Strategic Human Resource Management

Unit -2

Strategic Human Resource Management (SHRM)

The field of strategic HRM is still evolving and there is little agreement among scholars regarding an
acceptable definition. Broadly speaking, SHRM is about systematically linking people with the
organization; more specifically, it is about the integration of HRM strategies into corporate strategies. HR
strategies are essentially plans and programs that address and solve fundamental strategic issues related to
the management of human resources in an organization. The focus is on alignment of the organization’s
HR practices, policies and programs with corporate and strategic business unit plans. Strategic HRM thus
links corporate strategy and HRM, and emphasizes the integration of HR with the business and its
environment. It is believed that integration between HRM and business strategy contributes to effective
management of human resources, improvement in organizational performance and finally the success of a
particular business. It can also help organizations achieve competitive advantage by creating unique HRM
systems that cannot be imitated by others. In order for this to happen, HR departments should be forward-
thinking (future-oriented) and the HR strategies should operate consistently as an integral part of the
overall business plan. The HR-related future-orientation approach of organizations forces them to
regularly conduct analysis regarding the kind of HR competencies needed in the future, and accordingly
core HR functions (of procurement, development and compensation) are activated to meet such needs.

Definition

“Strategic HRM is an approach to making decisions on the intentions and plans of the organization in the
shape of the policies, programs and practices concerning the employment relationship, resourcing,
learning and development, performance management, reward, and employee relations.” – Michael
Armstrong.

Characteristics of SHRM

The strategic approach to human resource management applies the concept of strategy to managing firm’s
human resources.

There are 6 characteristics of strategic human resource management, which are given below:

1. Recognition of the outside Environment: Outside environment presents some opportunities and
threats to the organization in the form of-

 Laws
 Economic conditions
 Social and demographic change
 Domestic and international political forces
  Technology

Strategic human resource strategy explicitly recognizes the threats and opportunities in each area and
attempts to capitalize on the opportunities while minimizing or deflecting the effect of threats.

2. Impact of Competition: The forces of competition in attracting, rewarding, and using employees have
a major effect on corporate human resource strategy. Forces play out in local, regional and national labor
markets. Labor market dynamics of wage rates, unemployment rates, working conditions, benefits levels
minimum wages legislation, and competition reputation all have an impact on and are effected by
strategic human resource decisions.

3. Long-range Focus: A strategic human resource management should be of long range focus because it
is not easy to change strategic human resource policy.

4. Choice and decision making focus: In other words, strategy has a problem solving or problem
preventing focus. Strategy concentrates on the question, “what should the organization do and why?” this
action orientation requires that decisions be made and carried out.

5. Consideration of all personnel: A strategic approach to human resources is concerned with all of the
firm’s employees, not just its hourly or operational personnel. Traditionally, human resource management
focuses on hourly employees, with most clerical exempt employees also included.

6. Integration with corporate strategy: Human resource strategy adopted by a firm should be integrated
with the firm’s corporate strategy.

The key idea behind overall strategic management is to coordinate all of the company’s resources,
including human resources; in such a way that everything a company does contributes to carrying out its
strategy.

Synergy means the extra benefit or value realized when resources have been combined and coordinated
effectively. This concept often referred to as economic of scope, makes the combined whole of the
company more valuable than the sum of its parts. It is a true benefit of good strategic management of
resources.

Concept & Importance of SHRM

The concept of strategic HRM is derived from the concepts of HRM and strategy. It takes the HRM
model with its focus on strategy, integration and coherence and adds to that the key notions of strategy,
namely, strategic intent, resource-based strategy, competitive advantage, strategic capability and strategic
fit.

Armstrong believes that Strategic HRM defines the organization’s intentions and plans on how
its business goals should be achieved through people. It is based on three propositions:

 Human capital is a major source of competitive advantage;

 People implement the strategic plan;
 Systematic approach should be adapted to defining where the organization wants to go and how it
should get there.
Strategic HRM is a process that involves the use of overarching approaches to the development of HR
strategies, which are integrated vertically with the business strategy and horizontally with one another.

These strategies define intentions and plans related to overall organizational considerations, such as
organizational effectiveness, and to more specific aspects of people management, such as resourcing,
learning and development, reward and employee relations.

THE MEANING OF STRATEGIC HRM

Strategic HRM focuses on actions that differentiate the firm from its competitors (Purcell, 1999). It is
suggested by Hendry and Pettigrew (1986) that it has four meanings:

 The use of planning; a coherent approach to the design and management of personnel
 Systems based on an employment policy and workforce strategy and often underpinned by a
‘philosophy’;
 Matching HRM activities and policies to some explicit business strategy;
 Seeing the people of the organization as a ‘strategic resource’ for the achievement of ‘competitive
advantage’.

Strategic HRM addresses broad organizational issues relating to changes in structure and culture,
organizational effectiveness and performance, matching resources to future requirements, the
development of distinctive capabilities, knowledge management, and the management of change. It
is concerned with both human capital requirements and the development of process capabilities, that
is, the ability to get things done effectively. Overall, it deals with any major people issues that affect or
are affected by the strategic plans of the organization. As Boxall (1996) remarks: ‘The critical concerns of
HRM, such as choice of executive leadership and formation of positive patterns of labor relations, are
strategic in any firm.’

Aims of Strategic HRM

The fundamental aim of strategic HRM is to generate a perspective on the way in which critical issues
relating to people can be addressed. It enables strategic decisions to be made that have a major and long-
term impact on the behavior and success of the organization by ensuring that the organization has the
skilled, committed and well-motivated employees it needs to achieve sustained competitive advantage. Its
rationale is the advantage of having an agreed and understood basis for developing approaches to people
management in the longer term by providing a sense of direction in an often turbulent environment. As
Dyer and Holder (1998) remark, strategic HRM should provide ’unifying frameworks which are at once
broad, contingency based and integrative’.

When examining the aims of strategic HRM it is necessary to consider the need for HR strategy to take
into account the interests of all the stakeholders in the organization, employees in general as well as
owners and management. In Storey’s (1989) terms, ’soft strategic HRM’ will place greater emphasis on
the human relations aspect of people management, stressing continuous development, communication,
involvement, security of employment, the quality of working life and work-life balance.

Ethical considerations will be important. ’Hard strategic HRM’ on the other hand will emphasize the
yield to be obtained by investing in human resources in the interests of the business. This is also the
philosophy of human capital management. Strategic HRM should attempt to achieve a proper balance
between the hard and soft elements. All organizations exist to achieve a purpose and they must ensure
that they have the resources required to do so, and that they use them effectively. But they should also
take into account the human considerations contained in the concept of soft strategic HRM. In the words
of Quinn Mills (1983) they should plan with people in mind, taking into account the needs and
aspirations of all the members of the organization. The problem is that hard considerations in many
businesses will come first, leaving soft ones some way behind.

