmental aspects, the boundaries of the teams, and the organisational context. There are also examples of difficulties with the implementation of teams such as Levi Strauss, where the introduction of teams led to declines in productivity and morale.
Although work team effectiveness is a complex subject, effective work teams have some common characteristics. Such characteristics include relatively small size, dedication to a common purpose, commitment to common performance standards, willingness to be collectively accountable, equitable and effective work and role assignment procedures within the team and complementary skills. Effective work teams also require compensation approaches that reward teamwork, such as gain sharing or team bonuses.
Aside from their complexity and the potential disadvantages of teams, there is great interest in their potential contributions. For example, in design and production situations, cross-functional work teams have been found to be effective in reducing the time required from initial product design to eventual production through simultaneous engineering.
Such teams, which typically include both design and production engineering personnel, as well as programme managers who mediate differences, are ideally housed in the same area. Another benefit derived from these teams is the broadening experience that takes place within the teams across engineering specialities.
An example of the use of work teams having a great deal of autonomy is provided by the experiences of Sterlease Inc., which introduced work teams into its new Context Plant. The plant’s hourly employees are organised into some 47 work teams, several of which are cross-functional in nature.
In addition to normal production work, these teams perform many activities that normally would have been managerial responsibilities, such as scheduling production, scheduling vacations or design materials and purchasing new equipment. Performance evaluation and compensation reviews are still the responsibility of managerial personnel.
Stulcase has divided a number of important benefits from its work groups. One is that the teams, which include machine operators, tend to make better machinery purchasing decisions than managers. Another benefit is savings in labour costs because the proportion of indirect labour costs is lower than other plants in the industry. For examples, there is no need for the position of assistant foreman.
An additional benefit is that the context plant has experienced an annual turnover rate lower than one per cent. Furthermore, communication has been facilitated as a result of the use of work teams. Finally, Stulcase has found that its workers have not become complacent because of the sense of ownership produced by the teams.
3. Virtual Teams:
Virtual teams have members who work closely together even though they are based at different locations, including different locations, including different countries, and may even be indifferent time zones. They typically have members from different functions and work across organisational boundaries as well. Advances in telecommunications, such as the internet, e-mail, cell phones, and video conferencing, have made virtual teams a possibility.
In turn, market factors, such as shorter product life cycles, rapidly shifting customer tastes, and international competitive pressures have provided the driving force for the use of technology to develop virtual teams. A team at a Johnson & Johnson unit provides a good example of a virtual team. This team has been assigned the task of developing a new surgical product and bringing it into production.
The team consists of representatives of various functions and has members in Arlington, Texas and Juarez, Mexico, where production facilities are located. Team members communicate frequently with each other using e-mail, fax and telephone and the team leader also makes frequent trips between the different locations.
4. Human Resource Outsourcing:
One of the most significant forces affecting human resource management has been the outsourcing of human resource functions. Human Resource outsourcing is commonly understood as the permanent contracting out of activities that were previously performed in-house. The trend towards outsourcing has been extremely widespread and recent surveys have focused as many as 91 per cent of responding companies engaging in outsourcing.
The trend toward outsourcing has been caused by several strategic and operational influences. From a strategic perspective, some human resource departments have attempted to shift their focus and resource toward a mere strategic role through the use of outsourcing. To accomplish this, human resource executives have used outsourcing to relieve their departments of some of the mere mundane aspects of the function, such as the involving routine, low-value added transactions.
Outsourcing has also been used to help reduce bureaucracy and to encourage a mere responsive and cost sensitive culture by introducing external market forces into the organisation through the bidding process. In addition, outsourcing has been used for political purposes, such as to reduce or control head count in human resources.
Outsourcing has been pursued for several operational reasons as well, such as for greater efficiency or better service in the performance of functions. For example, companies almost universally outsource 401(K) plans because large financial services companies can provide almost flawless low cost administration of the plans. Other examples include medical claims processing and the processing of benefit continuation under the Consolidated Omnibus Budget Reconciliation Act (COBRA).
Outsourcing also has been seen as a vehicle for cutting costs, while cost reduction is an important consideration in many firms, the evidence indicates greater livelihood of successful outsourcing when it is pursued as part of a coordinated plan, such as for strategic focus and service has been used to obtain specialized expertise that is not available in-house.
During the past two decades, downsizing has often reduced the number of human resource specialists in human resource departments. This reduction in staff has required organisations to go to outside vendors to obtain specialized services, such as for test validation or in-depth assessments for leadership development.
