The Human Resource

Environment

DR. E. MARTINEZ
 SHRM
• Strategic Human Resource Management
– Involves aligning initiatives involving how people are
managed with organizational mission & objectives

• Strategic Management Process

– Determining what needs to be done to achieve corporate
objectives over 3 - 5 years
– Examining organization & competitive environment
– Establishing optimal fit between organization & its
environment
– Reviewing & revising strategic plan
Process of Strategic Management
The Human Resource Environment
• For making strategic decisions about hr, managers need to
scan the environment before formulating strategy.

• Several factors in the business environment such as increased

competition, corporate downsizing and rapid technological
advances.

• In the social environment (changing values regarding

work/non -work life balance and changing workforce
demographics) have brought about a new employment
relationship
• A new class of highly skilled knowledge workers has
emerged

• High demand for knowledge workers has created war

for talent among organizations

• Organizations have to develop new strategies to

attract, retain, motivate and develop employees
• Developments such as these affect business and
Human Resources

• Difficult in formulating viable competitive strategies

and their implementation during such times of rapid
change

• Organizations who scanned the environment

/developed strategies/planned alternatives fared
well
• Current situation very turbulent Situation in the last
ten years

• Political development, at home and abroad, led to

massive impacts on human resources

• The North American Free Trade Agreement (NAFTA)

became a reality
North American Free Trade Agreement
(NAFTA)
• Between Canada, Mexico, and United
States
• Facilitated movement of goods across
boundaries within North America
• Free-trade zone of over 400 million people
• Combined gross domestic profit of about
$12 trillion
 Major Factors Affecting HRM

Technological Demographics
Advancement and Diversity

Strategic
HRM

Globalization

1–11
Objectives:
We will identify issues trends relevant to strategy and
human resources.

Technology And Organizational Structure

Worker Values And Attitudinal Trends

 Demographic Trends
The Human Resource Environment
 Global environment

 Global competition

 Global sourcing of labor

 WTO and labor standards

 Culture and its relation to Global
Diversity
 Values and national cultures (Hofstede):
– Power distance
– Uncertainty avoidance
– Individualism-collectivism
– Masculinity-femininity
– Time orientation

Management 9/e - Chapter 5 14

Figure 5.3 How countries compare on Hofstede’s dimension of
national culture.

Management 9/e - Chapter 5 15

 Technology
As technological changes occur, certain skills are
no longer required.

This necessitates some retraining of the current

workforce.

The trend toward a service economy also affects

the type and amount of technology needed.
Technology and HRM
 Technology And Organizational Structure
Technology particularly information technology is
having a major impact on the structure of
organizations and nature of managerial work

• Enterprise software systems have been implemented

to integrate the major areas of business:

 manufacturing/sales/finance /supply chain

management and human resources
• These information systems have enabled companies
to gain numerous benefits

 Efficiency gains/quicker response times/better

inventory control/enhanced coordination/improved
decision making

• Companies spend $ 23 billion a year on enterprise

software such as Oracle/SAP/People Soft
 Technology And Organizational Structure
Information Systems such as these have eliminated the need for middle
management positions

Why?
-much of them were engaged in coordination and dissemination of
information which is now computerized

• Smart machine and skilled professionals who operate such machines

- less supervision or very different type of supervision

• Human resource strategist will have to consider changes in the nature of

managerial work
- that will result from accumulation of knowledge power in non-
managerial technical positions
Information Systems
• Human Resource Management System (HRMS)
– An integrated system providing information used by HR
management in decision making.