Evolutionary Stages and Foundations of SHRM

Works Linking HRM with Strategy:

Greer (1995) talks about four possible types of linkages between business strategy and the HRM
function / department of an organization:

 ‘Administrative linkage’ represents the scenario where there is no HR department and some other
figurehead (such as the Finance or Accounts executive) looks after the HR function of the firm.
The HR unit is relegated here to a paper-processing role. In such conditions there is no real
linkage between business strategy and HRM.
 Next is the ‘one-way linkage’ where HRM comes into play only at the implementation stage of
the strategy.
 ‘Two-way linkage’ is more of a reciprocal situation where HRM is not only involved at the
implementation stage but also at the corporate strategy formation stage.
 The last kind of association is that of ‘integrative linkage’, where HRM has equal involvement
with other organizational functional areas for business development.
Purcell (1989) presents a two-level integration of HRM into the business strategy – ‘upstream or first-
order decisions’ and ‘downstream or second-order decisions’:

 First-order decisions, as the name suggests, mainly address issues at the organizational
mission level and vision statement; these emphasize where the business is going, what sort of
actions are needed to guide a future course, and broad HR-oriented issues that will have an
impact in the long term.
 Second-order decisions deal with scenario planning at both strategic and divisional levels for the
next 3–5 years. These are also related to hardcore HR policies linked to each core HR function
(such as recruitment, selection, development, communication).
Guest (1987) proposes integration at three levels:

 First he emphasizes a ‘fit’ between HR policies and business strategy.

  Second, he talks about the principle of ‘complementary’ (mutuality) of employment practices
aimed at generating employee commitment, flexibility, improved quality and internal coherence
between HR functions.
 Third, he propagates ‘internalization’ of the importance of integration of HRM and business
strategies by the line managers.
Theoretical frameworks that propagated SHRM:

The strategic fit or the hard variant of HRM

Fombrun’s (1984) ‘matching model’ highlights the ‘resource’ aspect of HRM and emphasises the
efficient utilization of human resources to meet organizational objectives. This means that, like other
resources of organization, human resources have to be obtained cheaply, used sparingly and developed
and exploited as fully as possible. The matching model is mainly based on Chandler’s (1962) argument
that an organization’s structure is an outcome of its strategy. Fombrun expanded this premise in their
model of strategic HRM, which emphasises a ‘tight fit’ between organizational strategy, organizational
structure and HRM system. The organizational strategy is pre-eminent; both organization structure and
HRM are dependent on the organization strategy. The main aim of the matching model is therefore to
develop an appropriate ‘human resource system’ that will characterise those HRM strategies that
contribute to the most efficient implementation of business strategies.

The matching model of HRM has been criticised for a number of reasons. It is thought to be too
prescriptive by nature, mainly because its assumptions are strongly unitary. As the model emphasises a
‘tight fit’ between organizational strategy and HR strategies, it completely ignores the interest of
employees, and hence considers HRM as a passive, reactive and implementationist function. However,
the opposite trend is also highlighted by research (Storey, 1992). It is asserted that this model fails to
perceive the potential for a reciprocal relationship between HR strategy and organizational strategy
(Lengnick-Hall and Lengnick-Hall, 1988). Indeed, for some, the very idea of ‘tight fit’ makes the
organization inflexible, incapable of adapting to required changes and hence ‘misfitted’ to today’s
dynamic business environment. The matching model also misses the ‘human’ aspect of human resources
and has been called a ‘hard’ model of HRM. The idea of considering and using human resources like any
other resource of an organization seems unpragmatic in the present world.

Despite the many criticisms, however, the matching model deserves credit for providing an initial
framework for subsequent theory development in the field of strategic HRM. Researchers need to adopt a
comprehensive methodology in order to study the dynamic concept of human resource strategy. The main
propositions emerging from the matching models that can be adopted by managers to evaluate scenario of
strategic HRM in their organizations are:
 Do organizations show a ‘tight fit’ between their HRM and organization strategy where the
former is dependent on the latter? Do specialist people managers believe they should develop
HRM systems only for the effective implementation of their organization’s strategies?
 Do organizations consider their human resources as a cost and use them sparingly? Or do they
devote resources to the training of their HRs to make the best use of them?
 Do HRM strategies vary across different levels of employees?

The soft variant of HRM

The ‘Harvard model’ of strategic HRM is another analytical framework, which is premised on the view
that if general managers develop a viewpoint of ‘how they wish to see employees involved in and
developed by the enterprise’ then some of the criticisms of historical personnel management can be
overcome. The model was first articulated by Beer et al. (1984). Compared to the matching model, this
model is termed ‘soft’ HRM. It stresses the ‘human’ aspect of HRM and is more concerned with the
employer–employee relationship. The model highlights the interests of different stakeholders in the
organization (such as shareholders, management, employee groups, government, community and unions)
and how their interests are related to the objectives of management. This aspect of the model provides
some awareness of the European context and other business systems that emphasise ‘co-determination’. It
also recognises the influence of situational factors (such as the labor market) on HRM policy choices.

The actual content of HRM, according to this model, is described in relation to four policy areas, namely,
human resource flows, reward systems, employee influence, and works systems. Each of the four policy
areas is characterised by a series of tasks to which managers must attend. The outcomes that these four
HR policies need to achieve are commitment, competence, congruence, and cost effectiveness. The aim
of these outcomes is therefore to develop and sustain mutual trust and improve individual / group
performance at the minimum cost so as to achieve individual well-being, organizational effectiveness and
societal well-being. The model allows for analysis of these outcomes at both the organizational and
societal level. As this model acknowledges the role of societal outcomes, it can provide a useful basis for
comparative analysis of HRM. However, this model has been criticised for not explaining the complex
relationship between strategic management and HRM (Guest, 1991).

The matching model and the Harvard analytical framework represent two very different emphases, the
former being closer to the strategic management literature, the latter to the human relations tradition.
Based on the above analysis, the main propositions emerging from this model that can be used for
examining its applicability and for determining the nature of SHRM in different contexts are:
 What is the influence of different stakeholders and situational and contingent variables on HRM
policies?
 To what extent is communication with employees used to maximise commitment?
 What level of emphasis is given to employee development through involvement, empowerment and
devolution?

The issue of strategic integration

Debates in the early 1990s suggested the need to explore the relationship between strategic management
and HRM more extensively (Guest, 1991) and the emerging trend in which HRM is becoming an integral
part of business strategy. The emergence of SHRM is an outcome of such efforts. As mentioned above, it
is largely concerned with ‘integration’ and ‘adaptation’. Its purpose is to ensure that HRM is fully
integrated with the strategy and strategic needs of the firm; HR policies are coherent both across policy
areas and across hierarchies; and HR practices are adjusted, accepted and used by line managers and
employees as part of their everyday work (Schuler, 1992: 18).