5. Open Book Management:
The practice of sharing financial and performance information is often referred to as Open Book Management. Essentially, the practice relies on the notion that empowered employees can make informed decisions and take informed actions on behalf of the firm. Because employer have the information and are empowered, they are almost compelled to take action. Jack Stack of Springfield manufacturing has been credited for being the inventor of open book management.
Stack acquired a nearby bankrupt plant from International Harvester and was able to achieve a remarkable turnaround through the use of open-book-management. One of his most critical changes in implementing open- book-management was to help employees think of the firm as a business instead of an organisation that reconditioned diesel engines. Interestingly, “He persuaded employees to view running the business as a game they could learn to play-and win”.
Open-book-management is broader than many human resource practices as it combines a number of practices such as profit sharing use of bonuses sure-boarding (reporting results or scoreboards) and training employees to understand the business. It often process heavy emphasis on the vise of games in which the objective is to defeat a problem instead of other employees.
Typically firms that practice open-book-management develop simplified methods for reporting their financials to employer and train them to interpret various measures of performance. Open-book-management usually combines generous bonuses beyond competitive base pay for a broad group of employee when the firm’s goads are achieved.
Such bonuses are carefully spelled out as indicated in the following:
The bonus in open-book companies is an agreed-upon part, a significant part-of everyone’s compensation package. It pays out only if the company or business unit hits certain goals, which are determined and spelled out in advance. The bonus is everybody’s reward for boosting the company’s performance for succeeding in business…… Right away you can see a couple of conditions that an open-book bonus plan must meet.
For one thing, it has to be generous — generous enough to matter…. A bonus plan that breaks out any group of regular employees runs counter to the basic ideas of open-book- management. So does a plan with widely disparate rewards…. a bonus in an addition to competitive base pay.
Another positive feature of open-book-management is that the sharing of such information instils a sense of trust among employees. In firms that do not practice open-book-management, financial and performance information is often restricted to high level executives. This restricted information flow conveys to other employees that they are not to be trusted with such information. As a result if its positive features, open-book-management has the potential to enhance employee motivation.
Examples of companies using open-book-management include R.R. Donnelly and Sons, Carolina Safety Associates, and Terminex (North Carolina). The Braelshaw Group, Inc., in Richardson, Texas, provides an example of a small company that is practicing open-book-management. The firm trains its employees to understand accounting and financial terms and stores ten per cent of its firm’s profits when profit goads are achieved.
6. Total Quality Management:
While not new, another continuing trend of importance to management strategists is total quality management (TQM). TQM, pioneered by Edwards Derring, is a broad-based, systematic approach for achieving high levels of quality. Many leading companies such as Motorola, Cadillac, and Xerox, wrote strategies that require them to survive against the pressures of world-class competition, have implemented TQM.
In a strategic context, TQM is probably most accurately categorised as a tactic for carrying out strategies requiring high levels of product or service quality. Essentially, TQM pulls together a number of well-known managerial principle coherent and systematic frameworks. Through the systematic interaction of these principles, TQM has the potential to lead to increased quality.
TQM principles emphasize:
i. Articulation of a strategic vision.
ii. Objective and accurate measurements.
iv. Widespread employee empowerment and team-building.
v. Striving for continuous improvement.
vi. Emphasis on a systems view of quality that conceptualises quality related activities as being highly interdependent.
vii. Leadership correlated to quality.
viii.Great emphasis on customer satisfaction.
Interestingly TQM programmes have the potential to increase the importance of the human resource management function. Human resource management plays a major role in providing more systematic training, facilitating changes that empower employees, instituting team-based reward systems, and communicating to workers their role in quality.
David Bowen and Edward Lawks have described the relationship between TQM and human resource management as follows:
The importance of the HR side of the quality equation provides HR departments with a golden opportunity. Quality can be the “business issue” that truly brings senior managers and HR executives together to move from just HRM to strategic HRM. A major role in the quality improvement effort puts HR in a position to contribute directly and visibly to the bottom line to add value to the company’s products and services in the same way that other functions, such as sales, accounting and production add value.
Before the human resource function can make full contributions to TQM efforts, high quality must be assured within the function itself. Unfortunately, measurement of the functions, contributions is often difficult because of their indirect effects. Nonetheless, valid measures of human resource effectiveness can be developed.