– Purposes (Benefits) of HRMS

• Administrative and operational efficiency in compiling
HR data
• Availability of data for effective HR strategic planning
Information Systems
– Uses of HRMS
• Automation of payroll and benefit activities

• EEO/affirmative action tracking

• HR Workflow: increased access to HR

information
–Employee self-service reduces HR costs.
Uses of an HR
Information
System (HRIS)
HRIS samples
Managerial Services
Employee Services
Employee Privacy, Identity Theft, & HRIS

• HRIS makes it easier to invade employee privacy

– Danger lies both within and outside the organization
– The friendlier the system, the easier it can be for unauthorized
access

• Identity theft occurs when:

– Someone uses another’s name, address, social security
number, or other information:
• Without the person’s knowledge
• With the intent to commit fraud or other crimes
 Technology And Organizational Structure

• Managers will require new skills in such

environments

• In information -based lean and flat organizations

alternative job assignments and opportunities are
needed for the development of tomorrow’s high
level managers

• Another impact of increasing technology is that skill

and managerial educational requirements tend to
increase.
• Another impact of technology is that manufacturing
is moving toward much shorter developmental cycles

• Managers can use personal computers to complete

many HR transactions

• Line mangers can complete routine tasks-appraisals

automatically

• Jobs redesigned with fewer transactional activities

because of computerization
 Technology also had massive impacts as well

• Dot -com companies and existing business created

thousands of e-business and e-commerce operations-
employing the some of the labour forces most talented
workers

• Cisco Systems, Oracle, Sun Microsystems and Microsoft

became some of the largest companies in the world based
on their market capitalization
Technology Challenges for HRM
 NEW ORGANIZATIONAL STRUCTURES
Because of the knowledge power of skilled workers who will
operate technology of the future, the structure of today’s
organization will be poorly suited for the future.

• Probably much less hierarchical

-Organization structure may become less pyramidal and more
like a set of concentric circle.

• More work will be expected to be done by task force team

and project-oriented work groups.

• Organization maybe more flexible, porous and adaptive.

The Human Resource Environment
 Diversity
• Diversity is the sum total of the differences which
make individuals who they are, and their
collective ability to contribute to the goals of an
organization.

• Managing Diversity is a conscious choice and

commitment by an organization to VALUE these
differences by using diversity as a source of
strength to achieve organizational goals.
 Managing Workplace Diversity

• Understanding and Appreciating Diversity

– Is critical to effectively marketing to ethnic and
minority groups
– Is promoted by having a diverse workforce at all
organization levels
– Helps ensure that hiring and promotion decisions
are unbiased by person differences
 Managing Workplace Diversity

• Diversity Management Programs/Initiatives

– Must be integrated with organization’s mission
and objectives
– Help key decision makers identify diversity’s
benefits to the organization
– Make critical decisions about implementing the
optimal program/initiative contingent on the
organization and its people, mission and culture.
 Elements of Diversity

• AGE • EDUCATION
• RACE • GEOGRAPHIC
• GENDER LOCATION
• SEXUAL ORIENTATION • RELIGIOUS BELIEFS
• PHYSICAL ABILITIES • MILITARY EXPERIENCE
• PARENTAL STATUS • CLASS/INCOME
• ETHNICITY
MANAGING THE DIVERSE WORK FORCE

• Women in Business
• Contingency Workers
• Visible Minorities
• People with Disabilities
• Work and Family
• Older Workers
• Young Workers
 WOMEN IN BUSINESS
Women In Business The number of women in
entry and midlevel managerial positions has
risen from 34 percent in 1983 to 46 percent in
1998, meaning many more women are in the
pipeline to executive spots. Today, there are
more than 9 million women-owned businesses,
up from 400,000 in 1972.
 Single Parents and Working Mothers
• The number of non-traditional, single-parent
households in the United States is growing. Because
more than half of all marriages today end in divorce,
this trend is expected to continue.

Often, one or more children are involved. Of course,

there are always widows and widowers who have
children as well, and there are some men and
women who choose to raise children outside of
wedlock.
 Dual-Career Families

• The increasing number of dual-career families presents both

challenges and opportunities for organizations.
As a result of this trend, some firms have revised their
policies against nepotism to allow both partners to work for
the same company.