SHRM therefore has many different components, including HR policies, culture, values and practices.
Schuler (1992) developed a ‘5-P model’ of SHRM:
 philosophies
 policies
 programs
 practices and
 processes
This model melds the HR Practices with strategic business needs, and reflects management’s overall plan
for survival, growth, adaptability and profitability. The strategic HR activities form the main components
of HR strategy. This model to a great extent explains the significance of these five SHRM activities in
achieving the organization’s strategic needs, and shows the interrelatedness of activities that are often
treated separately in the literature. This is helpful in understanding the complex interaction between
organizational strategy and SHRM activities.

This model further shows the influence of internal characteristics (which mainly consists of factors such
as organizational culture and the nature of the business) and external characteristics (which consist of the
nature and state of economy in which the organization is existing and critical success factors, i.e. the
opportunities and threats provided by the industry) on the strategic business needs of an organization.
This model initially attracted criticism for being over-prescriptive and too hypothetical in nature. It needs
a lot of time to gain an understanding of the way strategic business needs are actually defined. The
melding of business needs with HR activities is also very challenging, mainly because linkages between
human resource activities and business needs tend to be the exception, even during non-turbulent times
(Schuler, 1992: 20). In essence, the model raises two important propositions that are core to the strategic
HRM debate. These are:
 What is the level of integration of HRM into the business strategy?
 What level of responsibility for HRM is devolved to line managers?