One means by which this might be accomplished is through external benchmarking, which provides a useful means of both evaluating the quality of human resource programmes, activities, and impact as well as a means of identifying areas in which resources should be concentrated.
The following quotation by David Ulrich, Wayne Brockbank, and Arthur Feung describes the practice:
Benchmarking HR practices provide the means of focusing attention on highest value-added HR activities those practices which are more likely to be practiced by successful companies. Rather than fall into the trap of trying to do everything well and please everyone with insufficient resources which results in no one being satisfied – HR professionals could use benchmarking to focus limited resources on critical activities.
Evaluation of the human resource function can also be accomplished by asking other managers in the organisation to evaluate the quality of services provided by the human resource management function. One guide for evaluation is to place greatest emphasis on measuring the most critical human resource management attributes, with secondary emphasis on the precision with which these attributes can be measured.
This point is evident in the following statement by Curt Reiman, Director of the Baldridge Award for the U.S. Department of Commerce – “A company does not earn money making measurements. The trick is to avoid great measurements of irrelevant things”. Along this same line, proponents of TQM also advocate the use of Pareto analysis. The basis of Pareto analysis is that a small number of factors have a disproportionately large impact on outcomes, such as quality. Therefore, by correcting a few critical problems, disproportionate improvements in quality can be obtained.
One of the important impacts of TQM, from a human resource management perspective, is that it places great emphasis on training. TQM maintains that errors and mistakes, which distracts from the quality of companies products and services, are a predictable result of untrained workers, and therefore training must be provided. Consistent with the emphasis on measurement, in some companies that use TQM, training is evaluated with the use of control groups and experimental designs.
In contrast to training, TQM is sharply at odds with conventional human resource practice in the area of performance evaluation. According to Deming, traditional performance evaluation systems are flawed because they are directed toward the individual instead of the team. Such systems also focus on assigning blame for past mistakes instead of pointing out direction for the future and may even detract from teamwork.
Deming also argued that faulty systems and procedures are usually the cause of quality problems, not the performance of individual employees. TQM proponents also maintain that compensation should be directed toward teams instead of individuals. In addition to disagreement over performance evaluation, there also is controversy among TQM proponents over the appropriateness of team-based pay.
Even some companies that have won the Baldrige Award for quality have not extended TQM into the areas of performance evaluation or compensation. Instead, companies implementing TQM have focused on problem areas that detract from quality, are relatively easy to fix, and do not involve much risk. For example, many companies focus their TQM efforts on improving training and communications.
Fewer companies have shifted from traditional compensation systems to team-based pay, abandoned their performance evaluation systems, or instituted self-managed teams. Motorola and Cadillac are exceptions in that they have instituted such teams. With any managerial innovation, TQM is not without problems. One says that TQM efforts can lead to goal displacement, in which TQM is an end instead of means.
In such cases, attention is diverted from pro-activities to gaining approvals from committees, filling out forms, and bureaucratic procedures. The well-publicized difficulties encountered by Flower and Hight and the Wallace Company after they won the Baldrige Award for quality provide wonderfully ironic examples of this problem. Finally, although not the fault of TQM-during economic difficulties, companies have reduced the level of employee empowerment. Executives of the companies have blamed employee empowerment for slower decision making.
However, this appears to be a short sighted criticism since the critical implementation process is facilitated by employee empowerment. Thus, even in Japan there has been second guessing of employee empowered consensus decision approaches because of their slowness. As a result, the leading Japanese Companies have formed to more top-downsizing of executive officers. Another problem is incompatibility of some of the concepts and downsizing strategies.
De-sousa from Cibaca has stated:
In case the aim of TQM is to add value to all stakeholders in every activity, it is almost of necessity make a company more efficient — increased productivity implies producing more with the same resources or, in a saturated market, produces the same amounts with fewer resources. In the latter case, which is the rule than exception in the industrialised nations today, downsizing is the probable consequence.
De-Sousa claims that layoffs can be avoided, presumably by attrition, insecurity resulting from downsizing or layoffs, would seem to under TQM philosophy.
7. Advance Manufacturing:
Manufacturing systems provide a new approach for streamlined manufacturing system and are commonly composed of advanced manufacturing (AMT), TQM and just-in-time (JIT) inventory control methods. AMT manufacturing approach based on highly computerized technologies, such as cost aided manufacturing (CAM). JIT inventory control is a method for manufacturing complements to the production line at the shortest practices before they are needed.