Other firms have developed polices to assist the spouse

of an employee who is transferred. When a firm wishes to
transfer an employee to another location, the employee’s
spouse may be unwilling to give up a good position or may be
unable to find an equivalent position in the new location.
Some companies are offering assistance in finding a
position for the spouse of a transferred employee.
• Workers Of Color
Workers of color often experience stereotypes about
their group (Hispanics, African Americans, Asians,
etc.).
At times, they encounter misunderstandings and
expectations based on ethnic or cultural differences.

• Older Workers
The world population is growing older, a trend that is
expected to continue through the year 2000. In
addition, the trend toward earlier retirement
appears to be reversing itself.
• Persons With Disabilities
A handicap, or disability, limits the amount or kind of work a
person can do or makes achievement unusually difficult.

• Young Persons With Limited Education Or Skills

Each year thousands of young, unskilled workers are hired,
especially during peak periods, such as holiday buying
seasons. In general, they have limited education—high school
or less. More jobs can be de-skilled, making it possible for
lower-skilled workers to do them.

• Educational Level Of Employees

Another form of diversity that is now found in the workplace is
that of the educational level of employees. The United States
is becoming a bipolar country with regard to education, with a
growing number of very educated people on one side and an
alarming increase in the illiteracy rate on the other.
 GO FORTH AND DIVERSIFY
According to a new study by SHRM (Society for Human
Resource Management) and Fortune Magazine

• 52% of employers say a good diversity initiative improves

relationships with clients.
• 79% of the respondents said it improves their corporate
culture
• Another 77% said it improves recruitment of new
employees
• More than half said it decreases interpersonal conflict
among employees(58%), increases creativity(59%) and
productivity(52%)
How Diversity Initiatives Help an Organization Keep
a Competitive Human Resources Advantage

• Improves corporate • Decreased interpersonal

culture conflict among employees
• Improves employee • Improves client relations
morale
• Increases productivity
• Higher retention of
employees • Improves the
• Easier recruitment of organization's bottom line
employees • Maximizes brand identity
• Decreases complaints & • Increases creativity
litigation
• Enables the organization
to move into emerging
markets Source: SHRM/Fortune Diversity
Survey
 The Costs of Not Managing Diversity
• “The Real Thing”-Coca-Cola Agrees to Pay $192.5
Million,Make HR Policy Changes to settle suit (Race),
11/16/00

• California Bakery Workers Awarded $120 Million on Race

Bias Claims, 8/2/00

• First Union Bank Corp. agreed to pay $58.5 million to 239

employees at two banks it acquired in 1992-93(settlement
date, Oct., 1997)-age discrimination
 DEMOGRAPHIC TRENDS

• AN AGING WORKFORCE
• THE BOOMER AGE BULGE
• LABOR SHORTAGES
• GREATER RACIAL DIVERSITY
• GREATER FEMINIZATION OF THE WORKFORCE
• DUAL CAREER WORKFORCE
 New Employee/Workplace Dynamics
• Emphasis on the Management of
Professionals
– Establishment of separate career tracks
• Technical/Professional, Managerial /Administrative
– Use of project teams
• Less Employee Loyalty, More Loyal to Self
– Staying with employers for shorter periods;
demanding more meaningful work and
involvement in organizational decisions
 New Employee/Workplace Dynamics
• Increased Personal and Family Dynamic Effects
– More single-parent families, dual-career couples,
and domestic partners

• Increased Nontraditional Work Relationships

– Part-time, consulting, and temporary employment
flexibility
– Outsourcing and entrepreneurial opportunities
 Changes in Family Composition
• The number of married couples without children
at home exceeds the number of couples with
children at home by 3 million.

• Dual career couples comprise 58% of all married

couples, representing 30.3 million couples.

• Single parent households make up 27% of all

families, with women heading most of these
households.