Major Trends in Organizations and Business Environment in HRM

The world of work is rapidly changing. As a part of organization, Human Resource Management (HRM)
must be prepared to deal with effects of changing world of work. As a rule human resource management
has to venture into new trends in order to remain relevant corporate development partner. Look at the new
trends bellow;
1. Globalization and its implications
Business today doesn’t have national boundaries – it reaches around the world. The rise of multinational
corporations places new requirements on human resource managers. The HR department needs to ensure
that the appropriate mix of employees in terms of knowledge, skills and cultural adaptability is available
to handle global assignments.  In order to meet this goal, the organizations must train individuals to meet
the challenges of globalization. The employees must have working knowledge of the language and culture
(in terms of values, morals, customs and laws) of the host country.
Human Resource Management (HRM) must also develop mechanisms that will help multicultural
individuals work together. As background, language, custom or age differences become more prevalent,
there are indications that employee conflict will increase. HRM would be required to train management to
be more flexible in its practices. Because tomorrow’s workers will come in different colors, `nationalities
and so on, managers will be required to change their ways. This will necessitate managers being trained to
recognize differences in workers and to appreciate and even celebrate these differences.
2. Work-force Diversity
In the past HRM was considerably simpler because our work force was strikingly homogeneous. Today’s
work force comprises of people of different gender, age, social class sexual orientation, values,
personality characteristics, ethnicity, religion, education, language, physical appearance, marital status,
lifestyle, beliefs, ideologies and background characteristics such as geographic origin, tenure with the
organization, and economic status and the list could go on. Diversity is critically linked to the
organization’s strategic direction. Where diversity flourishes, the potential benefits from better creativity
and decision making and greater innovation can be accrued to help increase organization’s
competitiveness. One means of achieving that is through the organization’s benefits package. This
includes HRM offerings that fall under the heading of the family friendly organization. A family friendly
organization is one that has flexible work schedules and provides such employee benefits such as child
care. In addition to the diversity brought by gender and nationality, HRM must be aware of the age
differences that exist in today’s work force. HRM must train people of different age groups to effectively
manage and to deal with each other and to respect the diversity of views that each offers. In situations like
these a participative approach seems to work better.
3. Changing skill requirements
Recruiting and developing skilled labor is important for any company concerned about competitiveness,
productivity, quality and managing a diverse work force effectively. Skill deficiencies translate into
significant losses for the organization in terms of poor-quality work and lower productivity, increase in
employee accidents and customer complaints. Since a growing number of jobs will require more
education and higher levels of language than current ones, HRM practitioners and specialists will have to
communicate this to educators and community leaders etc. Strategic human resource planning will have
to carefully weigh the skill deficiencies and shortages. HRM department will have to devise suitable
training and short term programs to bridge the skill gaps & deficiencies.
4. Corporate downsizing.
Whenever an organization attempts to delayer, it is attempting to create greater efficiency. The premise of
downsizing is to reduce the number of workers employed by the organization. HRM department has a
very important role to play in downsizing. HRM people must ensure that proper communication must
take place during this time. They must minimize the negative effects of rumors and ensure that
individuals are kept informed with factual data. HRM must also deal with actual layoff. HRM department
must play a vital role in the downsizing discussions that have to take place.
5. Continuous improvement programs
Continuous improvement programs focus on the long term well-being of the organization.  It is a process
whereby an organization focuses on quality and builds a better foundation to serve its customers. This
often involves a companywide initiative to improve quality and productivity. The company changes its
operations to focus on the customer and to involve workers in matters affecting them. Companies strive to
improve everything that they do, from hiring quality people, to administrative paper processing, to
meeting customer needs.
Unfortunately, such initiatives are not something that can be easily implemented, nor dictated down
through the many levels in an organization. Rather, they are like an organization wide development
process and the process must be accepted and supported by top management and driven by collaborative
efforts, throughout each segment in the organization. HRM plays an important role in the implementation
of continuous improvement programs.  Whenever an organization embarks on any improvement effort, it
is introducing change into the organization. At this point organization development initiatives dominate.
Specifically, HRM must prepare individuals for the change. This requires clear and extensive
communications of why the change will occur, what is to be expected and what effect it will have on
employees.
6. Re-engineering work processes for improved productivity
Although continuous improvement initiatives are positive starts in many of our organizations, they
typically focus on ongoing incremental change. Such action is intuitively appealing – the constant and
permanent search to make things better. Yet many companies function in an environment that is dynamic-
facing rapid and constant change. As a result continuous improvement programs may not be in the best
interest of the organization. The problem with them is that they may provide a false sense of security.
Ongoing incremental change avoids facing up to the possibility that what the organization may really
need is radical or quantum change. Such drastic change results in the re-engineering of the organization.
Re-engineering occurs when more than 70% of the work processes in an organization are evaluated and
altered. It requires organizational members to rethink what work should be done, how it is to be done and
how to best implement these decisions. Re-engineering changes how organizations do their business and
directly affects the employees. Re-engineering may leave certain employees frustrated and angry and
unsure of what to expect. Accordingly HRM must have mechanisms in place for employees to get
appropriate direction of what to do and what to expect as well as assistance in dealing with the conflict
that may permeate the organization. For re-engineering to generate its benefits HRM needs to offer skill
training to its employees. Whether it’s a new process, a technology enhancement, working in teams,
having more decision making authority, or the like, employees would need new skills as a result of the re-
engineering process.
7. Contingent workforce
Substantial parts of the modern day workforce are contingent workers. Contingent workers are
individuals who are typically hired for shorter periods of time. They perform specific tasks that often
require special job skills and are employed when an organization is experiencing significant deviations in
its workflow. When an organization makes its strategic decision to employ a sizable portion of its
workforce from the contingency ranks, several HRM issues come to the forefront. These include being
able to have these virtual employees available when needed, providing scheduling options that meet their
needs and making decisions about whether or not benefits will be offered to the contingent work force.
No organization can make the transition to a contingent workforce without sufficient planning. As such,
when these strategic decisions are being made, HRM must be an active partner in these discussions. After
all, it’s the entire HRM department’s responsibility to locate and bring into the organization these
temporary workers. As temporary workers are brought in, HRM will also have the responsibility of
quickly adapting them to the organization. HRM will also have to give some thought to how it will attract
quality temporaries. This is sometimes done on consultancy basis. Consultancy work is often a short time
basis and to re-invent the organization’s operation such a workforce of consultancy is vital.
8. Mass Customization
There is a lot going on already within HR concerning mass customization, the optimal combination of
mass production with customization. We’ve seen companies basing employment arrangements on
learning styles and personalities, allowing employees to choose between lower base pay and higher
bonuses vs. higher base pay and lower bonuses, and changing from career ladders with a straight shot to
the top to career lattices where a sideways move is considered a good career move. Here, HR has done a
great job of applying HR principles to its own traditional functional processes.
HR will need to take the tools of marketing around customization for consumers and clients and applying
them to the task of talent segmentation. The key is to optimize. At one extreme, a personal employment
deal for every individual would be chaotic. At the other extreme, defining fairness as “same for everyone”
risks missing important benefits of customization, and in fact may be unproductive and unfair.
Thus, HR should develop principles for understanding the optimal level of customization in the
employment relationship. Moreover, because customization will often mean that different groups of
employees receive different employment arrangements based on their needs or the way they contribute,
HR must develop principles that equip leaders to explain these differences to employees. Our work
suggests that while many HR managers understand the need for customization and differentiation in
principle, they resist it because they simply don’t feel well-equipped to explain them. It is far easier to
say, “We do the same thing for everyone, so it’s out of my hands.” The concept of fairness is sometimes
confused with treating everyone the same.
9. Decentralized work sites
Work sites are getting more and more decentralized. Telecommuting capabilities that exist today have
made it possible for the employees to be located anywhere on the globe. With this potential, the
employers no longer have to consider locating a business near its work force. Telecommuting also offers
an opportunity for a business tin a high cost area to have its work done in an area where lower wages
prevail.
Decentralized work sites also offer opportunities that may meet the needs of the diversified workforce.
Those who have family responsibilities like child care, or those who have disabilities may prefer to work
in their homes rather than travel to the organization’s facility. For HRM, decentralized work sites present
a challenge. Much of that challenge revolves around training managers in how to establish and ensure
appropriate work quality and on-time completion. Work at home may also require HRM to rethink its
compensation policy. Will it pay by the hour, on a salary basis, or by the job performed? Also, because
employees in decentralized work sites are full time employees of the organization as opposed to
contingent workers, it will be organization’s responsibility to ensure health and safety of the decentralized
work force.
10. Employee involvement
For today’s organization’s to be successful there are a number of employee involvement concepts that
appear to be accepted. These are delegation, participative management, work teams, goal setting,
employee training and empowering of employees.  HRM has a significant role to play in employee
involvement. What are needed are demonstrated leadership as well as supportive management.
Employees need to be trained and that’s where human resource management has a significant role to play.
Employees expected to delegate, to have decisions anticipatively handled, to work in teams, or to set
goals cannot do so unless they know and understand what it is that they are to do. Empowering employees
requires extensive training in all aspects of the job. Workers may need to understand how new job design
processes. They may need training in interpersonal skills to make participative and work teams function
properly.
11. Technology
With the current technological advancement and its projection in the future, it has brought in new eyes in
the face of HRM. A number of computerized systems have been invented to help in the HRM of which
they are seen as simplifier of HR functions in companies. Large or multinational organizations using
some of the human resources information systems are reaping big. You do not have to stay in a particular
location to do your duties but you can do on a mobile basis. For instance the paper work files are being
replaced by HRMIS which may be tailor made or Off the Shelf. These systems help in handling a lot of
data on a chip other than having a room full of file shelves.
What HRM is concerned with here is the safety (confidentiality) of the data/information of staff, and
therefore it is at the forefront of having to train personnel in operating such systems and developing the
integrity of such personnel to handle the sensitivity of the matter.
12. Health
With the emergence of the wellness clubs and fitness centers together with the need for having healthy
workforce, it has emerged that HRM has to move to another step like having to subscribe for its
employees to such clubs, paying health insurance services for the staff. This is not only a productivity
strategy but also a strategy used to attract and retain valuable employees.
In the current situation as it is now especially with the outbreak of HIV/AIDS epidemic, it has been seen
to be of value to have infected and affected employees have special attention so that they can have
confidence of support from the employers. With its effect leading to stigmatization, HRM has to think of
counseling and guiding such employee so that despite of the effect they (employee) remain productive.
Cancer is another kind of issue that has seen the current trend in HRM look closer to health and wellness
of employees. Cancers of all types are endemic to employees. Couple with other communicable and none
communicable diseases HRM has no option other than to advice management to invest in health care
packages that will revitalize the performance of the affected and infected employees’
Therefore for HRM to continue showing relevance it has shifted to providing health services to staff
through health insurance, sensitization, and free medical treatment bills. This has seen high results in not
only in performance but also in attraction and retention of highly qualified personnel.
13. Family work life balance
Over a long time now in HRM history it has been a big debate about family life work balance. Employees
have been on toes of the employers to see if there could be justice done and on the other hand employers
have been keen to minimize the effect of the same. The fact is a happy family is equal to a happy
workforce. With the current trend HRM have to work it out that every employee’s family to some extent
is a happy one. Therefore investing in what may seem out hand for the organization is inevitable. It is
time HRM to convince management to organize family day out for the staff and their families, sacrifice
sometimes for days off to enable employees to attend to their family issues.
The employment laws unlike from the past now allow family leaves and above all you have parental leave
(paternity and maternity). In this moment the member of the family is not missed. Time off your duty is to
enrich one with family chore which help identify the employee with the organization. From break of
family affairs of course an employee is rejuvenated and recognizes that the employer values him so much
to the extent that he/she is allowed to visit, stay and enjoy family bond.
Still it is realized that the family bond is a cost to employer in terms of time but it is a great motivator the
employee, which leads to high productivity. Therefore the HRM has to stay tuned the the dynamics of
family needs of employees and go a step ahead to provide development assistance like loans to meet
family needs and social development.
14. Confidentiality
The current trends have been seen as new challenges in the terms of costs especially in the short run but
for organization to strive well in this competitive market to together with the labor mobility it is
imperative important to rethink the HRM in terms of the current trends at all levels.
It goes without say that as longer as there are no clear defined human resource management strategies in
the given organization there is definitely a problem boiling in the same organization or an explosion is
bound to happen. With the current trend in managing the most valued organization resource,
organizations have to dig deeper to maintain in the race.