When these technologies and managerial systems use, integrated manufacturing systems have the potential to provide dissemination of information rank barriers associated with functional organisation, promote collaboration to serve quality problems, and develop control between goals of cost, quality and desired production lead times.
These systems require knowledge workers whose levels of technical and problem solving skills are advanced beyond those needed for earlier forms of manufacturing and have major implications for human resource management. Scott Snell and James Dean conducted an empirical analysis of the types of human resource practices associated with various components of integrated manufacturing systems.
In companies in which there is greater emphasis on AMT and TQM, there is more selectivity in hiring, more comprehensive training, and greater development on external pay equity. These results are consistent with company’s motivations to hire and maintain high quality workforces and to preserve their investments in human resources.
Reengineering, which is also called process innovation, core process redesign, and business process reengineering, has been practiced since the late 1980s, often by companies facing intense competitive pressures. Essentially, reengineering is directed at achieving large cost savings by eliminating unneeded activities and consolidating work.
It also sometimes redirects work across traditional departmental boundaries in order to accomplish work more quickly in cross functional teams. Accordingly, reporting relationships are sometimes changes along with reward structures. The type of service desired by customers is the key to the process.
An example of reengineering is provided by its application at Tatas Instruments. In this application, the driving force was the desire to reduce the time required for making customised semiconductor chips for a customer. In another example, the driving force was increased competition. In this case, GTE revamped its customer service process when it found that customers wanted to call only one number for repair service, to obtain answers to filling questions or to obtain additional services.
Prior to reengineering, customers having service problems called repair clerks, who then recorded the information and then forwarded it to repair personnel. These activities were subsequently combined into one role performed by employees called front end technicians who also now operate testing and switching equipment relocated from repair personnel. As a result, the front-end technicians solve 30 percent of all service calls, and a smaller percentage of calls must be passed onto other repair personnel.
Another example involves a bank. In order to reduce its operating costs The Banca di America and di Italia (BAI) reengineered its retail banking operations with the goal of becoming a paperless bank. After reengineering activities involved in depositing checks, the numbers declined from 64 to 25.
As a result of these and other changes, employees in each branch declined from seven to nine prior to engineering to three to four afterwards. With these labour savings, the bank was able to open 50 new branches with its existing workforce.
Often, reengineering requires cross functional coordination and the crossing of organisational boundaries. Because it may disrupt existing power relationships and eliminate organisation jobs, it has high potential for conflict. Because the process often fails to obtain desired improvements and it has high potential for destructive consequences, organisation should not engage in reengineering unless they perceive a serious need, furthermore, reengineering generally does not achieve the level of improvement desired.
The conventional wisdom is that the organisations strategy should be reengineered. Activities are necessary to these business needs are potential targets for elimination. As with early intervention of this nature, the organisations culture will have a major impact on its success. In many contemporary organisational cultures, the broad direction for reengineering should be the responsibility of those other performers.
In addition to the recruitment for extensive time commitment from the executive, successful reengineering is more likely to take place where it is needed to a broad range of activities, training programmes accompany work organisation, and there is extensive communication with employees.
As a closing note on reengineering, it should be noted that some high-level employees are not convinced of the ultimate value of reengineering. They have proved the elimination of jobs and such a massive increase in the workload of remaining employees that they have serious concerns about the long-range, environmental human impact of such programmes. Because of such reactions, the use of reengineering may diminish source that in the future.
9. Engagement of Professionals:
The case of the mature professionals requires a different form of management to provide a challenge for human resource management. Important characteristics of professionals are that they often have low organisational loyalty, require financial autonomy, follow a code of ethics established by their profession; standards of the profession and have a high need for intellectual and technical challenges.
The availability of managers who can manage the work, the professionals cannot be taken for granted. The difficulties are well-known and there has been a long standing controversy over whether, such managers should be the members of the relevant profession themselves or lawpersons. The problems to plan for the development of managers who can be effective in such things are apparent.
Mary Anne Vanglinew has stated:
Maximizing a professional productivity has led to the adoption or development of new methods of work organisation that limit hierarchical levels of supervision, group link pay and other records to performance, ease the tensions between the computing cultures of professionals and other employees, and give professionals greater participation in the decisions that affect their lives…. These managerial challenges and their solutions are crucial to the success and long-term survival of every high tech firm. The changes require different and sometimes counter intuitive management skills and practices.