50
 Workforce Demographic Changes
The “Graying” of the Workforce
• Negative Aspects of Older Workers
– Perceived resistance to change by older workers.
– Increased health-care costs for senior workers
– Blocking advancement opportunities for younger workers
– Higher wage and salary costs for senior workers

• Positive Aspects of Older Workers

– As productive or more productive than younger workers
– Have more organizational loyalty than younger workers
– Possess broader industry knowledge and professional
networks
• Baby Boomers (1945–1962)
– In excess supply in middle management ranks
– HR challenge is to manage “plateaued” workers

• Baby Busters (1963–mid-1970s)

– Are career bottlenecked by the Boomers
– Who have skills in high demand are doing and will do well

• Generation “X”ers (late 1970s–early 1980s)

– Have life-long exposure to technology and constant change
– Seek self-control, independence, personal growth,
creativity
– Are not focused on job security or long-term employment.
 A few facts
• In case you haven't heard, the oldest of the 76-million baby
boomer generation are set to reach their 65th year --
traditional retirement age -- last 2011.

• Already, the first of the boomers reached age 59-1/2 on July 1

of 2005; this age allowing them and all who follow to start
withdrawing retirement funds from tax-deferred accounts
without suffering early withdrawal penalties.

• The following generation -- the "baby bust generation (or

'Generation X')" is not as plentiful;
 about 47 million born from 1965 to 1975.
 The "echo boom (or 'Generation Y')," born 1976 to the mid-90's,
number more than 60 million (No established consensus exists on
exact Generation Y birth years).
 CONTINGENCY WORKERS
• Contingency workers have short term affiliations with
employers
• Over the 1990s Many Companies Chose to Hire Contingency
Workers
Contract Workers Hired by Companies to Cope With
Unexpected or Temporary Challenges

• This Workforce Consist of Part-timers, Freelancers,

Subcontractors, People Hired Through Employment Agencies
and Independent Workers

Examples:
temporaries, sub-contracted workers, part-time, consultants, life
of the project workers, and leased employees
 TEMPORARY WORKERS
• Temporary employees are used to provide a buffer of
protection for the jobs of the core of permanent
employees.
• Companies are also using more “leased” employees who
are “rented” from a temporary help agency on a long
term basis.
• Type of workers utilized as temporaries have expanded to
include: accountants, computer specialist, engineering
personnel, financial executives and technical writers.
• Temporary management personnel and executives are
sometimes early retirees from major computer
companies or managers who have lost their jobs as a
result of restructuring.
Factors prompting use of contingent
employees:
 Uncertainty in the economic outlook faced by
employers.

Avoidance in recruiting, hiring, and training

expense for workers to be used only a short
time and avoidance of several cost.
 FACTORS LIMITING USE OF
CONTINGENT EMPLOYEES
• Missing of affirmative action goals
• The need to train such workers
• Since there are shared employment
responsibility, the use of a leasing may not
eliminate liability.
• A number of leasing companies have failed,
leaving the employers using leased employees
liable for worker compensation.
 Why International Human Resource
Management?

• The role of HR in International Operations

Managing a Multicultural Workforce
Developing Managerial Talent in a Global
Business Environment
Global Human Resource Management

Global HR managers
develop and work
through integrated global
human resource
management system
similar to one they
experience domestically
 HRM in a Global Environment
• The environment in which organizations
operate is rapidly becoming a global one.
• Foreign countries can provide a business with
new markets.
• Companies set up operations overseas
because of lower labor costs.
• Technology makes it easier for companies to
spread work around the globe.
 HRM in a Global Environment
• Global activities are simplified and encouraged by
trade agreements among nations.