Strategic Perspective in HRM

Five different perspectives of human resource management (HRM) include

 The normative perspective,

 The critical perspective,
 Behavioral perspective,
 Systems perspective, and
 Agency or transaction cost perspective.

I- THE NORMATIVE PERSPECTIVE

The normative perspective of human resource management bases itself on the concepts of “hard HRM”
and “soft HRM,” on which the foundations of human resource management rest. The concept of “Hard
HRM” is the basis for the traditional approach toward human resource management. This concept traces
its origins to the Harvard model that links workforce management to organizational strategy. Hard HRM
stresses the linkage of functional areas such as manpower planning, job analysis, recruitment,
compensation and benefits, performance evaluations, contract negotiations, and labor legislations to
corporate strategy. This enforces organization interests over the employees' conflicting ambitions and
interests. It views the workforce as passive resources that the organization can use and dispose at will.

Soft HRM is synonymous with the Michigan model of human resources and is the bedrock of the
modern approach to strategic human resource management. This model considers human capital as
“assets” rather than “resources” and lays stress on organizational development, conflict management,
leadership development, organizational culture, and relationship building as a means of increasing trust
and ensuring performance through collaboration. This approach works under the assumption that what
is good for the organization is also good for the employee.

II-The Critical Perspective of Human Resource Management

The critical perspective of human resource management is a reaction against the normative perception.
This highlights some inherent contradictions within the normative perspective.
This perspective espouses a gap between rhetoric, as organizations claim to follow soft HRM policies
when they actually enforce hard HRM. A study by Hope-Hailey et al. (1997) finds that while most
organizations claim employees to be their most important assets and make many commitments for their
welfare and development, in reality employers enforce a hard HRM-based strategic control, and the
interests of the organization always take priority over the individual employee.

III- The Behavioral Perspective of Human Resource Management

The behavioral perspective of human resource management has its roots in the contingency theory that
considers employee behavior as the mediator between strategy and organizational performance. This
theory holds that the purpose of human resource intervention is to control employee attitudes and
behaviors to suit the various strategies adopted to attain the desired performance. This perspective thus
bases itself on the role behavior of employees instead of their skills, knowledge, and abilities.

For instance, an organization aiming to innovate will require a workforce that demonstrates a high degree
of innovative behavior such as long-term focus, cooperation, concern for quality, creativity, propensity
for risk taking, and similar qualities. The role of human resource management in such a context is to
inculcate and reinforce such behavioral patterns in the workforce.

IV-The Systems Perspective of Human Resource Management

The systems perspective describes an organization in terms of input, throughput, and output, with all
these systems involved in transactions with a surrounding environment. The organized activities of
employees constitute the input, the transformation of energies within the system at throughput, and the
resulting product or service the output. A negative feedback loop provides communications on
discrepancies.

The role of human resource management in the systems perspective is

1. Competence management to ensure that the workforce has the required competencies
such as skills and ability to provide the input needed by the organization.
2. Behavior management through performance evaluation, pay systems, and other methods
to ensure job satisfaction, so that employees work according to the organizational strategy,
ultimately boosting productivity.
3. Setting up mechanisms to buffer the technological core from the environment in closed
systems.
 4. Facilitating interactions with the environment in open systems.

V- Agency or Transaction Cost Perspective of Human Resource Management

Among the different perspectives of human resource management is the agency or transaction cost
perspective, which holds the view that the strong natural inclination of people working in groups is to
reduce their performance and rely on the efforts of others in the group. When one person delegates
responsibility to another person, conflicts of interests invariably arise.

The major role of human resource management in such a context is to promote alternative ways of
controlling behavior to reduce the effects of such conflicts and minimize the cost to the organization. The
two major approaches include

1. Monitoring employee behavior and preventing shrink of work by establishing effective

control systems and improving productivity.
2. Providing employees with incentives such as rewards, motivation, and job satisfaction to
increase their individual performance.

The human resource department needs to adopt the approach that minimizes transaction cost to the
organization.

Major Trends in Strategic Human Resource Management

Technology & Organization Structure

An organizations technology is the process by which inputs from an organization’s environment are
transformed into outputs. Technology includes tools, machinery, equipment, work procedures and
employee knowledge and skills.

All organizations, be they manufacturing or service, public or private, large or small, employ some form
of technology to produce something for the open market place or for a specific group of constituents.
With constant advances in technology and work processes, organizations are under increased competitive
pressure to implement, if not develop on their own, more efficient means of operations. However, the
financial considerations of whether to adopt a new technology must be balanced with a number of
strategic issues and, more specifically, a number of specific strategic HR issues as indicated in the exhibit
given below
 Consideration of adopting new Technology

Strategic Issues. Strategic HR issues.

 Impact on productivity.  Necessary expansion /

 Impact on quality of input.
 Impact on timing / delivery of
output.
 Cost of equipment /
technology.
 Adequacy of current
facilities.
 New market opportunities
contraction of workforce.
 Training needed to utilize
new technology.
 Costs for hiring, severance,
training.
 Effective management of
change.
 Impact of work group

At the same time it is necessary to understand the three ways in which work is changing. They are,

