Fundamentals of

Human Resource Management 11e

Chapter 1
The Dynamic Environment of HRM
 The Dynamic Environment of
HRM
▪ Globalization ▪ The contingent
▪ Global economies workforce
▪ Technology changes ▪ Decentralized work sites
▪ Workforce diversity ▪ Company mergers
▪ Labor shortages ▪ Offshore sourcing of
▪ Changing skill goods and services
requirements ▪ Employee involvement.
▪ Continuous improvement
initiatives
 Introduction
HRM is a subset of management. It has five main
goals:
attract
employees

retain hire
Goals employees
employees
of
HRM

motivate train
employees employees

Strong employees = competitive advantage.

 Globalization

▪ Globalization is the process of making

transactions across international borders.
▪ HRM professionals must adapt to cultures,
legal systems, and business practices in many
different countries.
▪ HRM professionals must ensure employees
with the appropriate mix of knowledge, skills,
and cultural adaptability are available and
ready to handle global assignments.
 Understanding Cultural
Environments
▪ HRM operates in a global business
environment
▪ Countries have different
• values
• morals
• customs
• political, economic, and legal systems

HRM helps employees understand other countries’

political and economic conditions.
 Exhibit 1-1: Cultural Values
▪ Individualistic society (US), people are
primarily concerned with themselves and their
own family.
▪ Collective society (Japan), people care for all
individuals who are part of their group.
 Understanding Cultural Environments
The Heritage Foundation’s Index of Economic Freedom rates
184 countries on openness to trade, business, investment, and
property rights. Guyana was #91 in 2022. North Korea is the
most repressed.
TOP 10 FREE COUNTRIES TOP 10 REPRESSED COUNTRIES
1. Singapore 1. North Korea
2. Switzerland 2. Venezuela
3. Ireland 3. Cuba
4. New Zealand 4. Sudan
5. Luxembourg 5. Zimbabwe
6. Taiwan 6. Burundi
7. Estonia 7. Eritrea
8. Netherlands 8. Iran
9. Finland 9. Bolivia
10. Denmark 10. Central African Republic
2022 Country Rankings, see www.heritage.org/index/Ranking.aspx
 The Changing World of Technology

▪ HRM operates in a technologically changing

environment
▪ Thomas Friedman:

Globalization 1.0 Globalization 2.0 Globalization 3.0

(1492-1800) (1800 -2000) (2000 -????)
Driven by transportation Driven by communication Driven by technology

3.0 fueled by instant communication and the Internet.

 The Impact of Technology

▪ HR is increasingly using IT
▪ Knowledge workers focus on the acquisition and
application of information for decision making.
▪ Some books for aspiring knowledge workers:

1. Learning as a Way of Being by Peter B. Vaill

2. Thinking for a Living: How to Get Better Performance and

Results from Knowledge Workers by Thomas H. Davenport
3. Information Anxiety 2 by Richard S. Wurman
 The Impact of Technology

▪ HRM information systems help to

• facilitate HR plans
• make decisions faster
• clearly define jobs
• evaluate performance
• provide desirable, cost-effective benefits
 The Impact of Technology

▪ HR managers use technology to:

• recruit, hire, and train employees
• motivate and monitor workers
• research fair compensation packages
• communicate throughout the organization
• evaluate decentralized employees’
performance
 Workforce Composition Trends

▪ Workforce and labor market are frequently used

interchangeably and refer to the available workers in
a specific area such as a city, state, country, or region
of the world.
▪ Factors influencing the composition of the global
workforce include global economics, birthrates,
education, and the increasing mobility of the
workforce.
▪ The need for skilled workers with math and science
skills is increasing, and shortages of qualified
workers exist.
 Workforce Composition Trends

▪ Older workers remain in the workforce to earn an

income to sustain current living standards or a desire
to remain active.
▪ Many European countries including the United
Kingdom, Italy, and Denmark have raised the age that
workers are eligible to receive pensions.
▪ HR professionals may see more intergenerational
conflict in the workplace as up to four generations
have different needs, work ethics, ambitions, learning
styles, and expectations.
 Workforce Composition Trends

▪ A significant number of women are entering the

workforce, looking for skilled and professional jobs.
▪ Hispanics and Asians have been the fastest-growing
ethnic groups in the population and in the workforce.
▪ The problem of illegal immigration complicates the
issue of worker diversity.
▪ HR professionals need to be diligent in understanding
and enforcing immigration laws and worker
documentation.
 Workforce Diversity

▪ HRM has moved from the melting pot assumption to

celebrating workforce diversity.
▪ Employees who are able to be open about all aspects
of their spirituality, politics, sexual orientation,
disabilities, socioeconomic status, family, cultural
influences, and many other beliefs and characteristics,
in addition to traditionally recognized and legally
protected personal attributes, are happier, more
engaged, and more productive.
 Workforce Diversity

▪ An inclusive culture allows everyone, regardless of

personal characteristics, to feel that they are valued,
respected, and have equal access to all organizational
opportunities.
▪ Most organizations have workforce diversity
programs established to hire, promote, and retain
minorities; encourage vendor diversity; and provide
diversity training for employees.
 Workforce Diversity

▪ Today’s workers want a healthy work/life balance.