• As these trends and arrangements encourage

international trade, they increase and change
demands on human resource management.
Organizations need employees who understand
the customers and suppliers in foreign countries.
Organizations need to understand the laws and
customs that apply to employees in other
countries.
 Environment of Global Human Resource Management
GLOBAL ENVIRONMENT
EXTERNAL ENVIRONMENT
UNITED STATES
Unions INTERNAL ENVIRONMENT Society

Technology
Legal Considerations

Marketing Operations

Unanticipated Events
Human
Resource
1
Management
Economy

Other

Shareholders
Finance Safety and Functional
Health Areas

Customers Competition Labor Market

Levels of Global Participation
Global Competitive Environment :
• Environment Rapid pace of change
• Pervasive shift towards markets
• Broad and fast distribution of capabilities
• Emerging markets
• New global competitors
• Excess capacity and slow growth
• Regionalization of trade
• New rules of global competition
 Global Competition
• Companies competing in a global basis
will need to use world-class labor.
• Companies uses training programs to
develop employees who can produce at
the level of world competitive standards.
• Moving foreign nationals across
international boundaries.
 Global Sourcing
• Global sourcing is a term used to describe practice of
sourcing from the global market for goods and
services across geopolitical boundaries.

• Global sourcing often aims to exploit global

efficiencies in the delivery of a product or service.
These efficiencies include low cost skilled labor, low
cost raw material and other economic factors like tax
breaks and low trade tariffs.
 Global Sourcing of Labor
Reasons:
Common language
Educated labor force
Shortage of Jobs
Relatively low wages
• Common examples of globally-sourced products or
services include:
labor-intensive manufactured products produced
using low-cost Chinese labor, call centers staffed with
low-cost English speaking workers in the Philippines
and India, and IT work performed by low-cost
programmers in India and Eastern Europe.

• While these examples are examples of Low-cost

country sourcing, global sourcing is not limited to
low-cost countries.
 Barriers to Global Sourcing
• Communication problems
– Language, culture, time zones, distance
• Lack of international experience
• More paperwork
– Letters of credit, dock receipts, import,
licenses, multiple bills of lading, …
Global Staffing

• Types of Global
Staff Members
• Approaches to
Global Staffing
 Approaches to Global Staffing
• Ethnocentric staffing - Companies primarily
hire expatriates to staff higher-level foreign
positions

• Polycentric staffing - When more host-country

nationals are used throughout the
organization, from top to bottom
 Approaches to Global Staffing (Cont.)

• Regiocentric staffing - Regional groups of

subsidiaries reflecting organization’s strategy
and structure work as a unit

• Geocentric staffing - Uses worldwide

integrated business strategy
When organizations operate overseas, they hire
a combination of parent-country nationals,
host-country nationals, or third-country
nationals.
 Employees in an International Workforce
• Parent-country national – employee who was born
and works in the country in which an organization’s
headquarters is located.
• Host-country national – employee who is a citizen of
the country (other than parent country) in which an
organization operates a facility.
• Third-country national – employee who is a citizen
of a country that is neither the parent country nor
the host country of the employer.
• Expatriates – employees assigned to work in another
country.
 The Expatriate Problem
• High Expatriate Failure Rates Average cost per failure
to the parent firm can be as high as three times the
expatriate’s annual domestic salary plus the cost of
relocation

• Between 16% & 40% of all American employees sent

abroad to developed nations, and almost 70% sent to
less developed nations return home early
 Reasons for Expatriate Failure
• Inability of spouse to adjust Manager’s
inability to adjust
• Other family problems Manager’s personal or
emotional maturity Inability to cope with
larger overseas responsibility
• Lack of technical competence
• Difficulties with new environment
LABOR STANDARDS AND THE WORLD
TRADE ORGANIZATION
According to the Organization for Economic
Cooperation and Development (2000, p. 20), there
are eight fundamental International Labor
Organization Conventions that form the basis of
consensus among the ILO’s constituents. These
include:
(1 &5) prohibition of forced labor (ILO Convention No.
29 and 105);
(2&3) freedom of association and protection of the
rights to organize and to collective bargaining (No. 87
and 98);
(4) equal remuneration for men and women for work of
equal value (No. 100);
(6) non-discrimination in employment and occupation
(No. 111); and
(7&8) minimum age of employment of children and
abolition of the worst forms of child labor (No. 138 and
182).
end.