Human resource problem for the future will be to develop career paths for professionals. To move up in an organisation, professionals have traditionally pursued an administrative track. Since they are often unprepared for management or administrative careers, they may not find such work satisfying. As a result, dual career leaders are sometimes provided, one is management and the other within the professional work.
Planning for career progressions for professionals will require greater attention to the development of alternative tracks that will satisfy the needs of both professionals and their employing organisations. Large public accounting firms provide a remarkable example of turnover problems among professionals.
A study of one such firm found that retention rates, after 60 months with the firm, ranged from 6 to 29 per cent. A challenge for the future will be to develop career tracks of professionals that will enhance organisation loyalty.
10. Managing in the Aftermath of Mergers and Acquisitions:
Although the level of merger and acquisition activity has begrimed, mergers and acquisitions are still a permanent feature of the economy. Whether a merger or acquisition is successful depends on more than financial considerations.
Success often depends on how well the two organisation’s human resources are integrated. As a result, the degree to which human resource aspects of mergers and acquisitions are planned can be critical.
Bruckman and Peters have stated – The amount of time and energy needed to successfully merge two sophisticated organisations, however, is more likely to resemble to planning and execution of the invasion of Normandy, accompanied by the resultant clash of cultures from many elements attempting to work together toward one end.
There is much evidence of the failure to work through human resource issues when organisations are acquired for their human resources. It also has been argued that planning for the contingencies of a merger is critical because human resources will pay the price. If the company loses a takeover battle, there may be redundant employees and the new entity will have to resort to layoffs. Conversely, if a company, is successful in finding the costs of the defensive actions to pay.
II. Demographic Trends
Many of the major demographic trends for the future are relatively well known. Nonetheless, these massive changes in demography have important implications for human resource management. Major changes include an ageing workforce, the baby born age glut, the baby bust labour shortage, increased racial diversity, and greater feminization of the workforce.
The developments, particularly the variations in growth across different age cohorts, will have major implications for the career potential of individual workers. Planning will be necessary to avoid age bulges, age gaps, and surpluses in job categories or job families.
1. Ageing Workforce:
Indications for ageing trends, the median age for the U.S. population will increase from 42 in 1998 to 45 by the year 2008, while the median age for the labour force will increase from 39 in 1998 to 41 in 2009. Some of the implications of ageing are that the workforce will be more productive. However, an older workforce may not adapt as quickly to a dynamic economy.
Greater costs will also request from greater pension contributions that is likely to be associated with an ageing workforce. One implication of this trend is that as the workforce ages there should be correspondingly greater health care costs. Huge increases in health care costs have already occurred. Company’s age distributions have already begun to affect their production costs of ability to compete.
Interestingly, during the post war period in which Japan’s remarkable economic growth occurred, it had a relatively smaller proportion of aged people to support than other industrial countries.
2. Labour Shortages:
At the beginning of the twenty-first century, firms faced the highest US labour market in 30 years. In some states, the unemployment rates for adults fell below three per cent. The combination of an exceptionally strong economy and demographic trends produced the labour shortages that had been predicted solely from demographic trends.
Employees were expected to respond to the shortage by hiring retired workers and creating mere varied work schedules to accommodate their needs. Indeed, as the shortage developed, employers responded in many predicted ways like hiring disabled workers such as the mentally challenged and retired workers. Barring an economic collapse, labour shortages also are predicted for the future.
The traditional want ad will be replaced with “situation wanted” ads – workers will place these ads on the internet or other media and wait for companies to call them. They will have good reason to expect a call back. The U.S. Bureau of Labour Statistics Projects 151 million jobs by 2006 and 141 people employees. As often happens today. Many of these workers will be working two jobs.
The availability of jobs with dot com or e-business companies and the prospects for rapid accumulation of wealth has made the labour market brighter for highly skilled workers who are willing to take risks and live with uncertainty. Nonetheless, the most admired companies in the United States such as Larent Technologies, General Electric, Microsoft and Dell Computer have high ratios of applicants to jobs.
The above companies have opened their units in India and attracting the Indian software intellectuals to join these companies. These companies are aggressive recruiters, but ratios of applicants to jobs are high at Southwest Airlines help reinforce the notion that good employees are attracted to companies that have good management even in light labour markets.
The internet has created many of the jobs for highly skilled workers and has helped the labour market work more efficiently by providing information about jobs and applicants and facilitating match-ups. Internet recruiting has become so important that trade journals publish ratings of the top job sites such as Naukri(dot)com or Jobs(dot)com.