1. Requires changes in skills and work habits of employees.

Technological change is creating demand for workers with more sophisticated training and skills,
a significant number of new workforce entrants have limited technical skills, and in some case
little or no training beyond basic literacy. This is compounded by the fact that the growth in the
world economy and the greatest number of jobs being created are in the service sector,
particularly services related to information processing. Service organizations are relatively easy
to establish and expand, and they provide significant entrepreneurial opportunities. However,
service sector employees need different skills than those utilized in manufacturing. Rather than
manual dexterity, service sector employees need strong interpersonal and communication skills as
well as the ability to be flexible in handling a variety of problems relating to serving clients.
2. Elimination of some lower-level positions and layers of management.
The implementation of advanced technologies has also resulted in many organizations
eliminating lower-level positions held by employees who performed tasks that can now be
accomplished through automation. This has resulted in reduced employee headcounts with those
remaining employees having higher levels of training and skills. Automated technologies require
more technically trained employees who act as trouble shooters to repair, adjust, or improve
existing processes. Consequently, organizations have been able to reduce and, in some cases,
eliminate layers of management and move toward, “flatter” organization structures with fewer
levels in the hierarchy. At the same time, because these technical workers have advanced training,
the power bases in many organizations have been rearranged from management to technical
workers. It is not uncommon today for managers to have, limited understanding of the technical
 dimensions of their subordinate’s work. This is a dramatic departure from traditional supervision
and creates unprecedented challenges for managers.
3. Less hierarchy, more collaboration.
Technological change has resulted in hierarchical distinctions being blurred and more
collaborative teramwork where managers, technicians, and analysts work together on projects.
This, in part, is reflected in the growing trend for organizations to offer total quality
management (TQM) initiatives for employees that focus on collaborative attempts to improve
organization processes to ensure continual improvement in the quality of the organization’s
product or service, similarly, technology has created more flexible, dynamic organization
structures that facilitate change and adaptation to changes in the organization’s environment.

In addition to impacting how work is organized and organization structure, technology has created three
new areas of concern for HR and organizations: Telecommuting, Workplace monitoring & Surveillance,
and e-HR.

Telecommuting

Telecommuting, the process by which employees work from home but connect to the organization via
the use of telecommunications, is dramatically gaining popularity in popularity in both small and large
organizations.
Telecommuting involves more than merely an agreement between employees and supervisors that the
subordinate can work at home. It involves a management system that allows employees a tremendous
amount of discretion as to how they fulfill their job responsibilities.

Today, two thirds of Fortune 100 companies currently have telecommuting programs, half of which were
implemented over the past three years. Of the remaining Fortune 100 organizations, 60 percent are
planning to implement a telecommuting program.

Employee Surveillance and Monitoring:

Most employers and employees agree that technology, particularly access to the Internet, has enhanced
employee’s abilities to do their jobs. The dizzying array of information available on demand on the
Internet allows more comprehensive and faster data collection while addressing issues and problems at
work. On line technology also makes it far easier for employees to work at home via either
telecommuting or in the employee’s own time. As employees perform more of their job responsibilities
on “non-work” time, they may feel much freer to take care of their personal needs during the work hours,
as long as their job responsibilities are being fulfilled.
One study found that 90 percent of employees admitted to visiting non work-related Web sites whole at
work, spending an average of more than 2 hours per week tracking care of personal work and needs.
Much of this activity centers on banking, bill paying, and shopping, but here is also significant employee
visits to adult Web sites, chat rooms, dating sites, and gaming sites during the working day.

In response, increasing number of employers’ implement electronic monitoring systems to monitor

employees. More than 80 percent of large employers are now utilizing such technology, which can
monitor not only Internet usage but also e-mails, computer files, and voice mail and telephone usage.

Such monitoring raises serious concerns about employee rights to privacy and can also have a detrimental
effect on employee morale and loyalty. As heightened job demands require employees to spend more and
more time at the office and to do work-related business at home, the line between work and personal life
blurs. Hence, employers have to balance the need for employee productivity with employees’ rights to
privacy and their need to maintain a balance between work and personal life. Employees actually have
very limited privacy rights in the area of workplace monitoring.

e-HR:

Technological advances have also provided HR with an incredible opportunity to deliver many of its
transactional types of service online, freeing HR staff to work on more strategic issues. Payroll, employee
benefits, scheduling, recruiting, training, and career development are just some of the areas that are being
delivered in a self-service format to employees.

While there are many examples of how various employers are using e-HR to benefit both employees and
the organization, the examples provided here illustrate the range of HR activities that are being delivered
electronically, as well as the scope of how “deep” such delivery can go.

One of the most comprehensive examples of electronic delivery of human resource services can be seen
at General Motors. GM sees itself as the world’s larger manufacturer of automobiles but rather as an e-
commerce organization that just happens to manufacture cars. A special unit of GM, e-GM, has been
created to produce consumer Web sites and business-to-business portals, and deliver e-HR services. The
delivery of e-HR, through GM’s “Employee Service Center,” is designed to allow HR to move away from
transactional issues and focus more on strategic issues. The ESC allows different information to be
displayed to different employee groups, in line with each group’s needs. Access to the center is not
limited to the workplace; employees can access it anywhere through the Internet. The suite receives more
than 15 million hits per month and allows employees to enroll in classes online, develop a career
development plan that can be reviewed with their supervisor, view job postings, manage their benefits,
and review their employment history. GM has rolled out its ESC to its international divisions and sees the
project as continuous, with an updated re-release of the site planned every 6 months.

Not only is the nature of work and work management is changing, but organizations also are changing as
result of information technology. The distinctions between management and labor have become blurred.
Workers are becoming increasingly responsible to act on matters that they become aware of through
computerized information systems. Further, there is a shift from individual to joint accountability because
more group members have the same information for decision making. Because of the knowledge power
of skilled technology workers, the structure of many of today’s organizations is poorly suited for the
future. Regardless of the exact form, many organizations have become much less hierarchical.

Recent Trends in Organization Structure

Unbundled Corporations:

Essentially, unbundled corporations employ a portfolio or conglomerate approach toward their peripheral
business units. As a result, units are retained or divested according to profitability and risk criteria.

An example of the unbundled corporation is Johnson & Johnson, which has 190 autonomous operating
companies in 51 countries. Johnson & Johnson has had over 100 consecutive years of profitability and
has achieved exceptional growth.

In unbundled organizations, many of the traditional support services of bureaucracies are outsourced to
consultants and vendors. For example, some traditional human resource management functions such as
training are performed by vendors, along with some compensation and pay-roll functions. An advantage
results from the potential to redeploy resources rapidly to more profitable alternatives. In addition,
developing mangers have more opportunities to exercise general managerial skills in running relatively
autonomous business units that function as profit centers. For a small group of fortunate employees who
form the core unit of the Unbundled Corporation, there is some job security. These units, which may be
quite small, are composed of high- impact employees who coordinate the work of vendors, manage
change, and manager the portfolio of business units.
While the jobs of core of permanent employees are more protected, there is lower commitment to the
employees of the peripheral units. Essentially, some of the employment security of the core employees
comes at the expense of the peripheral’s employees. Other implications for human resource strategy are
that some of the benefits of using temporary employees may be offset by the reduced control and
inefficiencies of dealing with “employees” through a vendor / supplier relationship. Further, when scarce
labor is involved, the wage savings of unbundling may be wiped out by the increased costs of components
purchased from vendors who must employ such labor.

