Chapter 1

Human Resources
in a Globally
Competitive
Business
Environment

Questions this Chapter will Help

Managers Answer

What will 21st century corporations look

like?

What people-related business issues must

managers be concerned about?

Which features will characterize the

competitive business environment in the
foreseeable future, and how might we
respond to them?
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Questions this Chapter will Help

Managers Answer (contd.)

What people-related problems are likely to

arise as a result of changes in the forms of
organizations?

How can we avoid these problems?

How do managers and human resource

departments work together?

What are the HR implications of our firms

business strategy?
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Table 1-1
Contrasting Views of the Corporation

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Activities in Managing People

Staffing

Retention

Development

Adjustment

Managing Change

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Table 12: HRM Activities and the

Responsibilities of
Line Managers and the HR Department

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Staffing Activities

Identifying work requirements within an

organization.

Determining the numbers of people and the

skills mix necessary to do the work.

Recruiting, selecting, and promoting

qualified candidates.

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Retention Activities

Rewarding employees for performing their

jobs effectively.

Ensuring harmonious working relations

between employees and managers.

Maintaining a safe, healthy work

environment.

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Development

is a function whose objective is to

preserve and enhance employees
competence in their jobs through
improving their knowledge, skills,
abilities, and other characteristics.

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Adjustment

comprises activities intended

to maintain compliance with the
organizations HR policies (e.g.,
through discipline) and
business strategies (e.g., cost
leadership.

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Managing Change

is an ongoing process whose

objective is to enhance the ability of
an organization to anticipate and
respond to developments in its
external and internal environments,
and to enable employees at all levels
to cope with the changes.

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Features of the Competitive

Business Environment

Globalization

The free movement of capital, goods, services, ideas,

information, and people across national boundaries.

Technology

Information and ideas are keys to the new creative

economy, because every country, company, and
individual depends increasingly on knowledge.
The most central use of technology in HRM is an
organizations human resources information system
(HRIS).

E-Commerce

The Internet is the foundation for a new industrial order

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Figure 1-1: Projected Percentage Change in Labor Force by Age, 2006-2016

Figure 11: Percentage Change in

Labor Force by Age: 2006-2016

Source: U. S. Bureau of Labor Statistics (July 31, 2008). Projected growth in labor force participation of
seniors, 2006-2016. Retrieved from http://www.bls.gov/opub/ted/2008/jul/wk4/art04.htm

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Figure 12: U.S. Population by Age and

Race,
2000 and 2050

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Implications of Demographic Changes

and Increasing Cultural Diversity for Managers

The reduced supply of workers (at least in

some fields) will make finding and keeping
employees a top priority.

The task of managing a culturally diverse

workforce, of harnessing the motivation
and efforts of a wide variety of workers,
will present a continuing challenge to
management.

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Responses of Firms
to the New Competitive Realities

The shift from vertically integrated

hierarchies to networks of specialists

The decline of routine work, coupled with

the expansion of complex jobs that require
flexibility, creativity, and the ability to work
well with people

Pay tied less to a persons position or tenure

in an organization and more to the market
value of his/her skills
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Responses of Firms
to the New Competitive Realities
(contd.)

A change in the paradigm of doing business

from making a product to providing a
service, often by part-time or temporary
employees

Outsourcing of activities that are not core

competencies of a firm

The redefinition of work itself: constant

learning, more higher-order thinking, less
nine-to-five mentality
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New Forms of Organization

Virtual Organization: where teams of
specialists come together to work on a project
and disband when the project is finished (e.g.,
the movie industry)
Virtual workplace: where employees
operate remotely from each other and from
managers
Modular corporation: where the organization
focuses on a few core competencies (e.g.,
designing and marketing of computers or
copiers) and outsource everything else to a
network of suppliers
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Figure 13: The Modular

Corporation

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Restructuring, Including
Downsizing

Restructuring can assume a variety of

forms, of which employment
downsizing is probably the most
common. Companies can restructure by
selling or buying plants or lines of
business, or by laying-off employees.

Downsizing is the planned elimination

of positions or jobs.

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Quality-Management
Programs

Six Sigma
Originated at Motorola in 1986, and became a
staple of corporate life in the 1990s after GE
embraced it.
Goal: Reduce variability from a process (no
more than 3.4 defects per million) in order to
avoid defects and increase predictability.
Based on 5 steps: define, measure, analyze,
improve, and control (DMAIC).
Main value to corporations lies in its ability to
save time and money.

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Reengineering

The fundamental rethinking and radical

redesign of business processes to achieve
dramatic improvements in cost, quality,
and speed.
Process: A collection of activities that takes one
or more kinds of input and creates an output
that is of value to a customer.
HR issues are central to the reengineering of
business processes.
It requires that managers create an
environment and an organizational culture that
embraces, rather than resists, change.
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Flexibility

Flexibility in schedules is the key, as

organizations strive to retain talented
workers.

Frequently viewed by managers and

employees as an exception or employee
accommodation, rather than as a new,
effective way of working to achieve
business results.

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Table 13: Implementing Flexibility:

A Spectrum Of Practice

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Figure 1-4. Overall productivity, expressed as GDP per person employed, in $U.S., ranks 1-10 and 39-49.

Figure 14: Overall productivity of

Top 10 Countries in U.S. Dollars

Source: Downloaded from

www.nationmaster.com/graph/eco_ove_pro_ppp-economy-overall-productivity-ppp

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Figure 1-5 Productivity

Labor
Capital
Equipment

More productive organizations

INPUTS
Labor
Capital
Equipment
INPUTS

Goods
and
Services

OUTPUTS

Less productive organizations

Goods
and
Services
OUTPUTS

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Quality of Work Life: What is

it?

A set of objective organizational conditions

and practices.
Employees perceptions that they are safe,
relatively well satisfied, have reasonable work-life
balance, and able to grow and develop as human
beings.
This relates QWL to the degree to which the full
range of human needs is met.

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Business Trends and

HR Competencies

Credible activists

Cultural stewards

Talent managers/organizational designers

Strategy architects

Business allies

Operational executors
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The 21st-century
Corporation

Management systems that produce profits through people share seven

dimensions:
Employment security
Selective hiring
Self-managed teams and decentralization are basic elements of the organization
design
Comparatively high compensation contingent on organizational performance
Extensive training
Reduced differences in status
Sharing of information

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