In addition to its advantages of speed and economy, Internet recruiting reaches the global labour market. Internet sites also offer the potential for tremendous volume. For examples, Naukri(dot)com receive 20,000 to 30,000 resources each year through e-mail. In addition, there is great specialisation. For instance, one site specializes in job openings for morticians.
In addition to recruiting efforts, companies have responded to labour shortages by hiring non-traditional workers. A number of companies have achieved excellent results by hiring disabled employees. Older workers also have provided on excellent source of labour.
Although many older workers are not interested in full-time work, they appear to be interested in “fill-in” work of a part-time nature if the jobs provide flexibility and are close to home. Interestingly, the reserve of female workers that provided needed labour in the past has been depleted by their current involvement in the labour force. Liberalised policies that would allow greater immigration of skilled workers also are being viewed as a remedy for shortage of labour.
Unfortunately, for unqualified workers, employers will need entry-level workers whose skills are on par with global standards. Reten Merrison has stated “when today’s first graders reach adulthood they will compete within a global labour market and will need intellectual skills and levels of education and literacy never demanded of their predecessors”. Stated differently, “Jobs that are currently in the middle of the skill distribution will be the least skilled occupations of the future, and there will be very few new jobs for the unskilled”.
3. Greater Racial Diversity:
The labour force will become much more diverse in the twenty-first century. The category consisting of Asians and others (Pacific Islanders, Native Americans) is projected to grow by over 40 per cent through 2008, the fastest of all racial groups Hispanic participation is expected to increase by 36.8 percent, and Hispanics will become the largest minority group in the labour force by 2008, accounting for 12.7 percent of the labour force.
The participation of black workers is expected to grow more slowly. 19.5 per cent growth in labour force participation of white workers will be the slowest, only 9.7 per cent. As a result of these growth patterns, by the year 2008, over 29 per cent of the workforce will be composed of nonwhites and organisations will need to plan to take advantage of diversity instead of forcing conformity. Likewise, organisations will need to be proactive in helping to create a work environment in which the creativity and innovations of diversity will flourish.
4. Changing Occupational Distribution for Women:
Females have constituted a growing portion of the workforce for several decades. However, this growth has slowed tremendously as women are predicted to constitute about 48 percent of the workforce by 2008, only one percentage point more than in 1998. While the occupational distribution of women still differs from that of man, they have made great strides in several job categories. Women now account for 68.3 per cent of the workers in training, human resources, and labour relations and for approximately 50 percent of accountants, although they are still underrepresented at the level of partner.
Women have advanced most rapidly in cutting-edge industries because the need for pure intellectual horsepower overcomes inclinations for exclusion on the basis of gender. For example, they have fared well as information workers and as computer scientists. In the past 10 years, they also have made impressive inroads as engineers, sales engineers and as support staff for technical sales.
In order to attract talented women, many employers have work arrangements that better accommodates childbirth and, for women as well as man, the care of young children. Such approaches include part-time schedules, flexitime, flexi scheduling, and allowing employees to work part of the time at home.
Experiences with the latter have been reported at General Motors and Citi Bank for managerial and professional personnel. The trends towards greater flexibility are clear. Between 1991 and 1997, the proportion of the civilian labour force working on flexitime increased from 15 per cent to 27 per cent.
An issue related to increased feminization of the workforce is the number of dual career families. The number of couples having two-wage earners has increased rapidly, having passed the two-thirds point more than a decade age. In order to accommodate such families, many employers offer support services such as “sick child” care programmes and day care — such services are believed to produce reductions in absenteeism, lower turnover, recruiting advantages, and a positive impact on productivity.
In order to help such dual-career couples, as well as single parents, employers now provide several forms of support. For example, referral services for child care are provided by one of the large public accounting firms as well as IBM. Other companies have set up child care facilities on company premises. Campbell Soup Company has had success with such a programme. However, such programmes are not automatic successes. Corning Glass and Merck encountered high costs and resentment from employees who did not need such services.
III. Trends in the Utilisation of Human Resources
Internet, e-mail, fax machines, cable modems, digital subscriber lines, personal computers, other forms of telecommunications, and express mail make up of forces that have been able to relocate geographically while continuing to perform the same work for their employers via telecommunications technology.
Commuting or telecommunicating does not necessarily involve geographic communication but simply involves working at home at least part of the time. In recent times, the number of workers who telecommute has increased dramatically; telecommuting is thought to bring several individual benefits, including savings from the avoidance of commuting as well as at-home child care, use of working for multiple employers, access to jobs by disabled workers and style advantages. There is a positive impact on the environment as well as fewer workers are on the highways.