Network organizations or Virtual organizations:

Charles Snow, Raymond Miles, and Henry Colemen have used the term network organizations to describe
organizations that are similar to unbundled corporations. (They refer to unbundled corporations,
consisting of one corporate entity with multiple autonomous units, such as Johnson & Johnson, as
internal networks.).

One of the driving forces for the evolution or creation of network organizations is the need to outsource
activities that other companies, consultants, or joint venture partners can perform better or more quickly.

The term virtual corporation also has been used to describe similar organizations in which there is heavy
reliance on outsourcing and a critical need for speed. Membership of the network may include companies
from throughout the world. Like unbundled corporations, network organizations also have a permanent
core member that performs a broker role. However, the non-core membership of the network may be
stable or dynamic. With the dynamic network in form, the core network member or broker may replace
network components with some frequency. For example, a member of a dynamic network performing a
manufacturing role may be replaced because its production facilities cannot handle a new product t design
preferred by customers. However, with the stable network form, the organization retains the component
members for long periods of time.

Cellular Organizations:

Another structural form is called the cellular organization, which has some similarities with classical
guilds. Such organizations are typically groups of small technology oriented companies that maintain
affiliations over time. Employees of these companies are pre-dominantly technical professionals. Subsets
of the organization’s companies join forces on various projects when their unique skills and capabilities
are needed. One company takes the leadership role depending on the nature of the project. Individual
companies also may join projects even when they only want to learn about a new technology that may be
involved. The skills required of managers in cellular organizations are technical knowledge, cross
functional experience, international experience, collaborative leadership, self-management skills, and
flexibility.

Respondent organization:

Another structural form, the respondent organization, is essentially an entrepreneurial corporation that
exists by filling niches to supply customized services to unbundled corporations and bureaucracies.

In such corporations, decision making is quick and likely retained at the level of the central
entrepreneurial figure. Unfortunately, these corporations are risky and have high failure rates. The
positive trade-offs, from the employees perspectives, are that although there is greater risk and less
individual development from participative decision making, there should be opportunities to develop as a
generalist and acquire new skills as well as the potential for financial gain. Some of today’s smaller
Internet players are respondent organizations.

Management Trends
Strategic Management Trends:
Strategic management is the process in which management implements a plan or strategy that maximizes
the utilization of resources for the benefit of the organization. Often times companies implement a plan,
but fail to execute a process that measures performance on meeting and achieving goals. The strategic
management plan should be used as a general blueprint of the direction of the organization, which
includes a strategic analysis, such as -- SWOT (strength, weaknesses, opportunities and threats). And
successful plans need to be flexible and innovative in order to adapt to complex fluid environments.
When conducting the strategic analysis either a "values" or "SWOT" analysis is required depending on
the enterprise.

Balanced Scorecard System

Balanced scorecard strategic management is a system that aligns business activities with the vision and
strategies of the enterprise. The system monitors the execution of objectives against the company's
strategies and improves internal and external communication. This approach provides a business an active
versus passive strategic management solution by providing management daily directives. With this
framework, management can identify needs to be executed, as well as how and what factors to measure.
The system views the organization from four perspectives -- learning and growth, business process,
customers and financial -- for the purpose of gathering and analyzing data from each perspective.
Stakeholder Theory
Freeman Strategic Management is a trend based on the "Stakeholder Theory." Under this theory,
management evaluates the importance of and identifies those organizational stakeholders that are vital to
the success of the enterprise. According to Freeman's theory, stakeholders that are vital to organizational
success are customers, suppliers, employees, communities, shareholders and managers. Under two
primary principles -- "principle of corporate legitimacy" and the "stakeholder fiduciary principle" --
stakeholders should benefit from and participate in the decision making process or management,
whereupon the manager acts as an agent in the interests of stakeholders for the benefit and survival of the
corporation.

Trends are defined as either a general direction that something moves toward or something that is in
vogue or stylish. The most successful strategic management philosophies are those that are historically
effective as opposed to a trend. Trends, by definition, are things that fail the test of time. In order to build
a successful organization, strategic management needs to be a general philosophy that provides the
organizational management the ability to adapt and overcome changing customer needs and demands,
government regulation and laws, markets, business and technological innovations, economies and
geopolitically-driven economic events.

In recent years, two management trends that seem significant in response to international competition are
the adoption of Japanese management practice and the renewed efforts to achieve excellence in product
and service quality.

Achieving Excellence
In their best seller on America’s best-run companies, In Search of Excellence, Peter and Waterman found
eight basic principles that reflected these companies, management value and corporate culture. The eight
principles of excellent companies are:
 Bias toward action. Successful companies value action, doing, and implementation.
 Closeness to the customer. Successful companies are customer driven; a dominant value is
customer need satisfaction.
 Autonomy and entrepreneurship. Organization structure in excellent corporations is designed
to encourage innovation and change.
 Productivity through people. People are encouraged to participate in production, marketing, and
new-product decisions.
 Hands on, value driven. Excellent companies are clear about their value system.
  Sticking to the knitting. Successful firms are highly focused. They do what they know best.
 Simple form, lean staff. The structural form and systems of excellent companies are elegantly
simple, and few personnel are employed in staff positions.
 Simultaneous loose-tight properties. Excellent companies use tight controls in some areas and
loose controls in others. A tight, centralized control is used for the firm’s core values. In other
areas employees are free to experiment, to innovate, and to take risk in ways they will help the
organization achieve its goals.
Application of these “principles” in the best-managed companies tends to produce an environment that
fosters entrepreneurial pursuit of new opportunities and adaptation to change.

Environmental Changes affecting Management Outlook:

Organizations have witnessed a great development from the olden times particularly in respect of
structure, operations and people. There is a considerable change in the cross-culture environment,
influence of MNCs, growth in the technical know-how and quality management which has provided
different environment in the modern organizations. Some of the important trends observed are mentioned
below:
 Globalization
 Emerging employment relationships
 changing workforce
 Knowledge Management
 Information technology and OB