▪ They can work any time, from almost anywhere
▪ Work more than 40 hours per week
▪ Part of a dual-income household

#1 reason
for leaving a company:
lack of work schedule flexibility
 The Labor Supply

▪ HR managers monitor the labor supply.

▪ Downsizing is aimed at creating greater
efficiency by eliminating certain jobs.
▪ Trend is to rightsize - link employee needs to
organizational strategy (company goals).
▪ Outsourcing is sending work ‘outside’ the
organization to be done by individuals not
employed full time with the organization.
 The Labor Supply

▪ Companies such as GE, Kraft, and Time

Warner have managed to create agility by
dividing their organization into smaller, more
flexible units.
▪ For agility, companies build a contingent
workforce of:
• Part-time workers
• Temporary workers
• Contract workers
 The Labor Supply

▪ Part‐time employees are those who work fewer

than 40 hours a week.
▪ Temporary employees may be employed
during peak production periods or act as
fill‐ins when some employees are off work for
an extended time.
▪ Contract workers, freelancers, subcontractors,
and consultants are contracted by
organizations to work on specific projects.
 The Labor Supply

▪ Many employers see offshoring as a necessity

in order to compete in a global economy and
find necessary skills, lower labor costs, and
reduced costs of distribution.
▪ Offshoring is the process of moving jobs out of
one country and into another for economic
reasons.
▪ Reshoring is the process of bringing jobs back
to the home country.
 Continuous Improvement
Programs
focus
on
customer

concern for
empowerment continuous
of employees continuous improvement
improvement
components

accurate concern for

measurement total quality

HR managers help workers adapt to continuous improvement changes

through retraining, providing answers, and monitoring expectations.
 Work Process Engineering

▪ Work process engineering is more radical than

continuous improvement and maybe a
response to game‐changing developments in
technology, competition, or the economy.
▪ It is rethinking or redesigning processes used
to accomplish organizational goals with the
objective of dramatic improvements in
efficiency and competitiveness.
 HRM & Support Improvement
Programs
▪ Improvement efforts introduce change.
▪ HRM are responsible for preparing the
organization and the affected individuals for
the changes with clear and extensive
communication of why the changes will occur,
what is expected, and the effects on
employees.
 HRM & Support Improvement
Programs
▪ HRM must be prepared to train employees in
new processes and help them attain new skill
levels that may be associated with improved
operations.
▪ HRM must be ready to give employees
appropriate answers and direction for what to
expect, as well as assistance in dealing with
conflicts that may result within the
organization.
 Employee Involvement

It’s all about employee empowerment through

involvement, which increases worker
productivity and loyalty.

Employee Involvement Concepts

delegation • participative management

work teams • goal setting • employer training
 Other HRM Challenges

▪ Challenges for HRM:

• The recession has brought layoffs and low morale.
• Increased offshoring means jobs can move
overseas, even HR.
• Current trend of mergers and acquisitions increase
HR’s role.
• Unions acts on behalf of its members to secure
wages, hours, and other terms and conditions of
employment. Unions and their role in representing
employees are changing.
 Ethics

▪ Ethics is a set of rules or principles that define

right and wrong conduct.
▪ Code of ethics: a formal statement of an
organization’s primary values and the ethical
rules it expects members to follow.
▪ Sarbanes-Oxley Act provides protection for
employees who report executive wrongdoing
(whistle-blowing). Sarbanes-Oxley Act of 2002
Requires proper financial recordkeeping
for public companies
 Sustainability

▪ Sustainability entails finding ways of living,

doing business, and employing individuals in a
responsible and ethical way.
▪ HRM may encourage volunteering and
recognizing participation, educate employees
and executives about sustainable practices
such as energy conservation, recycling efforts,
community outreach, and using sustainable
production resources.
 Sustainability

▪ HRM department sustainability practices

include providing a safe workplace,
employment, and compensation practices that
are free of discrimination, respect for diversity
in all forms, providing employee development
and encouraging employees to reach their
potential in the organization and the
community.
Ethical Issues in HRM