Organisation benefits include shifting advantages, lower costs in using part-time workers, increased ability of skilled professionals. On an ad hoc basis, reduced likelihood of unionization and need for office space, productivity improvements, and better morale for employers given the opinion of telecommuting, and employee retention states that it is able to retain more of its employees because of telecommuting. Some observers have asserted that telecommuters work more efficiently.
Nonetheless, there are potential problems with such arrangements, including control difficulties, career limitations related to lack of visibility, workers, seems about missing opportunities, social isolation, less sense of belonging, reduced loyalties to both employer and employee. There are also concerns about the security of confidential or competitive information when it is transmitted over telephone lines from to and from the telecommuter.
Although encryption technology may reduce such threats, security is a concern for some companies. Telecommuters also need remote office and information technology support. In addition, some managers find it difficult to trust their employees to work at home without their supervision.
Telecommunication advances have allowed information workers to migrate from cities to rural areas and small towns. This migration has created what futurists Naisbilt and Aburdene call the electronic heartland. These workers have been attracted to the heartland because there is less crime, a lower cost of living, and quality of life benefits. Workers who are working on this relocation include owners of home-based businesses, writers, artists, stock traders, composers, software developers and engineers.
Companies are also relocating their operations. In information systems and data processing, companies are relocating their facilities to areas where there are favourable costs. For example, a New York Money Centre Bank relocated its data processing operations to a nearby state where real estate and the cost of living are lower. Information is transmitted electronically and henceforth with no delay in information system responsiveness while achieving substantial cost savings.
It is increasingly common for automobile rental companies and hotels to locate their reservations operations in areas of the country where there are wage advantages. For example, Hertz has its reservations and accounting operations in Oklahoma City. Thrifty and Avis both have reservations operations in Tulsa, and Budget’s reservations operations for Hyatt Hotels are located in Omaha, Nebraska.
These geographic areas offer wage advantages over many areas in the United States, and location is irrelevant to the nature of the work performed. Recently, manufacturing companies have been relocating out of their operating areas because of the high costs of land and labour as well as regulative environment.
Another important human resource issue is the increasing use of temporary or contingent workers. Temporary employees are often used to provide a buffer of protection for the jobs of the core of permanent employees. Further, the use of such workers is increasing and there is likely to be additional unbundling in the future. In contrast to core employees, contingent workers have short-term affiliations with employers.
Examples include temporaries, subcontracted workers, part time workers, consultants, life of the project workers and leased employees. Companies also are using more “leased” employees who are “rented” from a temporary help agency on a long-term basis. Not surprisingly, unions typically resist the use of temporary workers.
Although there is growing use of higher skilled temporary employees, the largest category of temporaries is still administrative support of electrical work. The second largest category is industrial help workers such as labourers, equipment cleaners, helpers and handlers.
Because demand for such industrial help workers is cyclical and seasonal, the advantages to the employer are obvious. Temporary workers are even being used in the health care industry as registered nurses, practical nurses and X-ray technicians.
The nature of temporary jobs is changing as there is a shift toward the higher skill levels. Temporary workers now include accountants, computer specialists, engineering personnel, financial executives, and technical writers.
In information systems, temporary management services are being used for project management, installation of new systems, or during transition periods. Temporary management personnel and executives are sometimes early retirees from major computer companies or managers displaced as a result of restructuring.
A number of factors encourage the use of temporary or contingent employees. Because of economic uncertainty or turbulence, many employers are reluctant to use permanent employees and have increased their use of contingent employees. Another factor is fluctuating workloads.
Companies also can avoid paying overtime pay by using temporaries during peak demand periods. Growing and declining companies have been found to use more temporary employers. The use of temporaries who can be dismissed on short notice allows these companies to protect the core of permanent employees. Nonetheless, in tight labour markets, it may be difficult to obtain qualified temporary employees.
Other factors prompting the use of contingent workers include avoidance of recruiting, hiring and training expenses for workers who are to be used only s short time and avoidance of severance costs. The perverse effects of legislation also may have prompted the use of temporaries in some instances.
For example, the Worker Adjustment and Retraining Notification Act (WARN), which was designed to provide advance notice to plant shutdowns to full-time employees, may encourage the vise of temporary workers. Other advantages for employers in the use of such workers include flexibility, potential savings in labour costs, and acquiring labour needed during hiring freezes.