Globalization
Organization in recent days has changed the style of working and tries to spread worldwide. Tapping new
market place, new technology or reducing cost through specialization or cheap labor are few of the
different reasons that motivates organizations to become global Moreover the way companies integrate
their business practices with other countries has also changed. Instead of controlling the whole supply
chain, countries outsource some part of it to gain advantage of specialization. Thomas Friedman
highlights this phenomenon in his book “The world is flat” There are several types of organizational
changes that has occurred to help business adopt to globalization, as the old principles no longer work in
the age of globalization Strategic changes, technological change, change in organizational cultural
including organizational structural change and a redesign of work tasks are some of the important one. In
line with these changes, there is strong expectation of employee to improve their knowledge and become
an integral part of successful business formula in order to respond to the challenges brought by the global
economy. In other words it leads to formation of a learning organization, which is characterized by
creating, gaining and transferring the knowledge, and thus constantly modifying the organizational
behavior.
Emerging employment relationship:
Changing trends in organizations in recent years have made it utmost important to consider some of the
emerging employee relations issues which can affect employers in the coming decade. Understanding
these issues will help management to better plan and respond to changes in the workplace. Employer
employee relationship is also showing change in the modern era. Employers are no more autocrats and
participative style of leadership is welcomed. Flexible working hours and increased authority motivates
employees to perform to their best. Management now welcomes upward communication and participation
of lower level employees in the decision making process.
Changing workforce
The demographic of the workforce has changed in the recent years... This is due to a number of factors
such as an aging population, labor shortages and immigration. Another significant factor that has changed
the workforce is the changes in the attitudes of workers. Employers need to adapt their recruitment,
training and management processes to adapt to changing workforce. An example of this is that where
employers may have previously looked to younger people as a source of recruits, they may now have to
broaden their view as there are currently a large number of older people either currently employed or
seeking employment. These people may need extra training to bring their skills up to date.
New parents now want to work closer to home or from home, employers may find that they need to make
this a possible option in order to retain or find new staff. Allowing people to work from home will also
make the employer and job more attractive to a wider range of people.
Recent days is also witnessing a shortage of skilled labor in many sectors. Hence employers may have to
take on less skilled workers initially and develop them, rather than simply hiring experienced people.
Hiring employees from overseas also serves the purpose.
Knowledge Management:
Knowledge management is a structured activity that improves an organization’s capacity to acquire,
share, and utilize knowledge for its survival and success. Knowledge management is around us from a
very long period of time in one form or the other. The decisions we make and the action we take both are
enabled by knowledge of some type. Hence to improve quality of these actions and decisions it is
important to understand the process of knowledge management.
Studies in knowledge management has proved an inseparable relationship between knowledge
management and organizational culture (Davenport and Prusak,2000; Von Krogh, 2000; Nonaka and
Takeuchi, 1995) Research has also proved that organizational culture is a major barrier to leveraging
intellectual assets. They focus on four ways in which culture influences organizational behaviours central
to knowledge creation, sharing, and use. The first is the shared assumptions about what knowledge is and
which knowledge is worth managing. Second is the relationship between individual and organizational
knowledge. Third is the context for social interaction that determines how knowledge will be used in
particular situations. Fourth is the processes by which knowledge is created, legitimated, and distributed
in organizations.
There are three basic elements of knowledge management
1. Knowledge acquisition:- It is method of learning through experiences, sensation or perception.
2. Knowledge sharing:- Knowledge sharing is a process through which knowledge is shared among
family, friends or any community.
3. Knowledge dissemination: It is conceptual and instrumental use of new knowledge. Increased
awareness and ability to make informed choice among available alternatives are the outcomes of
knowledge dissemination.
Knowledge maps:- Knowledge maps guide employees to understand what knowledge is needed to
increase their efficiency and productivity and where these knowledge are located.

Information Technology and OB

Technological change and advancement is one of the most salient factors impacting organizations and
employees today. In particular, the prominence of information technology (IT) has grown many folds in
recent years. This innovation in IT has opened new ways for conducting business that are different from
the past. Technology has changed the nature of work as well as the roles of employees. Managerial
decision making, stress handling, and attitude towards work have changed as an impact of technology.It is
also seen from decades that there is a normal tendency of human being to resist to changes, making
adoption of new technologies a little difficult. It has become important for the business and management
to understand and take these issues into consideration while introducing or implementing any new
technology. Frequent sessions on change management can help employees understand, use and adopt new
technologies easily.

Demographic Trends
The major challenge from changing demographics of workforce relates to the following:
(a) Dual Career Couples:
This is a situation where both partners are actively pursuing professional careers. Organizations had been
used to physical relocation of employees. Employees moving through Organizational ranks to upper level
positions need experience in variety of roles in different Organizational units. Job makes and physical
relocation had been used by Organization for developing talent among employees. However, the dual
career couples limit the individual flexibility in accepting such assignments. This hinders the
Organizational flexibility in acquiring and developing talent.

(b) Growing number of youngsters:

Another form of diversity comes from younger people entering the workforce. Generation-X employees
are on an average about 25 years of age. These employees bring new ways of thinking about the world of
work and preferred employment relationships. The young employees are fresh, ambitions, enthusiastic
and innovative. Their personal needs have to be handled with circumspection. These people do not live to
work but work to live choosing a life that they want to have as opposed to just bringing home a pay
check.

(c) Gender factor:

Women used to have very traditional careers in earlier times like nurses, teachers, secretaries etc.
Gradually they moved into professions previously dominated by males e.g. lawyers, doctors and
executives. Nowadays, they are becoming more experiment and moving into civil services, engineering,
information technology etc. Many blue collar jobs are being increasingly sought by women. On the other
hand, more and more men are entering into professions previously dominated by women e.g. catering,
nursing, cooking, fashion and textile designing etc. These developments have their own implications for
human resource managers in Organizations.

(d) Aging Workforce:

Some of the implications of aging are that the workforce will be more experienced, stable, and reliable.
As a result, it should be more productive. However, an older workforce may lead to less flexibility as
older workers may not adapt as quickly to a dynamic economy. Greater costs will also result from greater
pension contributions that are likely to be associated with an aging 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. Companies’ age distributions have already begun to
affect their production costs and ability to compete. Interestingly, during the postwar period in which
Japan’s remarkable economic growth occurred, it had a relatively smaller proportion of retired people to
support than other industrial countries.

(e) Greater Racial Diversity

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
organization’s productivity through several avenues, one of which is increased problem-solving ability.

In addition to diversity-related creativity and problem-solving advantages, companies also may be able to
tap gender and racially diverse markets better with a more diverse workforce. They also may obtain 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. Organizations 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
standardized operating methods, and have developed skills in dealing with resistance to change.

Utilization of Human Resources

Telecommuting (Refer Page.18)

Relocation of Work

Telecommunication advances have allowed information workers to migrate from cities to rural areas and
small towns. This migration has created what futurists Naisbitt 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 making this relocation include owners of home-
based businesses, writers, artists, stock traders, composers, software developers, and engineers. 113

Companies also are relocating their operations. In information systems and data processing, companies
are relocating their facilities to areas where there are favorable costs. For example, a New York money
center bank relocated its data processing operations to a nearby state where real estate and the cost of
living are lower. Information is transmitted electronically back and forth 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.

Growing Use of Temporary and Contingent Workers

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 or clerical work. The second largest category is industrial help workers
such as laborers, 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.

As indicated, 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.