In addition to benefits for employers, there are some benefits for temporary or contingent workers. These benefits include the flexibility to match lifestyle and family obligations with work and the ease of finding a job. For women, who constitute approximately two thirds of the temporary workforce, the benefits also include exposure in the job market, opportunities to obtain work experience and work skills, and the opportunity to sample employment situations.
Opportunities to reacquire work skills and confidence may have appeal for women who have withdrawn from the labour force for substantial lengths of time. Youthful workers also may be attracted by temporary work as opportunities to gain work experience.
Although there are several advantages for employers in using temporary employees, there are also disadvantages. One disadvantage is the increased livelihood of missing affirmative action goals. Employers may not obtain desired numbers of female and minority employees in their permanent workforce if they curtail hiring and rely extensively on temporary workers. Another disadvantage is the need to train such workers. With temporary executives, disadvantages may include inordinate emphasis on short-term financial performance and absence of company loyalty.
Disadvantages for temporary employees include lower opportunities to receive health insurance and retirement benefits, lower pay and fewer training and educational opportunities. However, temporaries frequently have benefit coverage from spouse’s employment.
Employee leasing is different from the use of temporary workers because there is no implication that employers will be other than full time, long-term employees. Often, when an employer makes the decision to lease employees, his or her employees then become employees of a leasing firm. The leasing firm then supplies these same employees to the original employer.
As with the use of temporaries, there are some advantages with employees leasing. One primary reason for leasing is that small employers can obtain more economical health insurance by virtue of the leasing company’s larger numbers of employees and inclusion in order pooled rates. Another motivating factor is that all payroll and administrative services are performed by the leasing company, leaving the management of the small company free to focus on other aspects of the business.
However, there are other disadvantages with the use of based employees. One is that some of the advantages of small size, such as exclusion from coverage by various federal laws based on size limits, are lost because of the leasing company’s larger size. The use of the leasing company also may not eliminate liability, as there may be a shared employment relationship. Another disadvantage is that a number of leasing companies have failed, leaving the employers using based employers liable for workers compensation.
Companies competing on a global basis will need to use world-class labour to achieve the quality needed for some product markets. For example, The Motorola uses its training programmes to develop employees who can produce at a level of world competitive standards. One of the Motorola’s accomplishments was to develop some of the workers into world class software engineers. One software manufacturer has obtained specialised world class information service by having programming done in USA and routing work done in India.
Moving foreign nationals across internal boundaries is another approach for highly skilled individuals. However, the use of U.S. expatriate enters in overseas holdings may be declining. In some U.S. companies with overseas holdings, the number of U.S. expatriate workers is relatively small. For example, during one year Honeywell had 27,159 employees overseas and approximately 200 were U.S. citizens.
Instead, there may be growing tendency to bring foreign nationals to the United States for a few years training through the parent company and having them take on the managerial or professional responsibilities in their countries. The legal restrictions involved in these may be critical. Some large organisations have human resource management specialists who have developed expertise in working through the legalities in such ways.
Innovative uses of labour on a global basis are evident. One example is a large Insurance Company in which claims are processed in Ireland. The combination of a common language, an educated labour force, a shortage of jobs, and relatively low wages more than this is an attractive option.
As operations have been setup, its data are sent from the United States using overnight airmail and electronic transmission. An interesting benefit of this relationship is that, in addition to the low cost of labour, there is a time differential advantage as work delivered overnight can be worked on several hours prior to the normal starting time of 8.00 A.M. on the East Coast.
Additionally, U.S. companies sometimes have data entry performed offshore in order to take advantage of wage differentials. In some instances, data entry is performed by deistical workers who do not even speak English. For example, American Airlines has data entry performed in China and Barbados.
Several Asian Countries such as Korea, Singapore, Taiwan, Malaysia and Indonesia are major U.S. trading and outsourcing partners. Nonetheless, the dramatic changes in Eastern Europe also have implications for labour supplies.
Germany is especially intriguing. Although productivity in the eastern portion of Germany is lower because of the residual effects of communism, the prospects for rapid productivity growth are good because the labour force is literate, competent, mechanically adept, and has a strong work ethic.
This transition to high productivity is in stark contrast to expectations of the labour force in many U.S. cities where illiteracy among workers are high. Although the workforce from the former East Germany may be more skilled than those of some East European countries, the labour forces of these countries are attractive in many respects and are now accessible to western companies.